Changes to Nebraska Advantage Act advanced

Lawmakers gave first-round approval May 21 to a bill that would revise current definitions under the Nebraska Advantage Act.

Currently, the definition of taxpayer under the act includes any person who is subject to sales and use taxes and withholding. It also includes specific entities, including corporations and partnerships, that are subject to the same taxes. LB34, introduced by Kearney Sen. Galen Hadley, would eliminate the specific references and substitute the word entity in its place.

Hadley said the bill would assist cities in meeting financial obligations without placing undue stress on their cash flows.

“In the past, the [state Department of Revenue] has just said we’re going to take money away from you,” he said. “This wreaked havoc on the cities. This would allow the state to bankroll cities during a calendar year so they could meet their obligations.”

The bill also would allow flow-through entities and cooperatives to qualify as taxpayers even though all or some portion of the partners or members are political subdivisions or exempt entities.

LB34 would make several other changes, some of which include:
• changing calendar year to year for purposes of calculating the county and Nebraska average weekly wage;
• amending the definition of equivalent employees to clarify that salaried employees are deemed to have worked 40 hours per week for purposes of calculating the number of equivalent employees;
• creating the definition of political subdivision for purposes of the act and including in the definition a group of political subdivisions that form a joint public agency or are organized through an interlocal agreement or other method of joint action;
• changing the definition of year from taxable year of the taxpayer to calendar year;
• creating a presumption of interdependency when the taxpayer’s application or plan includes every location in the state that is involved in a qualified business activity; and
• changing the provisions for establishing and using credits.

The bill also would create a new provision directing the state tax commissioner to disclose information to an acquiring taxpayer about the project they are purchasing in order to determine future benefits and liabilities.

A Revenue Committee amendment, adopted 29-0, would require the tax commissioner to act within 180 days of application. It also clarifies the method by which the timeline would be determined to have started and allows the tax commissioner and taxpayer to agree on extension of the timeline.

Omaha Sen. Burke Harr supported the bill and committee amendment, saying the state should be very careful in targeting the types of businesses to attract to Nebraska.

“I don’t think any business has the right to receive money just because they open their doors,” Harr said. “This will clarify the rules of the road for job creators and create clear public policy on what these individuals are expected to do.”

Omaha Sen. Ernie Chambers introduced two technical amendments and a motion to bracket the bill, which he later withdrew.

Following the adoption of a technical amendment 26-0, senators advanced the bill on a 31-0 vote.