State senators differ sharply on whether tax incentives help or hurt Nebraska

State senators differ sharply on whether tax incentives help or hurt Nebraska
World-Herald News Service

LINCOLN — State senators expressed sharp differences Wednesday about whether Nebraska’s business tax incentives help or hurt the state, with some lawmakers vowing to oppose incentives until the Legislature delivers property tax relief to citizens.

“Nebraskans need property tax relief a whole lot more than we need this incentive package for business,” said State Sen. Tom Briese of Albion, who proposed that the two issues become a “package deal.”

Briese and other rural senators are pushing for property tax relief during the waning days of the 2019 legislative session. Meanwhile, the state’s business community is seeking a replacement for the Nebraska Advantage Act, a 14-year-old law that grants tax credits and exemptions for businesses that expand and create jobs in the state.

The proposed replacement, the ImagiNE Act, got mixed reviews during a three-hour debate Wednesday.

Supporters praised it as a vast improvement over the Advantage Act because its tax incentives require higher-paying jobs, additional reporting on the fiscal impact and a stronger focus on workforce development, which the State Chamber of Commerce has described as a “crisis” in Nebraska.

Nebraska needs to update and improve its incentives to remain competitive with other states, said backers of the ImagiNE Act.

“It’s critical that we send a strong message that Nebraska is a great place to do business,” said Seward Sen. Mark Kolterman, the main sponsor of the act, contained in Legislative Bill 720.

But critics of the proposal labeled it “Advantage Act 2.0” and said it failed to correct the problems of the current incentive programs, which they claimed gave generous tax breaks for jobs that would have been created anyway.

Bayard Sen. Steve Erdman, who tried unsuccessfully to kill LB 720 on Wednesday, complained that the Advantage Act was too expensive, granting between $7,400 and $208,000 in tax breaks for every job created, and wouldn’t be necessary if Nebraska’s overall tax rates were lower.

“We continue to treat the symptoms, we never treat the disease … our taxes are too high,” Erdman said.

Lincoln Sen. Kate Bolz said the ImagiNE Act didn’t solve the fiscal uncertainty of when companies claim their tax credits under the Advantage Act. The cost of the act, she said, has varied between $150 million and $290 million in excused state and local taxes a year in recent years.

“We need some fiscal guide rails,” Bolz said.

She proposed an amendment that would limit ImagiNE Act tax breaks to $80 million a year and require a peer-review board to preapprove applications for tax benefits. Such controls are used by several states, including Iowa, and have been suggested in past studies of Nebraska’s incentive programs. But the changes would be radical in Nebraska’s programs, which have no preapproval process and provide tax breaks when companies reach certain benchmarks in investment and job creation.

Bellevue Sen. Sue Crawford, who led a legislative study of business incentives last year, said that such “caps” would be difficult under Nebraska’s current “performance-based” incentive programs because it isn’t clear until later how much tax credits a company will qualify for.

Omaha Sen. John McCollister said that the ImagiNE Act — unlike the Advantage Act — will require annual reports, and an annual review by state legislators, which could lead to adjustments in the program by the State Legislature if costs grow out of control.

The leading senator on the property tax relief issue, Elkhorn Sen. Lou Ann Linehan, said she agrees that both an incentives bill and property tax relief should be passed this year, because they provide balance between solving issues that are primarily urban- and rural-based. Linehan was still working Wednesday to get 33 senators to agree to bring her proposal, LB 289, back up for debate.

Kolterman said he supports property tax relief, too, but disagreed that the ImagiNE Act should be blocked because LB 289 has stalled, at least for now.

He said he’s already amended LB 720 several times to address concerns of state senators and is willing to consider more. Postponing action on the bill until next year would create uncertainty that would harm business recruitment in the state, Kolterman said.

Debate on LB 720 was halted after three hours on Wednesday without taking a vote on first-round advancement. But Kolterman said he has the support of 33 of the one-house Legislature’s 49 senators to bring the bill back up for debate next week.

State budget bill stalls over dispute concerning spending on nursing home study

LINCOLN — Advancement of the mainline state budget bill stalled Tuesday evening amid a floor fight over spending for a study of why so many nursing homes are closing in Nebraska.

State Sen. Kate Bolz of Lincoln had sought to include an $174,000 study of the access to long-term care facilities in the budget bill. The spending had been approved by the Appropriations Committee but was inadvertently omitted in drafting the bill that was advanced from first-round debate last week.

