HCS HB 191 -- JOB DEVELOPMENT (Flook)

COMMITTEE OF ORIGIN:  Committee on Job Creation and Economic
Development

This substitute changes the laws regarding several economic
development programs and establishes the Small Business and
Entrepreneurial Growth Act.

TAX CREDITS AND EXEMPTIONS

The substitute:

(1)  Allows business headquarters to receive tax credits for new
or expanding businesses.  Expansions at headquarter facilities
will be considered separate business facilities and entitled to
the credits if at least 25 new employees and at least $1 million
of new investment are attributed to the expansion.  Buildings on
multiple noncontiguous properties will be considered one facility
if they are in the same county or within the same municipality.
No headquarters will receive the credits for facilities
commencing or expanding operations after January 1, 2020;

(2)  Authorizes a tax credit, beginning January 1, 2009, to a
taxpayer for 100% of the state sales tax paid on any new motor
vehicle assembled and purchased in Missouri on or after that
date.  The tax credit may be claimed against a taxpayer's income
tax; corporate franchise tax; financial institutions tax; or
bridge, express, and public utility companies tax.  Any political
entity may exempt these sales from the local sales tax by an
order or ordinance;

(3)  Authorizes a state and local sales tax exemption for all
electrical energy, gas, other utilities including
telecommunications services, and machinery or equipment used by a
business that, after August 28, 2009, relocates its facility to
one that is located within an underground mine that is no longer
used for mining, and which has at least 500,000 square feet of
space.  The facility must be used for data processing, hosting,
Internet publishing and broadcasting, and web search portals.
The business cannot receive these exemptions and simultaneously
receive benefits from the Quality Jobs Program;

(4)  Authorizes the Department of Economic Development to
allocate up to $5 million in tax credits per year to encourage
equity investment in technology-based early stage Missouri
companies, commonly known as angel investments.  Investors who
contribute the first $500,000 in equity investment to a qualified
Missouri business may be issued a tax credit equal to 30% of the
investment or 40% if the qualified business is in a rural area or
distressed community.  An investor can receive a credit of up to
$50,000 for an investment in a single, qualified business or up
to $100,000 for investments in more than one qualified business
per year.  Credits can be carried forward for up to three years
or transferred; and

(5)  Increases the total amount of all tax credits that can be
authorized for the Small Business Incubator Program from $500,000
to $1 million in any taxable year.

RURAL EMPOWERMENT ZONES CRITERIA

Currently, rural empowerment zones are only allowed to exist in
Hickory County, which has a population of 8,940 residents.  The
substitute allows these zones to exist in any county with 18,000
or fewer residents, which includes 56 counties.  The substitute
also prohibits more than two rural empowerment zones in any
county.

QUALITY JOBS PROGRAM

The substitute:

(1)  Revises the definition of "technology business project" as
it relates to the Missouri Quality Jobs Act to include certain
clinical molecular diagnostic laboratories;

(2)  Specifies that if the department fails to respond within 30
days to a Quality Jobs Program applicant's notice of intent, the
notice is deemed a disapproval.  Currently, the notice is deemed
an approval if the department fails to respond within 30 days;

(3)  Specifies how the department must apply certain definitions
when a business that has already received an approved notice of
intent later files another notice of intent;

(4)  Eliminates the per-company annual cap on technology business
projects.  Currently, the cap is $500,000 per business, per year;

(5)  Eliminates the per-company annual cap on high-impact
projects.  Currently, the cap is $750,000 per company, per year;

(6)  Allows a qualified company wishing to receive tax credits
for job retention projects under the program to do so if it has
maintained the lesser of 1% of the average number of total
employees in the county in which the project is located during
the previous 12 months or 750 full-time employees and the
qualified company agrees to maintain at least the same number of
full-time employees during the period for which it receives
benefits as it did when it applied for the benefits.  Currently,
a qualified company must have maintained at least 1,000 full-time
employees.  The substitute also changes other conditions which
must be met for a qualified company to receive these tax credits;

(7)  Increases the annual cap on job retention projects from $3
million to $30 million;

(8)  Allows the department to issue tax credits for approved job
retention projects until August 30, 2015.  Currently, tax credits
for job retention projects cannot be issued after August 30,
2013; and

(9)  Eliminates the annual cap on the program.  Currently, the
annual cap is $60 million.

SMALL BUSINESS AND ENTRPRENEURIAL GROWTH ACT

The substitute establishes the Small Business and Entrepreneurial
Growth Act which, beginning January 1, 2010, allows small
business employers who increase their total payroll by increasing
the number of jobs and meeting certain qualifications to retain
the Missouri withholding tax from the salaries of the newly
created jobs for one year.  If the employer pays at least 50% of
the cost of the premiums for health insurance for all employees,
the withholding tax can be retained for two years.  In either
case, wages for the new jobs must equal or exceed the county
average wage.  No employer retaining these withholding taxes will
be eligible for the benefits under the Quality Jobs Act.

