CSHB 232(ECD): "An Act establishing an economic development tax credit; and providing for an effective date."
00CS FOR HOUSE BILL NO. 232(ECD) 01 "An Act establishing an economic development tax credit; and providing for an 02 effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 43.20 is amended by adding a new section to read: 05 Sec. 43.20.043. ECONOMIC DEVELOPMENT TAX CREDIT. (a) Subject to 06 the conditions set out in this section, and in addition to any other credit authorized to the 07 taxpayer by this chapter, a taxpayer may apply as a credit against the state tax liability 08 that may be imposed on the taxpayer under this chapter for a taxable year after 09 December 31, 1995, the amount approved as a credit by the Economic Development 10 Board under AS 44.33.070 for that taxable year. 11 (b) The credit allowed by this section may not 12 (1) exceed the amount approved as a credit by the Economic 13 Development Board under AS 44.33.070; 14 (2) be awarded for more than 10 consecutive taxable years after approval;
01 and 02 (3) be used in a tax year by a taxpayer in conjunction with any other tax 03 credit program. 04 (c) If the commissioner determines that a taxpayer who has received a credit 05 under this section is not complying with the requirements of the tax credit agreement or 06 all of the provisions of this section and AS 44.33.070, the commissioner shall, after 07 giving the taxpayer an opportunity to explain the noncompliance, begin an enforcement 08 action against the taxpayer under AS 43.10. 09 (d) On or before March 31 each year, the commissioner shall submit a report to 10 the Economic Development Board on the tax credit program under this section. The 11 report must include information on the number of agreements that were entered into 12 under AS 44.33.070 during the preceding calendar year, a description of the project that 13 is the subject of each agreement, a summary of the status of projects under agreements 14 entered into before the preceding calendar year, and the sum of the credits awarded under 15 this section. 16 * Sec. 2. AS 44.33 is amended by adding a new section to read: 17 Sec. 44.33.070. ECONOMIC DEVELOPMENT BOARD. (a) The Economic 18 Development Board is established. The board consists of the following five members: 19 (1) the commissioner of commerce and economic development or the 20 commissioner's designee; 21 (2) the director of the office of management and budget; 22 (3) the commissioner of revenue or the commissioner's designee; and 23 (4) two public members appointed by the governor who shall serve 24 overlapping four-year terms. 25 (b) The commissioner of commerce and economic development or the 26 commissioner's designee shall serve as chair of the board. Three members of the board 27 constitute a quorum to transact and vote on the business of the board. 28 (c) The department shall assist the board in carrying out the board's duties under 29 this section. 30 (d) The board may make credit awards under this section to foster job creation 31 in the state. The credit may only be claimed for the taxable years specified in the
01 taxpayer's tax credit agreement and may not be applied retrospectively. 02 (e) A person that proposes a project to create new jobs in the state may apply 03 to the board to enter into an agreement for a tax credit under this section. The 04 commissioner of commerce and economic development shall prescribe the form of the 05 application. 06 (f) After receipt of an application, the board shall negotiate with the applicant 07 and may enter into an agreement with the applicant for a credit under this section if the 08 board determines that 09 (1) the applicant's project satisfies at least one of the following: 10 (A) the board 11 (i) verifies that at least one other state is being considered 12 for the project; 13 (ii) determines, using best available data, that the 14 projected costs for the applicant's project in this state would exceed the 15 costs of the project in the competing state, taking into account the 16 probable effect of the competing state's incentive programs based on state, 17 local, private, and federal funds available to the competing state; and 18 (iii) finds that receiving the tax credit is a major factor in 19 the applicant's decision to proceed with the project and not receiving the 20 tax credit will result in the applicant not creating new jobs in the state; 21 (B) the applicant's project will, upon completion, provide a net 22 increase of at least 25 percent in the number of new employees employed by the 23 applicant; or 24 (C) the applicant's project is economically sound and will, upon 25 completion, benefit the people of the state by increasing opportunities for 26 employment and strengthening the economy of the state, and significantly 27 expands existing facilities in the state; 28 (2) awarding the tax credit will result in a net fiscal gain to this state, as 29 certified by the office of management and budget, using the best available data; and 30 (3) the credit is not prohibited by (g) of this section. 31 (g) A person is not entitled to claim the credit provided by this section for jobs
