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General Assembly Bill No. 5505
February Session, 2022
LCO No. 5416
Referred to Committee on No Committee
Introduced by:
REP. RITTER M., 1
st
Dist.
SEN. LOONEY, 11
th
Dist.
REP. ROJAS, 9
th
Dist.
SEN. DUFF, 25
th
Dist.
REP. CANDELORA V., 86
th
Dist.
SEN. KELLY, 21
st
Dist.
AN ACT CONCERNING CERTAIN AEROSPACE MANUFACTURING
PROJECTS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective from passage) (a) As used in this section: 1
(1) "Aerospace manufacturing project" means a project involving the 2
production of helicopters in this state that, if certified by the 3
commissioner as provided in subsection (b) of this section, will require 4
(A) primary helicopter production for current United States government 5
programs specified in the assistance agreement, as of the date of the 6
assistance agreement, to be carried out at one or more facilities in this 7
state, (B) the undertaking and maintaining of primary production for 8
helicopters to be produced during the term of the assistance agreement 9
under one or more future United States government programs specified 10
in the assistance agreement under production contracts entered into by 11
the eligible taxpayer after the effective date of this section, to be carried 12
out at one or more facilities in this state, and (C) minimum requirements 13
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for total employment in this state, average employee wages in this state, 14
supplier spend and capital expenditures by an eligible taxpayer in 15
furtherance of such project continuing through at least June 30, 2042; 16
(2) "Annual recapture amount" means the total project tax benefits 17
utilized by an eligible taxpayer divided by ten; 18
(3) "Assistance agreement" means a contract entered into between the 19
commissioner and an eligible taxpayer in accordance with subsection (c) 20
of this section, including any amendments to or extensions of such 21
contract; 22
(4) "Average wage requirement" means, for compliance years 23
commencing on or after July 1, 2022, and prior to July 1, 2032, an average 24
annual wage for full-time employees in this state that is not less than the 25
amounts specified in the assistance agreement; 26
(5) "Benefit period" means the period commencing on the effective 27
date of the assistance agreement and ending on June 30, 2032; 28
(6) "Capital expenditure" means bona fide costs to the wholly-owned 29
subsidiary and its subsidiaries for: (A) Acquisition of lands, buildings, 30
machinery, equipment or any combination thereof; (B) site and 31
infrastructure improvements; (C) planning costs; (D) research and 32
development expenses, as defined in section 12-217n of the general 33
statutes, revision of 1958, revised to January 1, 2021, and including, but 34
not limited to, development of new products and markets; and (E) 35
development of diversification strategies, including plans for regional 36
diversification strategies and consultants required for the completion of 37
such strategies and plans; 38
(7) "Capital expenditure requirement" means, for compliance years 39
commencing on or after July 1, 2022, and prior to July 1, 2032, a total 40
annual amount of capital expenditures made in this state by the wholly-41
owned subsidiary that is not less than: 42
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(A) Seventy million two hundred thousand dollars for the 43
compliance year ending June 30, 2023; 44
(B) Seventy-one million one hundred thousand dollars for the 45
compliance year ending June 30, 2024; 46
(C) Seventy-two million nine hundred thousand dollars for the 47
compliance year ending June 30, 2025; 48
(D) Seventy-three million eight hundred thousand dollars for the 49
compliance year ending June 30, 2026; 50
(E) Seventy-five million six hundred thousand dollars for the 51
compliance year ending June 30, 2027; 52
(F) Seventy-seven million four hundred thousand dollars for the 53
compliance year ending June 30, 2028; 54
(G) Seventy-eight million three hundred thousand dollars for the 55
compliance year ending June 30, 2029; 56
(H) Eighty million one hundred thousand dollars for the compliance 57
year ending June 30, 2030; 58
(I) Eighty-one million nine hundred thousand dollars for the 59
compliance year ending June 30, 2031; and 60
(J) Eighty-three million seven hundred thousand dollars for the 61
compliance year ending June 30, 2032; 62
(8) "Commissioner" means the Commissioner of Economic and 63
Community Development; 64
(9) "Company" means an entity with a place of business or a wholly-65
owned subsidiary located in this state and the direct and indirect 66
subsidiaries and affiliates of such entity; 67
(10) "Compliance year" means each twelve -month period 68
