The content of these pages is developed and maintained by, and is the sole responsibility of, the individual senator's office and may not reflect the views of the Nebraska Legislature. Questions and comments about the content should be directed to the senator's office at email@example.com
Good News: The Gering to Ft. Laramie-Goshen irrigation tunnel that collapsed in Wyoming is now running water again! This is good news for farmers and ranchers in Western Nebraska who were affected by the sudden loss of these irrigation waters.
One thing governments love to do is to spend other people’s money, especially when it makes them feel good. Such is the case with Nebraska’s business incentive programs. Many people do not realize that Nebraska has welfare programs for businesses. So, today, I am going to tell you about some of these programs.
Last week a joint hearing was held between the Legislature’s Revenue Committee and the Appropriations Committee, of which I am a member, on the subject of these business incentive programs, or as I like to call them, business welfare programs, because that is what they really are. At the center of the debate was a report released by the Nebraska Department of Revenue called the “2018 Nebraska Tax Incentive Annual Report.” You can find the full report at the Department of Revenue’s website.
Perhaps the biggest business welfare program in our state has been the Nebraska Advantage Act, which was created nine years ago in order to keep Con Agra in our State. It didn’t work. Con Agra moved their headquarters to Chicago. This fact alone should convince even the most ardent supporter of these business incentive programs that they do not work. But, there is more.
The Nebraska Advantage Act has created $479 million in earned tax incentives, which businesses have yet to collect on. According to the Department of Revenue’s report, the Nebraska Advantage Act generated $2.6 billion in new qualifying investments and about 2,500 new full time jobs in 2018, each with an estimated annual wage of $46,874. However, the report also projected that by 2028 the cumulative losses from the program would be $1.5 billion, a number which has been confirmed by the government policy research group, Open Sky.
The Nebraska Advantage Act promotes a recipe for failure. It takes the State $121,000 in tax incentives to create a single $46,000 per year job. So, that job will never pay for itself. Simply ask yourself this question: How many years in paying taxes would it take for someone making $46,000 per year to contribute $121,000 in taxes?
The tax credits given to businesses under the Nebraska Advantage Act have hurt our local communities. In order to help you see this, consider how the sales tax reimbursement program effected the city of Sidney. The sales taxes withheld from Sidney over the course of a few short years totaled in excess of $8 million. To quote a member from the Nebraska Department of Revenue, “There is greater value to these incentive packages than one can quantify.” How does one manage that which cannot be measured? These programs are valued because of the way they make Legislators feel, not because they bring measurable economic prosperity to our local communities.
The Employment & Investment Growth Act has also proved to be disastrous for our State. Although the program has sunset, it continues to dole out incentives to businesses. The amount of tax incentives earned, but not collected on from that incentive program now totals $223 million. These two Acts combined have a total of more than $700 million in earned incentives not yet collected.
In 2018 businesses claimed $46.5 million in tax credits and refunds under the Employment & Investment Growth Act, even though there was no net increase in jobs created by the program for that year. Going forward, companies will continue to accrue more tax credits and refunds under this program, which was first enacted in back 1987. By 2025 the projected cumulative revenue losses to the state after factoring in economic growth will exceed $2 billion!
Earlier this year the Nebraska ImagiNE Act was introduced as a replacement for the Nebraska Advantage Act. If the Legislature passes the Nebraska ImagiNE Act, I believe many companies will figure out how to beat the system. They will reinvent themselves in order to make themselves eligible to take advantage of these tax incentive programs. In other words, the State will continue to give money to these businesses at the expense of the taxpayers, and this is why I refer to them as business welfare programs.
We cannot continue to give away billions of dollars in tax incentives when our property taxes and state spending are out of control. The Legislature continues to treat the symptom of high taxes and refuses to acknowledge the cause, which is spending too much!