Legislature advances tax credits to keep Union Pacific in the state

The Nebraska Legislature was split Tuesday over tax incentives for large companies that aim to garner more employees and residents to Nebraska.

Opponents of the bill filibustered for eight hours in an attempt to protect the state’s social programs and departments as the state grapples with a large budget deficit. But lawmakers eventually voted in favor of the tax credits 38-3, advancing the bill to the next round of votes.

The bill does not specifically name one company, but was written to give credits to Union Pacific, which is headquartered in Omaha. To get tax credits, a company must have at least 3,000 employees while offering them health care, child care and retirement benefits. It also must hire 500 new employees and pay those new employees an average salary of $100,000 a year for at least 10 years.

In return, the companies can receive up to $5 million in wage retention credits, another $5 million for capital improvements, and a 1% credit incentive for new employees brought to the state, among other incentives. Sen. Brad von Gillern, who brought the bill to legislators, said it could generate up to $440 million for the Nebraska economy and create over 1,000 jobs.

While the bill states that incentive credits will not be available until 2031, the fiscal note on the bill currently reports that the credits could cost $8.7 million next fiscal year and another $4.5 million the year after that. Von Gillern said that the fiscal note needs updating.

In the officially non-partisan legislature, senators largely divided over party lines and continued to debate the bill into the night hours.

Proponents said the tax incentives will help lower taxes in the future by expanding the tax base with new residents. Even Sen. Jared Storm, who is among a group of senators pledging to not raise taxes this year, said whatever the credits might cost now, that cost will be offset in future with new residents and future growth. Supporters argued that companies move to states with tax incentives like these and that the state needs to offer the credits in order to promote economic development.

“We have to grow our way to prosperity,” Von Gillern said.

Sen. Danielle Conrad led the filibuster as she and her colleagues fought the bill. Some said the bill only benefits wealthy residents and corporations, arguing that corporate welfare does not benefit the economy as much as the bill’s proponents claim.

“They’re blowing a hole in the budget,” Conrad said. “(The bill) fails on a practical basis, and it comes at a time when we have a structural budget deficit that’s ballooning into the next biennium.”

Many senators opposed the tax credits on account of the state’s budget deficit, which, at the start of the legislative session in January, was $471.5 million. After tough budget debates and cuts, the most recent deficit estimate is closer to $42 million. Sen. Jane Raybould pointed out that the legislature has one Constitutional mandate: to balance the budget.

“Are we gambling with ‘The Good Life?’” Raybould wondered. “Are we really growing ‘The Good Life’ with these incentives?”

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