Legislation adds $1 million annually to available credits
The Nebraska Legislature advanced a bill today that would increase the amount of tax credits available to angel investors. LB 156, introduced by Sen. John Stinner of Scottsbluff, moved to the second stage of consideration without opposition.
Stinner said the tax credit has a demonstrated record of success and needs to be expanded.
“The available credits were gone by mid-July in 2012, mid-April in 2013, and January 1 the past two years,” he said. “The demand clearly exceeds the available credits.”
The angel investment tax credit was part of a package passed in 2011 to expand the tools available to the state in promoting development and investment in high-growth companies, particularly in the technology sector. The initial proposal included $5 million annually for the credit, but budget constraints led the Legislature to reduce the amount to $3 million per year.
As introduced, LB 156 would raise the credit by $2 million annually to the original proposed level of $5 million. However, the Legislature’s Revenue Committee reduced the proposed increase to $1 million, or a total of $4 million per year.
Sen. Mike Gloor of Grand Island, Revenue Committee Chair, acknowledged the demand.
“The credit has been ‘sold out’ every year,” he said. “The committee wants to see how we do with an additional million. If the demand is there we can consider raising it again.”
Amendment added to evaluate credit’s value
An amendment was adopted that would direct more detailed reporting from participating businesses and investors.
“I’ve been disappointed in the quality of information we receive to evaluate the program,” Stinner said. “The credit is scheduled to sunset in 2019 so we will have three more years to evaluate.”
The state Department of Economic Development has not been given sufficient authority to gather and report information on jobs created, wage levels, and other details that demonstrate the program’s value. The amendment will provide that authority.
Information gathered with the assistance of Invest Nebraska and research staff at UNL and UNO suggest that the credit is having the desired impact. Estimates indicate the direct and indirect creation of about 500 jobs with an average salary of over $60,000.
The amendment also requires companies to report non-qualified revenue, including government grants and loans. Sen. Sue Crawford of Bellevue asked about the purpose of collecting this information.
“Why is this important?” she asked. “Will this give some indication if the angel investment credit is leveraging other sources of capital?”
Stinner replied that it would.
“This bill is getting the attention of investors across the Nebraska,” he said. “It keeps investment capital in the state instead of sending it to Wall Street, creates jobs and helps rebuild the middle class.”
LB 156 faces two more rounds of consideration before final passage.