HCS HB 854 -- JOB DEVELOPMENT PROGRAMS

SPONSOR:  Richard

COMMITTEE ACTION:  Voted "do pass" by the Committee on Job
Creation and Economic Development by a vote of 14 to 0.

This substitute changes the laws regarding job development
programs administered by the Department of Economic Development.

TAX INCREMENT FINANCING

The substitute:

(1)  Specifies that at no time can the annual amount approved for
disbursement from the Missouri Supplemental Tax Increment
Financing (TIF) Fund together with the annual amount approved for
disbursement from the State Supplemental Downtown Development
Fund exceed $140 million.  Currently, the aggregate appropriation
to only the TIF fund cannot exceed $15 million (Section 99.845,
RSMo); and

(2)  Removes the requirement that all personnel and other costs
incurred by the Department of Economic Development for the
administration and operation of the Missouri Supplemental TIF
Fund must be paid from general revenue and reimbursed by the TIF
projects' developers.  However, the state can still ask that the
reasonably incurred expenses of the departments of Economic
Development and Revenue for the administration of the TIF
projects be reimbursed from the revenues deposited into the
Missouri Supplemental TIF Fund (Section 99.845);

BUSINESS USE INCENTIVES FOR LARGE-SCALE DEVELOPMENT PROGRAM
(BUILD)

The substitute:

(1)  Authorizes certain development agencies or a corporation,
limited liability company, or partnership that is formed on
behalf of the development agency to act as an eligible industry
as it relates to the Business Use Incentives for Large-Scale
Development (BUILD) Program (Section 100.710); and

(2)  Requires that $950,000 of the $15 million in tax credits
authorized annually for BUILD be reserved for an approved project
in the City of Kansas City (Section 100.850);

MISSOURI QUALITY JOBS PROGRAM

The substitute:

(1)  Establishes the Missouri Quality Jobs Program to provide
incentives to businesses in return for the new tax revenues and
other economic stimulus that will be produced by the new jobs
created as a result of the program (Section 620.1875);

(2)  Prohibits any qualified company that receives benefits
through the program from receiving tax credits or exemptions for
the same new jobs at the project facility through new or expanded
business facilities, enterprise zones, relocating a business to a
distressed community, and rural empowerment zones (Section
620.1881);

(3)  Defines the following four project types (Section 620.1881):

(a)  Small and expanding business projects which create at least
20 new jobs in two years if located in a rural area or 40 new
jobs in two years if located elsewhere.  In either case, the
business cannot have more than 100 total employees.  Qualified
companies may retain for three years an amount equal to the
withholding taxes from the new jobs if the average wage of the
new payroll equals or exceeds the county's average wage.  If the
average wage of the new payroll is at least 120% of the county's
average wage, the amount may be retained for five years;

(b)  Technology business projects which create at least 10 new
jobs within two years.  Seventy-five percent of the jobs must be
directly involved with the operations of the technology company.
Qualified companies may retain for five years an amount equal to
a maximum of 5% of the new payroll from the withholding tax of
the new jobs if the average wage of the new payroll equals or
exceeds the county's average wage.  An additional 0.5% of new
payroll may be retained if the average wage of the new payroll
exceeds 120% of the county's average wage in any year.  If the
average wage of the new payroll exceeds 140% of the county's
average wage in any year, an additional 0.5% may be retained.
The Department of Economic Development will issue a refundable
tax credit for any difference between the benefit allowed and the
withholding tax retained in the event that the withholding tax is
not sufficient to provide the entire benefit due to the qualified
company.  The maximum amount of tax credits that can be issued in
a calendar year is $500,000 and cannot be carried forward but can
be sold.  A refund will be issued to the qualified company if the
credits exceed the company's tax liability.

(c)  High-impact projects which create at least 100 new jobs
within two years.  Qualified companies may retain an amount from
the withholding tax of the new jobs equal to 3% of new payroll
for a period of five years if the average wage of the new payroll
equals or exceeds the county's average wage.  A qualified company
may retain 3.5% of new payroll if the average wage of the new
payroll in any year exceeds 120% of the county's average wage or
4% of the new payroll if the average wage in any year exceeds
140% of the county's average wage.  An additional 1% of new
payroll may be added if local incentives are between 10% and 24%
of the new direct local revenues; 2% of new payroll may be added
if the local incentives are between 25% and 49%; or 3% of payroll
may be added if the local incentives are 50% or more of the new
direct revenue.  The department will issue a refundable tax
credit for any difference between the benefit allowed and the
withholding tax retained in the event that the withholding tax is
not sufficient to provide the entire benefit due to the qualified
company.  The maximum amount of tax credits that can be issued in
a calendar year is $750,000.  This amount can be increased to $1
million if the action is proposed by the department and approved
by the Quality Jobs Advisory Task Force.  This tax credit cannot
be carried forward but can be sold.  A refund will be issued to
the qualified company if the credits exceed the company's tax
liability; and

