Expansion of arena turnback taxes advances

Cities with sports arenas and convention centers would receive state sales taxes from an expanded range of hotels and businesses under a bill advanced by the Legislature March 29.

Under current state law, 70 percent of state sales taxes generated by new and existing retailers near an arena are turned back to the city to help pay for the new facility. Thirty percent is directed to a fund that provides development grants to smaller communities across the state.

Introduced by Sen. Jim Scheer of Norfolk, LB884 would apply turnback tax provisions to any publicly or privately owned hotel located within 600 yards of an eligible facility. Omaha and Lincoln currently receive turnback taxes from hotels within 200 yards and 450 yards, respectively, of any convention center or arena.

Scheer said the bill would standardize turnback tax provisions for all cities and may help Omaha, Lincoln and Ralston to more quickly pay off bond debt on their new arenas and convention centers. It also would make it easier for smaller cities to pay for arenas built on their outskirts, away from developed areas, he said.

A Revenue Committee amendment, adopted 26-3, replaced the bill. It clarifies that the 600-yard limit would be measured from any point on the exterior perimeter of a facility. It also would extend to 48 months the period during which taxes are turned back to political subdivisions to pay for sports arena facilities and would allow Lincoln to use 10 percent of its turnback taxes to pay for low-income housing projects.

The proposal also would allow cities to use the turnback tax to pay for capital improvements on the facilities, in addition to paying off the principal and interest on bonds used to pay for construction.

Sen. Jim Smith of Papillion supported the bill. He said that sports arena facilities and convention centers stimulate economic growth by attracting new businesses to the state. This generates jobs, increases tax revenue and introduces cultural opportunities for all Nebraskans, Smith said.

Sen. Mike Groene of North Platte opposed the bill, saying that the state is forgoing tax revenue to pay for projects that do not benefit rural Nebraskans. He said the proposal would channel additional state tax revenue into projects that have not generated as much economic growth as originally estimated.

Senators voted 26-5 to advance the bill to select file.