Department of Revenue officials will present at a joint hearing of the Legislature’s Appropriations and Revenue committees this afternoon to discuss a report on the state’s business incentive programs.
The report, which was released in July, shows businesses claimed about $200 million in tax credits and refunds in 2019 under Nebraska Advantage and LB 775, combined.[1]
Nebraska Advantage sunsets at the end of the year, making way for a new tax incentive program passed by the Legislature during the 2020 session, the ImagiNE Nebraska Act. Nebraska Advantage will only stop accepting new applications at the end of the year, however, and continue to provide benefits to participating businesses through 2040 or 2050, depending on the tier.[2] These long “tails” — activity beyond the program’s sunset date — on Nebraska’s tax incentive programs are not new. LB 775, for example, was enacted in 1987, sunset in 2005 and will continue to provide benefits to participating businesses until 2025, twenty years beyond its sunset date.[3]
Nebraska Advantage generated about $1.2 billion in new qualifying investment and about 3,400 new full-time equivalent jobs in 2019 with an estimated average annual wage of just over $48,000, the report showed. However, the report also estimates that by 2029 — as far out as it projects — the cumulative revenue loss from the program, even after accounting for economic growth created by the incentives, will be about $1.4 billion.
LB 775, according to the report, added fewer than 102 new full-time equivalent jobs in 2019,[4] paying an estimated annual average wage of about $32,400.[5] The report also projects that the cumulative revenue loss as a result of the program when factoring in economic growth will be more than $2 billion by 2025.
The Tax Incentive Report hearing starts at 1:30 p.m. in the State Capitol, Room 1113 and will be streamed online by NET Nebraska.