February 5, 1997

BILL ANALYSIS

TO:       Members, Committee on Trade and Economic Development

FROM:     Kenny Pittman, Research Analyst  (786-7392)

RE:       HB 1305 - Increasing availability of tax credits for job creation in distressed      areas.

BACKGROUND:

The Business and Occupation (B&O) Tax Jobs Credit program was created in 1986 as an incentive for manufacturing, research and development, and computer-related service businesses to create employment opportunities in economically distressed communities.  Businesses in eligible areas that create a new work force or increase an existing work force by 15 percent are allowed a B&O tax credit equal to $1,000 for each new full-time employment position.  In 1996, the Legislature increased the amount of the credit to $2,000 for applications approved on or after January 1, 1996.  The business must apply for the credit prior to hiring the new positions. 

No more than $15 million in total credits against the state B&O tax are allowed per biennium.  No single business may receive more than $300,000 in credits over the life of the program.  Business firms with insufficient B&O tax liability, unused tax credits may be carried forward to succeeding years.

SUMMARY:

The Business and Occupation (B&O) Jobs Tax Credit program requirement that a business must increase its existing force work by 15 percent to claim a tax credit is replaced with a requirement that there is an increase in employment over previous year.  The single business limitation of $300,000 in credits over the life of the program is changed to $300,000 per taxable year.

Appropriation:  None.

Fiscal Note:  Not requested.

Effective Date:  Ninety days after adjournment of session in which bill is passed.