Job growth proposal gets debated
March 7th, 2011
Lincoln, NE – The Legislature has begun debate on subsidizing investments in high-tech start-up companies. The idea is being promoted as an aid to economic growth.
The proposal is part of Governor Dave Heineman’s economic development strategy. It would provide tax refunds of up to 40 percent on investments in fields the bill defines as high technology, ranging from aerospace and nanotechnology to energy conservation and agricultural processing. If someone invested $100,000 in an approved company, he would get back whatever profit he made, plus up to $40,000 from the state.
Senator Galen Hadley of Kearney was among the supporting senators who argued that the state should step in where the private sector has not.
“Risk capital for new ventures has dramatically shrunk over the last 18 months,” Hadley said. “Tax credits are a way to incentivize the movement of risk capital.”
Senator Chris Langemeier of Schulyer was skeptical. He noted that funding for the bill would come from diverting up to $3 million a year from existing programs aimed at rural Nebraska. And Langemeier alluded to the high failure rate of start-up businesses, suggesting this was not the right time to embark on this new program.
“This is a year when we’re going to have to make serious cuts and serious priorities,” he said. “I’m not sure putting $3 million in the lotto machine and pulling the trigger and hoping that that 20 percent success rate is great.”
Under questioning by Sen. Tom Carlson of Holdrege, Senator Abbie Cornett of Bellevue, who introduced the bill for the governor, said she’d consider amending it to make sure a certain amount of the credits went to rural Nebraska. The Legislature then adjourned for the day without reaching a first-round vote on the bill.
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