Tax Incentive Bill Clashes With Property Tax Relief in Legislature

May 15, 2019, 5:26 p.m. ·

Sen. Mark Kolterman discusses tax incentives Wednesday (Photo by Fred Knapp, NET News)

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A proposal for new corporate tax incentives butted heads with a desire for property tax relief in the Legislature Wednesday.

Nebraska’s current corporate tax incentives, the so-called Nebraska Advantage program, expires next year. So Sen. Mark Kolterman said it’s important to put a new program in place. “The time is now to create a new program that is responsive to (the) 2019 economy and beyond. It is critical that we send a strong message that Nebraska is a great place to do business, to raise a family, and to live,” Kolterman said.

Kolterman’s proposal would offer companies tax credits ranging from 4 to 12 percent of the wages they pay for new jobs, depending on how much they pay. In 90 of the state’s 93 counties, the minimum they could pay would be the average wage for those 90 counties -- about $39,000. In the other three -- Douglas, Lancaster, and Sarpy Counties –the minimum would be the statewide average – about $45,000. For the maximum benefit, they’d have to pay twice that.

Sen. Steve Lathrop supported the proposal, although he wasn’t enthusiastic about tax incentives in genera. “I’d like to say that these things are a dinosaur, that they’ve gone away, and we don’t need ’em to compete. We do. It’s a fact of life. Other states are doing this. In order to keep up and attract business and growth in this state, it’s important. It also helps us broaden our tax base,” Lathrop said.

Sen. Curt Friesen said three decades of tax incentives haven’t produced the promised growth, and the state doesn’t need another round of them. “This is a rewrite of the Advantage Act. We can do better. We have 60,000, 50,000 job openings in the state and we don’t have people to fill ‘em. And we’re going to spend more money to create more jobs that we can’t fill,” Friesen said.

Sen. Steve Erdman said tax incentives for selected companies are the wrong approach. “We continue to treat the symptom. We never want to treat the cause. And the cause, or the reason we need incentives, is our taxes are too high,” Erdman said.

Sen. Adam Morfeld opposed the bill for a different reason: business opposition to some initiatives he supports. “Some of those programs that I’ve seen the business community actively oppose in the past is paid family leave. I’ve seen them oppose minimum wage. Pay equity measures that would make sure that women receive the same type of wages that their male counterparts receive,” Morfeld said.

Other senators said they’d support Kolterman’s bill, LB720, but only if a separate proposal for property tax relief moved ahead. That proposal didn’t have enough support to advance last week. “My support of LB720 is conditional on one thing, and that is passing substantial and significant property tax relief for hardworking Nebraskans,” said Sen. Tom Briese. “There’s no way I’m going to support a business incentive package without first, or simultaneously, passing property tax relief.”

Similar sentiments were expressed in an email Sen. Dave Murman read from a constituent. “I can’t believe the Legislature would consider doing another round of business incentives without first doing something meaningful on property taxes. That is my number one concern, and a concern shared by my neighbors,” Murman read.

But Sen. John Stinner called competition between business tax incentives and property tax relief a “head scratcher.” Stinner said a tax incentive works to address property taxes. “It brings in people. It brings in jobs. They pay taxes. They build buildings. They build houses. That’s property tax relief. It expands the property tax base. That’s how you get property tax relief,” Stinner said.

Lawmakers reached the three-hour time limit for debate without reaching a first-round vote on the bill. But Kolterman said he has enough support to bring it back for further debate later this week or next.

Also Wednesday, senators advanced a proposal making a series of changes to laws on crime and corrections. The bill allows the Department of Health and Human Services to contract with providers to handle people determined to be mentally incompetent to stand trial, so long as a judge determines there’s not a risk to public safety. It also allows courts to defer judgment and place certain defendants on probation. It allows judges more flexibility in handling people who violate probation. It makes it illegal for someone to bring a cellphone into a prison or provide one to an inmate. And it prohibits putting certain inmates into restrictive housing or solitary confinement. Those inmates include those under 18, those who are pregnant, and those who suffer from serious mental illness, developmental disabilities, or traumatic brain injury. The bill got first-round approval on a vote of 40-0.