US LegiSLative & incentive Update - Hickey and Associates · 2019. 8. 1. · US LegiSLAtive & incentive UpdAte WinteR 2017 Since the beginning of 2016, state legislatures and political

US LegiSLative & incentive UpdateWINTER 2017

© 2017 Hickey & Associates. All Rights Reserved. 2

US LegiSLAtive & incentive UpdAte WinteR 2017

SITE SELECTION &LOCATION ADVISORY

CREDITS &INCENTIVES PRACTICE

INCENTIVE COMPLIANCE & MANAGEMENT

LABOR ANALYTICS

LOGISTICS/SUPPLY CHAIN

Hickey & Associates (H&A) is a global leader in site location strategy, economic incentive advisory, and workforce solutions with active projects in the Americas, Asia, europe, Australia, and Africa. Utilizing state-of-the-art tools and techniques, H&A assists businesses in determining the best location to expand, relocate or consolidate anywhere in the world.

Over the past three decades, H&A’s incentive advisory team has identified, negotiated, captured, and administered economic incentives for their corporate clients. Offering experience in every major sector, H&A has developed proprietary models, innovative tools, and high-tech resources that streamline the process of incentive identification, negotiation and delivery, ultimately ensuring clients receive the most value with limited risk.

Our site selection and public incentives experts are based in key strategic markets to maximize your business goals with enhanced local knowledge and client service. With fifteen offices across the U.S., H&A ensures our service is always aligned with each unique local environment. internationally, our locations in Mexico city, São paulo, London, Berlin, Shanghai, Hong Kong, Singapore, and Sydney ensure global site considerations are well covered.

aBOUt HicKeY & aSSOciateS

San Francisco

Minneapolis New YorkPhiladelphia

Washington DC

Mexico City

São Paulo

Bogotá

London Berlin

Shanghai

Hong Kong

Sydney

Tokyo

Bangalore

Milan

Santiago

Buenos Aires

San José

MiamiTel Aviv

Singapore

US LegiSLAtive & incentive UpdAte


WinteR 2017

introduction 4State Legislative & incentive Summary 5

program Spotlight 15State Minimum Wage Update 16

Federal view 17



Since the beginning of 2016, state legislatures and political officials were active dealing with economic policies as the landscape evolves out of the challenging financial situations many faced in recent years. Programs dealing with economic development policy are constantly changing to spur business investments and job growth throughout the nation in all various industries and sectors. driven by relentless competition, government leaders seek innovative techniques to provide economic assistance to investors and companies while encountering budgetary constraints.

Leaders have been facing these budgetary constraints for several years now, confining the ability to provide effective economic development incentives. in order to remain competitive, states are continually creating new programs, adjusting current policies, and even eliminating certain efforts altogether. As they face budget cuts, they have to think strategically about the most cost-effective support programs going forward.

Several states, including Illinois, Florida, and Louisiana, are facing significant budget issues, leaving them to effectively suspend certain incentive programs. How are states dealing with these support gaps? in the following report, H&A illustrates the most updated and crucial legislative changes across the United States over recent months. the report highlights how policymakers are tackling their budget constraints, yet dealing with economic development in an increasingly competitive environment.

Additionally, the report takes a look at a few key updates to federal economic development policy. While incentives are typically driven at the state and local levels in the United States, the federal government also leverages funding to support economic development around the country.

Finally, H&A also takes a quick look at a critical factor in the location decision process – minimum wage. currently, a hot button issue across America, many states and communities are making significant changes to their minimum wage laws.

We invite you to thoroughly read the report and contact us to start the conversation on how to best leverage these changes in your next business investments. the changes are evidence of the active nature of the American economy, and ultimately the evolution of economic development in the country.

intrOdUctiOn

StateLegiSLative &incentiveSUmmarY



aLaBamaBusinesses requiring skilled trade workers have a new tool through the Alabama department of commerce. established through the Apprenticeship tax credit Act of 2016, companies can capture a $1,000 income tax credit for each worker in the apprenticeship program. to be eligible, apprentices must be registered in the US department of Labor program and meet strict classroom and on-the-job training requirements. targeted industry sectors for the program include: Healthcare, construction/carpentry, information technology, distribution/transportation/logistics, and Advanced manufacturing/industrial.

to combat diminishing access to health care in rural Alabama, Senator gerald dial introduced legislation to attract more medical professionals. Senator dial’s bill would extend an existing $5,000 annual income tax credit for 10 years to physicians locating in a community of 25,000 people or less. the current program is limited to 5 years. the legislation would also expand the tax credit to dentists.

aLaSKaAfter a number of iterations by the Alaska State Legislature, governor Bill Walker signed HB 247, legislation reforming the state’s oil and gas tax credit system. the bill intended to provide comprehensive changes to the system to reduce costs in a difficult budget environment. Among a number of modifications, key highlights of the legislation included a phase out of three major credits for cook inlet, implementation of $1/bbl flat tax on oil produced in certain areas, and adds a cap on the number of repurchased tax credits receivable by a single company each year.

