Press Release
More companies than expected have tapped a package of tax breaks designed to lure jobs to Nebraska, and the total payout from the state could exceed $500 million for a year's worth of applications.
Supporters of the tax breaks say the interest from companies is good news for the state's economy. But critics say it could overburden the state's budget.
Nearly 90 companies will get tax credits should they first meet promised levels of job creation and investment, according to the State Department of Economic Development.
All told, the companies have committed to investing $3.5 billion over the next five to seven years and creating about 15,000 jobs during the same time period.
The approved applications were made last year, the first year companies could apply for credits under a bill passed by the Legislature in 2005. The bill was an effort to spur job creation by making the state's tax-break package competitive with other states.
The state originally expected the Nebraska Advantage Act might create 50,000 jobs over 10 years.
"This well exceeds what we anticipated," said Richard Baier, director of state economic development. The amount of investment, he said is also several times higher than what was expected.
Baier said estimates of how much annual tax credit companies might receive won't come until after the state sees how quickly companies are reaching promised job and investment levels.
But if approved applications continue at the same pace set last year and companies meet their goals, the amounts could well exceed what was projected when the Legislature passed the job-growth package two years ago.
Officials estimated that once fully operational in 2014, the tax-break bill would provide an estimated $200 million a year in breaks to qualifying companies. That is roughly $60 million more a year than the old incentive tool.
Mark Vasina, president of Nebraskans for Peace and a critic of tax incentives, said the cost estimates mirror what happened in the 1980s, when the state's old tax-break took (LB775) ended up costing millions more than advertised.
"It becomes very unpredictable year to year to determine who's going to be using these credits and at what levels," Vasina said. "This program creates budget pressures all across the state."
"The real question," he said, "is what would have happened had you not had the program? Of course, you can't answer that question in any definitive way?"
Baier said he couldn't say positively that in every case the jobs wouldn't have been created without the program.
Of the 89 approved applications, 21 are biotechnology projects, 34 manufacturing, 11 financial services, and 23 tele-communications or other projects. The biotechnology projects account for more than half the total, planned investment - $2.2 billion.
More than half of all the projects are in the Omaha area, 13 in Lincoln and 30 outside the cities.
"The Nebraska Advantage package has made a competitive difference in our economic landscape," Baier said.
- Story Courtesy of the Norfolk Daily News