(d)  Job retention projects which the qualified company has
employed at least 1,000 full-time, year-round employees during
the two years prior to the year in which the application for the
program is made.  The average wage for these employees must be
greater than the county's average wage and the same level of
full-time, year-round employees must be retained after the
application is made.  The qualified company will make a $70
million investment within two years of making an application for
the program.  Local taxing entities must provide local incentives
of at least 100% of the new local revenues created by the project
for 10 years.  The tax credit will be up to 50% of the
withholding tax generated by the full-time, year-round employees
at the project facility for five years.  The maximum amount of
tax credits that can be issued in a calendar year is $750,000.
This amount can be increased to $1 million if the action is
proposed by the department and approved by the Quality Jobs
Advisory Task Force.  The total amount of tax credits issued for
all projects cannot exceed $3 million annually, and no tax
credits will be issued after August 30, 2007.  This tax credit
cannot be carried forward but can be sold.  A refund will be
issued to the qualified company if the credits exceed the
company's tax liability;

(4)  Requires qualified companies to provide an annual report to
the department documenting the basis for the benefits of this
program (Section 620.1881);

(5)  Stipulates that the maximum amount of tax credits that can
be issued in a calendar year for the entire program is $12
million.  The substitute reduces the annual amount of tax credits
that can be authorized for relocating a business to a distressed
community from $10 million to $8 million and specifies that the
remaining $2 million must be transferred to the program.  There
is no limit on the amount of withholding taxes that may be
retained by approved companies under the program (Section
620.1881);

(6)  Establishes the Quality Jobs Advisory Task Force consisting
of the chairperson of the Senate's Economic Development
Committee, the chairperson of the House of Representative's
Economic Development Committee, the Minority Floor Leader of the
Senate, the Minority Floor Leader of the House of
Representatives, the Director of the Department of Economic
Development, and two members appointed by the Governor (Sections
620.1884 and 620.1887);

(7)  Requires the department to submit an annual report to the
General Assembly by March 1 of each year.  The substitute
specifies the requirements of the report (Section 620.1890);

(8)  Authorizes the department to charge the recipient of any tax
credit a fee in an amount of up to 2.5% of the tax credits
issued.  The fee must be paid when the tax credits are issued;
however, no fee will be charged for Youth Opportunities and
Violence Prevention, Family Development Account, or Neighborhood
Assistance tax credits (Section 620.1900); and

(9)  Creates the Economic Development Advancement Fund for the
deposit of all fees for tax credits.  At least 50% will be
appropriated for marketing, technical assistance, training,
contracts for specialized economic development services, and new
initiatives and pilot programming to address economic trends.
The remaining money may be appropriated for staffing, operating
expenses, and accountability functions of the department (Section
620.1900).

LOCAL OPTION SALES TAX

Any city or county is authorized to levy a sales tax of up to
0.5%, upon voter approval.  This tax must be in lieu of the
economic development sales tax allowed by Sections 67.1300 and
67.1303.  Revenue collected from this tax will be deposited by
the Director of the Department of Revenue in the city's or
county's local option economic development sales tax trust fund.
These funds will not be considered state money and will be
distributed monthly to the city or county which levied the tax.
The substitute specifies how the funds are to be spent and
requires that the city or county establish an economic
development tax board.  The Department of Economic Development
must submit to the Joint Committee on Economic Development by
March 1 of each year a one-page report summarizing the status of
each project using this sales tax.  The substitute specifies what
must be included in this report (Section 67.1305).

HEALTH CARRIERS

Any health carrier that provides group health insurance plans or
health benefits to an employer is required to provide a statement
of the annual claims history for the last three years when the
employer requests this information.  The information must be
provided within 30 days of the request and must include the total
aggregate amount of claims paid and the total number of claims
filed for each annual period.  This information can only be used
by the employer for evaluating and marketing the group insurance
program.  The information must be furnished in a manner that does
not identify any individual and must comply with all state and
federal privacy laws regarding the disclosure of health records
(Section 376.1600).

FISCAL NOTE:  Estimated Cost on General Revenue Fund of Unknown
in FY 2006, FY 2007, and FY 2008.  Could exceed $100,000.  No
impact on Other State Funds in FY 2006, FY 2007, and FY 2008.

PROPONENTS:  Supporters say that this is the kind of program
Missouri needs to become competitive with other states.  The bill
will encourage and assist Missouri companies to expand because it
provides an incentive to hire new employees, provide health care
for those employees, and pay a better wage.  The program will
allow companies to retain a percentage of the withholding tax
that goes to the state, and the employees receive credit for the
full amount of the taxes paid.  The employer only retains this
money for new jobs, and these jobs must pay a higher-than-average
wage and provide health insurance for which they pay at least 50%
of the premium.  This can benefit a variety of companies,
including small businesses.

Testifying for the bill were Representative Richard; Department
of Economic Development; Missouri Economic Development Council;
Missouri Chamber of Commerce and Industry; Missouri Association
for Social Welfare; Missouri Community Colleges Association;
Express Scripts, Incorporated; St. Louis County Economic Council;
City of Kansas City; Center for Emerging Technologies; Cannon
Economic Development Consulting, LLC; and St. Louis Regional
Commerce and Growth Association.

OPPONENTS:  There was no opposition voiced to the committee.

Alice Hurley, Legislative Analyst

Missouri House of Representatives
93rd General Assembly, 1st Regular Session
Last Updated August 25, 2005 at 1:20 pm