State lawmakers could take up a bill to update Nebraska’s business tax incentives as early as next week. LB 720 was introduced by Sen. Mark Kolterman of Seward. Nebraska Farm Bureau testified in a neutral capacity on the bill at the bill’s public hearing, emphasizing that the Legislature must address property tax relief first, before spending legislative time and state resources to provide business tax incentives. Given the Legislature has yet to provide certainty on property tax relief this session, Farm Bureau members should be on the lookout for an Action Alert on the bill sometime next week.
March 6, 2019
LB 720 – Kolterman, Adopt the ImagiNE Nebraska Act and provide tax incentives
Thank you Chairwoman Linehan and members of the Committee.
My name is Mark McHargue and I’m here today on behalf of the Agriculture Leaders Working Group, comprised of the Nebraska Cattlemen, Nebraska Corn Growers Association, Nebraska Farm Bureau, Nebraska Pork Producers Association, Nebraska Soybean Association, Nebraska State Dairy Association, and Nebraska Wheat Growers Association, testifying in a neutral capacity on LB 720, Senator Kolterman’s bill to extend business tax incentives – formerly known as the Advantage Act – through December 2029.
I want to start by saying, I’m testifying in a neutral capacity primarily because our organizations want to show this Committee, the introducer, and the bill supporters that, while property tax relief is our priority, we are willing to keep an open mind about other issues which could, if done correctly and coupled with fundamental tax reform, be beneficial to our state’s economy.
We have heard everything from high income taxes to a workforce shortage to regulations are impediments to attracting businesses to this state. LB 720 would reauthorize business incentives and create Department of Economic Development workforce training loans, but we struggle to see how it streamlines government for those who want reduced red tape.
The bill also includes a finding that the “…Legislature hereby finds and declares that it is the policy of this state to modernize its economic development platform to encourage new businesses to relocate to Nebraska and existing businesses to remain and grow in Nebraska…”
We can appreciate what it might take to attract businesses to the state, but is it worth incentivizing companies into the state when property taxes are driving businesses and consumers out of the state?
We do not disagree that we need to grow Nebraska businesses and our workforce, but we also would offer that whether you are walking your legislative districts or talking to small businesses, the burden of property taxes is top of mind. And what truly seems to be making Nebraska uncompetitive is taxing our largest industry – agriculture – at a rate higher than any other state.
I would also like to highlight the fact that this bill provides ImagiNE Act participants tax refunds on their property tax bills. It seems property taxes are not always and only a local issue.
Several times this year we have heard spending cuts, more fiscal restraint, and smaller government are the keys to providing tax relief. The Ag Leaders Working Group is wondering, then, if this might be the place to start. Why wouldn’t we cap spending on incentives? According to the Performance Audit Committee, the Advantage Act had no protections that would prevent the program from increasing substantially beyond the state’s expectations.
When the Advantage Act was passed, the small bone thrown to rural areas and livestock production – the Nebraska Advantage Rural Development Act – was capped at 1 million dollars. Considering we are the number one state for red meat production, it shouldn’t be surprising that funding for this program is gone as soon as it opens to applicants. This program, despite its popularity and small footprint, is not reauthorized in the ImagiNE Act.
We represent hundreds of thousands of Nebraskans in production agriculture, value-added agriculture, and agri-business. These are small businesses that employ thousands, and whether it is the rate or incentives, they need a tax code that works for everyone – not only for those who can afford someone to navigate the complexities of the system.
Given we are not satisfied with the status quo on property taxes, we cannot support moving business tax incentives without first addressing comprehensive, meaningful property tax relief and reform.
Thank you for your time; I’m happy to answer questions.