SF 2230 (LSB 5516XS (13) 83)

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 credits for new job creation and eliminating the grow Iowa values fund and financial assistance program and including retroactive and other applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
NEW JOBS TAX CREDIT
    Section 1.  NEW SECTION.  422.11Y  New jobs tax credit.  
   1.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a new jobs tax credit in an amount equal to fifty percent of the amount of wages paid in a tax year for each new job created.
   2.  A job must meet the following conditions to qualify for the new jobs tax credit:
   a.  The job is a permanent full-time equivalent position that did not exist in the business in the state within the previous six months.
   b.  The job is filled by a new employee for at least twelve months.
   c.  The job shall be filled by a resident of the state.
   d.  The job was not created as a result of a change in ownership or as a result of a consolidation, merger, or restructuring of a business entity if the job does not represent a new job in the state.
   e.  The job shall not have been previously filled by the same employee in the state.
   f.  The job was not relocated from another location in the state.
   g.  The job pays at least one hundred percent of the lower of the average county or average regional wage, excluding the value of nonwage benefits, as calculated by the department of revenue.
   (1)  The average county wage and the average regional wage shall be the average hourly compensation rates, excluding the value of nonwage benefits for comparable jobs, from the most recent four quarters of wage and employment information from the quarterly covered wage and employment data report issued by the department of workforce development.
   (2)  The department of revenue may adopt by rule a method for calculating average county and average regional wage rates.
   3.  a.  A new jobs tax credit may only be claimed once for each qualifying new job.
   b.  A taxpayer is entitled to claim the tax credit upon the end of the twelfth month of the job having been filled. However, if the job is eliminated within twelve months from the date the taxpayer is entitled to claim the tax credit, the taxpayer is subject to repayment of the amount of the tax credit received.
   4.  An individual may claim a tax credit under this section of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust.
   5.  a.  Any tax credit in excess of the taxpayer’s liability for the tax year is not refundable, but the taxpayer may elect to have the excess credited to the tax liability for the following five years or until depleted, whichever is earlier.
   b.  A tax credit shall not be carried back to a tax year prior to the tax year in which the taxpayer first receives the tax credit.
   6.  A taxpayer eligible for the tax credit shall include with the taxpayer’s return information relating to each new job created during the tax year and shall include information establishing the total amount of wages paid for those jobs during the tax year pursuant to rules of the department.
   7.  The tax credit authorized in this section is in lieu of the new jobs tax credits authorized in sections 422.11A and 422.33, subsection 6.
    Sec. 2.  Section 422.33, Code Supplement 2009, is amended by adding the following new subsection:
   NEW SUBSECTION.  29.  The taxes imposed under this division shall be reduced by a new jobs tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11Y.
    Sec. 3.  Section 422.60, Code Supplement 2009, is amended by adding the following new subsection:
   NEW SUBSECTION.  15.  The taxes imposed under this division shall be reduced by a new jobs tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11Y.
    Sec. 4.  NEW SECTION.  432.12M  New jobs tax credit.  

   The taxes imposed under this chapter shall be reduced by a new jobs tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11Y.
    Sec. 5.  Section 533.329, subsection 2, Code Supplement 2009, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  n.  The moneys and credits tax imposed under this section shall be reduced by a new jobs tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11Y.
    Sec. 6.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to January 1, 2010, for new jobs created on or after that date.

DIVISION II
GROW IOWA VALUES FUND AND FINANCIAL ASSISTANCE PROGRAM ELIMINATION
    Sec. 7.  Section 15.103, subsection 6, Code Supplement 2009, is amended to read as follows:
   6.  As part of the organizational structure of the department, the board shall establish a due diligence committee and a loan and credit guarantee committee composed of members of the board. The committees shall serve in an advisory capacity to the board and shall carry out any duties assigned by the board in relation to programs administered by the department. The loan and credit guarantee committee shall advise the board on the winding up of loan guarantees made under the loan and credit guarantee program established pursuant to section 15E.224, Code 2009, and on the proper amount of the allocation described in section 15G.111, subsection 4, paragraph “g”.
    Sec. 8.  Section 15.104, subsection 1, Code Supplement 2009, is amended by striking the subsection.
