05/07/2002 03:50 PM Senate STA

                                                                                                                                
                     SB 312-ENTERPRISE ZONES                                                                                
                                                                                                                              
ZACH WARWICK, staff to the bill sponsor,  Senator Gene Therriault,                                                              
explained that  SB 312  authorizes the Governor  to declare  up to                                                              
four areas  of the  state as  enterprise zones  every year.  Zones                                                              
would be designated due to economic  distress and each designation                                                              
could  last up  to 20  years. This  is designed  to encourage  and                                                              
authorize  local municipalities  to  offer  incentives within  the                                                              
zone. Such incentives could include  a reduction of permit or user                                                              
fees, credit toward exemptions in  property taxes, and flexibility                                                              
in  regulations  such as  zoning,  leasing  or sale  of  municipal                                                              
properties.                                                                                                                     
                                                                                                                                
There  are  two state  incentives  that  are included.  First,  15                                                              
percent of  the initial investment  put into the area  would count                                                              
as  credit toward  state  corporate income  taxes  for that  first                                                              
year. The credit  may not be carried forward.  Second, there would                                                              
be a  $500.00 corporate  income tax credit  for each  new employee                                                              
hired every year.  One of the major reasons behind  the bill is to                                                              
help  communities to  produce proposals  and  qualify for  federal                                                              
grants and  federal tax  credits that are  offered by  HUD (Health                                                              
and Urban Development) and the U.S. Department of Agriculture.                                                                  
                                                                                                                                
There were amendments  made in the Community and  Regional Affairs                                                              
Committee to make the language clear.                                                                                           
                                                                                                                                
CHAIRMAN THERRIAULT  said there was language that  was problematic                                                              
in  terms  of   whether  the  federal  government   or  the  state                                                              
government  acted  first.  He  asked  whether  that  language  was                                                              
clarified.                                                                                                                      
                                                                                                                                
MR.  WARWICK said  that  language was  deleted.  The second  issue                                                              
dealt with cities within a borough.  Original language said a city                                                              
within  a borough  is  not  eligible to  make  a proposal  for  an                                                              
enterprise  zone, which  would exempt  many of  the cities  in the                                                              
state. The  third amendment was  to change the  language regarding                                                              
size  of  the  areas  that  would   be  called  enterprise  zones.                                                              
Originally the areas  were census tracts, which is  about a 10,000                                                              
person  area. That was  changed to  one or  more continuous  block                                                              
groups in  the U.S. census or  a compact geographic  area. Senator                                                              
Lincoln requested  that change because original  language excluded                                                              
rural Alaska.                                                                                                                   
                                                                                                                                
CHAIRMAN  THERRIAULT asked  whether  there were  any other  issues                                                              
brought up that were not addressed.                                                                                             
                                                                                                                                
MR. WARWICK replied all issues were addressed.                                                                                  
                                                                                                                                
There was no further testimony.                                                                                                 
                                                                                                                                
CHAIRMAN  THERRIAULT  said  he  had no  prepared  CS  and  members                                                              
offered no amendments.  There were two fiscal notes.  He asked for                                                              
the will of the committee.                                                                                                      
                                                                                                                                
SENATOR PHILLIPS  made a  motion to move  SB 312 and  accompanying                                                              
fiscal  notes  from  committee  with  individual  recommendations.                                                              
There being on objection, it was so ordered.