Possible termination of tax incentive programs proposed

The Revenue Committee heard testimony Feb. 14 on a bill that would require lawmakers either to extend or terminate two tax incentive programs on a five-year basis.

Under LB627, introduced by Lincoln Sen. Danielle Conrad, the Nebraska Advantage Rural Development Act and Nebraska Advantage Act would terminate on July 1, 2018, unless extended by the Legislature.

The programs then would be up for termination every five years thereafter unless extended by the Legislature. Termination would not affect any agreements existing on the date of termination.

Approximately 39 cents of every $1 of Nebraska’s state budget goes to tax incentives, Conrad said, so lawmakers should examine more closely how well those dollars are being used.

“We’ve always moved towards improvement in terms of transparency and accountability to ensure good value for the taxpayers,” she said.

Renee Fry, executive director of the OpenSky Institute, testified in support of the bill. The state’s biennial budget process ensures that lawmakers carefully examine expenditure of state funds, Fry said, and revenue programs should receive the same level of routine scrutiny.

“To the extent that we’re appropriating money, you already see that sort of rigorous review,” she said.

Richard Baier of the Nebraska Chamber of Commerce testified in opposition, saying the programs are performance based and businesses already must meet strict requirements in order to receive tax incentives.

Baier said potential termination of either program could negatively impact the state’s ability to attract investment.

“The last thing we want to do is insert more uncertainty for businesses into this process,” Baier said.

The committee took no immediate action on the bill.