    Sec. 9.  Section 15.104, subsection 8, paragraphs b and i, Code Supplement 2009, are amended by striking the paragraphs.
    Sec. 10.  Section 15.104, subsection 8, paragraph j, Code Supplement 2009, is amended to read as follows:
   j.  Renewable fuel programs.  A detailed accounting of expenditures in support of renewable fuel infrastructure programs, as provided in sections 15G.203 and 15G.204. The renewable fuel infrastructure board established in section 15G.202 shall approve that portion of the department’s annual report regarding projects supported from the grow Iowa values fund created in section 15G.111. This paragraph is repealed on July 1, 2012.
    Sec. 11.  Section 15.203, subsection 5, Code Supplement 2009, is amended by striking the subsection.
    Sec. 12.  Section 15.327, Code Supplement 2009, is amended by adding the following new subsections:
   NEW SUBSECTION.  01.  “Base employment level” means the number of full-time equivalent positions at a business, as established by the department and a business using the business’s payroll records, as of the date a business applies for financial assistance under the program.
   NEW SUBSECTION.  3A.  “County wage” means the county wage calculation performed by the department of revenue pursuant to section 422.11Y, subsection 2, paragraph “g”.
   NEW SUBSECTION.  7A.  “Full-time equivalent position” means a non-part-time position for the number of hours or days per week considered to be full-time work for the kind of service or work performed for an employer. Typically, a full-time equivalent position requires two thousand eighty hours of work in a calendar year, including all paid holidays, vacations, sick time, and other paid leave.
   NEW SUBSECTION.  7B.  “Maintenance period” means the period of time between the project completion date and maintenance period completion date.
   NEW SUBSECTION.  12A.  “Regional wage” means the regional wage calculation performed by the department of revenue pursuant to section 422.11Y, subsection 2, paragraph “g”.
    Sec. 13.  Section 15.327, subsections 1, 4, 7, 8, 10, 12, and 13, Code Supplement 2009, are amended by striking the subsections and inserting in lieu thereof the following:
   1.  “Benefit” means nonwage compensation provided to an employee. Benefits typically include medical and dental insurance plans, pension, retirement, and profit-sharing plans, child care services, life insurance coverage, vision insurance coverage, disability insurance coverage, and any other nonwage compensation as determined by the board.
   4.  “Created job” means a new, permanent, full-time equivalent position added to a business’s payroll in excess of the business’s base employment level.
   7.  “Fiscal impact ratio” means a ratio calculated by estimating the amount of taxes to be received from a business by the state and dividing the estimate by the estimated cost to the state of providing certain financial incentives to the business, reflecting a ten-year period of taxation and incentives and expressed in terms of current dollars. For purposes of the program, “fiscal impact ratio” does not include taxes received by political subdivisions.
   8.  “Maintenance period completion date” means the date on which the maintenance period ends.
   10.  “Project completion date” means the date by which a recipient of financial assistance has agreed to meet all the terms and obligations contained in an agreement with the department as described in section 15.330.
   12.  “Qualifying wage threshold” means the county wage or the regional wage, as calculated by the department of revenue pursuant to section 422.11Y, subsection 2, paragraph “g”, whichever is lower.
   13.  “Retained job” means a full-time equivalent position, in existence at the time an employer applies for financial assistance which remains continuously filled or authorized to be filled as soon as possible and which is at risk of elimination if the project for which the employer is seeking assistance does not proceed.
    Sec. 14.  Section 15.329, subsection 2, Code Supplement 2009, is amended to read as follows:
   2.  A business providing a sufficient package of benefits to each employee holding a created or retained job shall qualify for a credit against the qualifying wage threshold requirements described in subsection 1, paragraph “c”. The credit shall be calculated and applied in the following manner: described in section 15G.112, subsection 4, paragraph “b”.
   a.  By multiplying the qualifying wage threshold of the county in which the business is located by one and three-tenths.
   b.  By multiplying the result of paragraph “a” by one-tenth.
   c.  The amount of the result of paragraph “b” shall be credited against the amount of the one hundred thirty percent qualifying wage threshold requirement that the business is required to meet under subsection 1, paragraph “c”.
   d.  The credit shall not be applied against the one hundred percent of qualifying wage threshold requirement described in subsection 1, paragraph “c”.
