February 4, 1998

BILL ANALYSIS

TO:       Members, Committee on Trade and Economic Development

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

RE:       HB 2975 - Providing tax incentives for the development of job opportunities      in distressed counties.

BACKGROUND:

The state of Washington has developed various incentives that are designed to assist in job creation or retention in economically distressed areas.  The incentives available to businesses located in distressed areas include a sales and use tax exemption on equipment purchases and building construction,  a tax credit for employee training, and a tax credits for job creation.  A distressed area is a geographic area characterized by high unemployment rates, low median household income levels, or substantial job loss in major industries.

Staring in July 1, 1998, counties with an average unemployment rate 20 percent higher than the state average unemployment rate for the prior three-year period may impose a sales and use tax of 0.04 percent.  This tax is credited against the state sales and use tax.  The revenues must be used for financing public facilities in distressed counties.

SUMMARY:

The distressed county sales and use tax for public facilities is increased from 0.04 percent to 0.12 percent.  The use of the money is restricted to public facilities listed in the economic development section of the county=s comprehensive plan.  For counties not planning under the growth management act the public facilities must be listed in the county=s capital facilities plan.  Public facilities includes bridges, roads, domestic and industrial water, sanitary sewer, storm sewer, railroad, electricity, natural gas, buildings or structures, and port facilities.

The Joint Legislative Audit and Review Committee (JLARC) is required to review and study this program and report to the Legislature in January 2002.

Appropriation:  None.

Fiscal Note:  Requested January 28, 1998.

Effective Date:  This bill takes effect July 1, 1998.