QUALIFIED EQUITY INVESTMENT (NEW MARKETS) TAX CREDIT

Currently, no qualified equity investments can be made under the
New Markets Tax Credit Program beyond Fiscal Year 2010.  The
substitute extends the date through FY 2012 and increases the
program's tax credit cap from $15 million to $27.5 million per
fiscal year.

DOWNTOWN REVITALIZATION PRESERVATION PROGRAM

The substitute allows contributions to a downtown revitalization
preservation development project from any private not-for-profit
organization or local contributions from tax abatement or other
sources to be substituted on a dollar-for-dollar basis for the
local match of 100% of payments in lieu of taxes and economic
activity taxes from the development's fund.

QUALIFIED RESEARCH EXPENSES (RESEARCH AND DEVELOPMENT) TAX CREDIT

Currently, no tax credits for qualified research expenses can be
approved, awarded, or issued.  The substitute removes these
restrictions and allows a tax credit equal to no more than 6.5%
of a taxpayer's qualified research expenses.  The annual
aggregate cap on the amount of these tax credits that can be
authorized by the department is $10 million.

Qualified research expenses will be limited to those incurred in
the research and development of agricultural biotechnology, plant
genomics products, diagnostic and therapeutic medical devices,
and prescription pharmaceuticals consumed by humans or animals.
Expenses incurred in the research, development, or manufacturing
of power system technology for aerospace, space, defense, or
implantable or wearable medical devices are also permitted.

The department director may allow a taxpayer to transfer up to
40% of the tax credits issued, but not yet claimed, between
January 1, 2010, and December 31, 2016.  The substitute requires
that the department director act between August 1 and August 15
on tax credit applications filed between January 1 and July 1 for
claims from the previous year.

The formula is specified by which tax credits will be issued if
the eligible claims for the credits exceed the annual cap.  No
one taxpayer can be issued more than 30% of the total amount of
tax credits authorized in any calendar year.

BUSINESS, EDUCATION, SCIENCE, AND TECHNOLOGY DISTRICTS

The substitute allows the governing body of a municipality to
establish a business, education, science, and technology (BEST)
district.  BEST projects may be implemented in the district
according to a BEST plan.  The district, plan, and project must
be established or adopted by ordinance.  The substitute specifies
the requirements of a BEST plan and the findings a municipality
must make before adopting a BEST plan.

Following a municipality's establishment of a BEST district and
adoption of a BEST plan and one or more BEST projects, the BEST
revenues estimated for the businesses within the BEST district
will be available for appropriation by the General Assembly from
the General Revenue Fund to the department for distribution to
the treasurer of the municipality.  Municipalities cannot commit
any BEST revenues prior to an appropriation being made from the
General Revenue Fund to the department for a particular BEST
project.  The municipality's treasurer will deposit the BEST
revenues into a segregated BEST Projects Financing Fund.  The
State Treasurer will be the custodian of the fund and may approve
disbursements.  The initial appropriation or disbursement will
not be made until the department director has approved a BEST
plan and projects.

The substitute specifies that "BEST revenues" means:

(1)  Fifty percent of the incremental increase in the general
revenue portion of eligible state sales tax revenues received
under Section 144.020, RSMo.  Sales tax revenue attributable to
retail sales will only be included in this amount if it can be
proven that the sales tax revenue is attributable to new sources
which did not exist in the state in the baseline year; and

(2)  State income taxes withheld from new employees by the
employers at the businesses located within the BEST project.

The substitute requires the department director to approve a BEST
plan and projects if certain specified findings are made.  The
initial appropriation of BEST revenues will not be made until the
department director, or his or her designee, finds that:

(1)  The BEST project will be completed and its obligations paid
within 25 years from the adoption of the municipal ordinance;

(2)  BEST revenues do not exceed 50% of the total BEST project
costs;

(3)  Municipal funding will provide funds for the BEST project
equal to at least 10% of the BEST eligible project's costs.
These funds must be available within 10 years following the
establishment of the BEST district;

(4)  At least one higher education institution has committed to
having a significant physical presence in the BEST district and
plans to offer educational resources in the BEST district such as
classrooms, curriculum, dedicated faculty, graduate students, and
defined partnerships with target industry clusters; and

(5)  The BEST plan and projects are financially feasible and will
result in a net benefit to the state.

No BEST district will have the power to acquire any real property
by eminent domain.  Revenues will only be used to pay for
specified eligible BEST project costs.  The municipality is
required to submit an annual report to the department which
includes certain specified information.

The provisions regarding tax credits on the sales tax paid on new
vehicles assembled and purchased in Missouri will expire
December 31 six years from the effective date.

The substitute contains an emergency clause.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of
$9,102,290 to Unknown in FY 2010, $9,080,203 to Unknown in
FY 2011, and $9,091,475 to Unknown in FY 2012.  Estimated Cost on
Other State Funds of $0 to Unknown in FY 2010, FY 2011, and FY
2012.

Missouri House of Representatives
95th General Assembly, 1st Regular Session
Last Updated November 17, 2009 at 9:24 am