2335 AMS HARG FLOO 001

2335 AMS HARG FLOO 001

HB 2335 - S AMD ‑ 1019

BySenators Hargrove, T. Sheldon and Snyder

RULED OUTSIDE SCOPE AND OBJECT 3/11/98

On page 8, after line 31, insert the following:

"NEW SECTION. Sec. 10. A new section is added to chapter 82.04 RCW to read as follows:

In order to consolidate business and occupation taxes in distressed areas the legislation The legislature intends to adopt sections 11 and 12 of this act.

NEW SECTION. Sec. 11. A new section is added to chapter 82.04 RCW to read as follows:

(1) The definitions in this subsection apply to this section, sections 3 and 4 of this act, RCW 82.62.030, and sections 9 through 16 of this act, unless the context clearly requires otherwise.

(a) "Business" means the person applying for the tax deferral, credit, or exemption.

(b) "Construction" means the construction of a manufacturing operation complex and includes labor and services rendered in respect to construction. "Construction" ends when a project is completed as determined under subsection (2)(c) of this section.

(c) "Distressed county" means a county in which the average level of unemployment for the three years before the year in which an application is filed under this chapter exceeds the average state unemployment for those years by twenty percent.

(d) "Employment position" means a position in which a permanent full-time employee is employed in a project during the entire tax year. "The entire tax year" means the full-time position is filled for a period of twelve consecutive months. "Full-time" means at least thirty-five hours a week.

(e) "Equipping and operating" means the acquisition of tangible personal property for use at the manufacturing operation complex, and includes labor and services rendered in respect to the installation of tangible personal property.

(f) "Finished product" means an article, substance, or commodity that is manufactured at and shipped from the manufacturing operation complex.

(g) "Manufacturing operation complex" means the buildings, structures, and improvements located at the site where the manufacturing activity occurs. The complex includes the buildings, structures, and improvements used to receive, store, and ship raw materials and finished products as well as buildings, structures, and improvements used for the manufacturing production line. In addition, the term includes all administrative offices, employee support facilities, and production support facilities located at the site. The manufacturing operation complex does not include buildings, structures, and improvements located off of the site.

(h) "Person" has the meaning given in RCW 82.04.030.

(i) "Project" means the site preparation, construction, and equipping and operating of a manufacturing operation complex.

(j) "Raw material" means the ingredients, components, substances, articles, or other tangible personal property that is received at the manufacturing operation complex for use as ingredients or components of the finished product.

(k) "Site" means a discrete geographical location.

(l) "Site preparation" means demolition of existing improvements, environmental remediation, earth moving, land clearing, site excavation, and shoring, and includes labor and services rendered in respect to site preparation.

(2) As a condition to receiving initial approval and as a condition of continuing eligibility, the following criteria must be met:

(a) The project must be located in a distressed county and must be owned and operated by a person who meets the definition of "manufacturer" as defined in RCW 82.04.110;

(b) The business must commit to an investment, by the time of completion of the project, in land, structures, and equipment, the value of which must be at least four percent of the total of the equalized assessed value in the county in which the project is located. The total equalized assessed value in the county is as published annually by the department in accordance with RCW 84.48.080. Continuing eligibility is conditioned on this investment having actually occurred;

(c)(i) The business must commit to and must create a minimum of twenty new employment positions at the project within two years of completion of the project.

(ii) The business must commit to and create one new employment position for each two million dollars invested in the project within two years of completion of the project. The twenty minimum positions in (c)(i) of this subsection are part of and not in addition to the positions required to meet the investment to job ratio.

(iii) The individuals in the new employment positions must be the employees of the business and must not have been relocated from other locations of the business within this state. Completion of the project is deemed to have occurred when the project is capable of operating and producing finished products. The department of community, trade, and economic development shall determine when the project is complete;

(d) The business must commit to and must pay an average wage of at least one hundred fifty percent of the average wage in the county. The employment security department shall determine the average wage in the county and shall report this amount to the department of community, trade, and economic development; and

(e) The business must remain operational for a fifteen-year period after the project is completed. "Operational" means that the level of employment at the manufacturing operation complex must not drop below the total employment positions required under (c) of this subsection.

