Proposed Legislation Jeopardizes the Nebraska State Historic Tax Credit
Not quite three years ago, we shared the good news that then-Governor Heineman signed the Nebraska State Historic Tax Credit into law on April 17, 2014. Now, the program is in jeopardy in the Nebraska Legislature.
According to the linked report, which the University of Nebraska prepared for the State Historic Preservation Office (“SHPO”), in only its first year, this program supported projects that, in total:
• had a $79.84 million impact on the Nebraska economy;
• yielded 1,033 full time jobs in Nebraska and generated over $35.07 million in wages for Nebraska workers;
• contributed $45.26 million to the state’s gross state product; and
• contributed $3.22 million in state and local taxes.
In one year.
At the same time, this program “cost” the State of Nebraska fifteen million dollars in foregone tax revenues. However, all of the private investment to generate these tax credits has been made, but in many cases, the State has not yet released the credits and thus has not foregone the revenue.
And yet, four legislative bills target the program for reduction or extinction. Specifically:
• LB 126 would prohibit applications after December 31, 2020, instead of December 31, 2022;
• LB 373 would prohibit applications on or after January 1, 2018 (and kill other economic development programs);
• LB 467 would prohibit the SHPO from allocating credits in 2018/19 and stop unused credits from carrying over; and
• LB 475 would prohibit applications after the date on which the Governor would sign the bill, e.g., June 1, 2017.
LB 126 is set for hearing in the Revenue Committee on February 9. The other bills are not yet set for hearing, but they are all in the Revenue Committee. The members of the committee are: Jim Smith (Papillion, Chairman); Paul Schumacher (Columbus), Lydia Brasch (Bancroft), Curt Friesen (Henderson), Mike Groene (North Platte), Burke Harr (Omaha), Tyson Larson (O’Neill), and Brett Lindstrom (Omaha).
As you all have no doubt read, the state has a major budget deficit of nearly one billion dollars. And programs like the Nebraska historic tax credit may have to contribute to resolving that issue by absorbing some kind of cut. But the data in the Historic Preservation Office’s report confirms that this program generates economic development and tax relief far in excess of what it takes from the state’s general fund. This fifteen million is a tiny fraction of the overall deficit. In fact, keeping the program in place helps avoid future deficits because the program grows the economy.
In the good news category, Senator Tony Vargas of Omaha introduced LB 272, which would set deadlines for the Department of Revenue to review applications and issue credits. It also does not yet have a hearing date.
Please do not hesitate to contact us if you have questions about or interest in these bills.