Additional initiatives are being debated in Juneau to address the challenging budget situation facing the state, including the enactment of a state income tax.

arKanSaSvoters from the natural State approved changes to the Arkansas constitution last year for economic development purposes. the intent of the amendment is to provide more flexibility for cities and counties to provide incentives, particularly bonds for infrastructure and significant projects. Through the amendment, a 5% cap on Super project general Obligation Bonds is effectively removed, thus allowing for more opportunity to compete for major projects.

caLifOrniathrough the california Alternative energy and Advanced transportation Financing Authority (cAeAtFA), in conjunction with the california public Utilities commission (cpUc), is rolling out pilot programs throughout 2017 offering financial support for energy efficiency investments. Over the coming months, these programs are expected to be launched providing direct support for commercial and residential investments through financing, energy service agreements, and leases.

employers in the golden State with more than 25 employees are now paying a higher minimum wage. companies with less than 25 or fewer employees have one additional year before facing the higher wages. effective on January 1, 2017, the minimum wage is $10.50 per hour. Beginning in 2018, the minimum wage increases to $11/hour, and then increases $1/hour each year through January 1, 2023, to an ultimate level of $15/hour. governor Jerry Brown signed the changes into law in July 2016.



cOLOradO Legislation came into effect expanding the popular Job growth incentive tax credit (Jgitc) for companies partnering with State Higher education institutions (Hei). Under the Higher education partnership (Hep) provisions, a company can capture the state income tax credit with the creation of 5 net new jobs at the state’s average annual wage if a Qualified Partnership Agreement is in place with a colorado Hei.

The regional economic development office of the capital city will be facing transition this year. For the past 14 years, tom clark has led the Metro denver economic development corporation. clark, who also serves as executive vice president of the denver Metro chamber of commerce, announced he’ll be retiring from his post in the spring.

cOnnecticUtLeading democrats in connecticut, Speaker of the House Joe Aresimowicz and House Majority Leader Matt Ritter, introduced economic development proposals in early 2017. Key aspects of the proposals include expansion of the angel investor tax credit program, establishment of a small business hotline, provide income tax credits to recent college grads remaining in, or moving to, connecticut for work, and create a task force to study the state’s workforce development programs.

deLaWareFaced with potential disruptions to the economy, governor Jack Markell worked with state’s general Assembly to pass into law to key economic development bills in 2016: “the commitment to innovation Act” and “the delaware competes Act”.

the commitment to innovation Act ensures all companies receive the full research and development (R&d) tax credit by eliminating an annual expenditure cap of $5 million, while also making the credit refundable. Additionally, the legislation modifies the New Economy Jobs tax credit to provide corporate headquarters projects with a credit calculated on the value of their total income tax withholding payments in delaware.

the delaware competes Act changes the way corporate income tax is calculated in the First State. With the new law in place, only sales are factored into the calculation, thus removing payroll and property holdings as factors. Set to be published on a yearly basis, the initial annual threshold updates were announced in October 2016.

fLOridadebate in the Sunshine State has picked up once again in 2017 over economic development policies. With a request of $85 million for enterprise Florida, inc (eFi) for this year, governor Rick Scott is facing heavy opposition from many in tallahassee. if the recent past is any barometer for the future, days ahead are bleak for incentives. According to the state’s Office of Economic and demographic Research, nearly 70% of state-level incentives and investment programs experienced reduced funding over the past three years.

new leadership has recently taken over at eFi, which has delivered optimism to many in the state. chris Hart iv was unanimously approved president & ceO in november 2016, and has since claimed the realms of the organization. prior to this role, Hart was leading the state’s workforce organization, careerSource Florida. Hart has also served in the Florida House of Representatives and was Interim Director of the Governor’s Office of Tourism, trade and economic development.

geOrgiainvestors in rehabilitated historic properties had the opportunity to utilize the modified state income tax credit program, which was signed into law by governor nathan deal back in 2015. the new rules created additional project categories of $5 million and $10 million, instituted an annual aggregate program cap, and provided for the sale of earned credits. the new credit rules also allow for a carry forward of nine years, or to be taken in the year the building is placed in service. these new provisions are set to expire in 2020.

idaHOState legislative leaders are discussing the potential expansion of a successful job incentive program in idaho. the tax Reimbursement incentive, which provides a reimbursable credit of 30% on state taxes for up to 15 years, requires the creation of at least 50 new jobs in urban areas, and at least 20 jobs in rural parts of the state. governor Butch Otter is expected to propose legislation to reduce the job threshold for communities with less than 5,000 people, allowing for companies to meet a more micro-targeted investment.

iLLinOiSdespite outcry from industry, the state’s top economic development incentive program expired at the end of 2016. the economic development for a growing economy (edge) tax credit program provides tax incentives for businesses based on state withholding



taxes. Following contentious debate, governor Bruce Rauner signed a temporary extension of the program through April 30th. the future of edge is unclear as the illinois general Assembly deliberates the program’s merits and guidelines.

in december, governor Rauner signed legislation extending the River edge Redevelopment Zone program for an additional year. Administered by local zone administrators, investors may capture several incentives for reviving and redeveloping environmentally-challenged properties adjacent to rivers. the law allows for zone designation in five Illinois cities: Aurora, East St. Louis, elgin, peoria, and Rockford.

indianaWith former governor Mike pence’s new role in the White House, Governor Eric Holcomb has officially taken over the reins of the Hoosier State. In his first State of the State Address, governor Holcomb outlined several key policies for economic development in indiana. to encourage further investment, he proposed an additional $4 million for the Regional cities initiative. governor Holcomb also placed a heavy focus on infrastructure spending, including the additional fourth water port in southeastern indiana. He also discussed the need for continued spending on workforce development programs in the state.

iOWaWith an uncertain tax credit situation in congress, governor terry Branstad signed an extension of iowa’s biodiesel production tax credit through 2024. the state credit was set to expire at the end of 2017. As of the publishing of this report, the federal biodiesel tax credit has not been extended following expiration at the end of 2016. the legislation also extended and expanded the retailer’s credit, which provides a credit of 4.5 cents per gallon on petroleum blends with at least 5% biodiesel.

governor terry Branstad recently announced the launch of a new website dedicated to improving the skills of iowans. Known as “Future Ready iowa”, the new website was developed by iowa Workforce development, with support from the iowa economic development Authority, the iowa department of education, and the iowa college Student Aid commission. the aim of the Future Ready iowa initiative is to have 70% of the state workforce with education and/or training beyond high school by 2025.

