Incentives Update 05-03-2022

Nebraska Legislative Update………..

The Nebraska’s Unicameral meets every year, and every year we (CFO Services) are involved directly or indirectly, on various legislation that impacts Economic Development.  Our role is technical and narrow, but we have gone ahead and drafted a short summary and provided various links for more detail.  In addition to the typical activities/bills that occur every year, this year’s session was particularly interesting because State Senators were also responsible for allocating over $1B of ARPA funds.

Again, the intent is not to summarize everything that occurred, but to highlight certain areas of interest. If you have any questions, please don’t hesitate to reach out to Chad Denton (@ cdenton@cfoserv.com). 

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Nebraska’s second session of the 107th Legislature adjourned on April 20^th, 2022, which was a 60-day session and resulted in 146 bills passed.  CFO Services, as an Economic Developer/Compliance Partner, views a lot of the session with a more narrow lens, so this correspondence is cursory, and attempts to create awareness of the ARPA activity, in Nebraska, and hone in on specific bills that may impact business incentives. 

Provided below is a link to the Nebraska Unicameral site, as well as two other sites that we identified that provide a broader perspective/summary:

ARPA:

In addition to funding households, small businesses and schools, the American Rescue Plan Act (ARPA) was provided as a relief fund to state and local governments that were negatively impacted by the coronavirus pandemic. In Nebraska, over $1B (Pandemic funding bill approved – Unicameral Update (ne.gov)) in ARPA funds has been allocated to the State of Nebraska and its counties, cities, and local communities. As a result, a significant amount of time, during the 60-day legislative session, was spent sifting through over $4 billion of requests made for ARPA appropriations.  The aforementioned link provides a good summary directly from the State’s Unicameral Update.  High points include:

• Rural and urban workforce housing grants to help attract new talent; and
• Support for community college capital projects, as well as workforce development and dual-credit programs for high school students; and
• Recovery grants in qualified census tracts, primarily targeted to North and South Omaha; and
• Internships, apprenticeships and customized workforce training programs; and
• Expanding childcare capacity; and
• Rural Health Complex to be located at the University of Nebraska at Kearney; and
• Assistance for direct care staff at licensed Medicaid-certified nursing facilities; and
• Support for new, industrial rail park infrastructure; and
• Site and building development support for a North Omaha Industrial Park project; and
• Agricultural Research Service National Center; and
• Assistance to alleviate pandemic-related setbacks for shovel-ready capital projects building arts, culture, humanities and sports amenities across the state; and
• Enhanced outdoor recreation sites across the state; and
• Adjustments to the Nebraska’s Business Innovation Act (to spur additional investment, and assist the H3 career scholarship program

Other Legislation: 

LB873 reduces individual and corporate income tax top rates  over five years to 5.84%, offers income tax credits for property taxes paid to community colleges, boosts total income tax credits available for property taxes paid to local schools to $548 million, and $567 million for 2023, and completely phases out income taxes on social security income.

LB1261 extends the Nebraska Advantage Rural Development Act (NRDA) through 2027 and increases the tax credits available from $1 million to $10 million. The bill also allows a refundable income tax credit equal to ten percent of the investment, not to exceed a credit of $500,000 per application, specific to livestock modernization. A separate technical change also occurred specific to ImagiNE Nebraska, allowing/ensuring that rural and urban manufacturing tiers may include more than one location within their stated project parameters.

LB1150 was passed and includes a combination of other bills/provisions, mostly related to business incentives:

• LB817, an incentive clean-up bill from the Nebraska Department of Revenue, 
• LB502, which provides for the same sales tax treatment for Data Center projects under the Nebraska Advantage Act, as compared to those under ImagiNE Nebraska, 
• LB985 corrects an unintended base-year calculation, under ImagiNE Nebraska, for companies that hired more employees as a result of the COVID-19 pandemic, and 
• LB1094 clarifies the treatment/inclusion of Nebraska resident teleworkers under ImagiNE Nebraska.

NOT PASSED was LB701, which would have extended the Nebraska Job Creation and Mainstreet Job Development Act by 5 years (from 2022 – 2027) and Nebraska Advantage Research and Development Act by 1 year (from 2022 – 2023).