Defense contractor incentive amended, advanced to final round
A measure intended to encourage certain defense contractors to relocate to Nebraska advanced to final reading April 30 after lawmakers amended it to ensure that it rewards the creation of new jobs.
As amended on general file, LB649, introduced by the Revenue Committee, would create a wage credit for companies that employ qualifying workers “exclusively dedicated to supporting military defense efforts” in Nebraska. The incentive would be available beginning July 1, 2027, and total credits would be capped at $40 million over 10 years.
Elkhorn Sen. R. Brad von Gillern, the committee’s chairperson, introduced an amendment on select file that he said would more strictly define “defense contractor” and ensure that companies only qualify for wage credits if they create new positions in Nebraska.
Sen. Tom Brandt of Plymouth opposed the amendment and LB649, saying he had second thoughts about the measure after supporting it on general file. He questioned whether the $4 million in annual credits would be a “deciding factor” in a company’s decision to relocate.
Brandt also expressed concern about creating a tax incentive when the Legislature is unlikely to debate a proposed fix to a “gap year” in property tax relief created during last year’s special session and when the Nebraska Economic Forecasting Advisory Board recently lowered state revenue projections for the current fiscal year.
“It just doesn’t seem right that … we’re trying to create a program that’s going to cost the state money in light of that,” he said.
Von Gillern said the program, if fully utilized, actually would create a “positive cash flow” for Nebraska.
A company would have to hire approximately 900 qualifying employees at a salary of $90,000 per year to reach the $40 million credit cap, he said, and the amount of income, property and sales taxes those new Nebraskans would pay would more than offset the forgone revenue.
After adopting von Gillern’s amendment on a vote of 35-1, senators voted 40-4 to advance LB649 to final reading.
