RS 3121 - Competitive Projects Payroll Incentive Program
A. Definitions. For purposes of this Section, the following words or terms as used in this Chapter shall have the following meanings, unless a different meaning appears from the context:
(1) "Basic health benefits plan" means coverage for basic hospital care, coverage for physician care, and coverage for health care which is determined by the Department of Economic Development to have a value of at least one dollar and twenty-five cents per hour and which is the same coverage as is provided to employees employed in a bona fide executive, administrative, or professional capacity by the employers who are exempt from the minimum wage and maximum hour requirements of the federal Fair Labor Standards Act, 29 U.S.C. 201 et seq.
(2) "Business" means any individual, firm, joint venture, association, corporation, estate, partnership, business trust, receiver, syndicate, or any other legal business entity.
(3) "Department" means the Department of Economic Development.
(4) "New jobs" means permanent full-time direct new jobs based at the facilities designated in the contract and filled by residents of the state.
(5) "New payroll" means payment by the business to its employees for new jobs, exclusive of benefits, and defined as wages under Louisiana Employment Security Law (R.S. 23:1472(20)).
(6) "Program" means the Competitive Projects Payroll Incentive Program.
(7) "Qualified business" means a business certified by the secretary as meeting the eligibility requirements of Subsection B of this Section, approved by the Joint Legislative Committee on the Budget to participate in the program, and executing a contract providing the terms and conditions for its participation.
(8) "Secretary" means the secretary of the Department of Economic Development.
(9) "Significant positive economic benefit" means net positive tax revenue. This shall be determined by taking into account direct, indirect, and induced impacts based on a standard economic impact methodology utilized by the department, the value of the rebate, and any other state tax and financial incentives that are used by the department to secure the project.
B. Eligibility requirements. (1) A business shall be eligible for participation in the program if all of the following requirements are met:
(a) At least fifty percent of the total annual sales of the business from a Louisiana site or sites is to out-of-state customers or buyers, or to in-state customers or buyers who resell the product or service to an out-of-state customer or buyer for ultimate use, or the federal government, or any combination thereof.
(b) The business will primarily engage in one of the following activities at the project site:
(i) Manufacturing of the following types of durable goods: automobiles, motorcycles or other passenger vehicles, or components thereof; aircraft or components thereof; spacecraft or components thereof; medical devices; batteries or other power storage devices; motors, engines, turbines or components thereof; environmental control systems; household appliances; computers, computer peripherals or components thereof; communications equipment; audio or video equipment; semiconductors; consumer-oriented electronic devices or components thereof; industrial machinery; or construction heavy equipment such as excavators.
(ii) Manufacturing of pharmaceutical products.
(iii) Conversion of natural gas to diesel, jet fuel, or other refined fuels.
(iv) Data storage or data services, provided at least seventy-five percent of sales meet the out-of-state sales requirements of Subparagraph (1)(a) of this Subsection.
(v) Other activities as recommended by the secretary and approved by the Joint Legislative Committee on the Budget.
(c) The business offers, or will offer within ninety days of the effective date of qualifying for the incentive rebates pursuant to the provisions of this Chapter, a basic health benefits plan to the individuals it employs as provided in Paragraph (A)(1) of this Section.
(2) The secretary, at his discretion, may include sales by affiliates of the business in determining the percentage of sales meeting the requirements of Paragraph (1) of this Subsection.
(3) All of the following shall not be eligible for the program:
(a) A business engaged in gaming or gambling.
(b) A business primarily engaged in natural resource extraction or exploration, unless the project activity is conversion of natural gas to diesel, jet fuel, or other refined fuels.
(c) A business primarily engaged in retail sales; real estate; professional services; financial services; venture capital funds; shipbuilding; wood products; agriculture; or manufacturing of machinery or equipment primarily intended to serve the energy industry.
C. Applications and contract approval and administration. (1) At the invitation of the secretary, a business may apply for a contract by submitting to the department such certified statements and substantiating documents as the department may require.
(2) The secretary may certify eligibility of the business and request approval by the Joint Legislative Committee on the Budget of its participation in the program on terms and conditions specified by the secretary in a proposed contract, if the secretary determines all of the following:
(a) The business meets the eligibility requirements provided for in Subsection B of this Section.
(b) Participation in the program is needed in a highly competitive site selection situation to encourage the business to locate or expand in the state.
(c) Securing the project will result in a significant positive economic benefit to the state.
(3)(a)(i) Upon the approval by the Joint Legislative Committee on the Budget of participation in the program by the business, the secretary shall execute the contract with the business, and provide a copy to the Department of Revenue prior to the payment of any benefits under the contract.
(ii) No new contract shall be approved on or after July 1, 2022, but contracts existing on that date may continue and may be renewed.
(b) The contract shall provide for a rebate to the qualified business based upon new payroll and shall include the following provisions:
NOTE: Item (i) as amended by Acts 2015, No. 126, §2, eff. through June 30, 2018. See Acts 2016, 1st E.S., No. 28.
(i) The percentage of new payroll eligible for rebate, up to a maximum of fifteen percent. With respect to projects for which an invitation to apply is extended by the secretary on or after July 1, 2015, pursuant to this Section, the percentage of new payroll eligible for rebate shall not exceed twelve percent.
NOTE: Item (i) as amended by Acts 2015, No. 126, §3, eff. through June 30, 2018. See Acts 2016, 1st E.S., No. 28.
