SB70 - Modifies the BUILD tax credit program, tax increment financing, the quality jobs program, the local economic development sales tax, and health insurance claims history
SB 70 Modifies the BUILD tax credit program, tax increment financing, the quality jobs program, the local economic development sales tax, and health insurance claims history
Sponsor: Shields
LR Number: 0405L.05C Fiscal Note: 0405-05
Committee: Economic Development, Tourism & Local Government
Last Action: 5/13/2005 - H Calendar S Bills for Third Reading w/HCS Journal Page:
Title: HCS SCS SB 70 Calendar Position:
Effective Date: August 28, 2005

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Current Bill Summary


HCS/SCS/SB 70 - The act authorizes any city or county to levy a 0.5% sales tax upon voter approval. This tax must be in lieu of the economic development sales tax allowed by sections 67.1300 and 67.1303. Revenue from this tax is deposited by the director of the Department of Revenue in the city or county's local option economic development sales tax trust fund. The funds are not considered state money. The city or county must establish an economic development tax board. Each year, The Department of Economic Development must submit to the Joint Committee on Economic Development by March 1 of each year a one-page report summarizing the status of each project using this sales tax.

The act puts a cap on disbursements from the Missouri Supplemental Tax Increment Financing (TIF) fund combined with the annual amount approved for disbursement from the State Supplemental Downtown Development Fund not to exceed $140 million.

The act allows the state to ask that the reasonably incurred expenses of the departments of Economic Development and Revenue for the administration of the TIF projects be reimbursed from the revenues deposited into the Missouri Supplemental TIF Fund.

The act authorizes certain development agencies or a corporation, a limited liability company, or partnership that is formed on behalf of the development agency to act as an eligible industry for the purposes of the Business Use Incentives for Large-Scale Development (BUILD) Program.

The act reserves $950,000 of the $15 million in tax credits authorized annually for the BUILD for an approved project in the City of Kansas City.

The act expands the definition "computer programming" corporation to include Internet, web hosting, and other information technology for the purposes of disbursement of tax credits for industry in a distressed community.

The act requires any health carrier that provides group health insurance plans or health benefits to an employer to provide a statement of the annual claims history for the last three years to the employer upon request of that employer. There are various rules relating to the nature and content of the information.

The act establishes the Missouri Quality Jobs Program to provide incentives to businesses in return for the new tax revenues and other economic stimulus that will be produced by the new jobs created as a result of the program (Section 620.1875);

The act prohibits any qualified company that receives benefits through the program from receiving the following tax credits or exemptions for the same new jobs at the project facility: New or Expanded Business Facilities, Enterprise Zones, Relocating a Business to a Distressed Community, and Rural Empowerment Zones (Section 620.1881);

The act defines four different project types:

(1) Small and expanding business projects are those which create at least 20 new jobs in two years if the project is located in a rural area or 40 new jobs in two years if the project is located elsewhere. In either case, the business cannot have more than 100 total employees. Qualified companies of this type may retain for three years an amount equal to the withholding taxes from the new jobs if the average wage of the new payroll equals or exceeds the county's average wage. If the average wage of the new payroll is at least 120% of the county's average wage, the qualified company may retain the amount for five years.

(2) Technology business projects are those which create a least 10 new jobs within two years. Seventy-five percent of the jobs must be directly involved with the operations of the technology company, as determined by the Department of Economic Development. Qualified companies of this type may retain for five years an amount equal to a maximum of 5% of the new payroll from the withholding tax of the new jobs if the average wage of the new payroll equals or exceeds the county's average wage. An additional 0.5% of new payroll may be retained if the average wage of the new payroll exceeds 120% of the county's average wage in any year. If the average wage of the new payroll exceeds 140% of the county's average wage in any year, an additional 0.5% may be retained.

The department will issue a refundable tax credit for any difference between the amount of benefit allowed and the amount of withholding tax retained by the company, in the event the withholding tax is not sufficient to provide the entire benefit due to the qualified company. The maximum amount of tax credits that can be issued to this type of qualifying company in a calendar year is $500,000. This tax credit cannot be carried forward but can be sold. A refund will be issued to the qualified company if the credits exceed the company's tax liability.

