Text of NE LB 724 (2020)

LEGISLATURE OF NEBRASKA ONE HUNDRED SIXTH LEGISLATURE FIRST SESSION LEGISLATIVE BILL 724 Introduced by Vargas, 7; Cavanaugh, 6; Pansing Brooks, 28; Wayne, 13; Wishart, 27. Read first time January 23, 2019 Committee: A BILL FOR AN ACT relating to the Nebraska Advantage Act; to amend 1 sections 77-5701, 77-5723, and 77-5731, Reissue Revised Statutes of 2 Nebraska; to state findings; to provide requirements for boards of 3 directors in order to qualify for incentives; to harmonize 4 provisions; and to repeal the original sections. 5 Be it enacted by the people of the State of Nebraska, 6 LB724 2019 LB724 2019 -1- Section 1. Section 77-5701, Reissue Revised Statutes of Nebraska, is 1 amended to read: 2 77-5701 Sections 77-5701 to 77-5735 and section 2 of this act shall 3 be known and may be cited as the Nebraska Advantage Act. 4 Sec. 2. (1) The Legislature finds and declares that: 5 (a) Nationwide and in Nebraska, women are paid significantly less 6 than men. In addition to wage disparity, women make up a small share of 7 top leadership positions in private businesses. In recent years, women 8 have made some gains in leadership positions, and experience has shown 9 that the increase of women in leadership is helping businesses thrive in 10 unprecedented ways. For over fifty years, equal pay laws have sought to 11 remedy persistent disparities based on sex and gender in the workplace. 12 Nevertheless, gender-based disparities with regard to pay and leadership 13 status persist and have created a wage gap in Nebraska negatively 14 impacting working women, working families, our state budget, and our 15 state and national economies; 16 (b) The persistent gender disparities illustrate that this state 17 must do better and must modernize its equal pay laws with innovative and 18 creative policy strategies. Research shows that if the state waits for a 19 private market correction, Nebraska women will not realize equal pay for 20 equal work until 2066. That pace is unacceptable. The state must be 21 proactive and take additional steps to make equal pay a reality; and 22 (c) The Nebraska Advantage Act encourages and rewards employers that 23 invest in Nebraska and its workforce. One of the stated goals of the act 24 is to promote the creation and retention of new, quality jobs in 25 Nebraska. Quality jobs are jobs provided by employers that recognize that 26 women are a significant portion of Nebraska's workforce and that provide 27 for pay and employment equity for women, including equity in leadership. 28 (2) For any taxpayer that is a domestic corporation with a board of 29 directors, such taxpayer shall not qualify for any incentives under the 30 Nebraska Advantage Act unless at least one-half of the members of the 31 LB724 2019 LB724 2019 -2- taxpayer's board of directors are female. Such requirement shall continue 1 to apply to the taxpayer throughout the entitlement period. If a taxpayer 2 fails to meet such requirement at any time during the entitlement period, 3 such failure shall be treated in the same manner as a failure to maintain 4 the required level of employment for purposes of recapture and 5 disallowance of incentives under section 77-5727. 6 (3) For purposes of this section, female means an individual who 7 self-identifies as a woman, without regard to the individual's designated 8 sex at birth. 9 (4) This section applies to applications submitted on and after the 10 effective date of this act. 11 Sec. 3. Section 77-5723, Reissue Revised Statutes of Nebraska, is 12 amended to read: 13 77-5723 (1) In order to utilize the incentives set forth in the 14 Nebraska Advantage Act, the taxpayer shall file an application, on a form 15 developed by the Tax Commissioner, requesting an agreement with the Tax 16 Commissioner. 17 (2) The application shall contain: 18 (a) A written statement describing the plan of employment and 19 investment for a qualified business in this state; 20 (b) Sufficient documents, plans, and specifications as required by 21 the Tax Commissioner to support the plan and to define a project; 22 (c) If more than one location within this state is involved, 23 sufficient documentation to show that the employment and investment at 24 different locations are interdependent parts of the plan. A headquarters 25 shall be presumed to be interdependent with each other location directly 26 controlled by such headquarters. A showing that the parts of the plan 27 would be considered parts of a unitary business for corporate income tax 28 purposes shall not be sufficient to show interdependence for the purposes 29 of this subdivision; 30 (d) A nonrefundable application fee of one thousand dollars for a 31 LB724 2019 LB724 2019 -3- tier 1 project, two thousand five hundred dollars for a tier 2, tier 3, 1 or tier 5 project, five thousand dollars for a tier 4 project, and ten 2 thousand dollars for a tier 6 project. The fee shall be credited to the 3 Nebraska Incentives Fund; and 4 (e) A timetable showing the expected sales tax refunds and what year 5 they are expected to be claimed. The timetable shall include both direct 6 refunds due to investment and credits taken as sales tax refunds as 7 accurately as possible; and . 8 (f) If the taxpayer is a domestic corporation with a board of 9 directors, information regarding the gender of the members of the board 10 of directors at the time of application and, if necessary, a timetable 11 showing the year the taxpayer expects to meet the requirements in section 12 2 of this act with respect to its board of directors. This subdivision 13 applies to applications submitted on and after the effective date of this 14 act. 15 The application and all supporting information shall be confidential 16 except for the name of the taxpayer, the location of the project, the 17 amounts of increased employment and investment, and the information 18 required to be reported by sections 77-5731 and 77-5734. 