KanSaSLegislation has been introduced in the Kansas State Legislature to create economic development incentives

and financial assistance for businesses expanding or relocating to rural communities. the bill, introduced by Representative troy Waymaster, would include tax credits and loan financing, and would be targeting communities with a population of 60,000 or less.

governor Sam Brownback signed legislation in 2016 reforming the Sunflower State’s Sales Tax and Revenue (StAR) Bond structure. Working as a special kind of tax increment financing, STAR Bonds allow state and local sales tax revenue generated by a project for retiring bonds. Along with redefining an eligible area for STAR Bonds, the legislation established new reporting requirements for each StAR Bond district.

KentUcKYStart-up companies in the Bluegrass State have been active in pursuit of the Kentucky Angel investor tax Credit. Through the program, qualified investors may capture a tax credit of up to 50% for eligible investments. these tax credits are transferable and can be carried over for up to 15 years. With an annual cap of $3 million, less than 10% of the allocated tax credits remain for 2017.

LOUiSiana Facing extensive budget shortfalls, governor Jon Bel edwards signed an executive order to restrict the state’s industrial Ad valorem tax exemption program (itep) program. the program was designed to attract business by abating property taxes for up to 10 years for manufacturing sites. While the budget deficit has reduced significantly from early 2016, there are a number of provisions being debated in Baton Rouge, which include economic development incentives and tax structures, among others.

marYLand governor Larry Hogan introduced new economic development proposals for the State of Maryland at the outset of 2017. As a reincarnation of legislation introduced in 2016, one of the proposals would establish tax credits for manufacturing companies creating jobs in designated high-unemployment areas for up to 10 years. Additionally, governor Hogan proposed further spending on workforce development through pathways in technology early college High Schools and the Maryland partnership for Workforce Quality.

A new Regional institution Strategic enterprise (RiSe) Zone was designated around the University of Maryland – college park. Businesses from target industries investing and creating jobs in the 470-acre area may now be eligible for county and municipal real property tax credits of up



to 75% for 5 years, as well as, income tax credits. target industries include: engineering, data analytics, earth sciences, virtual reality, cybersecurity, quantum computing, linguistics, additive manufacturing, ecommerce, robotics, aerospace, biotechnology and similar industries.

maSSacHUSettSOne of the largest economic development bills signed into law in 2016 was in the Bay State. Signed by governor charlie Baker in August, the communities are now reaping the awards through the MassWorks program. With $500 million allocated over the next 5 years, communities and local developers are vying for grants to support public infrastructure investments. the legislation also provided $45 million over 3 years for projects in communities defined as “Gateway Cities”, as well as, $15 million earmarked to support site development. to support workforce development, the bill also provides $45 million over 3 years for workforce training.

micHiganBusinesses investing in Michigan data centers may now be taking advantage of a sales and use tax exemption. Beginning in 2016, the legislation amended state law to allow for eligible investments in certain equipment sold to qualified data centers to be exempt from state sales and use tax. Set to expire in 2035, the exemption may sunset earlier if job milestones are not met. to see the full length of the exemption, the great Lakes State must create at least 400 data center jobs by 2022, and 1,000 industry jobs by 2026.

Legislation has been introduced in the Michigan Legislature to incentivize employers hiring a person with a felony record. Known as the “Work Opportunity employer Reimbursement Fund”, the bill would provide

a $2,400 employer grant for hiring ex-offenders within one year of their release. the maximum award would be $7,200 per employer. this legislation is part of discussions regarding “ban the box” rules in Lansing, as legislators debate the removal of a criminal conviction check box on job applications.

the Michigan Business development program (MBdp) has recently been updated. this incentive program available from the Michigan Strategic Fund (MSF), in cooperation with the Michigan economic development corporation (Medc), is designed to provide grants, loans or other forms of economic assistance to businesses for highly competitive projects in Michigan that create jobs and/or investment. Historically, the program stipulated that companies seeking to qualify were required to create a minimum of 50 qualified new jobs, unless in a rural area, in which case 25 new jobs were required. Recently, the MSF began considering applications for “high-technology” activities with considerably less job creation thresholds.

minneSOta A key incentive for renewable energy investments in the Land of 10,000 Lakes may be on the chopping block soon. the Made in Minnesota (MiM) Solar incentive program, which was established in 2013, provides rebates for consumers installing solar photovoltaic (pv) and solar thermal systems manufactured in Minnesota. Legislation has been introduced by Representative Marion O’neill effectively terminating the program through repeal.