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commencing July first and continuing through June thirtieth of the 69
following year, provided the initial compliance year shall commence on 70
July 1, 2022, and end on June 30, 2023, and the last compliance year shall 71
commence on July 1, 2031, and end on June 30, 2032. "Annual" refers to 72
a compliance year; 73
(11) "Contract year" means each twelve-month period commencing 74
July first and continuing through June thirtieth of the following year, 75
provided the initial contract year shall commence on July 1, 2022, and 76
end on June 30, 2023, and the last contract year shall commence on July 77
1, 2041, and end on June 30, 2042; 78
(12) "Corporation business tax" means the tax due under chapter 208 79
of the general statutes; 80
(13) "Eligible taxpayer" means a company that, at the time application 81
is made under subsection (b) of this section, (A) is engaged in the 82
aerospace industry, (B) employs not less than seven thousand 83
individuals in this state, (C) operates the company's primary helicopter 84
production facility for its current United States government programs 85
in this state, (D) plans to bid on a production contract or contracts for a 86
helicopter under one or more United States government programs, and 87
(E) has a wholly-owned subsidiary with production facilities and its 88
headquarters, as set forth in the assistance agreement, in this state prior 89
to the effective date of this section; 90
(14) (A) "Employee requirement" means, for compliance years 91
commencing on or after July 1, 2022, and prior to July 1, 2032: 92
(i) A minimum level of full-time employees in this state that is not 93
less than an average of seven thousand three hundred seventy-five for 94
each compliance year if the eligible taxpayer has entered into a 95
production contract for one United States government program 96
specified in the assistance agreement; and 97
(ii) A minimum level of full-time employees in this state that is not 98
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less than an average of seven thousand five hundred for each 99
compliance year if the eligible taxpayer has entered into production 100
contracts for two United States government programs specified in the 101
assistance agreement. 102
(B) The average number of full-time employees for each compliance 103
year shall be determined by adding the number of full-time employees 104
at the end of each quarter of the respective compliance year and 105
dividing the sum of such quarters by four; 106
(15) "Full-time employee" means an employee in this state of the 107
company who works a minimum of thirty-five hours per week. "Full-108
time employee" does not include an employee working on a temporary 109
or seasonal basis or any individual who does not receive a federal Form 110
W-2 from the company; 111
(16) "Minimum requirements" means the minimum conditions the 112
eligible taxpayer must satisfy during each compliance year to qualify for 113
the sales and use tax offset for such compliance year and the refundable 114
tax credit for such compliance year, including, but not limited to, (A) 115
achieving the employee requirement, average wage requirement, 116
supplier spend requirement and capital expenditure requirement, (B) 117
the maintenance of the wholly-owned subsidiary's headquarters, as set 118
forth in the assistance agreement, in this state, (C) the maintenance and 119
operation of the company's primary helicopter production facility for its 120
current United States government programs, as of the date of the 121
assistance agreement, in this state, (D) the undertaking and maintaining 122
in this state of the company's primary production for helicopters to be 123
produced during the term of the assistance agreement under one or 124
more future United States government programs specified in the 125
assistance agreement under production contracts entered into by the 126
eligible taxpayer after the effective date of this section, and (E) the 127
maintenance of diversity and workforce training programs by the 128
company in accordance with the terms of the assistance agreement; 129
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(17) "Production" means the various operations related to the 130
completion of a helicopter, including, but not limited to, procurement, 131
engineering, manufacture, assembly, integration and testing; 132
(18) "Production contract" means a contract with the United States 133
government for the production of helicopters; 134
(19) "Project tax benefit" means the total benefit accruing to an eligible 135
taxpayer with respect to the sales and use tax offset and the refundable 136
tax credit; 137
(20) "Refundable tax credit" means the credit described in subsection 138
