Center for Rural Affairs March 21, 2005 Nebraska Legislative Update
Center for Rural Affairs
March 21, 2005
Revenue Committee Tax Incentive and Economic Development Package
The Revenue Committee has generally approved a package of proposals that will reshape Nebraska’s tax incentive programs. The committee approved the package on March 17 with the understanding that any or all pieces could be removed or changed. No official vote was taken to advance the package out of committee.
Two issues could cause that to happen – cost in lost revenue to the state and the approval of the state’s business community.
The package includes the following general concepts, many from other bills:
Modifications to the existing LB 775 tax incentive program. The proposed qualification tiers to trigger allowable tax credits would be: $1 million investment, 10 jobs; $4 million investment, 30 jobs; $14 million investment, 100 jobs; or creating 30 jobs with no jobs.
Workers in newly created jobs would have to be paid at least 60 percent of the state average wage; the higher the wage paid, the greater the wage income tax credit. This is a significant shift in policy, for there is currently no wage requirement in the LB 775 program.
New incentives not in current law would end in five years.
The personal property tax exemption in the tax incentive program would be limited to 10 years (rather than 15); it would also expand to businesses that distribute personal property such as warehouses.
Business could collect tax benefits for up to seven years and have five years to qualify (rather than the current seven and seven).
A new tax credit would be created for increasing expenditures for research and development.
The Invest Nebraska Act, providing tax credit for qualifying projects in rural Nebraska, would continue instead of ending in July.
LB 309 – providing tax credits for small businesses – would also be included.
It is possible this package would be rolled into LB 312 that was given Priority Bill status by Senator Connealy. LB 695, proposing to exempt manufacturing machinery and equipment from sales tax, may also be part of the economic development advanced by the Revenue Committee.
Committee hearings are essentially done for the session. Most committees will be meeting in Executive Session this week to determine the fate of any bills remaining in committee.
The Appropriations Committee will also be meeting in Executive Session to begin developing their final budget recommendation.
With committee meetings finished for the session, the Legislature will soon begin scheduling all-day floor sessions.
Any bill designated a Priority Bill will also have a “P” attached to its number (for example, LB 123P). The chief sponsor of the bill is listed in parentheses.
The words Support or Oppose after a bill description indicate where the Center for Rural Affairs has taken a position on the bill. If neither word is indicated, the Center has not taken a position at this time.
NOTE: Once a bill is Indefinitely Postponed (killed) or signed into law, we will remove it from the Legislative Update list.
LB 28 (Connealy) – The “Endow Nebraska Act.” The bill would provide a tax credit for a contribution to a qualified charitable organization. The bill sits on Select File. Support
LB 273P (Cunningham) – Would create the “Building Entrepreneurial Communities” program through a grant program for each of the next two years. The bill sits on General File. Last week Sen. Synowiecki filed an amendment that would include urban enterprise zone areas in the definition of economically distressed communities that would qualify for grants under this bill. Support
LB 71P (Stuhr) – Would re-authorize the Agricultural Opportunities and Value-Added Partnership Act (formerly the LB 1348 grant program). This program was terminated through budget cuts in 2001 and 2002. This bill would reauthorize the program through 2009. Sen. Stuhr has designated this as her Priority Bill. The bill awaits a vote on Final Reading. It will likely sit for awhile, awaiting decisions on the budget. Support
LB 132 (Cunningham) – This bill modifies the Nebraska Pasteurized Milk Law by providing exemptions to small-scale dairies and processors to the often-expensive bottling and processing requirements, and by allowing dairies and farmers to advertise on-farm sales of non-pasteurized milk (currently, the sale of non-pasteurized milk cannot be advertised). The bill sits on General File. Support
LB 346P (Agriculture Committee) – Would modify several provisions of the Beginning Farmer Tax Credit Act all with the goal to increase utilization of the tax credit. The bill sits on General File. Support
LB 126P (Raikes) – Would mandate the “assimilation” of Class I schools (elementary-only schools) into K-12 school districts for the 2006-07 school year. The bill awaits action on Select File. Oppose.
LB 129P (Education Committee) – An overhaul of the formula for state aid to schools. The bill is pending in the Education Committee.
LB 133 (Connealy) – Would provide a renewable energy sales tax credit, and would provide any generator of electricity from a renewable resource a credit against any sales and use tax. The bill is pending in the Revenue Committee.
LB 309 (Connealy) – Would establish the Small Business Rural Microenterprise Tax Credit. The bill would provide for $2 million worth of tax credits annually for small business (with five or fewer employees or beginning farmers/ranchers) in areas with declining population or low incomes or federal enterprise zones. The bill is pending in the Revenue Committee. Support
LB 404 (Wehrbein) – Would create a tax credit for modernization and expansion of livestock facilities. The goal of the bill is to “attract and retain investment in Nebraska’s livestock industry.” The bill is pending in the Agriculture Committee.
Business Tax Incentives
See the first item above.
LB 208 (Stuthman) – Provides for the appropriation of $1.75 million annually for the next two years to the state’s five federally qualified health clinics to provide services to the uninsured (the clinics are in Omaha, Lincoln and Scottsbluff). The bill is pending in the Appropriations Committee. Support
LB 550 (Jensen) – Requires a plan to be submitted by December 1, 2005, for the financial support of community health centers and emergency medical services in the state. The bill awaits action by the Health and Human Services Committee.
LB 655 (Beutler) – Would create the Task Force on Small Employers Health Plans that would review data and policy ideas concerning health care plans for small employers and recommend policy steps for the state on this issue. On March 15, the Banking, Commerce and Insurance Committee Indefinitely Postponed (killed) the bill. Support.