(3)(a) The department of community, trade, and economic development shall determine the eligibility of a business and certify eligibility to the department of revenue. A component of the department's eligibility review must include a determination as to whether the project would have a major adverse impact on an existing in-state company that is engaged in manufacturing a similar product. If the department does find a major adverse impact would occur and that a competitive alternative location is not available in the northwest, then the project may be deemed ineligible for the purposes of sections 2 through 5 of this act, RCW 81.104.170(3), section 7 of this act, RCW 82.62.030(5), sections 9 through 19 of this act, RCW 82.14.370, and sections 21 through 23 of this act.

(b) Approval of the project by a public vote of the governing body of the county or city in which the project is located is a precondition to deferral certification by the department of revenue. If the county or city approves the project, the county or city shall send a written notification of the approval to the department of revenue. If the project is in two jurisdictions, both jurisdictions must approve the project.

(c) When both of the notices under (a) and (b) of this subsection are received, the department of revenue shall issue a sales and use tax deferral certificate for use under sections 3 and 4 of this act.

(4) In addition to the initial certification under subsection (3) of this section, the project must be reviewed by the department of community, trade, and economic development each year for continuing eligibility. The business shall provide an annual report to the department of community, trade, and economic development, in a form as required by the department, of its status relative to the eligibility criteria under subsection (2) of this section. The department of community, trade, and economic development shall review the annual report and determine whether the project continues to meet the eligibility criteria. The department of community, trade, and economic development shall provide a written notice of this determination to the business and to the department of revenue. Annual reapproval by the county or city in which the project is located is not required. If the project fails to meet the eligibility criteria the amount of taxes deferred under sections 3 and 4 of this act are immediately due.

(5) Taxes deferred under sections 3 and 4 of this act need not be repaid if the project maintains its eligibility criteria for a fifteen-year period. The fifteen-year period begins when the deferral certificate is sent under subsection (3)(c) of this section by the department of revenue to the business.

(6) Application for the deferral under sections 3 and 4 of this act may not be accepted before the effective date of this section or after June 30, 2003.

(7) The employment security department shall provide such data to the department of revenue and the department of community, trade, and economic development as is necessary to administer this section wage data shall be updated annually to reflect current state and county conditions.

Sec. 12. RCW 82.62.030 and 1997 c 366 s 5 are each amended to read as follows:

(1) A person shall be allowed a credit against the tax due under chapter 82.04 RCW as provided in this section. For an application approved before January 1, 1996, the credit shall equal one thousand dollars for each qualified employment position directly created in an eligible business project. For an application approved on or after January 1, 1996, the credit shall equal two thousand dollars for each qualified employment position directly created in an eligible business project. For an application approved on or after July 1, 1997, the credit shall equal four thousand dollars for each qualified employment position with wages and benefits greater than forty thousand dollars annually that is directly created in an eligible business. For an application approved on or after July 1, 1997, the credit shall equal two thousand dollars for each qualified employment position with wages and benefits less than or equal to forty thousand dollars annually that is directly created in an eligible business.

(2) The department shall keep a running total of all credits granted under this chapter during each fiscal year. The department shall not allow any credits which would cause the tabulation to exceed five million five hundred thousand dollars in fiscal year 1998 or 1999 or seven million five hundred thousand dollars in any fiscal year thereafter. If all or part of an application for credit is disallowed under this subsection, the disallowed portion shall be carried over for approval the next fiscal year. However, the applicant's carryover into the next fiscal year is only permitted if the tabulation for the next fiscal year does not exceed the cap for that fiscal year as of the date on which the department has disallowed the application.

(3) No recipient may use the tax credits to decertify a union or to displace existing jobs in any community in the state.

(4) No recipient may receive a tax credit on taxes which have not been paid during the taxable year.

(5) A business that has received certification from the department of revenue under section 11 of this act is eligible for an annual credit of four thousand dollars for each of the positions used to establish project eligibility. Positions created in excess of those required to maintain eligibility are also eligible for the credit under this subsection. The business may apply for the credit once the project is complete, as determined in section 11 of this act. The business may apply each of the successive seven years following its initial application under this subsection and shall receive the credit if the continuing employment requirements of section11 of this act are met. The credits granted under this subsection do not affect the caps under subsection (2) of this section and the fifteen percent requirement under RCW 82.62.010. Application for the credit under this subsection may not be accepted before the effective date of this section."

Renumber the sections consecutively and correct any internal references accordingly.

HB 2335 - S AMD - 1019

By Senators Hargrove, T. Sheldon and Snyder

Make necessary title amendments