(e) of this section; 139
(21) "Regular place of business" means any bona fide office, factory, 140
warehouse or other space in this state at which a supply company is 141
doing business in its own name in a regular and systematic manner and 142
which place is continuously maintained, occupied and used by the 143
supply company in carrying on its business through its employees 144
regularly in attendance to carry on the supply company's business in the 145
supply company's own name. "Regular place of business" does not 146
include a place of business for a statutory agent for service of process, a 147
temporary office or location used by the supply company only for the 148
duration of the contract or an office maintained, occupied and used by 149
a person affiliated with the supply company; 150
(22) "Sales and use tax" means the taxes due under chapter 219 of the 151
general statutes; 152
(23) "Sales and use tax offset" means the offset described under 153
subsection (d) of this section; 154
(24) "Supply company" means any commercial business with a 155
regular place of business in this state that supplies goods and services 156
necessary to support (A) the manufacturing of company products, or (B) 157
company operations. "Supply company" does not include any local, 158
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state or federal revenue collection or taxing entity; 159
(25) (A) "Supplier spend requirement" means, for compliance years 160
commencing on or after July 1, 2022, and prior to July 1, 2032, the total 161
annual spend by the wholly-owned subsidiary and by the company, on 162
behalf of the wholly-owned subsidiary, with supply companies in this 163
state of not less than: 164
(i) Three hundred million dollars for compliance years commencing 165
on or after July 1, 2022, and prior to July 1, 2024; 166
(ii) Four hundred ten million dollars for compliance years 167
commencing on or after July 1, 2024, and prior to July 1, 2029; and 168
(iii) Four hundred seventy million dollars for compliance years 169
commencing on or after July 1, 2029, and prior to July 1, 2032. 170
(B) If an expenditure qualifies for both the supplier spend 171
requirement and the capital expenditures requirement, the eligible 172
taxpayer may choose between such categories for which such 173
expenditure may be counted. In no event shall any such expenditure be 174
counted towards more than one such category; and 175
(26) "Wholly-owned subsidiary" means a subsidiary of the company, 176
or such subsidiary's successor to its operations, that has its 177
headquarters, as set forth in the assistance agreement, in this state. 178
"Wholly-owned subsidiary" includes any direct or indirect subsidiary of 179
the company's wholly-owned subsidiary and any limited liability 180
company wholly owned directly or indirectly by the company's wholly-181
owned subsidiary. 182
(b) (1) Any eligible taxpayer that intends to undertake an aerospace 183
manufacturing project may apply to the commissioner for certification 184
of such project as a certified aerospace manufacturing project. In order 185
to receive such certification, an eligible taxpayer shall apply to the 186
commissioner, in a form acceptable to the commissioner and including 187
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such information as prescribed by the commissioner, including, but not 188
limited to, (A) a detailed plan outlining the aerospace manufacturing 189
project, (B) the term of such project, and (C) the estimated expenditures 190
for such project. The commissioner may require such eligible taxpayer 191
to submit such additional information as may be necessary to evaluate 192
the application. 193
(2) All decisions of the commissioner with respect to any application 194
received under subdivision (1) of this subsection shall be made in the 195
commissioner's discretion. The provisions of this subsection shall not be 196
construed to authorize suit against this state by any taxpayer that is 197
denied certification by the commissioner and shall not be construed as 198
a waiver of sovereign immunity. 199
(c) (1) Upon certification by the commissioner of an application as 200
provided in subsection (b) of this section, the commissioner may enter 201
into an assistance agreement with an eligible taxpayer pursuant to 202
which the commissioner may, in consideration of the eligible taxpayer's 203
agreement to meet the minimum requirements in a compliance year in 204
connection with the certified aerospace manufacturing project and as 205
further inducement for the eligible taxpayer to enter into an aerospace 206
manufacturing project, agree to permit the eligible taxpayer to offset its 207
sales and use tax liability and to claim a credit against its corporation 208
