SENATE BILL REPORT
SB 5808
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
As of January 18, 2012
Title: An act relating to the innovative industries for economic development.
Brief Description: Concerning innovative industries for economic development.
Sponsors: Senators Kastama and McAuliffe.
Brief History:
Committee Activity: Economic Development, Trade & Innovation: 2/16/11, 1/19/12.
SENATE COMMITTEE ON ECONOMIC DEVELOPMENT, TRADE & INNOVATION |
Staff: Jack Brummel (786-7428)
Background: In 2010 the Legislature directed the Department of Commerce (Commerce) to examine agricultural commodity commissions as a model for industry support organizations. Commerce was to collaborate with industry associations on legislation that would enable industries to develop self-financing systems for addressing industry-identified issues such as workforce training, international marketing, quality improvement, and technology deployment. Commerce found that the commission model had a number of advantages including:
shared costs;
access to the state taxing mechanism;
fair assessments based on a prorata share of the market;
improved technology and research available to all; and
economies of scale.
Commerce found that the model was well suited to agriculture but might need to be modified to fit other industries. Commerce reviewed other models from California and Kansas that raise money from a particular industry to benefit that industry and suggested that Washington could direct some of the growth in the state's business and occupation (B&O) tax from defined industries. Commerce labeled this a "pay as you succeed" model of economic development finance.
Summary of Bill: The bill as referred to committee not considered.
Summary of Bill (Proposed Substitute): The legislation is to be known as the Washington Innovative Industries Enabling Act. The Legislature declares that the promotion of industrial innovation is a fundamental purpose of state government and that the commercialization and manufacture of products within the state is in the public interest. The purpose of the Washington Innovative Industries Enabling Act is to enable industry sponsored organizations to provide assistance; improve firm productivity; increase the ability of firms to compete; and enhance the quality, reputation, and sales of the state's industrial products.
The Executive Director of Innovate Washington (Director) is to establish a process by which firms or industry development organizations petition for industry sector certification using North American Industry Classification System (NAICS) codes. Once an industry sector has been certified, industry development organizations may apply for grants to assist certified industry sectors. The Director is to set qualifications for industry development organizations. The grant period may be for up to five years. The grant amount to an organization must not exceed $5 million per year.
The grants may be used for:
research on production, processing, transportation, handling and marketing of products;
testing and quality control;
workforce training;
incubation and acceleration services;
exporting and cooperative marketing assistance;
energy efficiency services; and
other services approved by the Director.
Grantees may not lobby or provide financial support to firms. Grant contracts must specify the deliverables and performance expectations. Priority is given to those applicants who can show the ability to serve all firms in an industry sector and collaboration with other programs serving industry clusters.
The Industry Development Organization Grant Account (account) is established in the custody of the State Treasurer. The account is controlled by the Director and the Director is to establish subaccounts for each certified industry sector.
The Department of Revenue (Revenue), upon notice of an industry sector's certification, must establish the projected tax receipts for that sector, which is the B&O tax receipts expected from all businesses in the sector for a calendar year based on a five year trend line. Revenue must also establish the innovation allocation for an industry sector, which is 50 percent of the amount, if any, of a sectors B&O tax receipts exceeding the projected tax receipts. This innovation allocation goes to the account and may not exceed $5 million per year.
Appropriation: None.
Fiscal Note: Available. New fiscal note requested on January 18, 2012.
Committee/Commission/Task Force Created: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.
Staff Summary of Public Testimony:
Testimony From 2011 Regular Session on Original Bill.
PRO: Commerce supports this concept of letting the growth of an industry fund the industry assistance. This makes sense. This is about accelerating the growth of an industry. The focus on industrial sectors should be broadened.
Persons Testifying:
Persons Testifying From 2011 Regular Session on Original Bill.
PRO: Daniel Malarkey, Commerce.