Senate File 2230 - Introduced SENATE FILE 2230 BY ZAUN , KETTERING , BEHN , HAMERLINCK , HOUSER , HAHN , FEENSTRA , and REYNOLDS A BILL FOR An Act relating to economic development by providing tax 1 credits for new job creation and eliminating the grow Iowa 2 values fund and financial assistance program and including 3 retroactive and other applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5516XS (13) 83 tw/sc

S.F. 2230 DIVISION I 1 NEW JOBS TAX CREDIT 2 Section 1. NEW SECTION . 422.11Y New jobs tax credit. 3 1. The taxes imposed under this division, less the credits 4 allowed under section 422.12, shall be reduced by a new jobs 5 tax credit in an amount equal to fifty percent of the amount of 6 wages paid in a tax year for each new job created. 7 2. A job must meet the following conditions to qualify for 8 the new jobs tax credit: 9 a. The job is a permanent full-time equivalent position that 10 did not exist in the business in the state within the previous 11 six months. 12 b. The job is filled by a new employee for at least twelve 13 months. 14 c. The job shall be filled by a resident of the state. 15 d. The job was not created as a result of a change in 16 ownership or as a result of a consolidation, merger, or 17 restructuring of a business entity if the job does not 18 represent a new job in the state. 19 e. The job shall not have been previously filled by the same 20 employee in the state. 21 f. The job was not relocated from another location in the 22 state. 23 g. The job pays at least one hundred percent of the lower 24 of the average county or average regional wage, excluding the 25 value of nonwage benefits, as calculated by the department of 26 revenue. 27 (1) The average county wage and the average regional wage 28 shall be the average hourly compensation rates, excluding the 29 value of nonwage benefits for comparable jobs, from the most 30 recent four quarters of wage and employment information from 31 the quarterly covered wage and employment data report issued by 32 the department of workforce development. 33 (2) The department of revenue may adopt by rule a method for 34 calculating average county and average regional wage rates. 35 -1- LSB 5516XS (13) 83 tw/sc 1/ 12

S.F. 2230 3. a. A new jobs tax credit may only be claimed once for 1 each qualifying new job. 2 b. A taxpayer is entitled to claim the tax credit upon 3 the end of the twelfth month of the job having been filled. 4 However, if the job is eliminated within twelve months from 5 the date the taxpayer is entitled to claim the tax credit, 6 the taxpayer is subject to repayment of the amount of the tax 7 credit received. 8 4. An individual may claim a tax credit under this section 9 of a partnership, limited liability company, S corporation, 10 estate, or trust electing to have income taxed directly to 11 the individual. The amount claimed by the individual shall 12 be based upon the pro rata share of the individual’s earnings 13 from the partnership, limited liability company, S corporation, 14 estate, or trust. 15 5. a. Any tax credit in excess of the taxpayer’s liability 16 for the tax year is not refundable, but the taxpayer may elect 17 to have the excess credited to the tax liability for the 18 following five years or until depleted, whichever is earlier. 19 b. A tax credit shall not be carried back to a tax year 20 prior to the tax year in which the taxpayer first receives the 21 tax credit. 22 6. A taxpayer eligible for the tax credit shall include 23 with the taxpayer’s return information relating to each new 24 job created during the tax year and shall include information 25 establishing the total amount of wages paid for those jobs 26 during the tax year pursuant to rules of the department. 27 7. The tax credit authorized in this section is in lieu of 28 the new jobs tax credits authorized in sections 422.11A and 29 422.33, subsection 6. 30 Sec. 2. Section 422.33, Code Supplement 2009, is amended by 31 adding the following new subsection: 32 NEW SUBSECTION . 29. The taxes imposed under this division 33 shall be reduced by a new jobs tax credit in the same manner, 34 for the same amount, and under the same conditions as provided 35 -2- LSB 5516XS (13) 83 tw/sc 2/ 12