Bolz said rural areas of Nebraska had lost more than 1,000 nursing home beds in recent years because the state hasn’t provided adequate reimbursement for care of the poor and elderly. The study, she said, would discover what can be done to maintain nursing homes and in-home care at a time when the state’s elderly population, especially in rural areas, is increasing.

But a group of conservative senators, led by Elmwood Sen. Robert Clements, opposed Bolz’s amendment to Legislative Bill 298, the bill that provides funding for state government for the next two years.

Clements said the study was unnecessary because the State Department of Health and Human Services has already looked at the issue and is better suited to find a solution than the Legislature.

In a strange twist, backers of the Bolz amendment prolonged debate so that Clements’ amendment to strip out the nursing home study didn’t come up for a vote. That strategy backfired when the backers of the nursing home study fell two votes short, 31-14, of forcing a vote that would have approved the Bolz amendment and advanced the budget to final-round consideration.

Passage of the state budget is one of the few things required of the Legislature, so LB 298 will return for debate in the final days of the 2019 session. The fate of the nursing home study is unclear.

Ricketts to grads who aced ACT: If you leave state for college, ‘Come back to Nebraska’

LINCOLN — The governor needed a bigger room Monday to honor all of this year’s Nebraska high school graduates with perfect ACT scores.

Gov. Pete Ricketts moved his annual ceremony to the Warner Legislative Chamber of the Nebraska State Capitol to accommodate a record 44 graduating seniors and their parents.

This year’s total is double the number of perfect scores last year.

It reflects a rise in high scores that Nebraska has been experiencing for several years.

Josh Gromowsky, a senior at Skutt Catholic High School in Omaha, achieved perfect scores on both the ACT and SAT college entrance exams.

Gromowsky said the surge in high scores is “really good for the state, it’s really exciting.”

He said that Skutt offers test prep through a John Baylor program and that students are taking the test more seriously.

“I think it used to be you took it once and called it good,” he said. “Whereas people now are striving for better scores to help their college preparation and help them get into a better college.”

The governor, an ACT official and Nebraska Commissioner of Education Matt Blomstedt presented certificates to the graduates, shook their hands and praised them for their rare accomplishment.

Addressing the students, Ricketts said that some would probably pursue further education out of state. He urged them to one day return and pursue their long-term careers in Nebraska.

“Please come back to Nebraska,” he said.

“If you’re not in Nebraska, and you face that decision, wherever you are, ask yourself this question: Did the governor of that state ask you to stay there?”

That drew laughs from the crowd.

Ricketts told the group that a perfect score “doesn’t just happen because you crammed one night for exams, it happens through years of preparation. But you also didn’t do it by yourself either. You had a great support net — your parents, teachers, your educators — to be able to make that happen.”

Gromowsky plans to attend the University of Nebraska-Lincoln, where he will double major in political science and math. He plans to go to law school.

Gromowsky credited his academic success to good schools, a supportive family, being a conscientious student and keeping up with his schoolwork.

Teachers challenged him but also encouraged him to pursue what he wanted to learn about, he said.

Sibling rivalry played a role, too, he said.

“My brother also got a perfect ACT, so I was always trying to catch him,” he said.

Asked for tips on taking the test, Gromowsky said he would encourage students to take it multiple times.

“Don’t be afraid to take it again,” he said. “I took the ACT four times, and I got it on my fourth time. Be consistent, be determined, don’t be satisfied with less than you think you can get.”

The following 2019 high school graduates earned perfect ACT scores:

  • Bellevue East — Casey Nolte.
  • Bellevue West — Joshua Welling.
  • Elkhorn — Mia Giandinoto, Megan Raszler.
  • Mount Michael Benedictine —Patrick Collins, J.P. Jensen.
  • Gering — Brock Parker.
  • Grand Island — Samuel Harvey.
  • Lincoln East — Kyle Allen, Alix Cui, Alexander Petty, Akshit Sharma, Jennifer Wang, Crystal Xu, Isaac Zhang, Enya Zhu.
  • Lincoln High — Eric Lesiak, Johanna Schubert.
  • Pius X — Thomas Kotopka.
  • Millard North — Ethan Chen, Noah Ford, Campbell Haasch, William Nervig, Khoa Nguyen, Charlie Peng, Emma Ulrich.
  • Duchesne Academy — Lesley Lam.
  • Brownell-Talbot — Laura Liu, Meera Nair, Sukanya Kennamthiang.
  • Elkhorn South — Ted Gernhart, Michael Kelly.
  • Creighton Prep — Samuel Forrest, Matthew Muellner. Muellner also had a perfect SAT score.
  • Marian — Abby McGill.
  • Omaha North — Noah Crawford.
  • Millard West — Alex Vaslow, Ryan Hruby.
  • Westside — Ciara Baumert.
  • Skutt — Josh Gromowsky, Nathan Fletcher, Joseph McAuliffe. Gromowsky also had a perfect SAT score.
  • Papillion-La Vista South — Jackson Haselhorst, Darby Ronning.

