Skepticism greets tax incentive proposal; legislative voting questioned

Sen. Mark Kolterman discusses tax incentives (Photo by Fred Knapp, NET News)
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March 6, 2019 - 5:23pm

A proposal to update Nebraska’s corporate tax incentives drew some skeptical questions in a public hearing. And senators discussed if the way they do business is letting them avoid tough votes.

Sen. Mark Kolterman and 21 other senators are co-sponsoring what they’re calling the ImagiNE Nebraska Act, which offers tax breaks to companies for expanding investment and employment in the state. It would replace the Nebraska Advantage Act, the previous generation of tax incentives.

Kolterman said an update is needed. “I believe the Nebraska Advantage is the reason Nebraska has had a very stable economic climate in the past 15 years, even in the face of a national recession. Having said that, the time has come to create a new program that is responsive to a 2019 economy and beyond,” he said.

The proposal met a skeptical reaction from some senators on the Revenue Committee. “I keep hearing the phrase over and over from the governor and others that we’re going to grow ourselves into fixing property tax relief. But we’ve had the Advantage Act and LB775 going for a lot of years. When are we going to grow ourselves into lowering taxes?” Sen. Curt Friesen asked.

“Well senator, I’ve made it very clear to you that I’m in favor of lowering taxes. In fact I think I’m on the record of that. But at the same time we can’t close our doors to potential business that wants to come to this state,” Kolterman replied.

Director of Economic Development Dave Rippe supported the bill. Sen. Tom Briese asked him if tax incentives really cause business expansion. “When we talk about jobs created, investment generated, economic growth generated due to Nebraska Advantage and predicting what ImagiNE Nebraska can do, some of those numbers reflect economic activity that would have happened anyway, correct?” Briese asked.

“Yeah, I think it’s fair to say that certainly there is likely activity that’s received an incentive that would have occurred without that incentive. But equally and perhaps more so, there’s activity that occurred that would not have occurred,” Rippe said. 

Rippe said a study of 72 companies that received incentives showed 9 had come from outside the state. But he added that two thirds of the companies had operations in other states, suggesting they could have expanded there if incentives were not available.

Sen. Mike Groene of North Platte asked if the program would guarantee that one-third of the incentives of the program would go to the Third Congressional District. Rippe said his department doesn’t discriminate based on geography.

However, Groene said discrimination is the practical effect, suggesting that most of the benefits flow to metropolitan counties Douglas, Lancaster, and Sarpy Counties.

“You’re helping only three counties where most of it happens. And I’m helping to fund it. I’m Congresssional District Three. We’re not getting our share. So that’s what really bothers me about these economic development plans. You give me a third of it, I’ll sign on,” Groene said.

The committee took no immediate action on the bill.

And in debate by the full Legislature Wednesday, senators discussed whether the policies they follow result in avoiding votes on tough issues. The debate followed Tuesday’s failure of a proposal to prohibit employment discrimination based on sexual orientation or gender identity.

Senators never actually voted on the bill itself. Instead, it died on a procedural vote.

Speaker of the Legislature Jim Sheer has a policy of allowing three hours of debate on an issue. After that, he pulls it off the agenda until and unless the sponsor can show they have between 30 and 33 votes. It takes 33 votes to overcome a filibuster.

As the three-hour limit approached Tuesday, Sen. Matt Hansen moved for an immediate vote on the bill. Scheer ruled there had not been full and fair debate, saying 14 senators were still lined up to speak.

Hansen challenged that ruling, saying all those senators had already spoken. He later added most of them wouldn’t have gotten to speak again anyway, once the three hour time limit was reached. But the Legislature voted 26-16 against Hansen’s challenge, effectively killing the anti-discrimination bill without ever actually voting on the bill itself.

Wednesday, Sen. Patty Pansing Brooks, sponsor of the bill, joined Hansen in criticizing the procedure. “By using this this three hour rule, we really are avoiding many of the tough stance(s). I believe that in a way, we are not being transparent enough to the constituents to bring things to a vote,” she said.

In a later interview, Scheer acknowledged the procedure can result in there not being an up-or-down vote on a bill. “In some cases there’s  not,” he said.

However, Scheer added, the same thing can happen if he schedules a bill for further debate after the first three hours, and there’s a filibuster, where opponents try to talk a bill to death. In that case, a bill’s supporters can try to stop debate and proceed to a vote by invoking cloture, which requires a two-thirds majority. “There’s not an up or down vote at the end of six hours if you have a cloture vote. And if you do not succeed at a cloture vote, there still is not a vote on the  bill,” he said.

The only difference, Scheer added, is senators will have spent an additional three hours debating.



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