AN ACT Relating to tax deferrals for investment projects; amending RCW 82.61.030; adding a new section to chapter 82.60 RCW; adding a new section to chapter 82.61 RCW; and adding a new section to chapter 82.62 RCW.

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

NEW SECTION. Sec. 1. A new section is added to chapter 82.60 RCW to read as follows:

Investments in an eligible area by a person who reorganizes under an employee stock ownership plan or as an employee business cooperative constitute an eligible investment project for purposes of this chapter if:

(1) The reorganization occurred to help prevent a closure or mass layoff at the business, or is immediately after a closure or mass layoff at the business; and

(2) At least one full-time qualified employment position is retained or created for each three hundred thousand dollars of investment on which a deferral is requested; and

(3) The investments either:

(a) Constitute investments in qualified buildings or qualified machinery or equipment; or

(b) Result in modernization of the business. "Modernization" includes the expansion or renovation of existing buildings, and the upgrading of machinery and equipment necessary for manufacturing or research and development. Application for deferral of taxes for modernization projects shall be made during the calendar year in which construction begins or acquisition of machinery and equipment occurs. All other provisions of this chapter apply to these investment projects.

NEW SECTION. Sec. 2. A new section is added to chapter 82.61 RCW to read as follows:

(1) The reorganization occurred to help prevent a closure or mass layoff at the business, or is immediately after a closure or mass layoff at the business; and

(2) Helps retain or create qualified employment positions; and

(3) The investments either:

(a) Constitute investments in qualified buildings or qualified machinery or equipment; or

Sec. 3. Section 3, chapter 2, Laws of 1985 ex. sess. as amended by section 3, chapter 497, Laws of 1987 and RCW 82.61.030 are each amended to read as follows:

Except for eligible projects within the definitions in RCW 82.61.010(4) (c) or (d), a tax deferral certificate shall only be issued to persons who, on June 14, 1985, are not engaged in manufacturing or research and development activities within this state. For purposes of this section, a person shall not be considered to be engaged in manufacturing or research and development activities where the only activities performed by such person in this state are sales, installation, repair, or promotional activities in respect to products manufactured outside this state. Any person who has succeeded by merger, consolidation, incorporation or any other form or change of identity to the business of a person engaged in manufacturing or research and development activities in this state on June 14, 1985, and any person who is a subsidiary of a person engaged in manufacturing or research and development activities in this state on June 14, 1985, shall also be ineligible to receive a tax deferral certificate. This section shall not apply to any business which reorganizes under an employee stock ownership plan or as an employee business cooperative to help prevent a closure or mass layoff at the business, or which occurs immediately after a closure or mass layoff at the business.

NEW SECTION. Sec. 4. A new section is added to chapter 82.62 RCW to read as follows:

(1) Investments in an eligible area at a specific facility by a person who reorganizes under an employee stock ownership plan or as an employee business cooperative constitute an eligible business project for purposes of this chapter if:

(a) The reorganization occurred to help prevent a closure or mass layoff at the business, or is immediately after a closure or mass layoff at the business;

(b) The investments are for manufacturing or research and development activities; and

(2) A person shall be allowed a credit against the tax due under chapter 82.04 RCW of an amount equal to one thousand dollars for each qualified employment position directly retained or created in an eligible business project under this section.

(3) Application for tax credits under this section shall be made during the calendar year in which the investments in manufacturing or research and development activities occur.

(4) All provisions of this chapter not inconsistent with this section shall apply to eligible business projects undertaken under this section.