S.F. 2230 in section 422.11Y. 1 Sec. 3. Section 422.60, Code Supplement 2009, is amended by 2 adding the following new subsection: 3 NEW SUBSECTION . 15. The taxes imposed under this division 4 shall be reduced by a new jobs tax credit in the same manner, 5 for the same amount, and under the same conditions as provided 6 in section 422.11Y. 7 Sec. 4. NEW SECTION . 432.12M New jobs tax credit. 8 The taxes imposed under this chapter shall be reduced by a 9 new jobs tax credit in the same manner, for the same amount, 10 and under the same conditions as provided in section 422.11Y. 11 Sec. 5. Section 533.329, subsection 2, Code Supplement 12 2009, is amended by adding the following new paragraph: 13 NEW PARAGRAPH . n. The moneys and credits tax imposed under 14 this section shall be reduced by a new jobs tax credit in the 15 same manner, for the same amount, and under the same conditions 16 as provided in section 422.11Y. 17 Sec. 6. RETROACTIVE APPLICABILITY. This division of this 18 Act applies retroactively to January 1, 2010, for new jobs 19 created on or after that date. 20 DIVISION II 21 GROW IOWA VALUES FUND AND FINANCIAL ASSISTANCE PROGRAM 22 ELIMINATION 23 Sec. 7. Section 15.103, subsection 6, Code Supplement 2009, 24 is amended to read as follows: 25 6. As part of the organizational structure of the 26 department, the board shall establish a due diligence 27 committee and a loan and credit guarantee committee composed 28 of members of the board. The committees shall serve in an 29 advisory capacity to the board and shall carry out any duties 30 assigned by the board in relation to programs administered 31 by the department. The loan and credit guarantee committee 32 shall advise the board on the winding up of loan guarantees 33 made under the loan and credit guarantee program established 34 pursuant to section 15E.224, Code 2009 , and on the proper 35 -3- LSB 5516XS (13) 83 tw/sc 3/ 12

S.F. 2230 amount of the allocation described in section 15G.111, 1 subsection 4 , paragraph “g” . 2 Sec. 8. Section 15.104, subsection 1, Code Supplement 2009, 3 is amended by striking the subsection. 4 Sec. 9. Section 15.104, subsection 8, paragraphs b and i, 5 Code Supplement 2009, are amended by striking the paragraphs. 6 Sec. 10. Section 15.104, subsection 8, paragraph j, Code 7 Supplement 2009, is amended to read as follows: 8 j. Renewable fuel programs. A detailed accounting of 9 expenditures in support of renewable fuel infrastructure 10 programs, as provided in sections 15G.203 and 15G.204. The 11 renewable fuel infrastructure board established in section 12 15G.202 shall approve that portion of the department’s annual 13 report regarding projects supported from the grow Iowa values 14 fund created in section 15G.111 . This paragraph is repealed on 15 July 1, 2012. 16 Sec. 11. Section 15.203, subsection 5, Code Supplement 17 2009, is amended by striking the subsection. 18 Sec. 12. Section 15.327, Code Supplement 2009, is amended by 19 adding the following new subsections: 20 NEW SUBSECTION . 01. “Base employment level” means the 21 number of full-time equivalent positions at a business, 22 as established by the department and a business using the 23 business’s payroll records, as of the date a business applies 24 for financial assistance under the program. 25 NEW SUBSECTION . 3A. “County wage” means the county wage 26 calculation performed by the department of revenue pursuant to 27 section 422.11Y, subsection 2, paragraph “g” . 28 NEW SUBSECTION . 7A. “Full-time equivalent position” means 29 a non-part-time position for the number of hours or days per 30 week considered to be full-time work for the kind of service 31 or work performed for an employer. Typically, a full-time 32 equivalent position requires two thousand eighty hours of work 33 in a calendar year, including all paid holidays, vacations, 34 sick time, and other paid leave. 35 -4- LSB 5516XS (13) 83 tw/sc 4/ 12

