Business incentives removed from bill permitting contracts with tax services

The state Department of Revenue would be permitted to enter into contracts with businesses that identify uncollected revenue under a bill narrowly advanced from general file May 11.

LB642, introduced by Bellevue Sen. Abbie Cornett, would allow the department to use revenues identified by such businesses for fees associated with revenue identification services. As introduced, contracts would not be subject to state statute governing contingency fee contracts, which declares such contracts void if they are not executed by the highest executive officer after 30 days public notice.

Lincoln Sen. Bill Avery offered an amendment, adopted 36-0, to eliminate language exempting revenue identification contracts from contingency fee contract law.

Cornett said the intent of LB642 is to identify uncollected revenue using technology and software that the private sector offers.

“This is contracting for resources and technology that we do not have,” Cornett said, adding that the department still would be the collector of revenue identified.

Elk Creek Sen. Lavon Heidemann said the department should ask for a greater appropriation so that it could perform data mining itself, instead of outsourcing such procedures to the private sector.

A Revenue Committee amendment would have added a provision to allow the department to contract for the recruitment of businesses that would generate sales tax if determined by the governor to be in the best interest of the state. Such contracts would not have been subject to competitive bidding requirements.

Bellevue Sen. Scott Price raised concerns about the competitive bidding exemption, saying contracts should be awarded only when there is competition among all interested entities. He also said the amendment could result in contracts that turn back all of the sales tax revenue generated by participating businesses.

Cornett said recruitment contracts have been used by states and municipalities to attract businesses. She offered and withdrew an amendment to clarify the recruitment contracts and conform them with existing incentive programs.

Louisville Sen. Dave Pankonin offered an amendment, adopted 38-0, to remove the recruitment contract provision, leaving in the amendment provisions that would make technical changes to the bill.

The committee amendment was adopted 33-0 and LB642 advanced on a 25-7 vote.