SCS/SB 279 - This act establishes the Compete Missouri Program which combines six existing business incentive programs and will provide tax incentives for job creation and capital investment. The act also establishes the Compete Missouri Job Training Program which combines three existing job training programs and provides funding for job training.COMPETE MISSOURI JOB TRAINING PROGRAM
The act establishes the Compete Missouri Job Training Program which will provide financial assistance for job training for new jobs created by qualified companies. Financial assistance will also be available to business and technology centers established by Missouri community colleges, or state-owned postsecondary technical colleges, to provide business and training services for growth industries. The act provides for the diversion of withholding taxes from new or retained jobs of qualified companies to pay costs incurred by new or retained jobs training projects administered by local educational agencies such as community and technical colleges.
The provisions of the act creating the Compete Missouri Training Program will automatically sunset July 1, 2018, unless reauthorized.
COMPETE MISSOURI PROGRAM
The Compete Missouri Program is established to provide tax incentives in the form of sales and use tax exemptions, retained withholding taxes, and refundable income and financial institutions tax credits for qualified companies that create new jobs and make capital investments. The program provides both entitlement and discretionary benefits for qualified companies that offer health insurance to all employees and pay at least fifty percent of the premiums. Tax credits provided under the program are fully transferrable and must be used within one taxable year following the close of the taxable year in which they are issued.
SALES AND USE TAX EXEMPTIONS
Qualified companies, which create a minimum of twenty new jobs with an average wage equal to or exceeding ninety percent of the county average wage, will be eligible to receive up to three years of state and local sales tax exemption for purchases of tangible personal property and building materials used to construct, repair, or remodel a project facility. If a qualified company is an information technology business, it may also receive up to five years of state and local sales tax exemptions for utilities and telecommunications services purchased for use at the project facility. The department of economic development will certify qualified companies for the state sales tax exemptions while local governments will have the option to certify qualified companies for exemptions from their local sales taxes. The act contains recapture provisions requiring repayment of tax incentives in the event a qualified company fails to meet program requirements.
JOB CREATION BENEFITS
Qualified companies that create twenty or more new jobs with an average wage equal to or in excess of ninety percent of the county average wage will be entitled to retain withholding taxes from new payroll for a period of five years. Such a company will also be entitled to tax credits equal to up to two percent of new payroll to be issued each year for five years, provided that the combined tax credit and retained withholding benefits cannot exceed five percent of new payroll. The act gives the department of economic development the discretion to issue such company additional tax credits, equal to up to four percent of payroll, for five years provided that the total amount of all benefits received does not exceed nine percent of new payroll annually. In addition, discretionary tax credits authorized by the department cannot exceed the projected net state benefit.
If a qualified company is in a targeted industry and it creates ten or more new jobs with an average wage equal to or in excess of ninety percent of the county average wage, it will be entitled to retain withholding taxes from new payroll for a period of five years. Such a company will also be entitled to tax credits equal to up to three percent of new payroll to be issued each year for five years, provided that the combined tax credit and retained withholding benefits cannot exceed six percent of new payroll. The act gives the department of economic development the discretion to issue such company additional tax credits, equal to up to six percent of new payroll, for five years provided that the total amount of all benefits received does not exceed nine percent of new payroll annually. Discretionary tax credits authorized by the department cannot exceed the projected net state benefit.
Qualified companies, located within an enhanced enterprise zone, that create two or more new jobs with an average wage equal to or in excess of eighty percent of the county average wage and make a capital investment of at least one hundred thousand dollars will be entitled to retain withholding taxes for a period of five years. If a qualified company is located within a dormant manufacturing zone and it creates two or more jobs with an average wage equal to or in excess of eighty percent of the county average wage, it will be entitled to retain withholding taxes from the new payroll for five years.
Any qualified company that is an existing Missouri business and meets the aforementioned conditions under the compete Missouri program will be entitled to retain withholding taxes for an additional year.
As an alternative to all other benefits available under the program, the department of economic development may provide up-front financing to qualified companies in the form of refundable tax credits capable of being issued upon approval of the project. To receive such benefits, a qualified company must enter into a written agreement with the department that provides performance requirements and clawback provisions. Qualified companies in targeted industries could receive tax credits equal to as much as nine percent of new payroll projected over a five year period. Non-targeted industry qualified companies could receive tax credits equal to as much as seven percent of new payroll projected over a five year period.
GENERAL PROGRAM REQUIREMENTS
The Department of Economic Development is required to respond to a request for a proposed benefit award under the Compete Missouri Program within five business days of the receipt of such request. The response must contain either a proposal of benefits or a written refusal stating the reasons no proposal will be provided. Failure by the department to approve or disapprove a notice of intent for benefits under the program will result in a deemed approval. Beginning January 1, 2012, the department of economic development must provide quarterly reports on the program to the general assembly, including a listing of all approved and disapproved applicants and the department's response time to requests for proposed benefit awards. Qualified companies that receive benefits under the program will be required to provide annual reports to the department, in order to document compliance with all applicable requirements and stating the amount of sales taxes exempted.
The act prohibits the approval of new projects after August 28, 2011, under the Quality Jobs, Enhanced Enterprise Zone, BUILD, Development, Rebuilding Communities, and Business Facilities programs.
The act limits the amount of up-front job creation tax credits that may be authorized each fiscal year to no more than:
1) $15 million for FY 2012;
2) $30 million for FY 2013;
3) $45 million for FY 2014; and
4) $60 million for FY 2015 and all subsequent fiscal years.
The total amount of all tax credits authorized for each fiscal year under the Compete Missouri Program including any up-front job creation tax credits and any outstanding authorizations for tax credits under the six programs prohibited from approving new projects after August 28, 2011, cannot exceed:
1) $111 million for FY 2012;
2) $126 million for FY 2013; and
3) $141 million for FY 2014 and each subsequent fiscal year.
The provisions of the act creating the Compete Missouri Program will automatically sunset six years after the effective date of the act unless reauthorized.
JASON ZAMKUS