HCS HB 1675 -- MANUFACTURING JOBS ACT

SPONSOR:  Nolte

COMMITTEE ACTION:  Voted "do pass" by the Committee on
International Trade and Immigration by a vote of 8 to 0.

This substitute establishes the Manufacturing Jobs Act which
provides incentives for qualified suppliers or manufacturing
facilities that create or retain Missouri jobs.  In its main
provisions, the substitute:

(1)  Defines a "qualified manufacturing facility" as a business
which:

(a)  Manufactures goods in Missouri;

(b)  Derives more than 10% of its total sales revenues from goods
produced at the facility which are ultimately exported outside
the United States or that derives more than 20% of its total
sales revenues from goods produced at the facility which are
exported outside of Missouri;

(c)  Makes an additional capital investment of at least $50,000
per full-time employee equivalent retained at the facility;

(d)  Manufactures a new product that has not been manufactured in
Missouri by the company that owns the facility at any time prior
to the date of the notice of intent; and

(e)  Continues to manufacture these goods for a period of at
least five years from the date of the notice of intent;

(2)  Defines "qualified supplier" as a company which:

(a)  Derives more than 10% of its total annual revenues from
sales to a qualified manufacturing facility;

(b)  Adds five or more new jobs;

(c)  Pays wages for new jobs that are equal to or exceed the
industry average wage for Missouri as determined by the
Department of Economic Development using the National American
Industry Classification System (NAICS) industry classifications;
and

(d)  Provides health insurance to employees and pays at least 50%
of the insurance premiums;

(3)  Allows a qualified manufacturing facility, upon approval of
a notice of intent by the department, to retain 50% of the
withholding taxes from retained jobs for 10 years and also remain
eligible to participate in the Missouri Quality Jobs Program if
it meets its requirements.  Qualified manufacturing facilities
cannot simultaneously receive benefits from:

(a)  New or expanded business facilities (Sections 135.100 -
135.150, RSMo);

(b)  Enterprise zones (Sections 135.200 - 135.286);

(c)  Relocation of a business to a distressed community (Section
135.535); or

(d)  Rural empowerment zones (Sections 135.900 - 135.906);

(4)  Specifies that if the facility is utilizing withholding
taxes from the new jobs for any other state program, the taxes
will first be credited to the other state program before they
will begin to accrue to this program.  If the facility is
participating in the New Jobs Training Program, it cannot retain
any withholding taxes that are already allocated for use in that
program;

(5)  Allows a qualified supplier, upon approval of a notice of
intent by the department, to retain 100% of the withholding taxes
from new jobs for three years.  If the qualified supplier pays
wages for the new jobs that are equal to or greater than 120% of
the industry average wage for Missouri as determined by the
department using NAICS industry classifications, it can retain
the withholding taxes for five years;

(6)  Requires the department to respond with an approval or
rejection within 30 days to a qualified manufacturing facility or
qualified supplier who provides a notice of intent to receive
benefits under this program.  Failure of the department to
respond will result in the notice of intent being deemed an
approval;

(7)  Specifies that any taxpayer who is awarded benefits under
this program and knowingly hires individuals who are not allowed
to work legally in the United States will immediately forfeit
these benefits and repay the state an amount equal to any
withholding taxes already retained;

(8)  Requires a qualified manufacturing facility or qualified
supplier that fails to comply with the provisions of the program
to repay all benefits previously obtained from the state with an
interest of 5% per year from the date the benefit was originally
received;

(9)  Requires the department to submit an annual report by
March 1 to the General Assembly with information on the
participating facilities and suppliers, the amount of benefits
provided, the net state fiscal impact, and the number of new and
retained jobs;

(10)  Limits the aggregate amount of retained withholding taxes
authorized under the program to $35 million per year; and

(11)  Specifies that taxpayers awarded benefits under the program
will not be required to obtain affidavits from subcontractors
regarding the employment of illegal immigrants.

The provisions of the substitute will expire six years from the
effective date.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of $99,259
to $35,099,259 in FY 2011, $108,949 to $35,108,949 in FY 2012,
and $112,217 to $35,112,217 in FY 2013.  No impact on Other State
Funds in FY 2011, FY 2012, and FY 2013.

PROPONENTS:  Supporters say that manufacturing facilities are
very important to the communities in which they are located.  The
bill will help by allowing Missouri to compete with other states
that have these types of incentives for manufacturers by making
it more attractive for them to locate new product-line facilities
in Missouri.  It also recognizes the importance of suppliers and
will assist the export market from Missouri providing one more
tool to encourage business expansion in Missouri.

Testifying for the bill were Representative Nolte; Associated
Industries of Missouri; Jim Stoufer, Village of Claycomo Board of
Trustees; Jeff Wright, United Auto Workers, Local 249; Randy
Bland, United Auto Workers, Local 710; Deb Hermann, Kansas City
Councilwoman; Greater Kansas City Chamber of Commerce; Economic
Development Corporation of Kansas City, Missouri; Clay County
Economic Development Council; Missouri Chamber of Commerce and
Industry; National Federation of Independent Business; Richard
Gronniger, Altec Industries, Incorporated; Carl Deutsch, Standard
Machine and Manufacturing Company; James T. Price, Spencer, Fane
Britt and Browne, LLP; Tony Miller, Penny Plate, Incorporated; Al
Close, Pittsburgh Corning Corporation; Kansas City Power and
Light; Kansas City Area Development Council; and Missouri
Economic Development Council.

OPPONENTS:  There was no opposition voiced to the committee.

OTHERS:  Others testifying on the bill say that it will provide
an incentive for manufacturing facilities to stay in Missouri.

Testifying on the bill was Department of Economic Development.

Missouri House of Representatives
95th General Assembly, 2nd Regular Session
Last Updated September 14, 2010 at 3:11 pm