Legislation has been introduced in the Minnesota State Senate to expand investment in rural broadband. the bill, introduced by Senator dan Sparks, would invest $100 million into the Border-to-Border Broadband development grant program. As the program is currently written, the grants may provide up to 50% of project development costs, with a cap of $5 million per project

miSSiSSippi Mississippi’s film incentive may be nearing its end as governor phil Bryant has proposed ending the program altogether. Set to expire on July 1, 2017, the Mississippi Motion picture incentive program provides cash rebates on eligible expenditures and payroll for productions, along with sales and use tax reductions on eligible rentals and purchases. debate does exist on whether or not the current law is an effective sunset on the entire program, or just related to the rebate on non-resident wages. nevertheless, vast debate over the incentives is expected in the Magnolia State.



miSSOUrinewly-elected governor eric greitens wasted no time targeting Missouri’s tax incentive programs. during his State of the State address, governor greitens called for an extensive audit, and then signed an executive order creating a special review committee. State legislators have followed the lead by introducing bills directly impacting state incentive programs, which includes annual caps on funding, new approval procedures concurrent with annual budgets, and placing expiration dates on business incentives, among others.

mOntanaLegislation has been introduced in the Montana Legislature targeting economic development efforts for the treasure State. Since tabled in committee, Representative Mary Ann dunwell, sponsored legislation to increase the state minimum wage to $10.10 by January 2018. today, Montana’s minimum wage is set at $8.15. to address infrastructure, Senator Jon Sesso introduced a bill to divert money from the state’s coal tax into a new trust. Referred to as the Build Montana Fund, the trust would collect $50 million immediately, and then earn interest over 10 years. At that point in time, the funds would be utilized for investment in Montana infrastructure projects.

nevadaIn his final State of the State address, Governor Brian Sandoval outlined his main goal for economic development: create a modern workforce. through investments in higher education and the Office of Workforce innovation, governor Sandoval set a target of 60% of nevadans between 25-34 with a post-secondary degree or credential by 2025.

governor Sandoval also notched another major project during his administration with the announcement of a $1 billion Faraday Future plant in north Las vegas. Faraday joined the likes of Apple and Tesla in making significant investments in the Silver State, all with major incentive packages reportedly tied to their success. According to reports, the Faraday incentive package includes $215 million in tax concessions and $120 million infrastructure improvements.

neW HampSHiretaking a different direction than other states, new Hampshire approved a law last year increasing the cap on net metering. Signed into law by former governor Maggie Hassan, residents and businesses in the granite State can now sell back double the level of megawatts through solar power than previously.

Senate democratic leaders recently proposed economic development policies for newly-elected governor chris Sununu. the focus of these proposals focus squarely on workforce and education. Among the programs targeted, the leaders encourage further promotion of the new Hampshire college graduate incentive partnership (gRip), a program proving a $1,000 incentive for each year of work for the initial four years in the workforce.

neW JerSeYproponents of the grow nJ Assistance program are optimistic about the incentive’s impact on the most severely distressed cities in the garden State. Aiming to attract and retain jobs for new Jersey, the grow nJ program provides tax credits based on a complex formula. For projects located in garden State growth Zones, which includes camden, trenton, paterson, passaic, and the most recent addition, Atlantic city, incentives could go as high as $15,000 per new job. According to reports, the program has awarded approximately $4 billion since enactment in 2013.

neW mexicOSenate democrats of the new Mexico Senate and House recently announced their “new Mexico Jobs now!” proposal for 2017. encompassing six bills targeted at economic development, the legislation includes proposals to expand infrastructure investment, increase the minimum wage, develop hemp industrialization, reform the Local economic development Act (LedA) program, and improve the popular Job training incentive program (Jtip).

new leadership is now atop the new Mexico economic development department. Appointed in October 2016, Matt geisel is governor Susana Martinez’s cabinet Secretary for economic development. previously serving as economic development and Business Relations Manager for the city of Rio Rancho, geisel has also been on the Board of the new Mexico partnership.

neW YOrKWhile many states are cutting back on film production incentives, governor Andrew cuomo recently proposed a 3-year extension of new York’s program through 2022. Administered by empire State development, the incentive provides a 30% fully refundable tax credit on qualified production and post-production expenses incurred in new York State.

A premier economic development incentive in new York may be seeing major changes this year. in a proposal from governor cuomo, the StartUp nY program, which provides early-stage businesses with a tax-free



environment for 10 years, would modify eligibility limits and revise job creation targets. Further, businesses may no longer have more than 25 employees during the 12-month period leading up to applying for the program.

nOrtH carOLinaWith annual reductions since 2013, the tar Heel State’s corporate income tax rate is at 3%, down from 6.9% four years ago. in addition to the corporate income tax rate, the state also reduced the personal income tax from 5.75% to a flat rate of 5.49%. North Carolina is also now less than a year from fully implement single sales factor apportionment. As of Jan 1, 2018, multistate companies will have their corporate income subject to state tax determined by sales revenue located in or sourced to north carolina.

As of publishing date of this report, the controversy surrounding House Bill 2 (HB2) still continues in Raleigh. newly-elected governor Roy cooper has targeted repeal of the legislation as one of his top priorities. debate over the controversial legislation is expected to be on the forefront in the early months of 2017.

nOrtH daKOtaLegislation to end state incentives for downtown revitalization has been introduced in the north dakota Legislative Assembly. the bill, introduced by Representative Rick Becker, would end the Renaissance Zone program, an initiative to revitalize communities by leveraging state and local tax incentives for 5 years. instead, beginning in 2018, the legislation would establish a program administered by individual municipalities.

