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A proposed constitutional amendment authorizing lawmakers to extend tax-increment financing benefits for areas deemed "extremely blighted" was shelved after reaching the three-hour limit on debate Tuesday.

Omaha Sen. Justin Wayne said the change (LR14CA) would allow the Legislature to expand TIF benefits from 15 to 20 years, providing an incentive for developers to take on projects in areas with high poverty and unemployment rates.

Tax-increment financing diverts taxes paid on improved properties to fund infrastructure improvements such as streets, water and sewer lines over a 15-year period, after which the properties return to the tax rolls.

Opponents of the proposal, which would go before Nebraska voters in November 2020 if passed, said without including a clear definition of "extremely blighted," it runs the risk of future lawmakers expanding TIF benefits even further.

Near the end of Tuesday's debate, Speaker Jim Scheer told Wayne to find an amendment that added the controls that primarily rural opponents to the proposal sought, but Wayne said after the debate the speaker's request was a nonstarter.

"There's no amendment that's acceptable," he said.

Under existing state law, "extremely blighted" areas are those where the average unemployment rate is 200 percent the state average, and the annual poverty rate is 20 percent of the surrounding area based upon the most recent census data.

Scheer said without "some type of parameters" placed into the state constitution, state lawmakers and city councils could extend all TIF projects from 15 to 20 years, effectively removing the incentive Wayne hoped to create for areas in desperate need of redevelopment.

Wayne countered, saying any bill passed by this Legislature — including major property tax reform, which will hit the floor in the coming weeks — could be undone by future Legislatures.

"We have to have some faith that future bodies can do something great for this state," he said.

By keeping the definition in state statute, which the Legislature can change through its normal legislative processes, instead of in the state constitution, which can only be changed by a vote of the people, lawmakers can react quickly to changing situations.

Putting one definition into state law creates two sets of standards based upon where the blighted areas are located, Wayne added.

"In order for North and South Omaha to have some development, it needs to be in the constitution and federally defined, but everywhere else is just defined by statute," he said. "I have a huge problem with that."

When the Legislature reached the three-hour time allotment, Scheer said he believes LR14CA "has the potential to be amended" to assuage opponents.

"I'm not trying to kill this, but I do want to have some type of amendment, whatever that might be, that can possibly have the controls that many of us are looking at," he said, "and not dilute into areas not originally intended."

Scheer said later he hopes Wayne can work out an agreement with Sen. Mike Groene of North Platte and other opponents within the next week.

Wayne said he believes he has the votes needed to defeat a filibuster and move the proposed constitutional amendment out of the first round of consideration, but said getting it back on the schedule "is up to the speaker."

"For two years, this body has asked me 'What can we do for North Omaha?'" Wayne said, indicating the debate may shape how he approaches the coming discussions about property tax reform. "Clearly, any idea I bring doesn't meet what they want."

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Reach the writer at 402-473-7120 or cdunker@journalstar.com.

On Twitter @ChrisDunkerLJS.

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Higher education reporter

Chris Dunker covers higher education, state government and the intersection of both.

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