Rural development tax credit increase considered

The Revenue Committee heard testimony March 3 on a bill that would increase the amount of tax incentives available for livestock modernization or expansion projects and other qualifying rural Nebraska businesses.

Sen. Dave Murman
Sen. Dave Murman

LB1261, introduced by Glenvil Sen. Dave Murman, would make two changes to the Nebraska Advantage Rural Development Act, which provides refundable income tax credits based on a company’s employment and investment.

Currently, the tax commissioner may not approve further applications for incentives once the expected credits from approved projects total $1 million each year. Under Murman’s proposal, the cap would increase to $25 million per year beginning in 2022.

The bill also would increase the maximum amount of the investment credit from $150,000 per application to $500,000.

Murman said the cost of livestock production has increased dramatically since the last time the credit cap was increased several years ago. Demand for the credits now far exceeds the available amount, he said.

“With agriculture being the largest industry in Nebraska,” Murman said, “we need to do all that we can to incentivize investment in projects that would benefit rural Nebraska and the state as a whole.”

No new applications may be filed under the act after Dec. 31, 2022, but Murman brought an amendment to the hearing that would strike the sunset provision, allowing the program to continue indefinitely.

The state Department of Revenue estimates that LB1261 as introduced would reduce state general fund revenue by $11.5 million in fiscal year 2023-24, $5.8 million in FY2024-25 and $2.3 million in FY2025-26.

Kris Bousquet testified in support of the bill on behalf of the Nebraska State Dairy Association and several other agriculture groups. He said the current $1 million credit allocation usually is “gone in a blink of an eye” and that the program could provide a greater boost to Nebraska’s economy if it were better funded.

Attracting a new dairy processor to Nebraska alone could provide a $1.7 billion annual economic impact, Bousquet said.

No one testified in opposition to LB1261 and the committee took no immediate action on it.

Bookmark and Share