A number of other economic development incentive programs are also on the chopping block in 2017.

in the opening weeks of the year, the state’s House of Representatives has unanimously repealed three current programs: the new Or expanding Business income tax exemption, the Microbusiness investment and Employment Credit, and Certified Nonprofit development corporation investment tax credit. programs dealing with angel investor tax credits, telecommunications investments, and equipment purchase credits are actively under review.

OHiOgovernor John Kasich and the Ohio Legislature doubled down last year on their film tax incentive program. The Ohio Motion picture tax incentive, which provides a refundable, transferable tax credit against the corporate franchise or income tax for productions in Ohio, was limited to a cap of $20 million per year. the new law doubles the annual cap to $40 million, while also eliminating a $5 million project cap. Additionally, all eligible expenditures may be credited at 30%. productions must spend a minimum of $300,000 per project to be eligible for the incentive.

two major redevelopment projects are now set to receive significant tax credits in Ohio. Governor Kasich recently signed legislation earmarking large Ohio Historic preservation tax credits for renovation of the May co. building in cleveland and the former goodyear headquarters in Akron. through the catalytic award structure, as typical projects are capped at $5 million, these projects are set to receive approximately $25 million and $19 million, respectively.

OKLaHOmaRequired under Oklahoma’s incentive evaluation Act, a state commission evaluated 11 economic development incentive programs and submitted a report to the state’s elected leadership. Known as the incentive evaluation commission, the group is charged with providing recommendations once every four years.

in the commission’s report from this past december, the recommendations included the following: retaining 3 aerospace engineering tax credits; reconfiguring incentives for electricity generated by zero-emission facilities, aircraft sales and the Quality events program; retaining but making some revision to the five-year ad valorem property tax exemption and a historic rehabilitation tax credit; retaining the Oklahoma capital investment Board incentive and allowing it to complete its activities before its legislated sunset; and allowing the Oklahoma Film enhancement Rebate to sunset as scheduled in 2024.



OregOn An audit of state incentives was conducted in late 2016 by Oregon Secretary of State Jeanne Atkins. The findings of the audit centralized on the need for further evaluation of incentives provided to private businesses by Business Oregon, including a focus on performance outcomes. Additionally, Secretary Atkins’ report recommended further transparency measures to improve reporting to the public and policy makers.

Minimum wage increases passed into law in 2016 will rise again this coming July. phased in over 6 years, the new minimum wages are not standard across the Beaver State, instead there are three wage areas: Standard, portland Metro, and nonurban counties. On July 1, 2017, Metro workers will see a wage increase to $11.25/hr, workers in the “Standard” counties will receive $10.25/hr, while Rural workers will see minimum wages at $10/hr.

pennSYLvaniathe commonwealth of pennsylvania just completed the open window period for the Redevelopment Assistance capital program (RAcp). conducted through funding rounds, the RACP program, administered by the Office of the Budget, provides grants for the acquisition and construction of critical projects in the Keystone State. closing on February 3rd, the most recent round had $125 million available for allocation to awarded projects. the initial round of 2017 featured several new application procedures, including a streamlined submission process utilizing an e-application.

rHOde iSLandgovernor gina Raimondo is a strong proponent of the positive impact Rhode island has had from economic development incentives. Amid a competitive region of the United States, governor Raimondo has turned to an economic development toolbox to attract companies to the Ocean State. proponents of incentives in the state also point to the many improvements developed and implemented since the controversial loan guarantee for 38 Studios, LLc.

in her proposed 2018 budget, governor Raimondo continues to focus on economic development initiatives. Key priorities in the proposal include: $20 million for the Rebuild Rhode island tax credit program, replenishment of the i-195 development Fund, an investment in the First Wave closing Fund, and approximately $12 million for small manufacturers.

SOUtH carOLina With former Governor Nikki Haley’s confirmation as U.S. Ambassador to the United nations, a new face takes over as leader of the Palmetto State. Now officially sworn in, governor Henry McMaster takes over South carolina’s top post. near the top of his initial priority list is certainly expected to be the state’s infrastructure, economic development, and education.

As state leaders agree on a focus to fund infrastructure development, the mechanism for funding the investment has led to significant discourse in the ranks. Many support an increased gas tax, the 3rd lowest in the nation, while others call for borrowing to raise the funds. House democratic Minority Leader todd Rutherford recently proposed another revenue source: casino gambling. the legislation would allow the voters to decide on an amendment to the state constitution allowing casinos to open in South carolina, in which revenues would go directly to the maintenance and construction of highways, roads and bridges.

