HOUSE BILL ANALYSIS
HB 2468
Title: An act relating to distressed area designation.
Brief
Description: Modifying eligible
and distressed area designation.
Sponsors: Representatives Eickmeyer, Huff, Lantz, Woods,
Rockefeller and Haigh.
BRIEF SUMMARY OF BILL
CAdds to the definition of Adistressed area@ or eligible area@ a county that has experienced a
loss of more than 3,000 jobs over the previous five-year period due to military
base restructuring and where military employment exceeds 15 percent of the
total employment in the county.
CMakes these counties eligible to
access specific financial assistance programs designed to create or retain
jobs.
HOUSE ECONOMIC DEVELOPMENT, HOUSING & TRADE
COMMITTEE
Staff: Kenny Pittman (786-7392)
Background:
Washington has developed various
incentives designed to assist geographic areas that are experiencing economic
distress, due to high unemployment levels or low median household incomes,
create or retain jobs and to diversify the local economy. These incentives are
provided as financial or technical assistance to the local government or an
individual firm.
An economically distressed area
may be either an entire county or specific area within a county. An entire
county may be eligible if (1) it is a rural county with a population density of
less than 100 people per square mile; (2) it has an unemployment rate 20
percent higher than the state unemployment rate for a three-year period; (3) it
has a median household income that is less than 75 percent of the state median
household income; (4) it is a metropolitan area with an average unemployment
rate that exceeds the average state unemployment rate by 20 percent; or (5) it
is designated as a rural natural resources impact area. An area within a
county may be eligible if (1) it has experienced a sudden and severe or
long-term loss of employment; (2) it has a minimum population of 5,000 and at
least 70 percent of its households have incomes below 80 percent of the county
median income; or (3) it is a state designated community empowerment zone.
Rural Washington Loan Fund
The Rural Washington Loan Fund
(RWLF) program was created in 1985 and uses federal Community Development Block
Grant funds to make grants to local governments for loans to businesses in economically
distressed areas. The RWLF program was designed to allow the state to provide
financial assistance to businesses, without violating the constitutional
lending-of-credit prohibition. Financial assistance is provided to businesses
in the form of low-interest Agap financing@ loans for that portion of a project that a
business is unable to obtain from a conventional lender. The maximum loan to a
business is $700,000. The RWLF program is administered by the Department of
Community, Trade, and Economic Development.
Distressed Area Sales/Use Tax Deferral
The Distressed Area Sales/Use Tax
Deferral Program was created in 1985 and provides a three-year deferral and
eventual exemption from the sales and use tax liability on new or remodeled
buildings and/or equipment used in manufacturing or research and development
activities in economically distressed areas. The Distressed Area Sales/Use Tax
Deferral is administered by the Department of Revenue.
Business and Occupation Tax Credit for Job
Training Services
The Business and Occupation Tax
Credit for Job Training Program was created in 1996 and provides a credit
against the firms= business and occupation
(B&O) tax liability equal to 20 percent of the amount spent on job
training. The amount of credit for a particular firm is limited to $5,000
annually. The training must be designed to enhance employee job performance in
a state-approved program that is sponsored or provided by the employer. The
tax credit can be taken by those firms eligible for the Distressed Area
Sales/Use Tax Deferral Program (manufacturing or research and development
activities in economically distressed areas). The Business and Occupation tax
Credit for Job Training Services program is administered by the Department of
Revenue.
Summary of Bill:
The definition of Adistressed area@ or Aeligible area@ is expanded to include a county
that has experienced a loss of more than 3,000 jobs during the previous
five-year period due to military base restructuring and where military
employment in the county exceeds 15 percent of the total employment in the county.
A county that meets this criteria, and businesses located within the county,
may access (1) the Rural Washington Loan Fund; (2) the Distressed Area
Sales/Use Tax Deferral Program; and (3) the Business and Occupation tax Credit
for Job Training Services Program.
Appropriation: None.
Fiscal Note: Requested January 19, 2000.
Effective Date: Ninety days
after adjournment of session in which bill is passed.