Updates to 2020 tax incentive program advance

Lawmakers gave first-round approval April 27 to a bill that would update the provisions of a major tax incentive program passed in 2020.

LB18, sponsored by Seward Sen. Mark Kolterman, would make three changes to the ImagiNE Nebraska Act, a business tax incentive program that replaced the Nebraska Advantage Act. Kolterman said the bill would address minor implementation issues that have arisen since the program’s enactment.

A provision in the ImagiNE Nebraska Act requires all qualifying new full-time jobs to be filled by individuals who reside in the state. The result, Kolterman said, is that several businesses that are located near borders with other states are unable to qualify for the program because the jobs they’ve created are filled by individuals who don’t live in Nebraska.

“This issue affects more than Omaha and Bellevue,” he said. “Companies that are located in all of our border communities … all attract workers from communities in other states.”

LB18 would remove the residency requirement. Employees still would be subject to Nebraska income tax on compensation received from a qualifying employer. The bill also would change the definition of two qualifying business activities under the ImagiNE Nebraska Act to clarify terms and conform with a recent U.S. Supreme Court decision.

Gering Sen. John Stinner supported the bill, which he said would ensure that border businesses with employees who do not live in Nebraska are on equal footing with companies across the state. He said his district, which borders Wyoming, has at least three businesses that want to use the incentive to increase their employment base and bring economic development to the area.

Sen. Mike Groene of North Platte questioned the assertion that out-of-state employees are substantially similar to those who live in Nebraska. The purpose of the ImagiNE Nebraska Act was to create jobs for Nebraskans, he said, adding that the program has been in place for only half a year.

“Let’s wait a year or two and see what effect it has,” Groene said.

An amendment offered by Omaha Sen. Machaela Cavanaugh to increase the qualifying hourly wage threshold under the act failed on a 15-31 vote. She said qualifying wages should be high enough that an employee would not qualify for income-based state benefits such as the Supplemental Nutrition Assistance Program.

Lawmakers then voted 38-4 to advance LB18 to select file.