SOUtH daKOtain his 2017 State of the State Address, governor dennis daugaard outlined a list of priorities for the coming year. When it comes to economic development, he focused on two main policy areas: infrastructure and education. Utilizing different funding sources, including leveraging federal dollars alongside the state’s Future Fund, is core to infrastructure development in the Mount Rushmore State. in regards to education, governor daugaard pointed to the Build dakota Scholarship program, an initiative to encourage more South dakotans to study in high-need fields at technical institute. If the student promises to work in the respective field in South Dakota, the scholarship will be effectively full-ride.

tenneSSegovernor Bill Haslam recently introduced his comprehensive job growth plan for the State of tennessee. Referred to as the improving Manufacturing, public Roads and Opportunities for a vibrant economy (iMpROve) Act, the proposal cuts several taxes, increases fuel taxes, places new fees, opens the door for more federal funding, and establishes a new procedure for local governance measures.

in regards to tax cuts, the plan allows manufacturers to go to single weighted sales factor, reduces the sales tax on groceries by a half percent, and slashes the Hall income tax by 1.5%. Meanwhile, the plan calls for increasing the state’s fuel taxes by 7 cents/gallon for gas and 12 cents/gallon for diesel. the proposal also



increases car registration fees by $5, places a $100 annual fee on electric vehicles, and implements a 3% charge on rental cars. these new monies, in addition to $18 million in federal funds to be made available with changes to the state’s open container law, is expected to deliver nearly $400 million for the volunteer State’s infrastructure system.

governor Haslam’s iMpROve Act also includes a new economic development process for municipalities, which can only be approved via referendum, to impose a surcharge on local sales taxes for public transit projects.

texaSFilmmakers in the Lone Star State are concerned that the end is near for the texas Moving image industry incentive program. the program, which provides cash grants for qualified productions meeting in-state spend minimums and labor requirements, has been under considerable scrutiny in Austin, including a funding cut of approximately 2/3 last year. At the outset of 2017, several bills have already been introduced in the texas Legislature effectively ending the program.

governor greg Abbott requested $108 million over the next 2 years for the texas enterprise Fund. the program, commonly referred to as a “deal-closing” fund, has attracted thousands of jobs to the State of texas. However, not without controversy from many legislators over the years. initial budgets from both legislative bodies appropriate $43 million, but since governor Abbot was able to receive his full request of $90 million in 2015, the administration is hopeful the program will be well-funded again.

UtaHin his State of the State address, governor gary Hebert cited a number of policy proposals to improve the state’s future. A key part of the proposal is to conduct an extensive evaluation of Utah’s tax breaks and incentive programs. According to his speech, Utah has 89 sales tax exemptions and 38 income tax credits on the books. governor Herbert also introduced a new workforce development initiative called, “talent Ready Utah”. Building on the success of his Utah Aerospace pathways program, the new effort will develop business and education partnerships across the state, with an ultimate aim of filling 40,000 new skilled jobs over the next 4 years.

virginiaLegislators in the commonwealth of virginia are not only set to debate on the merits of their economic development incentive programs, but also on the structure of the organization tasked with awarding and administering the programs. the virginia economic development partnership (vedp), a quasi-independent agency, is facing heavy scrutiny following a challenging report from the Joint Legislative Audit and Review commission (JLARc). governor terry McAuliffe proposes an executive shake-up at the top of vedp by making the commonwealth’s secretary of commerce and trade as the vedp board’s chairman, along with providing his administration with more authority to appoint board members. Other legislative proposals call for changes directly from the JLARc recommendations, including creation of new divisions within vedp. newly-appointed vedp president and ceO will certainly have his hands full as he navigates the coming months.



According to a poll conducted by virginia commonwealth University, virginians strongly support state workforce training and development programs. in fact, 58% of respondents said they were willing to pay more in taxes to ensure these programs are maintained at the state level. Further, the majority of study respondents confirmed that these programs should be tied to economic development funds. individuals hailing from northern virginia and Hampton Roads felt the strongest for these initiatives, as they supported at 53% and 52%, respectively.

WaSHingtOnthe top legislative battle in Washington this year will likely turn out to be over K-12 education funding. Much of the debate is tied back to the state’s Supreme court ruling in 2012 regarding underfunding of schools in the evergreen State. governor Jay inslee has proposed $4.4 billion in new taxes in his 2017-2019 operating budget, which includes $2.75 billion to directly address teacher and school employee salaries. Lawmakers from both sides of the aisles are now weighing the administration’s proposal, as well as, a number of other plans recently unveiled in the Washington State Legislature.

A new statewide coalition was recently established to defend aerospace industry tax incentives in Washington. As one of the state’s key industries, legislators have crafted a number of economic development tools specific to the attraction and retention of aerospace businesses. these incentive programs include reduced business & occupation (B&O) tax rates, B&O credits for preproduction development expenditures, and sales & use tax exemptions for eligible computer hardware/software and construction of manufacturing, repair and maintenance facilities. According to the group, Aerospace Works for Washington, the state’s industry supports over 252,000 jobs and generates nearly $95 billion in economic activity

WeSt virginiaWith a projected budget shortfall estimated at $500 million in the budget for Fiscal Year 2018, debate in West virginia will immediately focus on addressing the funding gap. newly-elected governor Jim Justice will be outlining his proposal for budget cuts in his upcoming State of the State Address, which reportedly could surpass $600 million.

the Mountain State’s federal lawmakers recently proposed legislation to provide much-needed development financing for key projects. Introduced by congressman evan Jenkins, the legislation would provide tax incentives for projects in low-income

communities particularly affected by job losses in the coal industry. Known as the creating Opportunities for Rural economies (cORe), the bill would create a program similar to the existing new Markets tax credit (nMtc), which provides investors with a 39% tax credit over a 7-year period. Along with West virginia, bill sponsors say other states with qualifying counties include Alabama, colorado, Kentucky, indiana, illinois, new Mexico, Ohio, pennsylvania, texas, Utah, and virginia.

