Summary of the Perfected Version of the Bill

HB 1455 -- ECONOMIC DEVELOPMENT (Gatschenberger)

COMMITTEE OF ORIGIN: Committee on Economic Development

This bill changes the laws regarding the Manufacturing Jobs Act,

the Missouri Job Development Fund, and economic development.

Currently, an economic development tax board established by a

city consists of five members. The bill specifies that a board

must consist of at least five members but may be increased to

nine. The number of members must be designated in the order or

ordinance imposing the sales tax authorized under Section

67.1305, RSMo. One member of a five-member board or two members

of a nine-member board must be appointed by the school districts

within any economic development plan or the area funded by the

sales tax. Three members of a five-member board or five members

of a nine-member board must be appointed by the chief elected

officer of the city with the consent of the majority of its

governing body. One member of a five-member board or two members

of a nine-member board must be appointed by the governing body of

the county in which the city is located. If a board is already

in existence, any increase in the number of members must be

designated in an order or ordinance. The bill also specifies the

terms and election cycle for appointing the additional members.

The bill increases the annual fee for an alternative fuel decal

from $75 to $140 for a passenger vehicle, school bus, or a

commercial vehicle with a gross vehicle weight of 18,000 pounds

or less, from $100 to $185 for a licensed farm vehicle with a

gross vehicle weight greater than 18,000 pounds but no more than

36,000 pounds, from $150 to $280 for a vehicle with a gross

vehicle weight greater than 18,000 pounds but no more than 36,000

pounds and for a passenger-carrying vehicle, from $250 to $470

for a licensed farm vehicle with a gross vehicle weight greater

than 36,000 pounds, and from $1,000 to $1,880 for a vehicle with

a gross vehicle weight greater than 36,000 pounds. The fee for a

temporary decal for a nonresident’s vehicle is increased from $8

to $12. For all new alternative fuel or hydrogen-powered

vehicles assembled in Missouri, the first year’s decal fee must

be one-half of the fees as proposed under these provisions.

The Department of Economic Development must require applicants

for economic development assistance to provide third-party

verification of financial information when it is submitted to the

department and may require key officers of any start-up company

who is applying for assistance to pay the fees for any background

check.

The department must share all information it has about a company

seeking economic development incentives with all local governments and economic development officials competing for the

company’s business. Local governments and economic development

officials must also share all negative information they receive

about a company;

The department must develop a five-star system to apprise local

governments of the department’s opinion on proposals for economic

development incentives that combine local and state resources.

The bill requires the department to make efforts to prioritize

the use of funding under the Missouri Job Development Fund to

assist qualified suppliers as defined in the bill.

The bill changes the job retention provisions in the Missouri

Quality Jobs Act. The bill:

(1) Allows a qualified company to receive a tax credit for

workforce training if the company and the project meet specified

conditions;

(2) Changes the requirement that a qualified company has been

determined to represent a substantial risk of relocation to

include a company that has been determined to represent a

substantial risk of quality job loss;

(3) Reduces, from $70 million to $50 million, the amount of

investment that a qualified company must make and increases, from

two years to five years, the time period for making the

investment and removes the option of making a $30 million

investment over two years and maintaining at least an annual

payroll of at least $70 million and makes the $70 million annual

payroll a requirement for every qualifying company;

(4) Extends the date that a tax credit can be issued for a

project if it has been approved by the department from August 30,

2013, to August 30, 2018; and

  

(5) Authorizes economic incentives for job retention projects

for a qualified company that meets certain requirements if the

department determines that there is a significant probability

that the qualified company would relocate to another state in the

absence of the benefits. The economic incentives can be in the

form of retaining taxes otherwise withheld from full-time jobs or

a tax credit. Prior to the award of any benefits, the department

director must notify the President Pro Tem of the Senate and the

Speaker of the House of Representatives of the amount of the

award and other specified information unless the disclosure is

otherwise protected by law. In order to receive withholding tax

retention benefits, the qualified company must retain at least

125 full-time employees for a period of 10 years from approval of the notice of intent, make a new capital investment at the

project facility within three years from approval of the notice

of intent in an amount equal to 50% of the total withholding tax

retention benefits, and enter into a written agreement with the

department containing detailed performance requirements and

repayment penalties in the event of nonperformance. If a

qualified company meets these requirements, it may be authorized

to retain up to 100% of the withholding taxes from full-time jobs

for a period of 10 years if the average wage of the retained jobs

equals or exceeds 90% of the county average wage. The aggregate

amount of retained withholding taxes authorized is limited to $6

million for each fiscal year beginning on or after July 1, 2012.

The bill specifies the factors that the department must consider

in awarding withholding tax retention benefits. Beginning

January 1, 2013, but ending on or before December 31, 2014, in

lieu of the withholding tax retention benefits, the department

may authorize a qualified company a one-time tax credit in an

amount up to 7% of new payroll from the new jobs created over a

five-year period or up to 9% if the qualified company is in a

targeted industry as identified by the department by rule

following a specified process. The qualified company must also

enter into a written agreement with the department covering the

applicable project period which contains detailed performance

requirements; the time period during which the tax credits will

be issued; repayment penalties, including recapture of the tax

credits, in the event of nonperformance; and other specified

information. The total credits authorized cannot exceed $10

million annually. A qualified supplier is allowed, with approval

of a notice of intent by the department, to retain an amount

equal to a maximum of 5.5% of new payroll for a period of five

years from the date the required number of jobs were created in

this state from the withholding tax of the new jobs that would

otherwise be withheld and remitted by the qualified supplier if

the average wage of the new jobs equals or exceeds the county

average wage. An additional .5% of new payroll may be added to

the 5.5% maximum if the average wage of the new jobs in any year

exceeds 120% of the county average wage in the county in which

the project facility is located, plus an additional .5% of new

payroll may be added if the average wage of the new jobs in any

year exceeds 140% of the average wage in the county in which the

project facility is located. The department must issue a

refundable tax credit for any difference between the amount of

benefit allowed and the amount of withholding tax retained by the

qualified supplier in the event the withholding tax is not

sufficient to provide the entire amount of benefit due to the

qualified supplier. Any tax credits issued under these

provisions must be subject to specified provisions of the

Missouri Quality Jobs Act in Section 620.1881, RSMo. If a

qualified supplier also participates in the New Jobs Training

Program in Sections 178.892 to 178.896, the company must retain no withholding tax, but the department must issue a refundable

tax credit for the full amount of benefit allowed under these

provisions. The calendar year annual maximum amount of tax

credits which may be issued to a qualified supplier that also

participates in the New Jobs Training Program must be increased

by an amount equivalent to the withholding tax retained by that

company under the New Jobs Training Program. If combined

benefits of this program and the New Jobs Training Program exceed

the projected state benefit of the project as determined by the

department through a cost-benefit analysis, the increase in the

maximum tax credits must be limited to the amount that would not

cause the combined benefits to exceed the projected state

benefit.

The bill allows a company that no longer qualifies under Section

620.495 to apply for a loan if it can demonstrate specific

economic growth.

The department must include a conflict of interest policy in all

new consulting contracts for trade offices located in foreign

countries.

FISCAL NOTE: Estimated Net Effect on General Revenue Fund of an

income of $0 or a cost of $68,405 in FY 2013, an income of $0 or

a cost of $74,352 in FY 2014, and an income of $0 or a cost of

$75,152 in FY 2015. Estimated Net Income of Other State Funds of

Less than $100,000 in FY 2013, FY 2014, and FY 2015.

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