 From Site Selection magazine, November 2002
U.S. LEGISLATIVE UPDATE
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New Mexico
The 2002 New Mexico Legislature appropriated $12 million to the state's Industrial Development Training Program, which is the largest appropriation in the program's 28-year history. The program allows training reimbursement for new hires for an amount up to 1,040 hours or six months. Training funds for new employees equal up to one half of the employee's salary for up to six months. Gov. Gary Johnson signed a bill that provides a 15-percent tax credit for direct film production expenditures made in New Mexico. These can include wages or salaries for talent, managers or labor provided New Mexico residents are involved. Another bill signed into law allows the state to invest in film projects when they are backed by a guarantee from a bank or substantial corporate entity.
New York
The state budget enacted in May 2002 authorizes more than $1 billion in new tax cuts for individuals and businesses during the next three years, including $700 million over three years from the state's decision not to decouple from a federal bonus depreciation measure, $311 million from moving forward with previously enacted tax cuts and $10 million in sales tax cuts from creating new sales-tax-free periods in lower Manhattan. The budget legislation maintains New York's link to recently enacted federal tax reduction for businesses that provides a new 30-percent bonus depreciation for investments that companies make after Sept. 11, 2001. The new tax cut will serve as an additional incentive to companies in New York to make investments in their business. The legislation also extends the Investment Tax Credit for the financial services sector until October 1, 2008. The Empire Zone program has been expanded with the authorization of 10 new zones, bringing the total to 72. Businesses that create new jobs within the zones do business essentially tax-free. The legislation created the Empire Opportunity Fund, a $100-million seed fund that will support major infrastructure projects that lead to the creation of new jobs. The budget provides $250 million for Centers of Excellence, which are collaborations involving universities, business and government leading to major research facility improvements and high-tech capital projects. Several research and development, small business and job-training programs also were granted new funding in the budget.
North Carolina
At press time, the North Carolina General Assembly's 2002 session was still in progress. Among the issues under consideration was legislation supported by Gov. Easley that would establish a job-development grant program that would allow new and expanding industries to apply for rebates of employee withholding taxes to a special authority established to administer the program. The North Carolina Economic Stimulus and Job Creation Act was written to make the Tarheel State more competitive with competing states in the Southeast and elsewhere. A committee of state revenue, commerce and budget officials would award job development grants to strategically important businesses and industrial projects, particularly those at risk of locating in other states. Grants would be funded over a period of years from a portion of employee withholding taxes for the new jobs at the new or expanded facility. The program is essentially self-funding from new revenue to the state. A quarter of the eligible grant amount in more developed counties would be used to fund the Utility Account of the Industrial Development Fund, which is a rural infrastructure fund. The Act also proposes changes to the William S. Lee Act that would improve the incentives component and provide funding to support other economic development initiatives. Specific changes include altering rates and increasing the threshold for machinery and equipment tax credits, deleting a second wage test corporate taxpayers must take in order to receive worker training tax credits and modifying the first wage test to encourage job creation and new investment.
North Dakota
Gov. John Hoeven's first year in office saw an ambitious economic development agenda advanced in the state legislature. A key element was the creation of the Dept. of Commerce, which combines Economic Development & Finance, the Division of Community Services the Tourism Dept. and the Workforce Development unit into a single agency charged with streamlining economic development and tourism. A new Economic Development Cabinet advises Lee Peterson, the Commissioner of the Dept. of Commerce. New tax credits were introduced, including a 30-percent investment tax credit to encourage investment in primary sector businesses in the state, investment tax credits for value-added agriculture and for wind energy, $2.5 million in additional tax credits for renaissance zones and sales tax exemptions on high-tech equipment. The legislature also expanded the Beginning Entrepreneur Loan Fund from $500,000 to $4 million and increased individual loan amounts to $100,000. Public venture capital was increased with $2.35 million earmarked for the North Dakota Development Fund; the fund now has more than $21 million in assets for public investment. Funding for the Work Force 2000 training program was increased $850,000 to $2.1 million, and funding for work force training delivered through higher education increased from $875,000 to $1.35 million. Education funding on both the K-12 and higher education levels was increased substantially, with technology scholarships introduced to keep college students working in North Dakota. More than $89 million was approved to develop a statewide, high-speed data, video and voice network linking North Dakota schools, colleges, courthouses and state agencies.
Ohio
Legislation signed into law in Ohio provides an administrative framework for implementing the Clean Ohio Fund program, a $400 million bond issue dedicated to brownfield cleanup efforts and green space preservation. Provisions include the Clean Ohio Revitalization Fund, in which proceeds from the sale of $200 million in state revenue bonds are to be deposited. Fifteen percent of the funds are to be used for loans; a $3 million cap applies to loans and grants. Bond obligations worth $50 million are to be issued each year with the funds used to make grants for brownfield projects. A new Clean Ohio Council reviews applications for award grants under the brownfield revitalization program. Immunity is established for applicants of Clean Ohio Funds who did not cause the release of hazardous substances and conducts cleanup or remediation of the property. An economic development stimulus bill includes a job retention tax credit against the corporation franchise or income tax for a business that has made capital investments of at least $200 million at a facility in the state during a three-year period. It establishes a loan guarantee reserve to encourage financial institutions to lend to small businesses that may not qualify fur such loans under conventional standards. And it expands the existing Tax Increment Financing (TIF) district statute to create Area TIFs, which are not to be more than 300 acres (121 hectares) in size. The bill also extends the Rural Industrial Park Loan program until July 2007 and creates a Rural Development Initiative Fund. A budget corrections bill provides $50 million in bond money from the Higher Education Improvement Fund to fund development of Wright Centers as part of the governor's Third Frontier Project. Another bill signed into law established the Ohio Aerospace and Defense Advisory Council to examine the existing and proposed laws and policies of the state that may affect the growth of the aerospace and defense industry in Ohio. And a new Ethanol Incentive Board allows nonrefundable credits against the corporation franchise or income tax for taxpayers that invest in ethanol plants. The credit is equal to 50 percent of the money invested, not to exceed $5,000.
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