S.F. 2230 NEW SUBSECTION . 7B. “Maintenance period” means the period 1 of time between the project completion date and maintenance 2 period completion date. 3 NEW SUBSECTION . 12A. “Regional wage” means the regional 4 wage calculation performed by the department of revenue 5 pursuant to section 422.11Y, subsection 2, paragraph “g” . 6 Sec. 13. Section 15.327, subsections 1, 4, 7, 8, 10, 12, 7 and 13, Code Supplement 2009, are amended by striking the 8 subsections and inserting in lieu thereof the following: 9 1. “Benefit” means nonwage compensation provided to an 10 employee. Benefits typically include medical and dental 11 insurance plans, pension, retirement, and profit-sharing plans, 12 child care services, life insurance coverage, vision insurance 13 coverage, disability insurance coverage, and any other nonwage 14 compensation as determined by the board. 15 4. “Created job” means a new, permanent, full-time 16 equivalent position added to a business’s payroll in excess of 17 the business’s base employment level. 18 7. “Fiscal impact ratio” means a ratio calculated by 19 estimating the amount of taxes to be received from a business 20 by the state and dividing the estimate by the estimated cost 21 to the state of providing certain financial incentives to 22 the business, reflecting a ten-year period of taxation and 23 incentives and expressed in terms of current dollars. For 24 purposes of the program, “fiscal impact ratio” does not include 25 taxes received by political subdivisions. 26 8. “Maintenance period completion date” means the date on 27 which the maintenance period ends. 28 10. “Project completion date” means the date by which 29 a recipient of financial assistance has agreed to meet all 30 the terms and obligations contained in an agreement with the 31 department as described in section 15.330. 32 12. “Qualifying wage threshold” means the county wage or 33 the regional wage, as calculated by the department of revenue 34 pursuant to section 422.11Y, subsection 2, paragraph “g” , 35 -5- LSB 5516XS (13) 83 tw/sc 5/ 12

S.F. 2230 whichever is lower. 1 13. “Retained job” means a full-time equivalent position, 2 in existence at the time an employer applies for financial 3 assistance which remains continuously filled or authorized 4 to be filled as soon as possible and which is at risk of 5 elimination if the project for which the employer is seeking 6 assistance does not proceed. 7 Sec. 14. Section 15.329, subsection 2, Code Supplement 8 2009, is amended to read as follows: 9 2. A business providing a sufficient package of benefits to 10 each employee holding a created or retained job shall qualify 11 for a credit against the qualifying wage threshold requirements 12 described in subsection 1, paragraph “c” . The credit shall be 13 calculated and applied in the following manner : described in 14 section 15G.112, subsection 4 , paragraph “b” . 15 a. By multiplying the qualifying wage threshold of 16 the county in which the business is located by one and 17 three-tenths. 18 b. By multiplying the result of paragraph “a” by one-tenth. 19 c. The amount of the result of paragraph “b” shall be 20 credited against the amount of the one hundred thirty percent 21 qualifying wage threshold requirement that the business is 22 required to meet under subsection 1, paragraph “c” . 23 d. The credit shall not be applied against the one hundred 24 percent of qualifying wage threshold requirement described in 25 subsection 1, paragraph “c” . 26 Sec. 15. Section 15.330, subsection 4, Code Supplement 27 2009, is amended to read as follows: 28 4. A project completion date, a maintenance period 29 completion date, the number of jobs to be created or retained, 30 or certain other terms and obligations described in section 31 15G.112, subsection 1 , paragraph “d” an agreement , as the 32 department deems necessary in order to make the requirements in 33 project agreements uniform. The department, with the approval 34 of the board, may adopt rules as necessary for making such 35 -6- LSB 5516XS (13) 83 tw/sc 6/ 12

S.F. 2230 requirements uniform. Such rules shall be in compliance with 1 the provisions of this part and with the provisions of chapter 2 15G . 3 Sec. 16. Section 15.335A, subsection 1, unnumbered 4 paragraph 1, Code Supplement 2009, is amended to read as 5 follows: 6 Tax incentives are available to eligible businesses as 7 provided in this section. The incentives are based upon the 8 number of jobs created or retained that pay at least one 9 hundred thirty percent of the qualifying wage threshold as 10 computed pursuant to section 15G.112 15.329 , subsection 4 1 , 11 and the amount of the qualifying investment made according to 12 the following schedule: 13 Sec. 17. Section 15.335A, subsection 2, paragraphs b, c, 14 f, and g, Code Supplement 2009, are amended by striking the 15 paragraphs. 16 Sec. 18. Section 15.335A, subsection 5, Code Supplement 17 2009, is amended to read as follows: 18 5. The department shall negotiate the amount of tax 19 incentives provided to an applicant under the program 20 in accordance with this section and section 15G.112 , as 21 applicable . 22 Sec. 19. Section 15A.7, subsection 3, Code Supplement 2009, 23 is amended to read as follows: 24 3. That the employer shall agree to pay wages for the 25 jobs for which the credit is taken of at least the county 26 wage or the regional wage, as calculated by the department of 27 revenue pursuant to section 15G.112, subsection 3 422.11Y, 28 subsection 2, paragraph “g” , whichever is lower. Eligibility 29 for the supplemental credit shall be based on a one-time 30 determination of starting wages by the community college. 31 Sec. 20. Section 15E.193, subsection 1, paragraphs b, c, and 32 d, Code Supplement 2009, are amended to read as follows: 33 b. (1) The business shall provide a sufficient package of 34 benefits to each employee holding a created or retained job. 35 -7- LSB 5516XS (13) 83 tw/sc 7/ 12

