LINCOLN — Efforts to expand a program aimed at nurturing Nebraska-based startup companies will have to wait for another year.
Nebraska lawmakers failed Friday to give first-round approval to a bill that would have boosted funding for the state's two-year-old angel investment tax credit program. But State Sen. Pete Pirsch of Omaha, the bill's introducer, said he would continue working on the idea.
He could attempt to revive the measure next year, depending on what recommendations emerge from a major tax study planned for the summer and fall.
“Angel” investors are those who provide capital for risky, new businesses.
The program provides income tax credits for such investors if they put at least $25,000 into certain types of Nebraska startup companies. Qualifying businesses must have fewer than 25 employees.
Legislative Bill 281 would have expanded the amount of tax credits to $5 million a year, the level sought by Gov. Dave Heineman when he proposed the program in 2011 as one of his talent and innovation initiatives.
Lawmakers capped the program at $3 million instead, noting that many such companies fail.
A shortage of capital for high-tech startup companies was identified as a weakness in a 2010 study of Nebraska's economic development efforts.
Pirsch argued Friday that the higher funding was needed to give the program the best chance of succeeding. He also said there has been more demand for the tax credits than money available.
This year's credits have all been spoken for already, he said. In 2011, 74 applicants sought nearly $5 million in credits for investments. Last year, 138 applicants sought about $4 million.
He asked senators to advance the bill to the second round of consideration, promising to leave it there until the tax study is finished. But Sen. Ernie Chambers of Omaha objected to the move, saying that Pirsch was trying to give his bill an advantage.
He noted that the Revenue Committee had advanced several tax exemption and tax incentive bills, even as they study whether to close tax exemptions and eliminate tax incentives.
Chambers said the committee, of which Pirsch is a member, had not given the same consideration to his bill taking away cities' ability to raise sales taxes an additional half-cent.
He said LB 281 could still be considered next year even if it remains at the first of the three required rounds of consideration. His argument apparently proved convincing. The bill got only 15 of the 25 votes it needed to advance.
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