LINCOLN — The former speaker of the Legislature made a surprise visit to the State Capitol on Friday to oppose changes to a “grand compromise” he helped forge last year on tax incentives and tax relief.
Former State Sen. Jim Scheer of Norfolk testified against a proposal to amend the state’s new business incentive program, the ImagiNE Act, that would allow businesses to count nonresident workers in reaching job-creation targets to qualify for tax credits.
The amendment was portrayed as correcting a “poison pill” in the act for companies on Nebraska’s borders that employ numerous nonresident employees from Kansas, Iowa and other states, but can’t count them to qualify for tax breaks.
Scheer told the Legislature’s Revenue Committee that was no mistake. Senators who forged the compromise, he said, clearly agreed that only Nebraska residents should be counted as employees. In fact, Scheer said, the tax relief/incentive law, Legislative Bill 1107, would not have passed without that clause.
Workers who drive in from another state to work in Nebraska, he said, don’t pay property taxes here, don’t do a lot of shopping here, and overall, don’t contribute to the state’s well-being like those who do live here.
“We have to be good stewards of the Nebraska dollar, and that means we have to look at the return,” Scheer said. “Incentive packages should incentivize those who work, live and play, and stay, in Nebraska.”
Nothing in the ImagiNE Act, he added, blocks a company from hiring nonresidents, the act only disallows them from being counted as a new employee in reaching job-creation requirements.
Seward Sen. Mark Kolterman sought the change in his proposal, LB 18, saying the residency clause hurts the ability of companies on the state’s borders to quality for incentives for expansions.
A representative of Endicott Clay Products, which is a couple of miles north of the Kansas border, said about 10% of its workforce of 300 comes from the Jayhawk State, yet they can’t be used in qualifying for Nebraska tax breaks.
The Nebraska Chamber of Commerce, as well as the state bankers organization and a Nebraska City economic developer, also supported LB 18, pointing out that the state’s previous incentive programs, LB 775 and the Advantage Act, didn’t include the residency requirement.
Elkhorn Sen. Lou Ann Linehan, who chairs the Revenue Committee, said she felt it was too early to make changes to a bill passed only a few months ago. “People knew what they were doing,” she said, when they included the residency requirement last year.