Incentives Update 02-15-19

Nebraska Legislative Reminder/Update………..

• The 106th Nebraska Legislature’s 90-day session is at the 30%-mark, with the projected final day of the session at/around June 6, 2019.

• Approximately 740 bills were introduced.

• Speaker priority bills will be requested by March 14th, and priority bills must be identified by March 19th. Hearing deadlines are March 28th. Full-day floor debate begins April 2nd.

• One of the key priorities this session, for the business community, is to rewrite Nebraska’s business incentives. The Nebraska Advantage Act, which began 2006, is due to sunset as of 12/31/2020 and as a result, there is a concerted effort to create a new-improved economic incentive program. Priorities of the bill are to continue the pay-for-performance incentive approach, simplify administration, create more focus on higher wage jobs, all-the-while pursuing a market competitive incentive tool for Nebraska.

For additional information about the legislative session, please go to the Nebraska Legislature link at http://www.nebraskalegislature.gov/ __________________________________________________________

ImagiNE Nebraska (LB 720)

Press Release: ​Kolterman Introduces Bill To Rewrite Nebraska’s Business Incentives (January 23rd, 2019) 

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Senator Kolterman (and 21 other senators) have introduced LB 720, identified as the ImagiNE, which would replace the Nebraska Advantage Act.  The link to LB 720 is located at https://nebraskalegislature.gov/FloorDocs/106/PDF/Intro/LB720.pdf

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General comments/high points of the bill include:

• Nebraska Advantage Act applicants will not be impacted by ImagiNE (they are grandfathered in), but any new applications filed after enactment will fall under ImagiNE.  If passed via an emergency clause, which requires a vote of two-thirds (33 members), the bill becomes effective immediately.

• Application process will be assigned to the Nebraska Department of Economic Development, versus Nebraska Department of Revenue. Compliance review and audits still fall under the NDOR.

• Qualification of stipulated attainment levels, will not predicate a mandatory audit by NDOR.  Companies will file for benefits immediately after qualification.  NOTE:  Yearly filing requirements will require forms AND support to forms, which will allow NDOR to perform a certain level of review each year, which will displace the need for the majority of audits at qualification.  NDOR does retain the right to audit and procedures will predicate some form of ongoing sampling/audits.

• Qualified activities and definitions primarily follow a NAICs code requirement, which does represent a significant change from NE Advantage.  It’s important that all companies verify NAIC codes for inclusion within ImagiNE.

• Ramp up period is 5 years, Performance Period is 7 years, Carryover Period is 3 years.

• Current intent is to be able to move up or down between tiers/levels, during the ramp up period.

• Credit usage continues to include income tax, sales/use taxes paid and withholding. New additions include certain circumstances related to job training and site development.

• Direct pay permit-type scenario that would allow for an Applicant to, upon qualifying, have the option to enter into a direct pay relationship, with the State, intended to create a more streamlined sales/use tax process for filers and NDR.

• As introduced, a company creating:

  • 10 new FTE, at $19.53/hr. per each employee, combined with a $1 million investment, qualifies for 5% wage and 5% ITC credit;
  • 20 new FTE, at $21.55/hr. per each new employee, and zero investment, qualifies the taxpayer for wage credits on a 5-15% scale;
  • 30 new FTE, at $21.55/hr. per each new employee, and $5 million investment qualifies the taxpayer for 7% ITC, wage credits on a 5-15% scale, sales tax refund/exemption on qualified assets, and personal property tax exemption for data center equipment;
  • Mega-sites with 250 new FTE (each employee must be paid at or above $32.33/hr.) and $250 million qualifies the taxpayer for 10% ITC, wage credits on a 5-15% scale, sales tax refund/exemption on qualified investment, and a personal property tax exemption; and
  • $50 million investment with $32.33/hour average wage (at the site), qualifies the taxpayer for 4% ITC and personal property tax exemption for data center equipment. 

• Minimum wage requirements increase from current NE Advantage Act levels of $12.97, to $19.53 (1M/10), $21.55 (20 ees only or 5M/30), or $32.33 (Mega and Modernization).  This increase represents 100% of the 90-county average wage ($40,622 or $19.53), 100% of the statewide average wage ($44,824/$21.55), and 150% of the statewide average wage ($67,246/$32.33).

• Hearing for LB 720 is set for the first week in March, so don’t delay in your review of the LB 720 legislation.

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Economic Development around the Country……….

In New York, Amazon has redacted their intent to spend $2.5B and add 25,000 jobs.

Catalent, Inc., a global provider of advanced delivery technologies and development solutions for drugs, biologics and consumer health products, will expand its biologics manufacturing operations in Bloomington, IN.  Plans are to invest over $100M and create up to 200 new jobs by the end of 2024. 

Fujifilm Corp, a subsidiary of Fujifilm Holdings of Tokyo, will expand its biomanufacturing facilities in Morrisville, NC and add about 100 new employees as part of a $90 million investment in its contract development and manufacturing. In 2016 Fujifilm Diosynth Biotechnologies opened a 62,000-square-foot facility in Morrisville for its bioprocess R&D groups.

At a ribbon cutting ceremony in Gulfport last month, Geri-Care Pharmaceuticals announced the completion of a 200,000 square-foot manufacturing facility. The new manufacturing space is set to be utilized by up to 200 new employees, who make a variety of pharmaceutical products including over the counter medications for Walmart, Walgreens and CVS.

Google has announced that it will spend $13B to build new data centers and offices as it expands its presence across several key locations in the US, including new data centers in Nevada, Ohio, Texas and Nebraska. 

Stone Fox Ventures, a manufacturer of industrial-grade grinding and finishing products, has recently purchased Even Cut Abrasive (Cleveland), with expectations to create 52 new jobs as part of a $3.76 million expansion project…in Wyoming, Michigan.

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