(i) The percentage of new payroll eligible for rebate, up to a maximum of fifteen percent.
(ii) The maximum amount of new payroll eligible for rebate.
(iii) The number of new jobs and amount of new payroll required to be created and maintained and any other performance obligations required to be met in order to remain qualified for participation in the program.
(iv) Designation of the facility or facilities eligible for participation in the program.
(v) Monitoring of performance and consequences for failure to perform and other contract violations.
(vi) An initial term of the contract, which may be up to five years, and any renewal term available at the discretion of the secretary, which may be up to an additional five years.
(4)(a) In addition, a qualified business shall be entitled to either the sales and use tax rebates for capital expenditures for the facility or facilities designated in the contract provided for in Subparagraph (b) of this Paragraph, or the project facility expense rebate provided for in Subparagraph (c) of this Paragraph.
(b) Any qualified business which receives a contract pursuant to this Chapter shall also be entitled to a rebate of sales and use tax imposed by the state and imposed by any political subdivision of the state, upon approval of the governing authority of the appropriate political subdivision, including the office of sheriff in the case of a law enforcement district, on the purchases of the materials used in the construction of a building, or any addition or improvement thereon, for housing any legitimate business enterprise or machinery and equipment used in that enterprise.
(c) In lieu of the sales and use tax rebate, a qualified business shall be entitled to a project facility expense rebate equal to one and one-half percent of the amount of qualified capital expenditures for the facility or facilities designated in the contract for which an invitation to apply was extended by the secretary before July 1, 2015. With respect to projects for which an invitation to apply is extended by the secretary on or after July 1, 2015, a qualified business shall be entitled to a project facility expense rebate equal to one and two-tenths percent of the amount of qualified capital expenditures for the facility or facilities designated in the contract. For purposes of this Subparagraph, the term "qualified capital expenditures" means amounts classified as capital expenditures for federal income tax purposes related to the project plus exclusions from capitalization provided for in Internal Revenue Code Section 263 (a)(1)(A) through (L), minus the capitalized cost of land, capitalized leases of land, capitalized interest, capitalized costs of manufacturing machinery and equipment to the extent capitalized manufacturing machinery and equipment costs are excluded from sales and use tax pursuant to R.S. 47:301(3), and the capitalized cost for the purchase of an existing building. When a qualified business purchases an existing building and capital expenditures are used to rehabilitate the building, only the costs of the rehabilitation shall be considered qualified capital expenditures. Additionally, a qualified business shall be allowed to increase its qualified capital expenditures to the extent the qualified business's capitalized basis is properly reduced by claiming a federal credit. A qualified business earns the project facility expense rebate in the qualified business's fiscal year in which the project is placed in service but the qualified business may not be issued the project facility expense rebate until the Department of Economic Development signs a project completion report or such other time as provided for by rule or regulation.
D. Annual certification of eligibility. (1) The qualified business shall file requests for approval of annual rebates with the department. The request shall include documentation signed by a corporate officer of the qualified business certifying its continued eligibility for the program, as provided in Subsection B of this Section, and its actual new payroll and the performance of any other contractual obligations for the subject year. The qualified business may be subject to a limited audit by the department, at the expense of the qualified business, to verify such eligibility and performance. The approved contract between the qualified business and the department shall authorize the continued rebate as long as the business remains eligible for the program and complies with the terms and performance obligations of the contract. If a qualified business fails to maintain the eligibility requirements for participation in the program or fails to meet all performance obligations of the contract, the secretary may suspend or terminate its participation in the program.
(2)(a) After verification of continued eligibility and performance, the department shall send a rebate certification letter to the Department of Revenue, stating the amount of actual new payroll for the subject year, the amount of rebate to be issued, and the entity to which the rebate shall be issued. The Department of Revenue may require the business to submit additional information as may be necessary to properly issue the rebate. Payment of rebates shall be made from the current collections of the taxes imposed pursuant to Title 47 of the Louisiana Revised Statutes of 1950, as amended.
(b) No payment of a rebate shall be made under a specific contract during the fiscal year in which such contract is approved by the Joint Legislative Committee on the Budget.
E. Incentive limitations. A taxpayer shall not receive any other incentive administered by the Department of Economic Development for any expenditures or jobs for which the taxpayer has received a rebate pursuant to this Section.
F. Economic analysis verification. Prior to the implementation of the program, an independent third-party economist selected by the Legislative Fiscal Office and the department, and retained by the department after approval of the Joint Legislative Committee on the Budget, shall verify the standard economic impact methodology utilized by the department.
G. Rules. The department may promulgate rules and regulations after approval of the House Committee on Ways and Means and the Senate Committee on Revenue and Fiscal Affairs meeting jointly within sixty days of publication of such proposed rules and regulations in the Louisiana Register.
Acts 2012, No. 507, §1, eff. July 1, 2012; Acts 2013, No. 220, §24, eff. June 11, 2013; Acts 2014, No. 421, §1, eff. July 1, 2014; Acts 2015, No. 126, §2, eff. July 1, 2015; §3, eff. July 1, 2018; Acts 2016, 1st Ex. Sess., No. 28, §2, eff. April 1, 2016; Acts 2016, No. 664, §1, eff. July 1, 2016; Acts 2017, No. 386, §2, eff. June 23, 2017.