Critical that Nebraska has “stepped back” from its award-winning focus on economic development, Omaha area business leaders have launched an offensive plan to regain a competitive edge.
The Greater Omaha Chamber of Commerce today released a 24-page “Omaha Competes” report that urges major updates to the state’s key business incentive program and outlines strategies to help reverse what it says is a trend pushing quality jobs and talent elsewhere.
“Nebraska is at a crucial moment in its approach to economic development,” begins the report that included participation from the Omaha Mayor’s Office, Omaha Public Power District and numerous corporations.
The recommendations will be used to form legislative and policy proposals and guide the chamber’s outreach and programming over the next few years, said Heath Mello, president and CEO of the chamber, which represents corporate and business interests in the state’s largest metro area.
Authors describe state business attraction efforts as having retreated since hitting a “high water mark” from about 2016 to 2019. That period, which the report described as one of “better jobs, stronger communities and more robust budget revenue,” was reflected in a three-year streak of winning Site Selection Magazine’s “Governor’s Cup.”
That award recognizes states with the most qualifying new and expanded facilities per capita, based on criteria such as capital investment and new jobs. The chamber said the business climate during that previous stretch, which was during the administration of then-Gov. Pete Ricketts, benefited from “alignment between the state’s executive branch, legislature and business community.”
Freeze, sweep, cut
In more recent years, however, the report asserts that economic development efforts have taken a back seat to other priorities. It pointed out that the Nebraska Department of Economic Development has reduced staffing and asserted that DED has shifted away from its “historic role as a proactive, pro-growth partner.”
The Nebraska Examiner has reported that the DED team responsible for economic development across the state dropped by 22 full-time employees over the past couple of months.
Chamber officials said that at a time when other states have cranked up incentives, they have watched Nebraska freeze, sweep or cut resources in several economic development programs due to budget shortfalls.
Gov. Jim Pillen’s administration has defended some of the program trims to find savings that helped balance the budget and provide support for other priorities, including property tax relief for Nebraskans.
He has said in appearances speaking to business groups that some of the state’s incentive programs are not needed, maintaining that the state should not be subsidizing activities that the private sector could handle on its own.
During recent conflict over a legislatively-approved incentive designed to help pay for sports complexes, Pillen said the state for too long has been “duped” in approving sales tax exemptions he believes only shift the burdens to property taxes.
Supporters tout that Sports Arena Facility Financing Assistance Act as a way to spur economic development. Pillen, whose green light is necessary to unlock the incentive for individual proposals, said he won’t consider approval of any further projects until after the next legislative session during which he hopes to see lawmakers pass property tax relief.
Pillen, a former University of Nebraska regent, has argued that the state should focus more attention on emphasizing its strengths in areas like agribusiness and logistics and helping homegrown businesses seed and grow in the state.
“The result is clear: Nebraska now trails its neighbors in both new job creation and population growth,” said the Chamber report, citing the annual “economic scorecard” it issued in September. The Aksarben Foundation has released separate studies with similar findings.
Had Nebraska matched the growth in peer states, the chamber report said, Omaha and Lincoln would have roughly 68,000 additional jobs that would have produced about $11 billion in wages and up to $800 million of additional tax revenue.
Fertile for growth
The chamber is commissioning a deeper examination of “brain drain” — a term referring to the exodus of people with a bachelor’s degree or higher — that will be released early next year.
Other related efforts are ongoing, including the Aksarben Foundation’s recent formation of the Strengthening Nebraska Families, a nonprofit expected to educate and stir action to elevate the state’s competitiveness.
In preparing the Omaha Competes agenda, the chamber assigned working groups to explore key areas: talent retention and recruitment, and business growth.
They found that despite a relative job growth lag, Nebraska still has fundamental strengths required for long term success, such as high labor force participation, strong educational attainment and quality of life.
The report makes numerous recommendations, urging, for example, an update and revamp of the state’s flagship business incentive program. That ImagiNE Nebraska Act, enacted in 2020, which replaced the Nebraska Advantage Act.