S.F. 2230 For purposes of this paragraph, “created job” and “retained job” 1 have the same meaning as defined in section 15G.101 15.327 . 2 (2) The board, upon the recommendation of the department, 3 shall adopt rules determining what constitutes a sufficient 4 package of benefits. 5 c. The business shall pay a wage that is at least ninety 6 percent of the qualifying wage threshold. For purposes of this 7 paragraph, “qualifying wage threshold” has the same meaning as 8 defined in section 15G.101 15.327 . 9 d. Creates or retains at least ten full-time equivalent 10 positions and maintains them until the maintenance period 11 completion date. For purposes of this paragraph, “maintenance 12 period completion date” and “full-time equivalent position” have 13 the same meanings as defined in section 15G.101 15.327 . 14 Sec. 21. Section 15E.231, subsection 1, unnumbered 15 paragraph 1, Code Supplement 2009, is amended to read as 16 follows: 17 In order for an An economic development region to receive 18 moneys under the grow Iowa values financial assistance program 19 established in section 15G.112 , an may establish a regional 20 development plan. An economic development region’s regional 21 development plan must be approved by the department. An 22 economic development region shall consist of not less than 23 three counties, unless two contiguous counties have a combined 24 population of at least three hundred thousand based on the 25 most recent federal decennial census. An economic development 26 region shall establish a focused economic development effort 27 that shall include a regional development plan relating to one 28 or more of the following areas: 29 Sec. 22. Section 15E.232, subsections 3, 5, 6, 7, 8, and 9, 30 Code 2009, are amended by striking the subsections. 31 Sec. 23. Section 15E.351, subsection 1, Code Supplement 32 2009, is amended to read as follows: 33 1. The department shall establish and administer a business 34 accelerator program to provide financial assistance for 35 -8- LSB 5516XS (13) 83 tw/sc 8/ 12

S.F. 2230 the establishment and operation of a business accelerator 1 for technology-based, value-added agricultural, information 2 solutions, alternative and renewable energy including the 3 alternative and renewable energy sectors listed in section 4 476.42, subsection 1, paragraph “a” , or advanced manufacturing 5 start-up businesses or for a satellite of an existing business 6 accelerator. The program shall be designed to foster the 7 accelerated growth of new and existing businesses through the 8 provision of technical assistance. The department, subject to 9 the approval of the economic development board, may provide 10 financial assistance under this section from moneys allocated 11 for regional financial assistance pursuant to section 15G.111, 12 subsection 9 . 13 Sec. 24. Section 159A.6B, subsection 2, Code Supplement 14 2009, is amended to read as follows: 15 2. The office may execute contracts in order to provide 16 technical support and outreach services for purposes of 17 assisting and educating interested persons as provided in this 18 section. The office may also contract with a consultant to 19 provide part or all of these services. The office may require 20 that a person receiving assistance pursuant to this section 21 contribute up to fifty percent of the amount required to 22 support the costs of contracting with the consultant to provide 23 assistance to the person. The office shall assist the person 24 in completing any technical information required in order to 25 receive assistance by the department of economic development 26 pursuant to the value-added agriculture component of the grow 27 Iowa values financial assistance program established pursuant 28 to section 15G.112 . 29 Sec. 25. Section 455B.104, subsection 2, Code Supplement 30 2009, is amended by striking the subsection. 31 Sec. 26. REPEAL. Sections 15E.233 and 15G.109, Code 2009, 32 are repealed. 33 Sec. 27. REPEAL. Sections 15G.101, 15G.110, 15G.111, 34 15G.112, 15G.113, 15G.114, 15G.115, 266.19, 455B.433, Code 35 -9- LSB 5516XS (13) 83 tw/sc 9/ 12

