HOUSE BILL REPORT
2SSB 6626
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 Passed House - Amended:
March 6, 2008
Title: An act relating to creating a sales and use tax deferral program for eligible investment projects in community empowerment zones.
Brief Description: Creating a sales and use tax deferral program for eligible investment projects in community empowerment zones.
Sponsors: By Senate Committee on Ways & Means (originally sponsored by Senators Kilmer, Kastama, Rasmussen, Regala, Franklin, Marr, Carrell and Shin).
Brief History:
Finance: 3/3/08 [DPA].
Floor Activity:
Passed House - Amended: 3/6/08, 92-1.
Brief Summary of Second Substitute Bill (As Amended by House) |
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HOUSE COMMITTEE ON FINANCE
Majority Report: Do pass as amended. Signed by 9 members: Representatives Hunter, Chair; Hasegawa, Vice Chair; Orcutt, Ranking Minority Member; Condotta, Assistant Ranking Minority Member; Conway, Ericks, McIntire, Roach and Santos.
Staff: Jeff Mitchell (786-7139).
Background:
The Community Empowerment Zone (CEZ) program was created in 1993 to encourage
public and private investment in low-income areas with high rates of unemployment. Local
governments must request that an area receive a CEZ designation from the Department of
Community, Trade and Economic Development. Only six areas in the state may receive the
CEZ designation. Tax benefits available to firms that locate in a CEZ include sales and use
tax deferrals and business and occupation tax credits for job creation and employer-provided
job training.
Summary of Amended Bill:
Construction of corporate headquarters in a CEZ qualifies a person for deferral of sales and
use taxes that would normally be incurred in the course of the construction. Manufacturing,
warehousing, and wholesaling activities are excluded. The investment in the headquarters
must be at least $30 million and the headquarters must house at least 300 full-time employees
earning at least the average annual state wage.
Tax deferral will not be allowed for any tax liability incurred prior to application for deferral.
Only one deferral certificate may be issued per CEZ per biennium. The total number of
deferral certificates issued per biennium is limited to two.
Recipients of deferrals are required to complete an annual survey and provide information on
the amount of taxes deferred as well as on wages and jobs. The survey is due each year by
March 31. The Department of Revenue is to study the effect of the credit on jobs and firms
and report to the Legislature on December 1 of 2014 and 2018.
The deferred taxes need not be repaid if the recipient of the deferral continues to meet the
eligibility requirements. If a deferral recipient fails to complete an annual survey, one-eighth
of the taxes deferred are immediately due.
Appropriation: None.
Fiscal Note: Available.
Effective Date of Amended Bill: The bill takes effect July 1, 2009.
Staff Summary of Public Testimony:
(In support) This bill targets investments for good jobs in areas hungry for investment. Our
state has made a decision of targeting investments in CEZs and this bill is consistent with
that. Washington already has incentives for warehousing, manufacturing, and research and
development, but not service based jobs. Corporate headquarters need to be a key component
in our economic development toolbox. This tax incentive is targeted towards good
businesses that pay good wages and will bring dollars into the state. This makes Washington
competitive with other states. Idaho passed a very similar law four years ago. Three
companies have taken advantage of this incentive in Idaho. This puts some competitive
pressure on Washington; particularly for communities in eastern Washington. This bill puts
Spokane in a much more competitive position. We've worked hard to reduce the fiscal cost.
This tax incentive is targeted to transformational type investments by companies. Tacoma is
a CEZ. The bill should not be further limited; however, if the Legislature moved in that
direction we could limit it to one project in eastern Washington and one project in western
Washington.
(Opposed) None.
Persons Testifying: Senator Kilmer, prime sponsor; James McMahan, City of Tacoma and Washington Economic Development Association; and Jim Hendrick, Greater Spokane Incorporated.