business tax liability up to a specified amount for the corresponding 209
compliance year. 210
(2) Such assistance agreement shall have a term of not less than 211
twenty years and shall list: 212
(A) The specifications of the certified aerospace manufacturing 213
project; 214
(B) The length of time the certified aerospace manufacturing project 215
will take to complete; 216
(C) The minimum requirements the eligible taxpayer agrees to meet 217
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during each compliance year; 218
(D) The commitment by the eligible taxpayer to (i) maintain the 219
headquarters, as set forth in the assistance agreement, of the wholly-220
owned subsidiary or its successor in this state, (ii) operate its primary 221
helicopter production facility for its current United States government 222
programs, as of the date of the assistance agreement, in this state, and 223
(iii) to undertake and maintain its primary production of helicopters to 224
be produced during the term of the assistance agreement under one or 225
more future United States government programs specified in the 226
assistance agreement in this state under production contracts entered 227
into by the eligible taxpayer after the effective date of this section; 228
(E) The amount of sales and use tax that the eligible taxpayer is 229
eligible to offset for each compliance year set forth in the assistance 230
agreement, provided the eligible taxpayer meets the minimum 231
requirements for each such compliance year; 232
(F) The terms and conditions of the repayment of any sales and use 233
tax offsets and other required financial penalties resulting from the 234
eligible taxpayer's failure to comply with the terms of the assistance 235
agreement; 236
(G) The amount of corporation business tax, subject to the limits set 237
forth in subsection (e) of this section, against which the eligible taxpayer 238
is eligible to claim a credit for each compliance year set forth in the 239
assistance agreement, provided the eligible taxpayer meets the 240
minimum requirements for each such compliance year; 241
(H) The manner and method for the eligible taxpayer to provide 242
notice of any disputed claim under the assistance agreement; and 243
(I) Any other terms and conditions the commissioner may require. 244
(3) The assistance agreement shall provide that the project tax benefit 245
be earned and utilized during the first eight years of the term of any 246
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production contract, provided no project tax benefit may be earned or 247
utilized beyond the benefit period. 248
(4) Any eligible taxpayer that enters into an assistance agreement 249
with the commissioner under this subsection may, in the event of any 250
disputed claim under such assistance agreement, bring an action against 251
this state to the superior court for the judicial district of Hartford for the 252
purpose of having such claim determined, provided notice of such 253
disputed claim is first given to the commissioner in the manner and 254
method described in such assistance agreement. No such action shall be 255
allowed unless it is brought not later than two years after the date on 256
which the eligible taxpayer gave proper notice to the commissioner in 257
accordance with such assistance agreement. All legal defenses under 258
such assistance agreement, except sovereign immunity, are reserved to 259
this state. 260
(5) If the provisions of subsection (c) or (e) of section 32-223 of the 261
general statutes or section 32-462 of the general statutes are in conflict 262
with the assistance agreement, the provisions of such assistance 263
agreement shall supersede. 264
(6) Upon the execution of the assistance agreement, the commissioner 265
shall issue an allocation notice stating the maximum combined amount 266
of the sales and use tax offset and the refundable tax credit available to 267
the eligible taxpayer for the benefit period and the specific requirements 268
the eligible taxpayer shall meet to qualify for such offset and credit. Such 269
notice shall certify to the eligible taxpayer that the offsets and credits 270
may be claimed by the eligible taxpayer if the eligible taxpayer meets 271
the specific requirements set forth in the notice. 272
(d) (1) The assistance agreement shall provide for the offset of sales 273
and use tax amounts otherwise payable by the eligible taxpayer under 274
the provisions of chapter 219 of the general statutes. Such offset shall be 275
made in the form, timing and manner determined by the commissioner 276
in consultation with the Commissioner of Revenue Services. The sales 277
