The Legislature's Revenue Committee advanced a bill Thursday that would allow renewable energy companies tax breaks under the Nebraska Advantage Act.
The move provoked a heated response from Gov. Dave Heineman and Sen. Beau McCoy, a member of the committee.
McCoy said advancing the bill meant opening up the session for other tax changes the committee had agreed to put on hold this session to allow a special committee to study changes to the state's tax code.
"Hard-working Nebraskans that deserve tax relief are not going to get left by the wayside this session," he said.
If the committee is not going to put a freeze on all this to do a proper tax study, then he and others are going to look at all of the options for tax relief, McCoy said.
"We're going to find a lot of other worthwhile bills that help a lot of Nebraskans, and we're going to bring them to the floor, or amend it on the floor, one or the other," McCoy said.
That could include bills that would eliminate or reduce income taxes, including taxes on military retirement pay and Social Security, proposed changes that had been included in bills introduced by McCoy on behalf of the governor.
The committee killed those bills (LB405 and LB406) so it could take the rest of the year to study the state's tax code for any global changes that might be needed.
Heineman said he was disappointed the Revenue Committee chose to provide out-of-state wind energy developers a tax break but refused to provide relief to Nebraska families, seniors, veterans and small business owners.
"The Revenue Committee's priorities are misguided," he said in a news release. "Instead of carving out an exemption for out-of-state special interests, the Legislature should be working to lower the taxes of Nebraska citizens who continue to bear the burden for special interest tax breaks."
The committee voted 5-3 Thursday to advance a bill (LB104) introduced by Sen. Steve Lathrop after replacing it with a bill (LB501) introduced by Revenue Chairman Galen Hadley.
Voting to advance the bill to the full Legislature were Hadley, Omaha Sen. Burke Harr, Omaha Sen. Pete Pirsch, Sen. Paul Schumacher of Columbus and Sen. Kate Sullivan of Cedar Rapids.
Voting no were McCoy, Sen. Tom Hansen of North Platte and Sen. Charlie Janssen of Fremont.
The committee took a vote on the bill Wednesday, but it failed 4-3 to advance at that time, with one member not voting. On Thursday, Pirsch, who was the one who did not vote Wednesday, said he had more information that allowed him to vote in favor of advancing the bill.
The bill would encourage the development of alternative energy in Nebraska by adding qualifying renewable energy projects to the Nebraska Advantage Act. Hadley said it would enable Nebraska to be more competitive with other states in attracting renewable energy projects.
Those projects would produce electricity through wind, solar, geothermal, hydroelectric or biomass energy.
The state could allow a refund of sales tax to a company that qualifies. It was expected that in the next two-year budget year, if a company took advantage of a tax rebate, it could mean refunding about $7.8 million in taxes.
Several projects could be waiting in the wings for such a tax break. One of those is a $300 million wind energy export project for Dixon County. TradeWind Energy is proposing that project, which could mean hundreds of construction jobs and then 10-12 jobs when the project is complete.
Brice Barton, development manager for TradeWind Energy, testified at a February hearing that the Rattlesnake Creek wind energy export project in Dixon County was being hampered by the sales tax barrier.
Lathrop said Thursday afternoon he would prioritize the bill.
"The important thing is that we are going to put the welcome mat out to developers who will bring jobs and economic development to greater Nebraska," he said.
Lathrop said alternative energy producers don't pollute the aquifer, they are welcomed in the small communities that will prosper from the projects and they provide tremendous resources to the counties.
"There isn't a single other approach to rural economic development that is superior to this," he said.