The writer is president of the Nebraska Chamber of Commerce & Industry.
Recently, a few special interests in Nebraska have attracted media attention by criticizing our state’s business incentives. Some have used a subtle approach, calling on state policy-makers to establish “better benchmarks” for the Nebraska Advantage Act and other pro-business programs.
Nebraska Advantage, implemented in early 2006, is the state’s primary economic development tool. By allowing employers to keep more of the money they earn, the program aims to make Nebraska’s business climate more competitive while growing new job opportunities for our residents.
The Nebraska Chamber of Commerce & Industry has always supported transparency within these programs, and we are open to a continued dialogue about program improvement. But let’s remember that Nebraska officials already have more than seven years of results providing abundant proof that current incentives are working as intended. For example:
>> Since 2006, Nebraska Advantage has led to private-sector commitments of nearly 27,000 new jobs and $10.5 billion in investments across the state.
>> Nebraska’s job-creation incentives have benefited all parts of the Cornhusker State, with more than 200 Nebraska Advantage projects in the Omaha metro area, 75 in Lancaster or Seward County and another 140 throughout greater Nebraska.
>> Since implementation of Nebraska Advantage, the state has maintained one of the nation’s lowest unemployment rates while per-capita income has matched the national average and worker productivity has surpassed the U.S. average.
These benchmarks are impressive by any standard.
Without pro-business incentives, Nebraska simply could not compete with many other states — including our neighbors, most of which have more favorable tax climates.
Despite the success of Nebraska’s incentives, some critics say the state shouldn’t be “subsidizing” businesses to create jobs. It’s not worth the cost, they say. They would rather see even more tax dollars dedicated to growing government.
Nebraska taxpayers deserve the full story without the political rhetoric.
The business “subsidies” we sometimes read about are not subsidies at all; they are simply income tax credits or sales tax refunds. That means qualified businesses can keep more of their own money if they meet or exceed a specified level of job creation or investment in the state.
Under Nebraska’s pro-business incentives, no blank checks are issued. No taxpayer dollars are handed out. Our incentives are performance-based; tax credits are provided only after an eligible company meets the job creation or investment standard.
Participating companies must go through extensive annual audits to verify they have done what they said they’ll do. If for some reason a qualifying company fails to maintain employment and/or investment levels, it is forced into “recapture,” thereby forfeiting its tax credits.
But what about the “cost” of these incentives? To put things in perspective, consider the following:
>> From 2006 through 2012, a seven-year span, Nebraska Advantage generated around $400 million in earned credits — an average of $59 million a year. That’s money that likely would have never come to Nebraska if not for our incentives. (As of this writing, only $130 million of those credits have been utilized by businesses. Some will never be redeemed.)
>> The annual average unrealized revenue due to the Nebraska Advantage program was equal to 0.8 percent of the state’s total budgeted spending for the last fiscal year. In fact, when combined, Nebraska’s economic development aid programs comprised less than 1 percent of the state’s budgeted spending.
>> In fiscal 2012-13, the unrealized revenue triggered by Nebraska Advantage was equal to only 1.9 percent of what was spent by one state agency alone — the Nebraska Department of Health and Human Services.
These comparisons do not take into account the additional tax revenue that the State of Nebraska experiences once new jobs are created and additional investments are made.
Most people can agree that allowing businesses to keep more of their own money is a logical, practical and prudent way to ensure that Nebraska continues to attract new businesses and jobs while encouraging the growth of our existing companies. The numbers alone make a convincing case that Nebraska’s job-creation incentives are working well — and that our taxpayers have never received more bang for such a modest level of investment.