    Sec. 15.  Section 15.330, subsection 4, Code Supplement 2009, is amended to read as follows:
   4.  A project completion date, a maintenance period completion date, the number of jobs to be created or retained, or certain other terms and obligations described in section 15G.112, subsection 1, paragraph “d” an agreement, as the department deems necessary in order to make the requirements in project agreements uniform. The department, with the approval of the board, may adopt rules as necessary for making such requirements uniform. Such rules shall be in compliance with the provisions of this part and with the provisions of chapter 15G.
    Sec. 16.  Section 15.335A, subsection 1, unnumbered paragraph 1, Code Supplement 2009, is amended to read as follows:
   Tax incentives are available to eligible businesses as provided in this section. The incentives are based upon the number of jobs created or retained that pay at least one hundred thirty percent of the qualifying wage threshold as computed pursuant to section 15G.112 15.329, subsection 4 1, and the amount of the qualifying investment made according to the following schedule:
    Sec. 17.  Section 15.335A, subsection 2, paragraphs b, c, f, and g, Code Supplement 2009, are amended by striking the paragraphs.
    Sec. 18.  Section 15.335A, subsection 5, Code Supplement 2009, is amended to read as follows:
   5.  The department shall negotiate the amount of tax incentives provided to an applicant under the program in accordance with this section and section 15G.112, as applicable.
    Sec. 19.  Section 15A.7, subsection 3, Code Supplement 2009, is amended to read as follows:
   3.  That the employer shall agree to pay wages for the jobs for which the credit is taken of at least the county wage or the regional wage, as calculated by the department of revenue pursuant to section 15G.112, subsection 3 422.11Y, subsection 2, paragraph “g”, whichever is lower. Eligibility for the supplemental credit shall be based on a one-time determination of starting wages by the community college.
    Sec. 20.  Section 15E.193, subsection 1, paragraphs b, c, and d, Code Supplement 2009, are amended to read as follows:
   b.  (1)  The business shall provide a sufficient package of benefits to each employee holding a created or retained job. For purposes of this paragraph, “created job” and “retained job” have the same meaning as defined in section 15G.101 15.327.
   (2)  The board, upon the recommendation of the department, shall adopt rules determining what constitutes a sufficient package of benefits.
   c.  The business shall pay a wage that is at least ninety percent of the qualifying wage threshold. For purposes of this paragraph, “qualifying wage threshold” has the same meaning as defined in section 15G.101 15.327.
   d.  Creates or retains at least ten full-time equivalent positions and maintains them until the maintenance period completion date. For purposes of this paragraph, “maintenance period completion date” and “full-time equivalent position” have the same meanings as defined in section 15G.101 15.327.
    Sec. 21.  Section 15E.231, subsection 1, unnumbered paragraph 1, Code Supplement 2009, is amended to read as follows:
   In order for an An economic development region to receive moneys under the grow Iowa values financial assistance program established in section 15G.112, an may establish a regional development plan. An economic development region’s regional development plan must be approved by the department. An economic development region shall consist of not less than three counties, unless two contiguous counties have a combined population of at least three hundred thousand based on the most recent federal decennial census. An economic development region shall establish a focused economic development effort that shall include a regional development plan relating to one or more of the following areas:
    Sec. 22.  Section 15E.232, subsections 3, 5, 6, 7, 8, and 9, Code 2009, are amended by striking the subsections.
    Sec. 23.  Section 15E.351, subsection 1, Code Supplement 2009, is amended to read as follows:
   1.  The department shall establish and administer a business accelerator program to provide financial assistance for the establishment and operation of a business accelerator for technology-based, value-added agricultural, information solutions, alternative and renewable energy including the alternative and renewable energy sectors listed in section 476.42, subsection 1, paragraph “a”, or advanced manufacturing start-up businesses or for a satellite of an existing business accelerator. The program shall be designed to foster the accelerated growth of new and existing businesses through the provision of technical assistance. The department, subject to the approval of the economic development board, may provide financial assistance under this section from moneys allocated for regional financial assistance pursuant to section 15G.111, subsection 9.