WiScOnSinLegislators in the Badger State wasted no time addressing economic development policy in 2017. in pursuit of a significant cheese processing and distribution plant, the village of Oostburg is challenged with statutory limits on tax increment financing (TIF). Under existing law, the town is limited to a total amount of tiFs to 12% of taxable property. the legislation, which has already passed unanimously out of the Wisconsin Senate, will provide a temporary increase of the village’s tiF limit to 15%. At time of publishing, the legislation is currently under review by the Wisconsin Assembly.

governor Scott Walker recently announced a new welfare reform package, which is being referred to as “Wisconsin Works for everyone”. Under the proposal, adults with children between age 6 and 18 working fewer than 80 hours/month could face benefit cuts. Currently, only childless adults are required to meet the minimum work thresholds. those same parents would also be required to attend job training and look for work 5 days a week. the proposal also provides for investments in workforce training programs and creates tax credits to support low-income parents, among other provisions.

WYOmingLegislation has been introduced in the cowboy State to beef up the existing film production incentive. Currently, the standard rebate for film productions is set at 10%. For productions with a story based in Wyoming, the incentive is increased to 15%. the legislation, which has been approved by the Wyoming Senate, would increase the standard rebate rate to the 15% level.

Joining a growing list of U.S. states, the State of Wyoming recently entered into a voluntary collection agreement with Amazon, the country’s largest online retail business. the sales tax collection process will begin March 1st. the Wyoming Legislature is also debating legislation regulating broader e-commerce sales tax regulations.



vermOnt ecOnOmic deveLOpment OmniBUS act

creatiOn Of tHe vermOnt ecOnOmic deveLOpment aUtHOritY

• Shall consist of 16 voting board members serving six year terms • the Secretary of commerce and community development; the

State treasurer; the Secretary of Agriculture, Food and Markets; the commissioner of Forestry, parks and Recreation; and commissioner of public Service or the aforementioned designee shall service as ex-office member.

• Up to 10 voting members shall be residents of the State of vermont and be appointed by the governor with the consent of the Senate

• One member, who is a current member of the vermont general Assembly, appointed jointly by the Speaker of the House of Representatives and the president pro tempore of the Senate.

• Delegates review and approval of loans to loan officers• creates a program cap of $155 million dollars.

creatiOn Of tHe vermOnt agricULtUre credit prOgram

discretionary fund to provide funding to local governments to secure commitments for recruitment, expansion, or retention of new or existing businesses.

• program is designed to provide an alternative source of sound and constructive credit to farmers and forest products businesses who are not having their credit needs fully met by conventional agricultural credit sources at reasonable rates and terms.

• Aggregate loan balances may not exceed $5,000,0000• A farm operation is defined as the cultivation of land or other

uses of land for the production of food, fiber, horticultural, orchard, maple syrup, christmas trees, forest products, or forest crops; the raising, boarding, and training of equines, and the raising of livestock; or any combination of the foregoing activities. Farm operation also includes the storage, preparation, retail sale, and transportation of agricultural or forest commodities accessory to the cultivation or use of such land.

• A Forest products business means a vermont enterprise that is primarily engaged in managing, harvesting, trucking, processing, manufacturing, crafting, or distributing products derived from vermont forests.

• An approved facility is defined as land and rights in land, buildings, structures, machinery, and equipment which is used for, or will be used for producing, processing, preparing, packaging, storing, distributing, marketing, or transporting agricultural or forest products which have been primarily produced in this State, and working capital reasonably required to operate an agricultural facility.

regiOnaL ecOnOmic deveLOpment perfOrmance grantS

• the Secretary shall annually award, negotiate, and issue performance grants to qualified regional development corporations, regional planning commissions, or both in the case of a joint proposal, to provide economic development services.

• the service provider serves an economic region generally consistent with one or more of the State’s regional planning commission regions.

• the service provider demonstrates the ability and willingness to provide planning and resource development services to local communities and to assist communities in evaluating economic conditions and prepare for economic growth and stability.

in 2016, vermont governor peter Shumlin signed House Bill 868, comprehensive economic development legislation. the following is a brief review of the act:

tHe vermOnt training prOgram

• the Secretary of commerce and community development may annually allocate up to 10% of the funding appropriated for the program to fund work-based learning programs and activities with eligible employers to introduce vermont students in a middle school, secondary school, career technical education program, or postsecondary school to manufacturers and other regionally significant employers.

• An employer with a defined work-based learning program or activity developed in partnership an approved institution may apply to the program for a grant to offset the costs the employer incurs for the work-based learning program or activity, including the costs of transportation, curriculum development, and materials.

• Additionally, the legislation adds reporting requirements such as pre-employment training that turns into employment; incumbent training that leads to a newly created or existing position within the company; the number of training grants started and completed; average wage of the employees and the identity of the training provider.

vermOnt empLOYment grOWtH incentive prOgram

• the creation of the vermont economic progress council, which will have oversight over the vermont employment growth incentive program and the tax increment Financing program

• The Council shall adopt and maintain a cost-benefit model for assessing and measuring the projected net fiscal cost and benefit to the State of proposed economic development activities.

• program is designed to incentivize businesses to add incremental and qualifying payroll, jobs, and capital investments by sharing with the business a portion of the revenue generated by the new payroll, new jobs, and new capital investments, thereby generating net new revenues to the State.

• Defines an enhanced incentive for areas located in qualifying labor markets or energy technology businesses.

• Defines an enhanced incentive for workforce training for up to 75% of the wages of the employee or the cost of trainer.

