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The Revenue and Appropriations Committees met last month to hear the Revenue Department’s annual report on Nebraska’s Tax Incentive Programs.
The cost to the State’s tax receipts was over $295 million in 2016. The breakdown of the tax credits and direct refunds on the two major incentive programs (Nebraska Advantage and 775 Incentives) in millions: corporate income-$115 (to put that number in perspective the State only collected $235 in corporate income taxes), individual income-$10.4, employee income withholding-$22, sales taxes-$59 and direct refunds of sales and use taxes-$39.
The Advantage Act will sunset in 2020, there is movement in the Legislature to examine the cost-benefit of the incentive program. The economic advantage of the program leans heavily to eastern Nebraska where the jobs, retail sales, and property tax growth occur. Meanwhile, rural taxpayers help absorb the lost state revenue without economic benefits.
We were also briefed by the Department of Economic Development (DED) on Nebraska being one of 15 states under consideration for a Toyota-Mazda auto manufacturing plant.
Requirements for the project include availability of 1500+ acres of land with major rail services, 4-lane highways, competitive-available electric power, and a reliable workforce of 200,000 within 60 miles radius of plant.
I pointed out to the Director of DED that Lincoln County had plenty of open land, was the site of the largest freight classification rail-yard in the world, had interstate I-80, and a soon to be expanded Hwy 83; plus we have the under-utilized Gerald Gentleman power plant–one of the most efficient and reliable sources of electricity in the nation. We also have a solid, blue collar work ethic in our people. History of free market activity shows that workers will migrate to jobs and that the infrastructure of housing and government services will follow.
She made it obvious the plant was going to be pursued for eastern Nebraska. I made it clear that rural Nebraska needs to be included in the discussions.
It is ironic that urban areas of the state have not been willing to help the economy of rural Nebraska by addressing high property taxes but assume we will jump on the bandwagon of new tax incentives that focus on urban growth. The odds of landing the Mazda-Toyota plant are small but it is worth a reasoned try. Lincoln County would be a good location, if given the opportunity.
A couple of closing comments in the informative LB98 property tax debate we are having with the North Platte NRD (NPNRD) management. On one side of the issue stands the NPNRD with the highest property tax rate (.063545) of the state’s 23 NRDs and on the other side stands my belief of fiscally responsible government. Local control starts and ends with legislation enacted by the Unicameral. The Legislature gave for a period of time the levy authority in question, it is set to sunset next year. The Legislature has since given NRDs the authority to assess up to a $10 per acre occupation tax on irrigated land. NPNRD has yet to use their local control to assess the occupation tax to address their overuse of groundwater.
It was a local control decision by the NPNRD that accentuated the problem when they allowed a massive increase in well-permits in 2003 in anticipation of enactment of LB962. Now when the results of those local decisions come home to roost, they disingenuously attempt to blame state and federal governments for their problem.
There are ways to alleviate the problem by using tax dollars wisely. For example, I introduced LB488 which would have created a voluntary program for land owners to choose to farm irrigated land as dry-land for one year. This new local control tool was opposed by the NRDs. Unlike NPNRD’s program to pay excessive and panicked prices to land owners for their water allotments to permanently retire irrigated acres, LB488 would keep irrigated acres in production long-term.
I will continue to fight for property tax relief by opposing LB98. It will be interesting to see, in an election year, how many of my colleagues will support an unnecessary property tax increase?
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