Biggins Lacy Shapiro & Company, LLC

Legislative Update - Summer 2019


Significant changes in state incentives programs and other economic development policy initiatives are emerging from 2019 legislative sessions. Our research team is actively following all 50 states so you don't have to.

Here are recent changes across the United States and Puerto Rico. 

Northeast
Maine

Food Processing Tax Credit:  Passed in June, the food processing tax credit allows eligible Maine companies to receive a refundable tax credit equal to two percent of their investment for 20 years.  Companies must make a minimum investment of $35 million and be previously headquartered in Maine for at least five years.

New Jersey

The primary NJ incentives programs “sunset” on June 30, 2019 without replacement programs having been enacted. Whereas the legislature passed an extension of current programs as a bridge until new legislation can be enacted, the Governor has publicly stated that he would veto that extension bill, seeking to motivate the legislators to enact his proposed program revisions. Given the continuing lack of consensus between the Governor and Legislature over the details of future incentives programs, as of this writing (August 5, 2019), it is reasonably likely that the current state of impasse – in which the State has no operative programs for job and investment attraction – may continue for an extended period of time. BLS & Co. will provide updates on this page as circumstances evolve, and will upon request provide briefings on the specific program proposals being advanced by the Administration and the primary legislators active in this process.  

Vermont

HB533 - Provides $1.95 million for expanded incentives, including incentives of up to $7,500 per family to new workers who move to the state to work for a Vermont company, and $2 million in tourism marketing funds as well as an additional $225,000 to market Vermont as a place to live and work.

Additionally, new legislation provides funding to workforce training initiatives to better enable populations with traditional barriers to employment to enter the workforce, with emphasis placed on the corrections population, workers in recovery and new Americans.

Midwest
Illinois

Blue Collar Jobs Act (Beginning Jan 1, 2021):  For projects making a minimum real property investment of at least $10 million and qualifying for the EDGE, HIB, or Enterprise Zone programs, the Department of Commerce and Economic Opportunity has the discretion to approve a “New Construction Project” designation which awards additional, non-refundable tax credits to a project. Tax credits are equivalent to 50% of the incremental income tax paid by construction workers and laborers associated with the real property investment. An additional 25% can be awarded to the tax credits if the project is located in an underserved area. The total Blue Collar Jobs tax credits awarded by DCEO in any fiscal year cannot exceed $20 million. The program requires contractors and subcontractors associated with designated projects to file certified payroll information associated with the project.

Data Center Tax Exemption (SB 690): Data centers investing more than $250 million and creating more than 20 new jobs over a five-year period are eligible for sales tax exemptions on qualifying tangible personal property including new equipment, construction materials, and building infrastructure in addition to excise tax exemptions on electricity consumed at the facility.

Indiana

Data Center Tax Exemptions: Beginning July 1, 2019, a sales tax exemption on data processing equipment and electricity used at the facility is available to data center projects investing at least $150 million over a five-year period. The sales tax exemption is awarded for 25 years and can be extended to 50 years for projects investing at least $750 million.  A negotiated exemption on personal property tax is also available at the discretion of the local government(s).

Economic Development for a Growing Economy Program (EDGE): Beginning July 1, 2019, the IEDC may include non-resident employees in the calculation of EDGE. Additionally, the IEDC may enter into an agreement with states with a reciprocal agreement to help cover the cost of employees who live in another state but work in Indiana.

Hoosier Business Investment Tax Credit Program (HBI): HBI has been expanded to include refurbished machinery, technology-integrated equipment, 3D and other digital printing used in manufacturing to be considered a qualified investment. For taxable years beginning after December 31, 2018 and before January 1, 2030, digital manufacturing equipment can qualify for a 15% credit as opposed to the standard 10% or 25% in the case of logistics investment.

Headquarters Relocation Tax Credit: The HQRTC is expanded to allow companies who have received at least $4 million in venture capital within 6 months of submitting an application to the IEDC for a Small HQRTC. The company must commit to relocating either its corporate headquarters or the number of jobs that equal 80% of the total payroll to Indiana for at least 5 consecutive years after first incurring relocation expenses. This new subset of companies is subject to a $5 million cap for each state fiscal year, but the credit is refundable for these companies.

Industrial Recovery Tax Credit: The program sunsets on December 31, 2019.

