Disclosure of tax incentive data proposed

The Revenue Committee heard testimony March 15 on a bill intended to increase the amount of financial information on state tax incentive programs that is available to the public.

As introduced by Sen. John McCollister of Omaha, the bill would require the state treasurer to add tax incentive program data to a website it maintains showing how the state spends tax dollars. Data on seven existing programs, including the Nebraska Advantage Act, and any future tax incentive programs meant to recruit or retain businesses in the state would be included.

McCollister said the bill would cap an effort begun with the enactment of a law last year that requires quasi-public agencies to post their financial information on StateSpending.Nebraska.gov. Providing taxpayers with more information on Nebraska’s business tax incentive programs would ease concerns raised last year by a Performance Audit Committee report on the Nebraska Advantage Act, he said.

“LB565 would give citizens the ability to see for themselves how much these programs cost and what they — the taxpayers — are receiving for their money,” McCollister said.

McCollister brought an amendment to the hearing that would require the following information to be listed on the site for each taxpayer receiving a credit or refund under the programs:

• the identity of the taxpayer;
• the location where the taxpayer is using tax credits or refunds;
• the name of the tax incentive program under which the taxpayer is earning the credits or refunds;
• the total tax credits used or tax refunds received by the taxpayer under the program for the prior two-year period;
• the increases in jobs and investment that are intended to be produced to earn the credits or refunds;
• the increases in jobs and investment that actually are produced; and
• any amount of credits or refunds recouped from the taxpayer for failure to provide the increases in jobs and investment that are required under the tax incentive program.

Data from fiscal years 2014-15 through 2016-17 would be on the website no later than Dec. 31, 2017. For each subsequent fiscal year, the data would be available by Dec. 31 following the end of the fiscal year.

Nebraska State Treasurer Don Stenberg testified in support of the bill. Stenberg said the amount of information required to be publicly reported by the state tax commissioner varies from program to program. LB565 would create a uniform list of disclosures for each tax incentive program, he said.

“This would be a big step forward for Nebraska,” Stenberg said. “A number of other states are now disclosing this type of information on their state transparency websites.”

Renee Fry of the OpenSky Policy Institute also testified in support of the bill. A 2015 Governmental Accounting Standards Board statement compels government entities to report tax incentive programs in their budgets, she said. This helps citizens understand how these programs affect a government’s future ability to raise revenue and meet financial obligations.

“Tax credits, which are a form of state spending, are in many cases extended anonymously,” Fry said, “which prevents taxpayers from fully accounting for how the state is spending money through the tax code.”

Joseph Young, speaking on behalf of the Nebraska Chamber of Commerce and Industry and the Lincoln and Omaha chambers of commerce, provided neutral testimony on the bill. He said LB565 would require financial disclosures similar to those required under the Nebraska Advantage Act.

“The Nebraska Advantage Act does have pretty good transparency provisions relative to the rest of the country,” Young said. “We think the current provisions are appropriate.”

No one testified in opposition to the bill and the committee took no immediate action on it.