01 that the person relocates from one site in the state to another site in the state. 02 Determinations under this subsection shall be made by the board. 03 (h) In negotiating the credit amount that should be awarded, the board shall take 04 into consideration the following factors: 05 (1) the economy of the area where the projected investment is to occur; 06 (2) the potential effect on the economy of the state; 07 (3) the magnitude of the cost differential between the state and the 08 competing state; 09 (4) the incremental payroll attributable to the project; 10 (5) the capital investment attributable to the project; 11 (6) the amount the average wage paid by the applicant exceeds the 12 average wage paid within the area in which the project will be located; 13 (7) the costs to the state with respect to the project; and 14 (8) the financial assistance that is otherwise provided by the state and the 15 municipalities in the affected area. 16 (i) The board shall determine the amount and duration of a tax credit awarded 17 under this section. The credit amount may not exceed the lesser of 18 (1) the amount of the credit approved under (f) of this section, which 19 credit amount may not exceed five percent of the amount of gross wages payable as 20 compensation for new employees; or 21 (2) 25 percent of the tax due and payable by the taxpayer under this 22 chapter. 23 (j) The board shall enter into an agreement with an applicant that is awarded a 24 credit under this section. The agreement must include 25 (1) a detailed description of the project that is the subject of the 26 agreement; 27 (2) the duration of the tax credit and the first taxable year for which the 28 credit may be claimed; 29 (3) the credit amount that will be allowed for each taxable year; 30 (4) a requirement that the taxpayer shall maintain operations at the 31 project location for at least two times the number of years as the term of the tax credit;
01 (5) a specific method for determining the number of new employees 02 employed during a taxable year who are performing jobs not previously performed by 03 an employee; 04 (6) a requirement that the taxpayer shall annually report to the board the 05 number of new employees who are performing jobs not previously performed by an 06 employee and any other information the commissioner of commerce and economic 07 development needs to perform the commissioner's duties under this section; 08 (7) a requirement that the commissioner of commerce and economic 09 development is authorized to verify with the appropriate state agencies the amounts 10 reported under (6) of this subsection and after doing so shall issue a certificate of 11 verification to the taxpayer stating that the amounts have been verified; 12 (8) a requirement that the taxpayer shall provide written notification to 13 the commissioner of commerce and economic development and the board not more than 14 30 days after the taxpayer makes or receives a proposal that would transfer the taxpayer's 15 state tax liability obligations to a successor taxpayer; and 16 (9) any other performance conditions that the board determines are 17 appropriate. 18 (k) A taxpayer claiming a credit under this section shall submit to the department 19 a copy of the certificate of verification under (j) of this section for the taxable year. 20 However, failure to submit a copy of the certificate does not invalidate a claim for a 21 credit. 22 (l) Biennially, the board shall provide for an evaluation of the tax credit program 23 authorized by this section. The evaluation must include an assessment of the 24 effectiveness of the program in creating new jobs in the state and of the revenue effect 25 of the program, and may include a review of the practices and experiences of other states 26 with similar programs. The board shall submit a report on the evaluation to the governor 27 and the legislature. 28 (m) In this section, 29 (1) "board" means the Economic Development Board established by this 30 section; 31 (2) "credit amount" means the amount agreed to between the board and
01 applicant under this section; 02 (3) "department" means the Department of Commerce and Economic 03 Development; 04 (4) "full-time employee" means an individual who is employed for 05 consideration for at least 35 hours each week or who renders any other standard of 06 service generally accepted by custom or specified by contract as full-time employment; 07 (5) "new employee" 08 (A) means 09 (i) a full-time employee employed by a taxpayer in the 10 project that is the subject of a tax credit agreement and who is first 11 employed by the taxpayer after the taxpayer enters into the tax credit 12 agreement; 13 (ii) notwithstanding (B)(i) of this paragraph, a new 14 employee who performs a job that was previously performed by an 15 employee who was treated under the agreement as a new employee and 16 was promoted by the taxpayer to another job; 17 (B) does not include 18 (i) an employee of the taxpayer who performs a job that 19 was previously performed by another employee if that job existed for at 20 least six months before hiring the new employee; 21 (ii) an employee of the taxpayer who was previously 22 employed in the state by a related member of the taxpayer and whose 23 employment was shifted to the taxpayer after the taxpayer entered into the 24 tax credit agreement; or 25 (iii) a child, grandchild, parent, or spouse, other than a 26 spouse who is legally separated from the individual, of any individual 27 who is an employee of the taxpayer and who has a direct or an indirect 28 ownership interest of at least five percent in the profits, capital, or value 29 of the taxpayer, as determined in accordance with 26 U.S.C. 1563. 30 * Sec. 3. This Act takes effect January 1, 1996.