New tax incentive law. Two former senators are slamming a proposed replacement for the state’s main business incentive act as failing to address past “mistakes.”

“There are better ways for the state to focus its resources in terms of economic development,” said former State Sens. Dan Watermeier of Syracuse and John Harms of Scottsbluff in a commentary distributed by the Open Sky Policy Institute, a think tank that opposes the proposed replacement, the ImagiNE Act.

The two former senators, who both chaired a committee that examined the effectiveness of tax incentives, said the current business incentive law, the Advantage Act, turned out to be much more costly than predicted and didn’t generate the type of high-wage jobs that would support a family. It paid out incentives of up to $208,000 for each job created.

In addition, the former senators criticized the Advantage Act for allowing companies to qualify for incentives by requiring part-time employees to work overtime, thus “pooling” hours to meet job creation thresholds rather than creating a new job.

The ImagiNE Act, or Legislative Bill 720, fails to correct those deficiencies, said the two senators, who called it “another shaky incentive program.”

Sen. Mark Kolterman of Seward, the main sponsor of LB 720, rejected the criticism and said the former lawmakers may not be aware of all the amendments he’s proposed to the bill since a public hearing in March.

Watermeier and Harms wrote that if LB 720 is enacted, Nebraska would be paying out benefits on three incentive programs — the Advantage Act, LB 775 and the ImagiNE Act — creating a huge burden on the state budget.

It’s not often that past state senators criticize actions by current state lawmakers. First-round debate on the ImagiNE Act is scheduled for Wednesday.

School choice. As it has in past years, a proposal to give a state tax break to those who contribute funds for private school scholarships for lower-income students failed to advance in the Legislature on Monday.

Proponents, led by Sen. Lou Ann Linehan of Elkhorn, said that lower-income students deserve the same chance to attend a private school as children of wealthy families and that providing tax credits to contributors to such scholarships would make that possible.

“We should give parents more choice, not less,” Linehan said, adding that LB 670 would save the state money by encouraging more public school students to switch to private schools.

But opponents, led by Sen. Rick Kolowski of Omaha, a former public high school principal, said LB 670 was an “end run” around the Nebraska Constitution, which prohibits the use of public dollars for private and parochial schools. He also said that it was a “thinly veiled” tax break for the rich and corporations and that there was no solid proof that such proposals save money.

Linehan said she plans to seek another debate on the measure next year.

Fantasy sports. Sen. Justin Wayne of Omaha launched an unsuccessful effort Monday to attach an amendment to legalize and regulate “fantasy sports,” such as Fan Duel.

Wayne, who said Nebraska is missing out on gambling revenue, said allowing fantasy sports wouldn’t expand gambling because federal courts have declared them to be legal. His amendment, he said, would only regulate games that are already widely played in the state and would keep “fly-by-night” operators out.

Several senators opposed Wayne’s attempt, which came during second-round debate of LB 538, a proposal to regulate video “skill” games, such as Skill Touch. Some maintain that the skill games, which have proliferated in bars, convenience stores and veterans clubs, operate as illegal slot machines because of the lack of state rules.

Under LB 538, operators would be required to prove that their skill games are legal games of skill rather than illegal games of chance. A business could have between four and 15 such machines based on the size of the business.

The bill advanced to final-round debate without a dissenting vote.

Wind energy. Nebraska lawmakers have passed a scaled-back bill that could make it harder to install wind-energy transmission lines on private property if landowners object.

A new version of a measure that was previously defeated won final approval Monday on a 44-0 vote.

The bill would allow eminent domain for renewable energy projects but would give opponents a better opportunity to challenge such projects in court.

The original bill would have barred Nebraska’s public power organizations from using eminent domain to install transmission lines for use by privately developed wind-energy farms. Opponents said it would have stifled wind energy development in Nebraska.

But senators agreed to revive the measure and reached a compromise.

The bill was introduced by Sen. Tom Brewer of Gordon, whose district includes Nebraska’s scenic Sand Hills.