Redevelopment Tax Credit: The Redevelopment Tax Credit replaces the Industrial Recovery Tax Credit program, starting on January 1, 2020. The industrial site and square footage requirements are removed and the following changes are made:

  • Allows vacant land and brownfield sites over 50 acres to be considered a qualified redevelopment site.
  • Increases the amount of credit a taxpayer may receive if the site is within the geographical jurisdiction of a Regional Development Authority.
  • Allows for a 5% increase to the credit if the site is located in a Qualified Opportunity Zone or qualifies for a New Markets Tax Credit, subject to the IEDC’s discretion.
  • Requires repayment of any credit award exceeding $7 million, except in certain circumstances.
  • Caps the program at $50 million annually, with certain exceptions.
Kentucky

Kentucky Business Investment Program (KBI) - SB 246 amends the Kentucky Business Investment Program to allow for an additional 5 years of KBI benefits for projects which invest at least $200 million but do not locate in “enhanced incentive counties”.

Minnesota

Angel Tax Credit: Newly enacted legislation provides a 25% credit to investors or investment funds that put money into startup companies focused on high technology, new proprietary technology or a new proprietary product, process or service in specific fields.

Missouri

Missouri Works – Deal Closing Fund: Legislation targeting a General Motors OEM plant expansion enacted a highly discretionary “Deal Closing Fund” designation to the Missouri Works program. The designation allows for Missouri Works tax credits to be awarded prior to job creation occurring in an expansion, with performance clawback contingencies.  A maximum of $5 million in tax credits can be awarded for up to 10 years.                

Missouri Fast Track: Newly enacted workforce training program which fills workforce gaps through financial aid and tuition assistance for adults age 25 or older pursuing education or certificate training in high demand industries.                      

Missouri One Start: Consolidates Missouri's workforce programs that help businesses recruit, onboard, and train job applicants during major expansions by providing pre-employment screening of potential job applicants, employment marketing/recruiting, and customized training for approved employers.  

North Dakota

21st Century Manufacturing Tax Credit: HB 1040 reinstates the expired Automation Tax Credit and provides a 20% tax credit on equipment and technology used to automate a manufacturing process.

North Dakota New Jobs Training Program: The state provides a variety of training programs in the form of loans and grants. Loans are repaid through state income tax withholding credits (HB 1016 places a cap of $2.5 million in awarded tax credits for FY2020 through FY2021). The state also assists firms in recruiting, screening, and testing potential trainees.

South
Alabama

Alabama Incentives Modernization Act: Expands the definition of “rural” counties from counties with population less than 25,000 to a new 50,000 limit or counties which have lost population allowing for an increase in eligible incentive benefits for projects. The Act also targets high-technology companies by allowing for increased benefits under the Alabama Jobs Act including the investment tax credit. The Act also increases incentive benefits for projects locating in federal Opportunity Zones as well as increasing funding mechanisms for the Growing Alabama Credits program.

Arkansas

HB 1490: Amends the Consolidated Incentive Act of 2003 which provides economic development tax incentives to promote economic development in Arkansas. The bill also makes changes to the following programs:

  • Job-creation tax credit: The bill gives the qualified business an additional tax credit of 1% if the average hourly wage paid to employees exceeds 125% of the lesser of the county or state average hourly wage for the county in which the qualified business is located or expands.
  • Investment tax incentives: The bill increases the county investment thresholds.
  • Economic Development Incentive Fund: The bill gives AEDC discretion to offer lower payroll thresholds for businesses located in Tier counties 2, 3 and 4 and allow an additional 1% rebate if the average hourly wage paid to employees exceeds 125% of the county or state average hourly wage. The payroll threshold for eligibility would be changed to: Tier 2 Counties -- $1,750,000; Tier 3 Counties -- $1,500,000; and Tier 4 Counties -- $1,250,000.
Florida

Florida Job Growth Grant Fund: Created in 2017, the Florida Job Growth Grant Fund (FJGGF) provides funding to local governments for public infrastructure projects (including transportation and utility needs) and job training initiatives. For the 2019-20 fiscal year (July 1-June 30), $40 million has been made available for the fund.

North Carolina

Job Development Investment Grant (JDIG):  Several new legislative changes were enacted over the past year to greatly expand the discretionary awards available to projects:

  • Increase in the JDIG per job award cap from $6,500 to $16,000 on all JDIG awards.
  • Creates a “high-yield” project designation for projects that invest at least $500 million and create at least 1,750 jobs. High-yield projects can qualify for a JDIG award of up to 90% of new job personal income tax withholdings (increase from the normal from 75%) for up to 20 years (increase from the normal 12 years).
  • Creates a “transformative” project designation for projects that invest at least $1 billion and create at least 3,000 jobs. Transformative projects can qualify for a JDIG award of up to 90% of new job personal income tax withholdings (increase from the normal from 75%) for up to 30 years (increase from the normal 12 years).
South Carolina

Carolina Panthers Bill (HB 4243) and Jobs Tax Credit Changes: Commonly referred to as the “Panthers’ Bill”, in an effort to attract the neighboring Carolina Panthers’ headquarters and practice facility to South Carolina, HB 4243 makes significant changes to Job Tax Credit awards in Tier III and IV counties. The new bill increases tax credits from $4,000 to $20,250 per job in Tier III counties and increases tax credits from $8,000 to $25,000 per job in Tier IV counties.

