BILL REQ. #:  H-1714.1 

Read first time 02/10/09.   Referred to Committee on Technology, Energy & Communications.

     AN ACT Relating to tax incentives for renewable energy manufacturing facilities; amending RCW 82.32.535; amending 2006 c 300 s 12 (uncodified); reenacting and amending RCW 82.32.600; 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.

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 twenty million dollars of credit.
     (2) The total amount of credits taken under this section in any year for a project may not exceed four million dollars. A maximum of forty million dollars of credits may be issued per year.
     (3) 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.
     (4) 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 solar, wind, geothermal, or bioenergy equipment.
     (5) A person taking the credit under this section must report as required under RCW 82.32.535.
     (6) 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 82.32.535 and 2003 c 149 s 11 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 82.04.240(2) or who claims an exemption or credit under RCW 82.04.426, 82.08.965, 82.12.965, 82.08.970, 82.12.970, section 2 of this act, 82.04.448, or 84.36.645, shall make an 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 82.04.240(2), or tax exemption or credit under RCW 82.04.426, 82.08.965, 82.12.965, 82.08.970, 82.12.970, section 2 of this act, 82.04.448, or 84.36.645. The report is due by March 31st following any year in which a preferential tax rate under RCW 82.04.240(2) is used, or tax exemption or credit under RCW 82.04.426, 82.08.965, 82.12.965, 82.08.970, 82.12.970, section 2 of this act, 82.04.448, or 84.36.645 is taken. 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 an annual report under (a) of this subsection the department shall declare the amount of taxes exempted or credited for that year to be immediately due and payable. Excise taxes payable under this subsection are subject to interest, 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 the effective date of this act, and November 1st of the year occurring eleven years after the effective date of this act, 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 149, Laws of 2003 in regard to keeping Washington competitive. The report shall measure the effect of chapter 149, Laws of 2003 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 149, Laws of 2003.

Sec. 4   RCW 82.32.600 and 2008 c 81 s 14 and 2008 c 15 s 8 are each reenacted and amended to read as follows:
     (1) Persons required to file annual surveys or annual reports under RCW 82.04.4452, 82.32.535, 82.32.5351, 82.32.545, 82.32.610, 82.32.630, 82.82.020, or 82.74.040 must electronically file with the department all surveys, reports, returns, and any other forms or information the department requires in an electronic format as provided or approved by the department. As used in this section, "returns" has the same meaning as "return" in RCW 82.32.050.
     (2) Any survey, report, return, or any other form or information required to be filed in an electronic format under subsection (1) of this section is not filed until received by the department in an electronic format.
     (3) The department may waive the electronic filing requirement in subsection (1) of this section for good cause shown.

Sec. 5   2006 c 300 s 12 (uncodified) is amended to read as follows:
     (1)(a) ((This act and)) Section 3, chapter . . ., Laws of 2009 (section 3 of this act), section 7, chapter 300, Laws of 2006, and section 4, chapter 149, Laws of 2003 are contingent upon the siting and commercial operation of a significant semiconductor microchip fabrication facility in the state of Washington.
     (b) For the purposes of this section:
     (i) "Commercial operation" means the same as "commencement of commercial production" as used in RCW 82.08.965.
     (ii) "Semiconductor microchip fabrication" means "manufacturing semiconductor microchips" as defined in RCW 82.04.426.
     (iii) "Significant" means the combined investment of new buildings and new machinery and equipment in the buildings, at the commencement of commercial production, will be at least one billion dollars.
     (2) ((This act)) Chapter 149, Laws of 2003 takes effect the first day of the month in which a contract for the construction of a significant semiconductor fabrication facility is signed, as determined by the director of the department of revenue.
     (3)(a) The department of revenue ((shall)) must provide notice of the effective date of this act to affected taxpayers, the legislature, and others as deemed appropriate by the department.
     (b) If, after making a determination that a contract has been signed and ((this act)) chapter 149, Laws of 2003 is effective, the department discovers that commencement of commercial production did not take place within three years of the date the contract was signed, the department ((shall)) must make a determination that ((this act)) chapter 149, Laws of 2003 is no longer effective, and all taxes that would have been otherwise due ((shall be)) are deemed deferred taxes and are immediately assessed and payable from any person reporting tax under RCW 82.04.240(2) or claiming an exemption or credit under section 2 or 5 through 10 ((of this act)), chapter 149, Laws of 2003. The department is not authorized to make a second determination regarding the effective date of ((this act)) chapter 149, Laws of 2003.