LINCOLN — Nebraska's cities won first-round approval Tuesday of a bill that would help them deal with the negative effects when a local business cashes in its state tax incentives.
When businesses such as Cabela's and ConAgra cash in sales tax refunds due under business incentive laws such as Legislative Bill 775 and the Nebraska Advantage Act, it can create a budget shock for cities.
The City of Tecumseh, for instance, had 25 percent of its expected sales tax revenue wiped out overnight when a company decided to take the refunds it had earned.
The problem is most acute in smaller cities, like Sidney and South Sioux City, which have expanding businesses and smaller budgets. But the issue has also affected Omaha.
In 2010, ConAgra Foods told the city it was on track to get a $6.5 million refund but would be willing to phase in the payments over time to assist the city in budgeting for the loss.
Statewide, between $70 million and $100 million a year in sales tax refunds are paid to businesses that qualify by creating jobs and investing in expansions.
Under Legislative Bill 209, smaller cities would get a year's notice before a company could obtain a refund. Omaha and Lincoln are not covered under LB 209.
State Sen. Abbie Cornett of Bellevue, who sponsored LB 209, said that would gives cities time to prepare for the budget shock.
Contact the writer:
402-473-9584, paul.hammel@owh.com
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