Nebraska: Planting Seeds For Sustainable Growth
Governor Dave Heineman’s long-term approach has put in place a solid foundation for a thriving, diversified economy with a home-grown workforce.
Nebraska Gov. Dave Heineman likes to take the long view. Since taking office in 2005, Heineman has methodically moved forward with a series of initiatives designed to position his state for years of prosperity.
He has championed an innovative and expanding incentives program, Nebraska Advantage, which rewards businesses willing to put down roots, create high-paying jobs and make a long-term commitment. As target growth industries mushroom across the state, including biotech, telecom, data centers, financial services and insurance, the governor is making sure that young Nebraskans entering the workforce have the skills to match these new high-wage jobs.
Heineman summarized his philosophy in an interview with Business Facilities: “We’re trying to think long term,” he said. “We give our children the best education we can and then create the high-paying jobs that are going to keep them in Nebraska.”
Building on the success of the incentives program, Heineman signed into law a sixth tier, known as Nebraska Super Advantage, which specifically rewards 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. 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.
The job-creation track record—often meaning jobs paying $50,000 or more—thus far has been impressive. Nebraska Advantage has played a key role in luring major players like Paypal, Kawasaki, and Verizon to the state. Assurity Life Insurance put its $32-million headquarters in Lincoln, and Danish biotech giant Novozymes is building a $100-million enzyme production plant in Blair. In February, Gov. Heineman cut the ribbon for Yahoo’s new data center in the Omaha metro area. Last fall, another high-tech megadeal was inked when Dell purchased one of Lincoln’s largest employers, Perot Systems, for $3.9 billion, creating 200 new jobs.
“With Tier 6, we’re creating a long-term partnership with businesses. We’re making policy decisions that aren’t based on the next quarter, but on the next year, five years, or 10 years, says Richard Baier, Nebraska Department of Economic Development director. “And we’re seeing companies like Yahoo suddenly say let’s not just bring the data center, let’s bring our customer care, our technical assistance, and our sales department with it—400 great-paying jobs in a high-tech industry.”
BUILDING AN ALTERNATIVE ENERGY POWERHOUSE
On the energy frontier, Nebraska has long enjoyed some powerful advantages. It is the only state in the nation with a 100-percent public power system, enabling it to hold down energy costs for manufacturers. And the Cornhusker State naturally took a leadership position when the nation’s alternative energy strategy was centered on corn-based ethanol.
However, as solar energy, wind energy and cellulosic ethanol have moved into the forefront of the alternative energy juggernaut, Nebraska has confronted some unique challenges.
While its geographic position in the center of the U.S. “wind corridor” should make it a wind-power generation leader, the state is not among the top 15 in wind energy. Nebraska’s public power system is one the stumbling blocks, because federal tax incentives for alternative energy projects have been targeted to private rather than public power initiatives.
With his forward-thinking approach, Gov. Heineman has anticipated this challenge and moved to meet it. He recently signed legislation enabling the Nebraska Public Power Review Board to approve private projects and exempt from property taxes private concerns who export power from the state. The legislation also permits the use of eminent domain to establish new transmission lines. Baier says the state is working to establish public-private partnerships in which transmission costs for wind power projects are shared.
“It’s been a challenge, because we’re a public power state and it’s private incentives, but we now have the legislation in place that will accelerate our wind energy development,” Heineman says. “I think the private developers are excited now about the potential of new developments in Nebraska. I just came from a meeting with about 250 landowners who are organizing in one of our counties to promote wind energy.”
According to Baier, wind-power developers will be required work with power districts to share transmission costs and to make sure they have adequate connections to the state’s power grid.
“If you live in a place where the generation and the transmission are owned separately, [you may have] rolling blackouts and cost increases,” Baier says. “We get the luxury of having the best of both worlds.”
Heineman says he is confident that “by 2020, Nebraska will be among the top 10 wind energy states, if not sooner.” The governor believes the United States can meet a national renewable energy target of 25 percent by 2020; however, he adds that he is not planning to push for any mandatory targets in Nebraska.
“My citizens and I are not big on telling each other what we’ve got to do in the marketplace,” Heineman explains. “Nebraska’s a state that prefers voluntary targets rather than mandatory, so that is always a difficult issue for us. I believe we can compete and we’ll get there.”
The governor also is confident Nebraska can maintain it’s ethanol production leadership, even as advanced cellulosic biofuels move into the market.
“Corn-based ethanol will continue to be a strong component of the overall ethanol industry,” he says. “We’ve attracted a company from Denmark, Novozymes, that is going to be a leader in cellulosic ethanol. So I believe we’re poised to take advantage of both [forms of ethanol}. We are looking at ethanol, wind, solar, biodeisel, all of these opportunities.”
Heineman says Nebraska will have an alternative energy strategy that plays to the state’s strengths. “Those areas are areas where we can capitalize. Other states will do it a little differently, depending on their resources,” he says.
RELATIONSHIPS THAT SPAN THE SEAS
Gov. Heineman has conducted foreign trade missions to Japan, Taiwan and even Cuba, nailing down lucrative in agricultural contracts for Nebraska. International trade creates more than $ 5 billion in annual revenue for the state, and Heineman has set up permanent state trade offices in Japan and China.
He also succeeded in luring 150 overseas business and government representatives to a “reverse trade” mission in Nebraska.
“We were told that if we succeeded in getting 25 or 30, we’d be pretty lucky,” Heineman recalls.
The reverse-trade summit exceeded expectations to the point that it will now be held every two years.
As in other aspects of his program, Gov. Heineman takes the long view when it comes to international trade. He intends to continue to expand Nebraska’s trade horizons.
“While other states are pulling back on international trade offices and their financial support for them, we aren’t doing that,” Heineman says. “It’s all about relationships. If you don’t keep those relationships strong and vibrant, you start all over again in two or three years.”
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