Tax incentive data requirement advanced

Lawmakers gave first-round approval April 4 to a bill intended to increase transparency regarding tax incentive programs in Nebraska.

LB629, introduced by Lincoln Sen. Danielle Conrad, would require information regarding tax incentive programs to be included as part of the governor’s biennial budget submission to the Legislature.

Conrad said the bill would place tax expenditures and incentive programs on par with state expenditures in the budget process.

“It improves transparency and accountability,” she said. “This statute would model best practices utilized in other states.”

Required information would include the number and type of jobs created and the average wage and benefits of those jobs. A provision in the bill requiring that the governor’s budget proposal also include recommendations on whether to continue, modify or terminate such incentives was made optional by an Appropriations Committee amendment.

The amendment, adopted 39-0, also would eliminate a current requirement that the state Department of Revenue make recommendations on tax expenditures and incentive programs.

Omaha Sen. Heath Mello, chairperson of the Appropriations Committee, said including recommendations regarding revenue issues in the governor’s budget recommendations would provide a more accurate picture of the state’s fiscal situation.

Scottsbluff Sen. John Harms supported the amendment, saying tax incentive recommendations should be made by the governor rather than the state Department of Revenue. Those who develop public policy – not those who administer the resulting programs – should make policy recommendations, he said.

Harms said that while the department technically is complying with the current requirement to issue a report on whether to continue, modify or terminate tax incentive programs, their recommendation always is to make no recommendation.

He said this results in the Legislature not having adequate information regarding the impact and effectiveness of tax incentive programs.

“Unlike direct appropriations, tax incentives are not tracked in the state budget and therefore are not reviewed regularly by the Appropriations Committee,” he said.

Omaha Sen. Scott Lautenbaugh offered, and later withdrew, an amendment that would have changed the date that a first-year governor would be required to present a budget to the Legislature from Feb. 1 to March 1.

Senators voted 39-0 to advance the bill to select file.