Tax subsidies may soon get needed attention

Tax subsidies may soon get needed attention

Tax subsidies and other tax expenditures take money from the state’s coffers just as appropriations do and a bill advanced by the Legislature on Thursday brings that fact more to the forefront of the state’s budget process.

LB 629 – a bill by Sen. Danielle Conrad – would require Nebraska governors to include with their budget proposals, Department of Revenue reports on the state’s subsidy programs and other tax expenditures, such as those that were targeted for elimination under LB 405 and LB 406.

A move toward transparency

This is good news for Nebraskans because the bill – which advanced with a 39-0 vote — will give lawmakers a more complete budget picture on which to base their decisions. It also is a step toward transparency in regards to the billions the state spends each year on tax expenditures and subsidies.

While tax expenditures cost the state revenue just like appropriations, they are not reviewed in the same manner. In fact, after they are passed into law, they are rarely reviewed again. This means they continue whether they benefit the state or not.

Measure has been successful elsewhere

The side-by-side reporting of tax expenditures and appropriations is a measure that other states – including Vermont — have enacted to help monitor spending through the tax code – a task many states struggle to carry out.

Earlier this year, the legislature’s Performance Audit Committee released a report that found Nebraska has no good way to know if the millions it spends on subsidy programs actually work.

More progress on the subsidy front

More hope for transparency comes in the form of LB 612, a bill by Sen. Paul Schumacher that calls for the Department of Revenue to appear at a joint public hearing before the Revenue and Appropriations Committees and present on various tax expenditure and subsidy reports. LB 612 is on the Legislature’s debate agenda for this afternoon.

OpenSky also testified in favor of LB 612, which like LB 629, received unanimous committee approval.

Nebraskans can take heart in both bills as they are steps toward a system that helps make sure the money the state forgoes is money well spent.