    Sec. 24.  Section 159A.6B, subsection 2, Code Supplement 2009, is amended to read as follows:
   2.  The office may execute contracts in order to provide technical support and outreach services for purposes of assisting and educating interested persons as provided in this section. The office may also contract with a consultant to provide part or all of these services. The office may require that a person receiving assistance pursuant to this section contribute up to fifty percent of the amount required to support the costs of contracting with the consultant to provide assistance to the person. The office shall assist the person in completing any technical information required in order to receive assistance by the department of economic development pursuant to the value-added agriculture component of the grow Iowa values financial assistance program established pursuant to section 15G.112.
    Sec. 25.  Section 455B.104, subsection 2, Code Supplement 2009, is amended by striking the subsection.
    Sec. 26.  REPEAL.  Sections 15E.233 and 15G.109, Code 2009, are repealed.
    Sec. 27.  REPEAL.  Sections 15G.101, 15G.110, 15G.111, 15G.112, 15G.113, 15G.114, 15G.115, 266.19, 455B.433, Code Supplement 2009, are repealed.
    Sec. 28.  APPLICABILITY.  This division of this Act applies to awards of financial assistance made on or after July 1, 2010.
EXPLANATION
   This bill provides tax credits for new job creation and eliminates the grow Iowa values fund.
   Division I of the bill provides a tax credit to employers in an amount equal to 50 percent of the wages paid for certain qualifying new jobs created after January 1, 2010. 
   A qualifying new job:
   1. Must be a full-time equivalent position that did not exist in the business within the previous six months in the state.
   2. Must be filled by a new employee for at least 12 months before the credit can be claimed.
   3. Must be filled by a resident of the state.
   4. Must not be created as a result of a change in ownership or as a result of a consolidation, merger, or restructuring of a business entity if the job does not represent a new job in the state.
   5. Must not have been previously filled by the same employee in the state.
   6. Must not have been relocated from another location in the state.
   7. Must pay at least 100 percent of the lower of the average county or average regional wage, excluding benefits.
   The tax credit is available against the individual and corporate income taxes, the franchise tax, the insurance premiums tax, and the moneys and credits tax.
   A tax credit may only be claimed once for each qualifying new job. A taxpayer is entitled to claim the credit upon the end of the 12th month of the job having been filled. However, if the job is eliminated within 12 months from the date the taxpayer is entitled to claim the credit, the taxpayer is subject to repayment of the amount of the tax credit received.
   The tax credit is not refundable, but the taxpayer may elect to carry forward any excess tax liability for five years or until depleted, whichever is earlier.
   The tax credit is in lieu of the existing new jobs tax credit allowed against the individual and corporate income taxes.
   The division applies retroactively to January 1, 2010, to new jobs created on or after that date.
   Division II of the bill eliminates the grow Iowa values fund and financial assistance program and makes conforming changes throughout the Code.
   The division repeals Code sections 15E.233, 15G.101, 15G.109 through 15G.115, 266.19, and 455B.433. The sections in chapter 15G constitute the grow Iowa values fund and program. Code section 15E.233 allows economic development regions to apply to the department of economic development for approval to be designated as an enterprise area. Currently, enterprise areas may apply for financial assistance from the grow Iowa values fund. Eliminating the grow Iowa values fund eliminates the financial assistance for these areas as well. Code sections 266.19 and 455B.433 required Iowa state university and the department of natural resources, respectively, to cooperate with the department of economic development on certain aspects of financial assistance under the grow Iowa values fund. With the elimination of the grow Iowa values fund, these sections are no longer operable.
   In 2009, the general assembly amended the high quality jobs program to share administrative provisions with the grow Iowa values fund. Eliminating the grow Iowa values fund eliminates the ability to share such provisions, so the division makes corresponding amendments to the high quality jobs program to retain certain definitions necessary to allow it to function in substantially the same manner after the elimination of the grow values fund and program, with the following exception: the high quality jobs program requires certain average county and regional wage calculations be made. Currently, such calculations are made by the department of economic development as part of the administration of the grow Iowa values fund. The division shifts responsibility for these calculations to the department of revenue as part of the administration of the tax credit created in division I.
   The division applies to awards of financial assistance made on or after July 1, 2010.