Bill targeting Nebraska business incentives advances with some shifts, after an intense exchange

State Sen. Brad von Gillern of the Elkhorn area is chair of the Legislature's Revenue Committee, which is targeting business incentives and proposing other program cuts to help address the state's projected budget deficit. July 29, 2024. (Zach Wendling/Nebraska Examiner)
LINCOLN — A revised bill aimed at plugging Nebraska's budget gap by about $51 million, largely by clawing back several business incentives, sparked intense exchanges and nearly three hours of debate Thursday before it advanced another lawmaking step.
Legislative Bill 650 is one way the Legislature's Revenue Committee proposes to help address the state's projected biennial budget shortfall, said committee chair State Sen. Brad von Gillern of the Elkhorn area, who introduced the bill.
He told lawmakers that the committee used a 'last-in-first-out' approach in targeting initiatives previously approved by the Legislature and Gov. Jim Pillen. He said the package scales back or repeals incentives and programs the committee believed would have the least negative impact on a typical taxpayer.
'We opted to target business incentives and steer around consumer items as much as possible,' von Gillern said. 'In other words, these rollbacks are unlikely to hit the pocketbooks of most everyday Nebraskans.'
State Sen. Bob Hallstrom of Syracuse challenged that assertion, however, in successfully seeking an amendment to save a newly passed law that eliminated a tax on providers that lease space on cell phone towers.
Hallstrom argued that such a tax, which under LB 650 would have equated to about $4 million for the state over two years, likely would be passed on as a cost to cell phone users.
'It will send a chilling signal to providers considering where to invest next, and it will undercut our shared goal across party lines of expanding broadband access to every corner of Nebraska,' said Hallstrom. His amendment passed on a 30-10 vote.
Two other successful amendments by von Gillern on Thursday in effect added more anticipated savings by further paring back an employer relocation incentive program and a rural development program, putting the latest total impact of LB 650 at about $51 million, he said.
That's down from the $71 million von Gillern attached to the package earlier this month. He said that earlier projection was partly based on faulty timelines, as certain rollbacks can't begin in the middle of a fiscal year.
The $51 million is also down from the $140 million worth of clawbacks and program revisions that Pillen sought in his original budget proposal, von Gillern noted. He said the package reflects a 'good compromise' made as the committee sought to respond to stakeholder groups yet address a budget shortfall.
As of Thursday, the state's projected deficit over two years stands at $457 million, as the Legislature's Appropriation Committee works to whittle that to zero.
Among programs scaled back or repealed by LB 650, and related estimated savings over two fiscal years, according to the Department of Revenue and an update by von Gillern:
A credit to retailers for collecting sales tax ($11.7 million).
Renewable Chemical Production Tax Credit Act ($8.5 million)
Relocation Incentive Act ($8 million)
Nebraska Advantage Rural Development Act ($7.3 million)
Nebraska Biodiesel Tax Credit Act ($1 million)
Creating High Impact Economic Futures, or the CHIEF Act ($900,000)
Cast and Crew Nebraska Act ($500,000)
Income tax credit for food donations ($500,000)
Nebraska Shoreline Rail Modernization Act ($500,000)
Reverse Osmosis System Tax Credit Act ($250,000)
Urban Redevelopment Act ($101,000)
Also included is a rollback of a buyer-based exemption ($12.9 million), which was championed two years ago by von Gillern. It allowed an organization's tax-exempt status to be used in certain circumstances by a purchasing agent for that group.
LB 650 passed to its final round of debate with a 34-5 vote.
State Sen. Danielle Conrad of Lincoln, who was among the five 'no' votes, reiterated criticism that the state is in a position of having to 'beg, borrow and steal' because of a 'self-created' budget deficit fueled by the Pillen administration-led 'inequitable, unsustainable tax cuts for the largest corporations and the wealthiest individuals.'
But the most scorching moments of the debate came after State Sen. Bob Andersen of north-central Sarpy County called State Sen. Terrell McKinney of North Omaha to the microphone. He noted McKinney's repeated request to save millions of state dollars by canceling the planned construction of a new prison.
Andersen suggested that some of the budget deficit could be resolved instead by redirecting the millions of dollars appropriated for a North Omaha area business park.
McKinney told Andersen that it seemed as though he had 'a problem that North and South Omaha received dollars.'
Andersen responded: 'Those are your words. … My perspective is, there's money that was allocated for COVID relief that is being used for economic development, and that's misappropriation of funds. That money should be brought back.'
Andersen left the chamber as McKinney continued and requested that Andersen return to hear him out. He did not immediately return.
'Do you want to see communities like North and South Omaha impoverished for eternity? That's what it sounds like to me,' McKinney said. 'And you probably would be happy to see little Black kids poor for the rest of their lives; little Latino kids poor for the rest of their lives … making sure businesses that are owned by Black and Latino business owners are not as successful.'
Andersen did not respond to a reporter who asked if he had further comment.
Conrad, responding to the exchange during debate, said that federal COVID-19 relief funds were intended to address communities hit hardest during the pandemic. She said communities with high poverty and communities of color were hit 'particularly hard' and that there was legislative intent to ensure those federal dollars had a direct connection to those communities.
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