(The following story by Leslie Reed appeared on the Omaha World-Herald website on February 10.)
LINCOLN, Neb. — As opponents and proponents square off yet again over Nebraska’s business tax incentive program, they use different yardsticks to take the measure of the 17-year-old program.
Union Pacific’s decision to move 1,038 jobs to Omaha from St. Louis demonstrates what’s wrong with Nebraska’s business tax incentive law, tax incentive opponents said Monday.
Nebraska is paying out subsidies to a profitable company for merely shifting jobs from one state to another, said Mark Vasina of Lincoln, treasurer of $top Big Business $ubsidies, the Nebraskans for Peace-led coalition trying to repeal the state’s major tax incentive law.
“As we repeatedly cut funding for education in Nebraska, we are annually forking over tens of millions of state and local tax dollars to this and other Fortune 500 companies to enhance their profits,” Vasina said at a Capitol press conference.
Gov. Mike Johanns said Monday that those statements were simplistic and misleading.
“They don’t take into account the thousand families who will buy a house, the thousand families who will buy cars, who will pay property taxes, who will send their children to school and furnish their homes,” Johanns said.
He touted the tax credits when the railroad announced last month that it was bringing twice as many jobs to its new Nebraska headquarters than was originally contemplated. “It’s almost immeasurable to describe what these jobs do,” Johanns said at the time.
State lawmakers during the next two weeks will ponder the costs and benefits of Nebraska’s economic development program, commonly called LB 775 (for Legislative Bill 775). The Legislature’s Revenue Committee has scheduled hearings on at least eight tax-incentive-related bills on Wednesday, Thursday and Feb. 18.
Chief among them:
o An outright repeal (LB 945), introduced by State Sen. Ernie Chambers of Omaha at the initiative petition coalition’s request. Scheduled for Wednesday.
o Required disclosure of credit amounts paid to individual companies (LB 1096), introduced by Sen. DiAnna Schimek of Lincoln. Currently, credits are disclosed only on an aggregate basis, by industry. Scheduled for Wednesday.
o Requirements that new jobs pay at least average wages and pay benefits (LB 1188 and LB 1189), introduced by Sen. Chris Beutler of Lincoln. Scheduled for Wednesday.
Nebraskans for Peace mounted its repeal drive after legislative efforts to change LB 775 fizzled in 2003. The drive appears to have stalled since November at 15,000 signatures collected. Vasina and fellow organizer Tim Rinne said circulation has been hampered by the weather. Vasina said he expects more petitions to be turned in next month.
Schimek said lawmakers need to keep talking about the tax incentive law, regardless of the petition effort. She said some of her constituents are angered about how LB 775 has been used, particularly after some major recipients announced layoffs.
“People were very angry about 775; this is coming from the grass roots,” she said.
Vasina pointed to two 2001 state analyses of the Union Pacific headquarters project as evidence that business tax incentives cost taxpayers more than they’re worth.
Extrapolating from one analysis, Vasina said state government would give Union Pacific nearly $75 million in tax credits but would receive only about $13 million in new taxes from the project.
Vasina said he calculates that LB 775 costs Nebraska about $77 million a year, even taking into account new tax revenues generated by business.
Joseph Bateman, senior assistant vice president of government affairs at Union Pacific, said lawmakers were given the information Vasina discussed before they created the 2001 incentive program used to reel in the Union Pacific headquarters project.
Lawmakers were more persuaded by Union Pacific’s study of the overall economic benefit to Nebraska, he said.
“(The state analysis) is basically a taxes in, taxes out sort of thing,” Bateman said. “The study we provided to the Legislature showed the overall economic benefit to the state.”