19 (3) An application must be complete to establish the date of the 20 application. An application shall be considered complete once it contains 21 the items listed in subsection (2) of this section, regardless of the Tax 22 Commissioner's additional needs pertaining to information or 23 clarification in order to approve or not approve the application. 24 (4) Once satisfied that the plan in the application defines a 25 project consistent with the purposes stated in the Nebraska Advantage Act 26 in one or more qualified business activities within this state, that the 27 taxpayer and the plan will qualify for benefits under the act, and that 28 the required levels of employment and investment for the project will be 29 met prior to the end of the fourth year after the year in which the 30 application was submitted for a tier 1, tier 3, or tier 6 project or the 31 LB724 2019 LB724 2019 -4- end of the sixth year after the year in which the application was 1 submitted for a tier 2, tier 4, or tier 5 project, the Tax Commissioner 2 shall approve the application. For a tier 5 project that is sequential to 3 a tier 2 large data center project, the required level of investment 4 shall be met prior to the end of the fourth year after the expiration of 5 the tier 2 large data center project entitlement period relating to 6 direct sales tax refunds. 7 (5) The Tax Commissioner shall make his or her determination to 8 approve or not approve an application within one hundred eighty days 9 after the date of the application. If the Tax Commissioner requests, by 10 mail or by electronic means, additional information or clarification from 11 the taxpayer in order to make his or her determination, such one-hundred- 12 eighty-day period shall be tolled from the time the Tax Commissioner 13 makes the request to the time he or she receives the requested 14 information or clarification from the taxpayer. The taxpayer and the Tax 15 Commissioner may also agree to extend the one-hundred-eighty-day period. 16 If the Tax Commissioner fails to make his or her determination within the 17 prescribed one-hundred-eighty-day period, the application shall be deemed 18 approved. 19 (6) Within one hundred eighty days after approval of the 20 application, the Tax Commissioner shall prepare and mail a written 21 agreement to the taxpayer for the taxpayer's signature. The taxpayer and 22 the Tax Commissioner shall enter into a written agreement. The taxpayer 23 shall agree to complete the project, and the Tax Commissioner, on behalf 24 of the State of Nebraska, shall designate the approved plan of the 25 taxpayer as a project and, in consideration of the taxpayer's agreement, 26 agree to allow the taxpayer to use the incentives contained in the 27 Nebraska Advantage Act. The application, and all supporting 28 documentation, to the extent approved, shall be considered a part of the 29 agreement. The agreement shall state: 30 (a) The levels of employment and investment required by the act for 31 LB724 2019 LB724 2019 -5- the project; 1 (b) The time period under the act in which the required levels must 2 be met; 3 (c) The documentation the taxpayer will need to supply when claiming 4 an incentive under the act; 5 (d) The date the application was filed; and 6 (e) A requirement that the company update the Department of Revenue 7 annually on any changes in plans or circumstances which affect the 8 timetable of sales tax refunds as set out in the application. If the 9 company fails to comply with this requirement, the Tax Commissioner may 10 defer any pending sales tax refunds until the company does comply. 11 (7) The incentives contained in section 77-5725 shall be in lieu of 12 the tax credits allowed by the Nebraska Advantage Rural Development Act 13 for any project. In computing credits under the act, any investment or 14 employment which is eligible for benefits or used in determining benefits 15 under the Nebraska Advantage Act shall be subtracted from the increases 16 computed for determining the credits under section 77-27,188. New 17 investment or employment at a project location that results in the 18 meeting or maintenance of the employment or investment requirements, the 19 creation of credits, or refunds of taxes under the Employment and 20 Investment Growth Act shall not be considered new investment or 21 employment for purposes of the Nebraska Advantage Act. The use of 22 carryover credits under the Employment and Investment Growth Act, the 23 Invest Nebraska Act, the Nebraska Advantage Rural Development Act, or the 24 Quality Jobs Act shall not preclude investment and employment from being 25 considered new investment or employment under the Nebraska Advantage Act. 26 The use of property tax exemptions at the project under the Employment 27 and Investment Growth Act shall not preclude investment not eligible for 28 the property tax exemption from being considered new investment under the 29 Nebraska Advantage Act. 30 (8) A taxpayer and the Tax Commissioner may enter into agreements 31 LB724 2019 LB724 2019 -6- for more than one project and may include more than one project in a 1 single agreement. The projects may be either sequential or concurrent. A 2 project may involve the same location as another project. No new 3 employment or new investment shall be included in more than one project 4 for either the meeting of the employment or investment requirements or 5 the creation of credits. When projects overlap and the plans do not 6 clearly specify, then the taxpayer shall specify in which project the 7 employment or investment belongs. 