City out $39K due to business incentive program

by Nathan Arneal
Published 1/13/21

The North Bend City Council got a surprise in late December when it received a letter from the Nebraska Department of Revenue informing the city that it will be losing $38,877 in sales tax revenue this year.

North Bend typically receives a little more than $20,000 per month in sales tax, so the deduction accounts for nearly two months of sales tax revenue for the city.

According to the letter from the Nebraska Department of Revenue, the deduction is a result of the Nebraska Advantage Act (LB 312) and Employment and Investment Growth Act (LB 775). These allow companies to apply for a sales tax refund to help offset investments they are making to expand their business or add employees.

That left the city council with all kinds of questions at its Jan. 5 meeting.

The council was unclear if the deduction was a one-time payment or if it would be recurring in future years. City clerk Theresa Busse thought it would be an annual occurrence.

The council also doesn’t know which business or businesses in North Bend are receiving the tax credits. The letter said it cannot divulge who applied for the refund because of confidentiality laws.

“We’re losing $40,000-some and really didn’t get an explanation as to why, nor did we get proof that that money was out of our tax base,” councilman Bart Bosco said. “I just can’t believe that they’ll hold $40,000 out and not tell you anything about where that’s coming from.”

The money will be deducted from the city’s sales tax revenues in November.
Councilman Ken Streff said he understood the goal of the program to encourage investment and technology growth in small towns, but he quested if North Bend was getting enough benefit to offset losing nearly one-sixth of its sales tax revenue.

“It seems to me that the whole goal is to pull technology to Nebraska,” Streff said, “but that seems like a huge negative outcome to a small town to pull two months of sales tax out. For a major corporation to do that to a small town, there’s something wrong.”

While North Bend’s sales tax is not designated for any particular purpose, it is used to fund projects that don’t have another source of funding. In the last couple of years the city has used sales tax money to repave 10th Street and to help fund flood repairs to city infrastructure.

Council members said they will do some more research on the Nebraska Advantage Act and try to figure out how it will affect North Bend in the future.

In other council business, Dodge County Emergency Manager Tom Smith and the local Natural Recourse District approached the city about making improvements on the North Bend dike along the Platte River. Specifically, four weak spots between the cutoff ditch three miles west of town to Highway 79.

The project is estimated to cost between $1 million and
$1.7 million, with the thought that FEMA would pay for 75% of it. Busse said she hoped the NRD and the city would split the remaining 25%, leaving the city in the neighborhood of $200,000 to pay.

Mayor Rod Scott said the NRD wants the city’s commitment to the project by March.

Busse said the city could probably pay for its share out of sales tax money. Several council members said it was well worth the investment if it prevents another flood and they decided it was worth moving forward with the project.

“If (the river) broke out, it would cost us three times as much,” Scott said. “Maybe more.”

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