BILL REQ. #:  H-2481.1 

READ FIRST TIME 03/03/09.   

     AN ACT Relating to tax incentives for renewable energy manufacturing facilities; amending RCW 82.32.5351; adding a new section to chapter 82.04 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature finds that the welfare of the people of the state of Washington is positively impacted through the encouragement and expansion of key growth industries in the state. The legislature further finds that targeting tax incentives to focus on key growth industries is an important strategy to enhance the state's business climate. A key area of growth is those industries associated with the green economy and in specific renewable energy manufacturing. The state has the necessary infrastructure, supporting industries, and skilled labor force to support renewable energy manufacturing. It is of great concern that businesses in this sector have been increasingly expanding and locating their operations elsewhere. Additional incentives for the renewable energy industry are needed in recognition of the unique forces and issues involved in business decisions in this industry. Tax incentives for the sector are important in both retention and expansion of existing business and attraction of new businesses, all of which will strengthen this growth industry within our state, will create jobs, and will bring many indirect benefits to the state. This incentive is intended to create new facilities and expand existing facilities which will create new jobs in Washington state.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.04 RCW to read as follows:
     (1) In computing the tax imposed under this chapter, a fifty percent credit is allowed for each dollar of capital invested in renewable energy manufacturing expenditures, up to a maximum of fifteen million dollars of credit per person per year.
     (2) The total amount of credits allowed under this section in any year for a project may not exceed twenty percent of the total amount of credit earned. A maximum of thirty million dollars of credits may be claimed statewide per year. Credits are allowed in accordance with rules adopted by the department. The department must disallow any credits, or portion thereof, that would cause the total amount of credits claimed statewide under this section to exceed thirty million dollars per year. A person may claim a credit under this section only for renewable energy manufacturing expenditures occurring on or after the effective date of this act. The person claiming a credit must be the owner of the renewable energy manufacturing facility or must have purchased the credit under subsection (4) of this section from the person who is the owner of the facility.
     (3) No refunds may be granted for credits under this section. No credit may be claimed before July 1, 2010.
     (4) A person may sell or otherwise transfer the economic value of any credit provided in this section for a renewable energy manufacturing expenditure at a rate equal to seventy percent of the total amount of credit being sold or transferred. The buyer may apply the full value of the credits being purchased to satisfy the tax otherwise due under this chapter for the tax reporting period. The buyer may not seek a refund for any credits purchased in excess of their tax liability due under this chapter.
     (5) The department of revenue, in coordination with the department of community, trade, and economic development, must adopt rules to implement this section, including rules that provide a formulary method of determining allowable credits and specify how credits may be sold, transferred, and tracked.
     (6) The definitions in this subsection apply throughout this section:
     (a) "Renewable energy manufacturing expenditures" means expenditures for:
     (i) Land that includes a renewable energy manufacturing facility;
     (ii) Machinery and equipment used in or integral to a renewable energy manufacturing facility; and
     (iii) Tangible personal property and labor and services used in the construction, expansion, or reconstruction of a renewable energy manufacturing facility.
     (b) "Renewable energy manufacturing facility" means a facility predominantly used for manufacturing raw materials, components, or equipment for solar, wind, bioenergy, or geothermal energy systems.
     (7) A person taking the credit under this section must report as required under RCW 82.32.535.
     (8) Credits may be carried forward until used; however, no credit may be earned under this section on or after July 1, 2014.

Sec. 3   RCW 82.32.5351 and 2006 c 84 s 5 are each amended to read as follows:
     (1) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information on how a tax incentive is used.
     (2)(a) A person who reports taxes under RCW 82.04.2404 or who claims an exemption or credit under RCW 82.08.9651, section 2 of this act, and 82.12.9651 shall make a complete annual report to the department detailing employment, wages, and employer-provided health and retirement benefits per job at the manufacturing site. The report shall not include names of employees. The report shall also detail employment by the total number of full-time, part-time, and temporary positions. The first report filed under this subsection shall include employment, wage, and benefit information for the twelve-month period immediately before first use of a preferential tax rate under RCW 82.04.2404, or tax exemption or credit under RCW 82.08.9651, section 2 of this act, and 82.12.9651. The report is due by April 30th following any year in which a preferential tax rate under RCW 82.04.2404 is used, or tax exemption or credit under RCW 82.08.9651, section 2 of this act, and 82.12.9651 is taken. The department may extend the due date for timely filing annual reports under this section as provided in RCW 82.32.590. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (b) If a person fails to submit a complete annual report under (a) of this subsection by the due date of the report or any extension under RCW 82.32.590, the department shall declare the amount of taxes exempted or credited, or reduced in the case of the preferential business and occupation tax rate, for that year to be immediately due and payable. Excise taxes payable under this subsection are subject to interest but not penalties, as provided under this chapter. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (3) By November 1st of the year occurring five years after December 1, 2006, and November 1st of the year occurring eleven years after December 1, 2006, the fiscal committees of the house of representatives and the senate, in consultation with the department, shall report to the legislature on the effectiveness of chapter 84, Laws of 2006 in regard to keeping Washington competitive. The report shall measure the effect of chapter 84, Laws of 2006 on job retention, net jobs created for Washington residents, company growth, diversification of the state's economy, cluster dynamics, and other factors as the committees select. The reports shall include a discussion of principles to apply in evaluating whether the legislature should reenact any or all of the tax preferences in chapter 84, Laws of 2006.