Tennessee

Job Tax Credit: Legislation approved eliminating the following program features:

  • Discretion to lower JTC job threshold in enhancement counties (Tiers 2, 3, and 4)
  • Discretion to lower job threshold for super JTC, amount of credit lowered in proportion to lowered job threshold
  • Discretion to lower job threshold for headquarters jobs tax credit (credit starts at 100 job thresholds at $10,000 per job and increases up to $40,000 per job for 500+ jobs)
  • Discretion to lower job threshold for HQ sales & use tax credit
Texas

Chapter 312 Property Tax Abatement: HB 3143 reauthorizes the Chapter 312 property tax abatement program for an additional ten years until 2029. In addition, the bill adds new public notice and hearing periods with 30 days’ public notice required prior to a meeting be held.

West
California

California Competes Tax Credit (“Cal Competes”): This discretionary program has been re-authorized through fiscal year 2022-2023 and makes available an annual total of $180 million of corporate income tax credits to businesses that create new jobs and make capital investments.  

March 25, 2019 marked the deadline to apply for the final round of Cal Competes credits in fiscal year 2018 - 2019. In FY 2019 – 2020, the Cal Competes program is expected to again take applications and award tax credits via three competitive funding rounds, most likely adhering to the established July/January/March timeframes. As the program is always over-subscribed, it’s generally advised to apply during one of the earlier funding rounds if possible.

Colorado

In-state Tuition Rate Benefits: House Bill 07-1256 provides the Colorado Office of Economic Development and International Trade (OEDIT) with the ability to grant immediate in-state tuition rate benefits at public institutions of higher education for employees and their direct dependents that relocate to Colorado as a result of receiving an economic development incentive from the state or a local government. 

Montana

HB 52: Reauthorizes technical assistance and grant programs under the Departments of Agriculture and Commerce which were scheduled to sunset in July 2019.

New Mexico

High Wage Jobs Tax Credit: Refundable corporate income tax credit equal to 8.5% (new change down from 10%) of wages and benefits paid for each job created and retained for a 44-week period.  [NOTE: revisions take effect on July 1, 2019].  

Oregon

As of this writing, Oregon is expected to add certain public benefits conditions to all incentives programs. This could include requirements for community engagement, or social policy goal obligations such as local procurement, diversity, etc. BLS & Co. will continue to monitor the situation and will provide updates as appropriate.

Utah

Rural Economic Development Incentive Program (REDI): Newly created program which awards post-performance grants for businesses creating new, high-paying jobs in counties with populations of 31,000 or less. To qualify, businesses must create new jobs that pay at least 125% of the average county wage. These jobs can be remote, in a satellite hub/office, or physically located in the same county as the business. They also cannot be primarily engaged in construction, retail, staffing or public utilities industries. A business considering the REDI grant must apply for and receive approval through GOED in advance of creating a new position. Qualifying businesses can receive $4,000 to $6,000 for each new full-time employee position. The incentive has an annual cap of $250,000 per company.

Talent Ready Utah Grants: Newly-created program which has been designed to strengthen collaboration between education, industry, and economic development in order to better respond to the needs of regional and statewide-designated clusters. Talent Ready Utah has been a successful model for collaboration in cluster industries and has demonstrated success in developing new educational programs supporting industry growth.

Utah Works: This new program, under the direction of the center and the talent ready board, will develop workforce solutions and incentive grants that meet the needs of the businesses that are creating jobs and economic growth in the state. 

Puerto Rico
Puerto Rico

Federal Opportunity Zone Incentives: Approximately 95% of the Island is classified as a Federal Opportunity Zone. Investing in the Opportunity Zone offers three significant benefits: 1) Temporary deferral of income tax on gains invested in an Opportunity Fund; 2) Step-up basis for gains invested in an Opportunity Fund; and 3) Income tax exclusion of Opportunity Fund gains.

Local Opportunity Zone Incentives:  Puerto Rico offers additional benefits to augment those available through federal legislation: 18.5% tax on Opportunity Zone Fund income; 100% tax exemption on interest and dividends; 25% exemption on license, property, and construction excise tax; tax deferment on capital gains; credit priority system for Priority Projects; up to 25% tax credit for investment; and simplified project evaluation and permits.


Published: 8/1/2019
Biggins Lacy Shapiro & Company, LLC
609-924-9775
info@blsstrategies.com