Retention incentives proposed for ‘anchor’ companies

The Revenue Committee heard testimony Feb. 25 on a measure that would provide tax incentives to certain large businesses to encourage them to remain in Nebraska after merging with an out-of-state company.

Elkhorn Sen. R. Brad von Gillern, who introduced LB1165 on behalf of Gov. Jim Pillen, said the bill is intended to help Nebraska retain and grow key employers like Union Pacific, which has proposed merging with Atlanta-based railway Norfolk Southern.

Von Gillern said Union Pacific, which employs approximately 3,000 people at its Omaha headquarters, is the latest major Nebraska business at risk of relocating to another state that offers more favorable economic incentives.

“We don’t want to see a relocation of one of our largest employers … a company whose history is inextricably tied to our own and is a terrific corporate citizen,” he said.

As introduced, LB1165 would update the Key Employer and Jobs Retention Act, which provides a wage retention credit to certain businesses experiencing a change in ownership and control.

Von Gillern brought an amendment to the hearing that would replace the bill with a modified version of the original measure.

Under the proposed Grow the Good Life Act, a qualified employer that merges with an out-of-state company would receive a similar wage retention credit of no more than $5 million per year, or $50 million in total.

Among other requirements, a company would have to employ at least 3,000 employees in Nebraska before the merger and retain at least 90% of that number throughout the 10-year performance period.

If the company fails to retain the required number of employees, all or a portion of the credits would be recaptured or disallowed.

Von Gillern’s proposal also would increase wage credit percentages for qualifying companies that meet certain job creation and investment thresholds under the ImagiNE Nebraska Act.

Under the amendment, those percentages would increase by one point if an employer hires 500 or more full-time employees who are paid average annual wages of at least $100,000 within seven years of a merger.

Additionally, the measure would allow the state Department of Economic Development to award an employer a grant of no more than $5 million for capital improvements related to employee retention and recruitment before and after a merger.

Finally, the proposal would require the state Department of Labor to create a grant program for economic development organizations that assist companies with employee retention and relocation when they are experiencing a merger. Total grants for any organization would be limited to $300,000.

Matt Williams testified in support of the amended proposal on behalf of the Nebraska Chamber of Commerce and Industry. He said the enhanced ImagiNE Nebraska Act credits would help the state compete for manufacturing expansion projects in both rural and urban areas.

Williams said the measure also could increase workforce participation by allowing companies to use the credits to offset employees’ child care costs.

Also in support was Marco Floreani, who testified on behalf of the city of Omaha. He said the proposal is a “strategic necessity” at a time when “anchor” companies often are targets for mergers with out-of-state corporations.

The measure could help retain thousands of high-wage jobs in Omaha and encourage companies to modernize their offices, Floreani added, attracting new workers and ensuring commercial buildings remain occupied.

Josh Perkes testified in support of LB1165 on behalf of Union Pacific, saying the railroad intends for its headquarters to remain in Omaha if its proposed merger is approved by federal regulators.

He said the measure would “complement” the company’s efforts to retain and grow its workforce after the merger, boosting the local economy by helping it relocate hundreds of highly paid workers to Omaha.

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