US LegiSLAtive & incentive UpdAte


WinteR 2017

http

://w

ww

.ncs

l.org

/res

earc

h/la

bor-a

nd-e

mpl

oym

ent/

stat

e-m

inim

um-w

age-

char

t.asp

x

StateS WitH minimUm Wage increaSeS

Arkansas $8.50 effective Jan.1, 2017

Hawaii: $9.25 effective Jan.1, 2017

$10.10 effective Jan.1, 2018

Connecticut $10.10 effective Jan.1, 2017

New York $15.00 effective dec.31, 2018

Michigan: $8.90 effective Jan.1, 2017


Vermont: $10.00 effective Jan.1, 2017


Minnesota: $9.50 effective Aug.1, 2016 (large employers)

$7.75 effective Aug.1, 2016 (small employers)

Washington DC: $11.50 effective Jul.1, 2016

$12.50 effective Jul.1, 2017 $13.25 effective Jul.1, 2018 $14.00 effective Jul.1, 2019 $15.00 effective Jul.1, 2020

California: $11.00 effective Jan.1, 2018

$12.00 effective Jan.1, 2019 $13.00 effective Jan.1, 2020 $14.00 effective Jan.1, 2021 $15.00 effective Jan.1, 2022

Oregon: $9.75 effective Jul.1, 2016

$10.25 effective Jul.1, 2017 $10.75 effective Jul.1, 2018 $11.25 effective Jul.1, 2019

$12.00 effective Jul.1, 2020



Maryland: $8.75 effective Jul.1, 2016

$9.25 effective Jul.1, 2017 $10.10 effective Jul.1, 2018

Massachusetts $11.00 effective Jan.1, 2017

More than 40% of the U.S. states will see minimum wage increases in 2017. According to the national council of State Legislatures, 7 states have automatic increases, 5 states are via ballot initiatives, and another 7 states have increases from prior legislation. Below is an infographic highlighting minimum wages across the U.S.

None



Following a contentious election cycle, the dust has finally settled and a new administration is in the White House. president donald trump, with former indiana governor Mike pence serving as vice president, will have a Republican majority in both the House of Representatives and Senate to begin his first term in office. There are a number of policy areas that will affect economic development in the U.S., including taxes, regulations, immigration, infrastructure, and trade, among scores of others. However, for this brief report, we’ll focus on just a few critical points.

ecOnOmic deveLOper-in-cHiefLeading up to inauguration day, then president-elect trump made big splashes around the country as he engaged his new role on multiple fronts. perhaps the most public was the announcement by United technologies regarding facilities for carrier corporation and United technologies electronic controls in indiana, the home state of vice president pence. As a frequently mentioned, hot-buttoned story during the campaign, president trump asserted himself into the company’s decision to cut jobs in the Hoosier State plants.

in early december, president trump announced a drastic change of plans for the company, virtually saving 1,100 jobs from going to Mexico. A key part of this decision was a $7 million incentive package provided by the state. Since this announcement, debate has been widespread about the true number of jobs being saved and the reasoning for the company’s decision.

Aside from the actual project numbers and business justification, the impact of this event is unprecedented in modern politics. President Trump’s direct engagement with the company, state, and local officials, especially in the public, is a vastly different policy direction than previous administrations have taken. Moving forward, will president trump continue to engage directly in these business decisions? How will state lawmakers and economic development officials react? Will the administration actively negotiate for state and local incentives in similar situations going forward? All interesting questions that only time can tell the answers.

federaL vieW



trade WindS BLOWingAs promised throughout the campaign, President Trump took immediate actions on trade policies. In one of his first official actions in the White House, the president signed an executive order withdrawing the U.S. from the Trans-Pacific Partnership (tpp), a 12-nation trade deal in the works.

president trump has also moved forward on discussions to renegotiate the north American Free trade Agreement (nAFtA). Without going as far as withdraw, the president has been in contact with canadian prime Minister Justin trudeau and Mexican president enrique peña nieto. Further, president trump has also has had conversation with United Kingdom prime Minister theresa May about a potential free trade agreement following the country’s impending exit from the european Union.

Along with the renegotiation of other free trade deals, president trump has also discussed additional enforcement of trade violations and new import tariffs. More recently, the administration has floated the idea of a 20% tax on all imports from Mexico to help pay for a proposed wall along the nation’s southern border. previous reports have also acknowledged the potential for a 10% tariff on all imports into the U.S. these proposed tariffs are expected to be part of a larger, comprehensive tax reform debate on capitol Hill this year.

cUtting red tapein late January, president trump followed up on another campaign promise to reduce regulations from the federal government. through an executive order, the president set a one-in, two-out policy for regulatory process going forward. As the order reads, whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed. certain regulatory procedures will be exempted from this order, including anything in respect to military, national security, foreign affairs, or agency organization and personnel.

H i c K e Y & a S S O c i at e SSite Selection, incentiveS and Workforce SolutionS

Berlin • charlotte • chicago • denver • detroit • Hong kong • london • Mexico city • Miami • Minneapolis new York • Phoenix • San francisco • São Paulo • Shanghai • Singapore • Sydney • tel aviv • Washington

1(800) 840.8850 • www.hickeyandassociates.com

Documents

US LegiSLative & incentive Update - Hickey and Associates · 2019. 8. 1. · US LegiSLAtive & incentive UpdAte WinteR 2017 Since the beginning of 2016, state legislatures and political