Governor Dave Heineman takes a hands-on approach to economic development as the biggest booster for the Nebraska Advantage.
They call it the Nebraska Advantage. And if there is any question whether the label fits this multi-incentive program, consider this: since January 2006, more than 150 companies building new facilities or expanding in the state have applied for these tax credits and exemptions, investing $4.86 billion and creating 13,541 jobs.
The Advantage program includes tiers of performance-based tax breaks, job training programs and research grants for companies seeking to build in Nebraska; it also facilitates international investment. The program stands at the center of Governor Dave Heineman’s efforts to grow the state’s economy, built largely around agriculture, insurance and biotechnology.
Since taking office in 2005, Gov. Heineman has made economic vitality a top priority in Nebraska. In an interview with Business Facilities, he discussed his initiatives, which have enabled the state to thrive in the midst of a national economic downturn. Heineman says the state’s economic development program complements two of Nebraska’s biggest assets: a great quality of life and a dedicated workforce. The governor, known for his hands-on approach to ushering in new business, has made it a priority to get his message out to CEOs.
“Our people are our greatest asset in terms of their work ethic, their dedication and their commitment to the company they work for,” Heineman says. “We combine that with an increasingly competitive tax environment, lower tax rates and expanding economic incentives. We also [focus] on low energy costs and an ability to move quickly to help [companies] locate here. We continue to grow every single day.”
When he put his signature on the Nebraska Advantage, the governor sought, in part, to promote the growth of existing companies through new capital investments and to increase the number of successful start-up business ventures. The incentives portion of the package provides performance-based tax breaks to businesses, based on six tiers that relate to capital investment and job creation. On the lowest tier, businesses creating 10 new jobs and investing $1 million in capital are eligible for a refund of half the sales tax paid for qualified capital purchases on the project; a full sliding-scale wage credit of up to six percent (depending on wage level); and a three percent investment tax credit. More jobs and higher capital investments qualify companies for higher tiers, which can result in full sales tax refunds on capital purchases and higher investment tax credits.
Paypal, Kawasaki and Verizon were among the early entrants into the program. More recent examples are Assurity Life Insurance Co., which is planning to build a $32-million headquarters in Lincoln’s Antelope Valley, and Novozymes, which will build a $100-million enzyme production facility in Blair, just north of Omaha.
“This is exciting news for our state,” Heineman says. “It’s what I’ve emphasized all along. There are two issues that are interrelated: education and the economic vitality of your state. Continue to give your young people the best education you can to prepare them for a global free-market economy and a technology-driven society, and create jobs to keep young people in the state and expand middle-class job opportunities: That’s what the Nebraska Advantage is doing for us.”
Initially, the tax incentives were available to companies in four sectors – biotechnology, telecommunications, financial services and manufacturing. While biotech-related firms entering the program have invested the greatest amount of money thus far, the majority of projects have been in the manufacturing and processing industry.
In April, Heineman signed the Nebraska Super Advantage, adding a sixth tier of incentives specifically to reward all non-retail companies that create higher-paying jobs. To qualify, the new jobs must pay at least 150 percent of the state average wage, or 200 percent of the county average, whichever is greater (the state average salary is $33,800, so the new jobs would have to pay at least $50,700 to qualify). Companies that create 75 new jobs and make a $10-million capital investment – or 50 new jobs and a $100-million investment – can receive a sales and use tax refund on capital purchases; a 10-percent wage credit on new employee compensation; a 15-percent investment tax credit, and a 10-year exemption on all personal property.
Nebraska is the Second Largest Ethanol Producer
“The results have exceeded expectations for all of us who were involved in the development of the package,” says Rod Moseman, vice president of economic development for the Greater Omaha Economic Development Partnership. “Some [of those projects] are up, done and operating, and others are multi-year, even in the construction. We are definitely seeing the results.”
According to Moseman, the capital investment component of the Super Advantage is helping to draw data centers, a targeted industry for the greater Omaha area, and one that can take advantage of the state’s public energy rates, which are among the nation’s lowest. With the new higher-wage criteria, Heineman says the program is aimed at retaining the next generation of workers by providing more high-tech, information technology, and financial service jobs.
“We’re saying to potential businesses that if you will create jobs that pay twice the current average salary of any county in the state, we will provide you with more benefits, more incentives than ever before to do that,” Heineman says.”
In Omaha, Moseman notes, employers added 4,700 net new jobs during the 12-month period ending in May, and unemployment there has remained at 3.4 percent. While roughly half the Nebraska Advantage applications have been for projects in the greater Omaha area, Heineman says the program has allowed smaller communities to compete for business interest. In June, Katana Summit opened a facility in Columbus to manufacture wind turbines, a $20-million investment that created 200 jobs. Biotech firms and renewable energy facilities continue to spring up throughout the state. According to Heineman, Nebraska recently surpassed Illinois as the second-largest producer of ethanol in the U.S.
Novozymes, based in Denmark, conducted a global search for a new location and honed in on several Midwest states before picking Nebraska. The company, which will sell enzymes to corn-based ethanol makers, wanted to be near current fuel ethanol customers and well-located for future cellulosic ethanol plants, says Mark Paige, Novozymes’ vice president of technical operations, adding that the company also was drawn by “a quite attractive city” and the state’s tax incentive package.
Another economic initiative has the state providing matching grants to companies for customized job training in areas from welding skills to ethanol system operations. Meanwhile, Heineman in April also signed legislation to lower taxes for Nebraska businesses, adjusting the state’s corporate income tax bracket so that businesses will now pay a 5.58-percent tax on earnings of up to $100,000, eliminating a $50,000 cap. Earnings above $100,000 are taxed at 7.81 percent.
The governor also is aiming to expand international trade. More than 350 businesses in the state are foreign-owned, employing more than 19,000 workers. As a whole, international trade creates more than $5 billion in annual new revenue for the state. In September, the state will host a “reverse trade mission” for international companies to explore business opportunities first-hand.
Nebraska, as Heineman says, is “open for business.”
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