FINAL BILL REPORT

SHB 1450

                                   C 41 L 88

BYHouse Committee on Trade & Economic Development (originally sponsored by Representatives Vekich, Schoon, Fox, Hargrove, Wineberry, B. Williams, Peery, Betrozoff, P. King, Sayan, McLean, May, Fuhrman, Doty, Sutherland, D. Sommers, Walker, Sanders, Rayburn, Moyer, Cooper, O'Brien, Spanel and Day;by request of Governor Gardner)

Extending the excise tax deferral and credit programs for manufacturing and research and development activities.

House Committe on Trade & Economic Development

Rereferred House Committee on Ways & Means/Revenue

Senate Committee on Economic Development & Labor and Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

The Legislature established two sales tax deferral programs in the 1985 session.  One applies to investments in new manufacturing and research and development facilities by manufacturers who have not operated manufacturing facilities in the state.  The other applies to investments in facilities located in economically distressed counties, such a county is defined as one with an unemployment rate twenty percent above the three-year state-wide average unemployment rate.  Provisions in both programs permit a three year deferral of sales taxes for a manufacturer and a five year payback period was provided in each of these programs.

During the 1986 session, the new manufacturers' tax deferral program was extended for two years. The Legislature also established a program providing for credits against the state business and occupation tax for manufacturers in distressed areas that create employment at least 15 percent above the prior year.  Under the provisions of the program, a manufacturer may apply to the Department of Revenue to receive a $1,000 business and occupation tax credit for each new job created. A business in a distressed area may qualify for both the distressed area sales tax deferral program and the business and occupation tax credit.  In 1987 the provisions of the new manufacturers' program were extended to the acquisition and modernization of the aluminum production facilities.  To participate in the program applicants are required to obtain a written concurrence from collective bargaining units representing employees in the facility for which a deferral is being sought.  The Department of Trade and Economic Development is permitted to grant a waiver to the concurrence under specific conditions.

The sales tax deferral program for new manufacturing facilities by out-of- state firms cannot accept new applications after June 30, 1988, and construction must begin by December 31, 1988.  The sales tax deferral program for facilities in distressed areas cannot accept new applications after June 30, 1991.  The business and occupation tax credits for investments in distressed areas are to expire on July 1, 1988.

SUMMARY:

The sales tax deferral program available for investments in manufacturing and research and development by firms with no previous manufacturing operation in the state is extended until July 1, 1994.

The business and occupation tax credit available for investments in economically distressed counties is extended until July 1, 1994.

The capacity of the Department of Trade and Economic Development to grant waivers to the concurrence required for investments in the aluminum product facilities for the new manufacturers' sales tax deferral program is eliminated.

The sales tax deferral program available for investments in manufacturing and research and development by firms in economically distressed areas is extended until July, 1994.  A severance clause is provided.

VOTES ON FINAL PASSAGE:

      House 84  12

      Senate    40     1(Senate amended)

      House 92   6(House concurred)

EFFECTIVE:June 9, 1988