Bill expanding revenue sources for local economic development projects advances

Cities could use more revenue sources to fund economic development projects under a bill advanced from general file Feb. 22.

During the 2010 general election, Nebraska voters approved a constitutional amendment to permit cities to use a greater number of revenue sources for economic or industrial development projects approved by city voters. Previously, property taxes and local option sales taxes were the only revenue sources authorized. The amendment added to the list of suitable funding sources any general tax authorized by the municipality and revenue generated from municipal utilities, grants, donations, or state and federal funds.

LB471, introduced by Wilber Sen. Russ Karpisek, would incorporate the approved amendment into the Local Option Municipal Economic Development Act. The bill also would restrict uses for revenues generated from municipal utilities to utility-related projects or activities associated with a city council-approved economic development program, such as energy efficiency, load management and site development.

Karpisek said the bill could increase opportunities for municipalities to expand local businesses. He said approximately 60 cities currently have economic development programs under the act.

Ogallala Sen. Ken Schilz spoke in support of the bill, saying it would add flexibility checked by voter approval, preventing cities from overextending themselves.

Columbus Sen. Paul Schumacher supported the bill but voiced concerns regarding the structure of economic development programs. He said there is a distinction between programs that connect capital with labor to create economic activity and programs that merely encourage existing businesses to relocate.

“What we have done … is authorized the taking of tax money and put it toward programs in which we try to give it away to a business to come here,” Schumacher said. “That is not economic development; it’s economic relocation.”

LB471 advanced from general file on a 38-0 vote.