LINCOLN, Neb. (AP) - A group of lawmakers on Thursday set to work creating specific goals to ensure that Nebraska’s tax incentives for businesses are working as intended.
The special Tax Incentive Evaluation Committee met for the first time to start writing recommendations for lawmakers to act on next year. Its possible goals could include strengthening the state economy, revitalizing rural areas, or promoting entrepreneurship, tech jobs and renewable energy.
For lawmakers, the challenge lies in deciding how to measure each. Senators formed the special committee earlier this year amid concerns that state law was too vague in explaining what each tax break should accomplish.
“What’s missing there, from an evaluation standpoint, is a ‘How much?’ question - how much of those things did the Legislature hope to see?” Legislative Auditor Martha Carter said during a presentation to lawmakers.
For instance, the Nebraska Advantage Act, which is the state’s largest tax incentive program, was written to create new jobs in Nebraska, but at one point it didn’t specify whether those jobs should be full-time or part-time. Earlier this year, lawmakers tweaked the law to require that businesses create “quality” jobs, but they never defined “quality,” according to the Legislative Audit Office.
The committee chairman, Sen. John Harms, of Scottsbluff, said the panel wants to improve the tax incentives, if possible, instead of just scrapping them. Despite the concerns about the incentives, several senators said Nebraska still needs some to compete with other states trying to attract businesses and new jobs.
“It’s like a nuclear arms race,” said Sen. Galen Hadley, of Kearney. “Unless everyone stands down, we’ve got to compete.”
Sen. Paul Schumacher, of Columbus, said lawmakers should try to find a way to compare businesses that receive tax credits with those that don’t, to see if the incentives made a difference.
A report released in September by the Legislature’s Performance Audit Committee found that state officials don’t have enough information to measure how well Nebraska’s tax incentives stack up against other states. State programs and economies vary so widely that it’s difficult to tell whether Nebraska’s tax breaks have given the state an edge, according to report.
In February, the Performance Audit Committee reported that Nebraska has no way to judge whether its tax incentives have succeeded in attracting businesses. The report concluded that the state was spending $43,000 to $235,000 for each job created by the Advantage Act.
The largest of Nebraska’s tax-incentive laws, the Nebraska Advantage Act, has created about 7,100 full-time jobs since its inception in 2006, at a cost of $412 million in tax credits, according to the Department of Revenue.
Lawmakers plan to hold public input hearings on Aug. 27 in Kearney and Aug. 28 in Lincoln. The committee’s report must be finished by Dec. 15.
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