8 (9) The taxpayer may request that an agreement be modified if the 9 modification is consistent with the purposes of the act and does not 10 require a change in the description of the project. An agreement may not 11 be modified to a tier that would grant a higher level of benefits to the 12 taxpayer or to a tier 1 project. Once satisfied that the modification to 13 the agreement is consistent with the purposes stated in the act, the Tax 14 Commissioner and taxpayer may amend the agreement. For a tier 6 project, 15 the taxpayer must agree to limit the project to qualified activities 16 allowable under tier 2 and tier 4. 17 Sec. 4. Section 77-5731, Reissue Revised Statutes of Nebraska, is 18 amended to read: 19 77-5731 (1) The Tax Commissioner shall submit electronically an 20 annual report to the Legislature no later than July 15 of each year. The 21 Department of Revenue shall, on or before September 1 of each year, 22 appear at a joint hearing of the Appropriations Committee of the 23 Legislature and the Revenue Committee of the Legislature and present the 24 report. Any supplemental information requested by three or more committee 25 members shall be presented within thirty days after the request. 26 (2) The report shall list (a) the agreements which have been signed 27 during the previous year, (b) the agreements which are still in effect, 28 (c) the identity of each taxpayer who is party to an agreement, and (d) 29 the location of each project. 30 (3) The report shall also state, for taxpayers who are parties to 31 LB724 2019 LB724 2019 -7- agreements, by industry group (a) the specific incentive options applied 1 for under the Nebraska Advantage Act, (b) the refunds allowed on the 2 investment, (c) the credits earned, (d) the credits used to reduce the 3 corporate income tax and the credits used to reduce the individual income 4 tax, (e) the credits used to obtain sales and use tax refunds, (f) the 5 credits used against withholding liability, (g) the number of jobs 6 created under the act, (h) the expansion of capital investment, (i) the 7 estimated wage levels of jobs created under the act subsequent to the 8 application date, (j) the total number of qualified applicants, (k) the 9 projected future state revenue gains and losses, (l) the sales tax 10 refunds owed, (m) the credits outstanding under the act, (n) the value of 11 personal property exempted by class in each county under the act, (o) the 12 value of property for which payments equal to property taxes paid were 13 allowed in each county, and (p) the total amount of the payments, and (o) 14 the percentage of female members on the boards of directors of such 15 taxpayers. 16 (4) In estimating the projected future state revenue gains and 17 losses, the report shall detail the methodology utilized, state the 18 economic multipliers and industry multipliers used to determine the 19 amount of economic growth and positive tax revenue, describe the analysis 20 used to determine the percentage of new jobs attributable to the Nebraska 21 Advantage Act assumption, and identify limitations that are inherent in 22 the analysis method. 23 (5) The report shall provide an explanation of the audit and review 24 processes of the department in approving and rejecting applications or 25 the grant of incentives and in enforcing incentive recapture. The report 26 shall also specify the median period of time between the date of 27 application and the date the agreement is executed for all agreements 28 executed by December 31 of the prior year. 29 (6) The report shall provide information on project-specific total 30 incentives used every two years for each approved project. The report 31 LB724 2019 LB724 2019 -8- shall disclose (a) the identity of the taxpayer, (b) the location of the 1 project, and (c) the total credits used and refunds approved during the 2 immediately preceding two years expressed as a single, aggregated total. 3 The incentive information required to be reported under this subsection 4 shall not be reported for the first year the taxpayer attains the 5 required employment and investment thresholds. The information on first- 6 year incentives used shall be combined with and reported as part of the 7 second year. Thereafter, the information on incentives used for 8 succeeding years shall be reported for each project every two years 9 containing information on two years of credits used and refunds approved. 10 The incentives used shall include incentives which have been approved by 11 the department, but not necessarily received, during the previous two 12 years. 13 (7) The report shall include an executive summary which shows 14 aggregate information for all projects for which the information on 15 incentives used in subsection (6) of this section is reported as follows: 16 (a) The total incentives used by all taxpayers for projects detailed in 17 subsection (6) of this section during the previous two years; (b) the 18 number of projects; (c) the new jobs at the project for which credits 19 have been granted; (d) the average compensation paid employees in the 20 state in the year of application and for the new jobs at the project; and 21 (e) the total investment for which incentives were granted. The executive 22 summary shall summarize the number of states which grant investment tax 23 credits, job tax credits, sales and use tax refunds for qualified 24 investment, and personal property tax exemptions and the investment and 25 employment requirements under which they may be granted. 26 (8) No information shall be provided in the report that is protected 27 by state or federal confidentiality laws. 28 Sec. 5. Original sections 77-5701, 77-5723, and 77-5731, Reissue 29 Revised Statutes of Nebraska, are repealed. 30 LB724 2019 LB724 2019 -9-