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Nebraska property tax, incentives packages wins initial OK

August 6, 2020 GMT
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Nebraska Sen. Lou Ann Linehan of Elkhorn speaks in Lincoln, Neb., Wednesday, Aug. 5, 2020, as lawmakers debate a property tax and business incentive package. (AP Photo/Nati Harnik)
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Nebraska Sen. Lou Ann Linehan of Elkhorn speaks in Lincoln, Neb., Wednesday, Aug. 5, 2020, as lawmakers debate a property tax and business incentive package. (AP Photo/Nati Harnik)

LINCOLN, Neb. (AP) — Nebraska lawmakers advanced a compromise package Wednesday to soften the impact of local property tax increases, preserve tax incentives for businesses and commit as much as $300 million in state money to a proposed disaster response facility in Omaha.

The measure won first-round approval just days before this year’s legislative session is scheduled to end.

Lawmakers struck the last-minute deal even though a lot of them said they didn’t like much of the package, and others complained that it was being rushed through the Legislature. Several rural senators said the property tax portion would only slow the rate of increases for some homeowners, farmers and business owners.

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“This is peanuts, thrown to the gallery,” said Sen. Mike Groene, of North Platte. “Don’t let the politicians tell you they’re doing something great for you. They’re not.”

Speaker of the Legislature Jim Scheer said it was critical for lawmakers to pass the entire package this year to make the state “a more inviting place” and promote economic development.

“We have an opportunity to move this state forward,” said Scheer, of Norfolk.

Other lawmakers questioned whether the funding would be sustainable and tie the hands of future lawmakers who oversee state money.

“The question is, is my successor going to have some impossible budget to balance in 2024 or 2025 because of decisions we make today,” said Sen. Matt Hansen, of Lincoln.

Sen. Lou Ann Linehan, a leading architect of the bill, said the measure isn’t perfect but will benefit most Nebraskans.

“This helps everybody in the state,” said Linehan, the chairwoman of the Revenue Committee. “It helps us create more jobs. It helps homeowners and (farmers) and businesses that are stretched very thin.”

The bill would offer a state income tax credit to farmers, homeowners and business owners, based on the amount of school district property taxes they paid the previous year.

State officials would award a total of $125 million in credits in the current year, and the amount would increase to $375 million within five years. Every time the state collects at least 3.5% more tax revenue than expected, at least half of the excess money would automatically go into the credit fund.

For most property owners, the credit would only reduce the size of the increase in their local property tax bill. One lawmaker estimated that a homeowner seeing a $500 increase would only see that reduced by $90.

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The second piece of the package would create a new business tax incentive program to replace its current program, the Nebraska Advantage Act, which expires this year. The proposed program would provide $25 million in incentives in its first and second years, and the amount would grow to $150 million by year five. Nebraska business groups have fought hard for the incentive program as a way to create jobs and boost the economy, but critics cast them as a taxpayer-funded giveaway to companies.

“These businesses are going to come here whether we give them an incentive or not,” said Sen. Steve Erdman, of Bayard, who frequently advocates for lower spending and tax cuts.

The third piece would offer state matching dollars of up to $300 million for a new all-hazard research and training facility at the University of Nebraska Medical Center in Omaha. The project, estimated to cost $2.6 billion, would help respond to crises such as natural disasters and disease outbreaks. Nebraska would only contribute money if the federal government and private donors meet funding requirements.

Two more votes are required to pass the bill before it goes to Gov. Pete Ricketts.

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Follow Grant Schulte on Twitter: https://twitter.com/GrantSchulte