(3) High-impact projects are those which create at least 100 new jobs within two years. Qualified companies of this type may retain an amount from the withholding tax of the new jobs equal to 3% of new payroll for a period of five years if the average wage of the new payroll equals or exceeds the county's average wage. A qualified company may retain 3.5% of new payroll if the average wage of the new payroll in any year exceeds 120% of the county's average wage or 4% of the new payroll if the average wage in any year exceeds 140% of the county's average wage. An additional 1% of new payroll may be added to these percentages if local incentives are between 10% and 24% of the new direct local revenues. An additional 2% of new payroll may be added to these percentages if the local incentives equal 50% or more of the new direct local revenue. An additional 3% of payroll is added to these percentages if the local incentives are 50% or more of the new direct revenue.

The department will issue a refundable tax credit for any difference between the benefit allowed and the withholding tax retained by the company in the event the withholding tax is not sufficient to provide the entire benefit due to the qualified company. The maximum amount of tax credits that can be issued to this type of qualifying company in a calendar year is $750,000. This amount can be increased to $1 million if the action is proposed by the department and approved by the Quality Jobs Advisory Task Force. This tax credit cannot be carried forward but can be sold. A refund will be issued to the qualified company if the credits exceed the company's tax liability.

(4) Job retention projects are those in which the qualified company has employed at least 1,000 full-time, year-round employees during the two years prior to the year in which the application for the program is made. The average wage for these employees must be greater than the county's average wage and the same level of full-time, year-round employees must be retained after the application is made. The qualified company will make a $70 million investment within two years of making an application for the program. Local taxing entities must provide local incentives of at least 100% of the new local revenues created by the project for 10 years.

The job retention tax credit will be up to 50% of the withholding tax generated by the full-time, year-round employees at the project facility for five years. The maximum amount of tax credits that can be issued to this type of qualifying company in a calendar year is $750,000. This amount can be increased to $1 million if the action is proposed by the department and approved by the Quality Jobs Advisory Task Force. The total amount of tax credits issued for all job retention projects cannot exceed $3 million annually and no tax credits will be issued to these projects after August 30, 2007. This tax credit cannot be carried forward but can be sold. A refund will be issued to the qualified company if the credits exceed the company's tax liability.

The act requires qualified companies to provide an annual report to the department documenting the basis for the benefits of this program.

The act stipulates that the maximum amount of tax credits that can be issued in a calendar year for the entire program is $12 million. The bill reduces the annual amount of tax credits that can be authorized for relocating a business to a distressed community from $10 million to $8 million and specifies that the remaining $2 million must be transferred to the program. There is no limit on the amount of withholding taxes that may be retained by approved companies under the program.

The act establishes the Quality Jobs Advisory Task Force consisting of the chairperson of the Senate's Economic Development Committee, the chairperson of the House of Representative's Economic Development Committee, the minority floor leader of the Senate, the minority floor leader of the House of Representatives, the Director of the Department of Economic Development, and two members to be appointed by the Governor.

The act requires the department to submit an annual report to the General Assembly by March 1 of each year. The substitute specifies the requirements of the report (Section 620.1890);

The act authorizes the department to charge the recipient of any tax credit a fee in an amount of up to 2.5% of the amount of the tax credits issued. The fee must be paid when the tax credits are issued, however, no fee will be charged for Youth Opportunities and Violence Prevention, Family Development Account, or Neighborhood Assistance tax credits.

The act establishes the Economic Development Advancement Fund, into which all fees for tax credits will be deposited. At least 50% of the money in the fund will be appropriated for marketing, technical assistance, training, contracts for specialized economic development services, and new initiatives and pilot programming to address economic trends. The remaining money may be appropriated to pay for staffing, operating expenses, and accountability functions of the department.

ANDY LYSKOWSKI