The chamber characterized elements of the program as “cumbersome.” Users told task force members they faced a “bureaucratic maze” in accessing the tax breaks and an average 10-month wait between application and approval.
In contrast, the report identifies peer programs in competing states it says act quicker. “Other states are able to provide access to cash upfront.”
Highlighted in the report are successes in places such as North Carolina, Georgia, Kansas, Texas and Virginia — in program areas such as site development funding, discretionary closing tools, customized workforce training and biotechnology investment.
“The analysis recognizes that incentives are now basic table stakes and that Nebraska’s current structure is slower, less flexible and less valuable than those in many peer states,” the report said.
Mello, in a prologue, said “countless hours” of meetings and research informed Omaha Competes recommendations. He said goals are to have properties teed up for development, public incentives and a business climate that grows top-notch talent.
“States across the country are moving faster, building stronger systems and signaling that they are ready for the next generation of jobs and talent,” he said. “Nebraska must match that ambition.”
Budget constraints
Chamber officials are in “constant communication” with the state DED, Mello said, adding that an “integrated partnership” is crucial to recruitment and retention of business.
A former state senator, Mello acknowledged that the state’s current budget shortfall limits what policy objectives can be won, at least in the short term. The projected state budget deficit stands at $471 million, which lawmakers must fill before the soon-to-begin 2026 legislative session concludes.
“We will be thoughtful about how and when we take certain proposals to the Legislature to be sensitive to those fiscal challenges,” he said.
Among changes the chamber report proposes: a public tax incentive to relocate employees to Nebraska to fill new jobs; increase credit values to levels competitive with other states; remove a cap that limits the ImagiNE program to 3% of gross receipts; make credits transferable; expand a revolving loan fund partly to help finance essential extensions of utilities to be repaid with ImagiNE credits.
In addition, the task force groups called for reinstatement or full restoration of entrepreneurial tools such as the Angel Tax Credit, which was eliminated by legislation in 2019 during Ricketts’ tenure, and the Business Innovation Act, which funds entrepreneurial-centric programs but was reduced during the past legislative session.
The chamber also urges new tools to finance “shovel-ready” industrial sites and the use of Sales Tax and Revenue (STAR) Bonds. The report’s authors likened STAR bonds to tax-increment financing. Given the power, municipalities would issue such bonds to finance development of commercial, entertainment and tourism projects. Bonds are paid off through the sales tax revenue generated by the development.
States across the country are moving faster, building stronger systems and signaling that they are ready for the next generation of jobs and talent. Nebraska must match that ambition.
– Heath Mello, CEO of Greater Omaha Chamber
A section of the Omaha Competes report focused on the state’s persistent “brain drain” struggle, particularly among young professionals ages 20 to 34.
From 2010 to 2020, the report said, Nebraska lost an average of nearly 6,000 residents annually to other states. While out migration improved in 2023, talent flight continues “to constrain employer growth and discourage new investment.”
To attract an educated workforce, the group is calling for state-supported relocation assistance and a unified rural relocation system modeled after a Kansas program.
For retention, it proposed such initiatives as a graduate transition and housing pilot modeled after West Virginia’s “First Ascent” program, which offers short-term housing, coworking space, mentorship and social integration for recent graduates to create a “soft landing” in the Nebraska.
The chamber report urged reinstatement of funding for InternNE — calling it the cornerstone of the state’s “brain gain” strategy. It referred to an interim study led by Sen. Jason Prokop of Lincoln this year, saying that findings reaffirmed the program’s importance.
Authors of the report urged the state to modernize a “fragmented approach to job training” and to look to North Carolina and Louisiana for examples. Those state programs work directly with employers and community colleges to design and deliver training from start to finish, the report said, producing a “proactive economic development tool rather than a reactive grant process.”
The Cornhusker state’s drift from a nationally recognized focus on economic development “was not an accident,” the report said, contending that it came as “posture shifted from assertive to reactive.” It urged a course that “reasserts” more emphasis on economic development.
“Nebraska has led before,” the report stated. “With these updates it can again.”