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A legislative audit showed the steep price of creating some jobs under the Nebraska Advantage Act.

In the wake of a new legislative performance audit that focused on the higher-than-expected cost of Nebraska's business attraction and development tax incentive program, Sen. Mark Kolterman of Seward argued Tuesday that the state dare not abandon that competitive playing field.

"We have a workforce and tax crisis in this state," Kolterman said.

"Nebraska must make policy decisions with an emphasis on making our state more competitive for businesses and boosting economic growth in urban and rural areas."

The current tax incentive program, known as Nebraska Advantage, is due to expire at the end of next year, and Kolterman is the chief sponsor of a new business incentive package that is being held by the Legislature's Revenue Committee.

That bill (LB720), dubbed the Imagine Nebraska Act, is co-sponsored by 22 other senators. 

But the proposal was not enthusiastically received by a number of committee members who questioned the relative costs and benefits of the program during a public hearing five weeks ago.

The performance audit of the current program, issued last week, may have complicated the challenge.

That audit showed that the current business attraction program has a larger-than-expected impact on the state budget, Legislative Performance Audit Committee Chairwoman Suzanne Geist of Lincoln said in issuing the report.

"With the increased public interest in the cost of incentives and a major overhaul currently being discussed in the Legislature, the release of this report will help create a much-needed discussion about tax incentives going forward," Geist said.

The cost of jobs created was estimated to range between $5,159 and $208,559 per full-time employee.

As of Dec. 31, 2017, some 140 Nebraska Advantage projects reviewed in preparing the report had earned $1.2 billion in benefits, with $497 million in benefits yet to be earned.

Kolterman said he believes the legislative audit is "an incomplete depiction of the performance of the Nebraska Advantage Act, as its conclusions are based on broad assumptions supported by incomplete data.

"Each job created and every dollar invested adds revenue to Nebraska's tax rolls and generates economic activity in the state," he said.

"Focusing only on tracking companies new to Nebraska misses another key element of our incentives — growing Nebraska companies in our state is just as important as recruiting new ones," Kolterman said.

"Retaining our homegrown companies and making sure they expand and grow in Nebraska is a measurement of success."

Business incentives amount to less than 3% of Nebraska's general fund budget, he said.

Under terms of his bill, tax benefits would be targeted according to a range of factors, including the number of jobs created, expanded employment, the amount of investment and wage figures tied to the project.  

"We need to focus on the current crisis and the war to keep our kids in this state," Kolterman said. 

"It is critical we have a performance-based incentive program that allows Nebraska to compete in this global economy," he said. 

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Reach the writer at 402-473-7248 or dwalton@journalstar.com.

On Twitter @LJSDon.

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Political reporter

Don Walton, a Husker and Yankee fan, is a longtime Journal Star political and government reporter.

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