By Aaron Sanderford | Nebraska Examiner
Decision follows review of program impact, administrative freeze
OMAHA — On the same day the Greater Omaha Chamber released a report seeking updates to Nebraska business incentives, Gov. Jim Pillen announced plans Monday to restore funding to a state program that invests early in local startups.
Pillen’s proposal to restore funding to $15 million for the state’s Business Incentive Act — which provides seed capital for local businesses — reverses course on state money he previously proposed cutting. He originally proposed trims of $5 million a year and directed his Department of Economic Development to evaluate the program’s effectiveness.
Earlier this year, the Legislature accepted most of Pillen’s proposed cut. During budget negotiations, lawmakers restored about $1.25 million a year after statewide testimony from business leaders.
The state also briefly paused grants under the program late this year, spurring concerns from Nebraska’s startup community.
Research backs funding
Pillen on Monday said his team’s research now backs up what many in the business community had told him about the return on state investment, which strengthened his support for the program.
One twist: He wants to shift the state support for the program from general funds to cash funds earmarked for workforce development, which would help the state avoid increasing bottom-line spending tallies in a tight budget cycle. The “general fund” is the state’s main checkbook, mainly sales and income taxes.
Pillen said he wants the state to take a greater role in seeding such public-private partnerships with solid returns. The program returns nearly $6 private investment dollars for every $1 of state funds spent, he said.
A 2020 study of the program by the University of Nebraska-Lincoln’s Bureau of Business Research found that the program’s investments had created more than 1,100 jobs at an average wage of $67,000.
“It’s important to continually assess the performance of any government program to ensure it is making good use of taxpayer dollars,” Pillen said. “We did so, and the result is that we are going to significantly enhance and strengthen this program.”
Chamber grateful
Heath Mello, president and CEO of the Greater Omaha Chamber of Commerce, applauded the state’s embrace of the program. His group released a report this week calling on the state to modernize its business tax incentive programs, including this one.
The chamber and other business groups say the Omaha and Lincoln areas must grow faster if Nebraska wants to provide meaningful tax relief. They argue that growth needs state help.
“We have appreciated the governor’s willingness to collaborate on this issue,” Mello said in a statement. “Nebraska has seen an incredible ROI with this program and this expanded commitment will only accelerate that impact.”
Pillen did not directly address the chamber’s push to modernize state incentive programs. He has said previously that he does not want the state to fund what he believes private companies could do themselves.
The next legislative session starts Jan. 7.
Nebraska Examiner Reporter Zach Wendling and Senior Reporter Cindy Gonzalez contributed to this report.