Incentives and credits would be scaled back to balance budget under proposal

By Fred Knapp , Senior Reporter/Producer Nebraska Public Media

11 de Abril de 2025 a las 17:00 ·

Sen. Brad von Gillern in debate Friday (Photo by Fred Knapp, Nebraska Public Media News) — Sen. Brad von Gillern in debate Friday. (Photo by Fred Knapp, Nebraska Public Media News)

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The Nebraska Legislature advanced a bill Friday scaling back various tax incentive programs in an effort to help close the state’s budget gap.

Introducing the proposal, Sen. Brad von Gillern, chair of the Revenue Committee, compared it to what households have to do, and alluded to the Nebraska Constitution’s balanced budget requirement.

“When we face a budget deficit at home, we can either find ways to bring in more income or cut our expenses," he said. "LB650 is one of the solutions to bringing in more income to our state. The Appropriations Committee is working hard every day on the other half of this equation, that is cutting spending. The biggest difference between what we do here at the Capitol and … what they do in Washington is the state cannot put our bills on a credit card."

The state is facing a projected $289 million shortfall at the end of the upcoming two-year budget cycle. The bill would close that gap by an estimated $71 million dollars by eliminating or limiting a series of tax credits for activities ranging from rural development to food bank donations.

Sen. Terrell McKinney objected to eliminating some incentives for urban development, and suggested a different way to address the budget gap.

“If we want to increase our resources and save money, one thing that is in the budget this year that we do not need to put money into is building a new prison,” he said.

The Appropriations Committee’s preliminary budget includes $145 million to keep up with the projected cost of building a new prison, currently estimated at $350 million.

Sen. Mike Jacobson said he was having trouble following McKinney’s logic.

“You're telling me the prison, when it gets built, will be overcrowded, but we don't need a new prison," he said. "Are we just supposed to turn the inmates out loose? Are we just supposed to release everyone from prison? I understand that seems to be what you're after, but I can tell you that the state of Nebraska does not agree with you."

McKinney denied he was advocating releasing all prisoners. He has advocated sentencing reform to reduce prison overcrowding.

Several veteran senators cautioned new members not to oppose the bill just because some critics might describe it as a tax increase. Among those echoing that caution was Sen. Teresa Ibach.

“This is not a tax increase. This is an estimated increase in revenue of over $71 million,” she said.

Sen. Danielle Conrad rejected that description.

“No matter what verbal gymnastics you try to utilize, or assuage your principles or guilt in pushing those forward, it is a tax increase. Otherwise it wouldn't show a $70 million increase in revenue on the fiscal note,” she said.

Conrad blamed the budget shortfall on cuts in income and corporate taxes approved by the Legislature in recent years, when the state had big budget surpluses.

“Nebraska has squandered historic revenues, both in terms of state revenues and federal aid that came to us in the last biennium, where we had historic surpluses, and in less than a biennium, you've blown a hole in the state budget through inequitable, irresponsible, unsustainable tax cuts that primarily benefit the wealthiest and the largest corporations,” she said.

But Sen. John Arch argued those tax cuts were preferable to selective tax credits or incentives.

“Tax incentives are one of those things where we are giving away future revenue with the intention that it would grow our economy and actually increase revenue over time," he said. "So I don't see it as a bad thing, backing up from tax incentives as we have done some very structural, fundamental things in reducing our taxes the last several years."

And von Gillern said the bill would help reduce the need for deeper budget cuts.

“We can't just cut our way to a balanced budget. It's a two-sided equation. Like I said, just like at home, should we take money from Medicaid? Should we take it from education? Should we take it from public health? Should we take it from income tax relief or property tax relief? Is that better or worse than what we have here?” he asked. “Hopefully, I and most of the people in the room feel that this is the least negative impact to taxpayers.”

Senators then voted 38-2 first-round advancement for the bill, with only Conrad and McKinney opposed.

Also Friday, senators gave first-round approval to a bill by Sen. Tanya Storer that would require parental consent and age verification for Nebraskans under age 18 to establish social media accounts. That bill also advanced on a vote of 38-2.