S.F. 2230 Supplement 2009, are repealed. 1 Sec. 28. APPLICABILITY. This division of this Act applies 2 to awards of financial assistance made on or after July 1, 3 2010. 4 EXPLANATION 5 This bill provides tax credits for new job creation and 6 eliminates the grow Iowa values fund. 7 Division I of the bill provides a tax credit to employers 8 in an amount equal to 50 percent of the wages paid for certain 9 qualifying new jobs created after January 1, 2010. 10 A qualifying new job: 11 1. Must be a full-time equivalent position that did not 12 exist in the business within the previous six months in the 13 state. 14 2. Must be filled by a new employee for at least 12 months 15 before the credit can be claimed. 16 3. Must be filled by a resident of the state. 17 4. Must not be created as a result of a change in ownership 18 or as a result of a consolidation, merger, or restructuring of 19 a business entity if the job does not represent a new job in the 20 state. 21 5. Must not have been previously filled by the same employee 22 in the state. 23 6. Must not have been relocated from another location in the 24 state. 25 7. Must pay at least 100 percent of the lower of the average 26 county or average regional wage, excluding benefits. 27 The tax credit is available against the individual and 28 corporate income taxes, the franchise tax, the insurance 29 premiums tax, and the moneys and credits tax. 30 A tax credit may only be claimed once for each qualifying new 31 job. A taxpayer is entitled to claim the credit upon the end of 32 the 12th month of the job having been filled. However, if the 33 job is eliminated within 12 months from the date the taxpayer 34 is entitled to claim the credit, the taxpayer is subject to 35 -10- LSB 5516XS (13) 83 tw/sc 10/ 12

S.F. 2230 repayment of the amount of the tax credit received. 1 The tax credit is not refundable, but the taxpayer may elect 2 to carry forward any excess tax liability for five years or 3 until depleted, whichever is earlier. 4 The tax credit is in lieu of the existing new jobs tax credit 5 allowed against the individual and corporate income taxes. 6 The division applies retroactively to January 1, 2010, to 7 new jobs created on or after that date. 8 Division II of the bill eliminates the grow Iowa values fund 9 and financial assistance program and makes conforming changes 10 throughout the Code. 11 The division repeals Code sections 15E.233, 15G.101, 15G.109 12 through 15G.115, 266.19, and 455B.433. The sections in chapter 13 15G constitute the grow Iowa values fund and program. Code 14 section 15E.233 allows economic development regions to apply 15 to the department of economic development for approval to be 16 designated as an enterprise area. Currently, enterprise areas 17 may apply for financial assistance from the grow Iowa values 18 fund. Eliminating the grow Iowa values fund eliminates the 19 financial assistance for these areas as well. Code sections 20 266.19 and 455B.433 required Iowa state university and the 21 department of natural resources, respectively, to cooperate 22 with the department of economic development on certain aspects 23 of financial assistance under the grow Iowa values fund. With 24 the elimination of the grow Iowa values fund, these sections 25 are no longer operable. 26 In 2009, the general assembly amended the high quality jobs 27 program to share administrative provisions with the grow Iowa 28 values fund. Eliminating the grow Iowa values fund eliminates 29 the ability to share such provisions, so the division makes 30 corresponding amendments to the high quality jobs program to 31 retain certain definitions necessary to allow it to function 32 in substantially the same manner after the elimination of the 33 grow values fund and program, with the following exception: 34 the high quality jobs program requires certain average county 35 -11- LSB 5516XS (13) 83 tw/sc 11/ 12

S.F. 2230 and regional wage calculations be made. Currently, such 1 calculations are made by the department of economic development 2 as part of the administration of the grow Iowa values fund. 3 The division shifts responsibility for these calculations to 4 the department of revenue as part of the administration of the 5 tax credit created in division I. 6 The division applies to awards of financial assistance made 7 on or after July 1, 2010. 8 -12- LSB 5516XS (13) 83 tw/sc 12/ 12