Retention, attraction incentives for large companies advanced

Lawmakers gave first-round approval March 24 to a measure intended to incentivize major employers to keep their headquarters and employees in Nebraska after merging with another company.

Elkhorn Sen. R. Brad von Gillern, who introduced LB1165 on behalf of Gov. Jim Pillen, said the bill would help Nebraska compete with other states in retaining and attracting corporations and their employees.

He said the measure would grow the state’s economy and possibly prevent the economic and individual disruptions caused by the departure of a major employer.

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

A Revenue Committee amendment, adopted 34-3, replaced the bill with a revised version of the original proposal as well as two other bills considered by the committee this session.

Under the proposed Grow the Good Life Act, an 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.

To qualify, a company would have to employ at least 3,000 people in Nebraska before a merger. It also would have to retain its headquarters and at least 90% of its base year employees in Nebraska throughout a 10-year period, during which it may earn the credits, and another 10-year period, beginning in 2031, during which it must claim them.

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

The proposal also would increase credit percentages for companies that meet certain job creation and investment thresholds under the ImagiNE Nebraska Act.

Under the amendment, the credit percentages would increase by an additional point if a qualifying large employer hires 500 or more full-time employees within seven years of a merger.

For the increased percentage to apply, an employee must be newly employed by the company in Nebraska, an existing employee who transfers to a position in the state or a new employee who relocates to Nebraska. Employees also would have to be paid average annual wages of at least $100,000.

The amendment would allow companies to use the ImagiNE Nebraska Act credits to pay up to 50% of employees’ child care costs.

Additionally, the measure would allow the state Department of Economic Development to use the Site and Building Development Fund to award grants to an employer for capital improvements related to employee retention and recruitment after a merger.

The department also could award grants or interest-free loans to certain first class cities that have been affected by a “sudden and significant private-sector entity closure or downsizing.” A grant could be used to acquire land, infuse infrastructure or otherwise prepare large sites and buildings for industrial development.

Both types of grants would be limited to $2.5 million per year for fiscal year 2026-27 and FY2027-28.

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 grant funds would be limited to $300,000.

The committee amendment also contains provisions of LB1191, sponsored by Sen. Bob Hallstrom of Syracuse. Under his proposal, certain companies with active agreements to receive tax incentives under the Nebraska Advantage Act would have nine years rather than six to meet required employment and investment levels.

For the extension to apply, a company would have to make a one-time election and pay a $90,000 fee. The provision would apply only to Tier 6 projects approved on or after Dec. 1, 2020.

Under the provisions of LB1192, introduced by Lincoln Sen. Jason Prokop, facilities in primary class cities with seating capacities of greater than 16,000 seats would be eligible for assistance under the Convention Center Facility Financing Assistance Act.

Prokop said the proposed change could allow for the expansion of Lincoln’s Pinnacle Bank Arena.

Sen. Mike Jacobson of North Platte supported LB1165, calling it a “model” program for growing the state’s population and tax base. He said the incentives would encourage Union Pacific, which has proposed acquiring Atlanta-based railway Norfolk Southern, to keep its headquarters in Omaha and relocate employees from Georgia to Nebraska.

Those new arrivals and their families would pay income, property and sales taxes, Jacobson said, more than offsetting the proposal’s reduction in state revenue.

“We’ll get them here for a fraction of what we have to lay out,” he said.

Several senators who opposed LB1165 said the proposal would incentivize activity that would happen anyway.

Lincoln Sen. Danielle Conrad, who offered a series of unsuccessful motions to extend debate, said Union Pacific has committed to keeping its headquarters in Omaha after the merger.

She added that it would be fiscally and morally irresponsible to create additional business tax incentives at a time when lawmakers have proposed cutting services for veterans, the homeless and Nebraskans with disabilities in an effort to balance the state budget.

“[LB1165] comes at the wrong time, and it sends the wrong message,” Conrad said.

She introduced an amendment to remove the retention and relocation grant provisions from the bill, saying they would be used to create a “white glove concierge service” for Union Pacific employees who relocate to Nebraska.

She said the company should pay for those services, not taxpayers.

Von Gillern opposed the amendment, saying the grant would help provide site visits and other services to relocating employees and their families, helping them “put down roots” in Omaha.

“This is all about getting people here and making sure that they turn into lifelong Nebraskans and that they’re productive employees,” he said.

The amendment failed on a vote of 9-24.

Senators rejected another Conrad amendment that would have removed the portion of the bill allowing for capital improvement grants to employers experiencing a merger. She said the provision is intended to help Union Pacific remodel its headquarters.

LB1165 advanced to select file on a vote of 38-3.