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and use tax offset amounts shall be calculated after the application of all 278
other sales and use tax exemptions set forth in chapter 219 of the general 279
statutes in effect on the effective date of this section and any subsequent 280
amendments to said chapter that the eligible taxpayer is eligible to 281
claim. Nothing in this subsection shall affect the eligible taxpayer's 282
ability to claim the sales and use tax exemptions that it otherwise 283
qualifies for under any provision of the general statutes. 284
(2) Subsequent to a production contract taking effect for helicopters 285
to be produced during the term of the assistance agreement, not later 286
than sixty days after the end of each compliance year or, if the eligible 287
taxpayer requests and the commissioner approves an extended date, not 288
later than such extended date, the eligible taxpayer shall certify, subject 289
to a third-party audit performed in accordance with the Department of 290
Economic and Community Development audit guide or such protocols 291
as may be set forth in the assistance agreement, the actual employment, 292
wages, supplier spend and capital expenditure amounts to the 293
commissioner in accordance with the requirements of the assistance 294
agreement. If the results of such audit reveal that the eligible taxpayer 295
has claimed a sales and use tax offset in excess of the amount allowable, 296
the eligible taxpayer shall be subject to the repayment provisions as set 297
forth in the assistance agreement. At the end of each compliance year, 298
upon receipt of the eligible taxpayer's certification, the commissioner 299
shall notify the Commissioner of Revenue Services whether the eligible 300
taxpayer has met all minimum requirements necessary to qualify for the 301
sales and use tax offset or is required to repay the amount of such offset 302
in accordance with the terms of the assistance agreement. 303
(e) (1) If the results of the audit performed pursuant to subdivision 304
(2) of subsection (d) of this section reveal that the eligible taxpayer was 305
unable to utilize all of the sales and use tax offset to which it was entitled 306
under the assistance agreement for a compliance year against its sales 307
and use tax liability, the assistance agreement shall permit the eligible 308
taxpayer to claim the excess amount as a refundable tax credit, not to 309
exceed five million dollars for each compliance year, against the 310
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corporation business tax. If the amount of the excess is greater than five 311
million dollars for any compliance year, the excess over five million 312
dollars shall be carried forward to future compliance years to offset the 313
eligible taxpayer's sales and use tax liability and then as refundable tax 314
credits of up to five million dollars for each compliance year against the 315
eligible taxpayer's corporation business tax liability, until the excess is 316
fully utilized, except that no carry-forward shall extend beyond the 317
benefit period. Such carry-forward shall be utilized prior to any sales 318
and use tax offset earned in any subsequent compliance year. 319
(2) If the amount of the refundable tax credit exceeds the eligible 320
taxpayer's corporation business tax liability for the applicable income 321
year, the Commissioner of Revenue Services shall treat such excess as 322
an overpayment and shall refund the amount of such excess, without 323
interest, to the eligible taxpayer. In no event shall the refundable tax 324
credits allowed under this subsection exceed forty-five million dollars 325
in the aggregate over the term of the assistance agreement. The eligible 326
taxpayer shall claim the refundable tax credit allowed under this 327
subsection on its corporate tax return for the income year that ends 328
during the compliance year and such credit shall not be subject to the 329
limits set forth in section 12-217zz of the general statutes. 330
Notwithstanding the provisions of section 12-217aa of the general 331
statutes, such credit shall be claimed after all other tax credits have been 332
claimed. 333
(3) Not later than thirty days after the commissioner receives an audit 334
performed pursuant to subdivision (2) of subsection (d) of this section 335
or as provided for in the assistance agreement, during each year of the 336
benefit period, the Department of Economic and Community 337
Development shall issue the eligible taxpayer a credit voucher that sets 338
forth the amount of the refundable tax credit permitted pursuant to this 339
subsection and the income year for which such credit may be claimed. 340
The commissioner shall annually provide to the Commissioner of 341
Revenue Services a report detailing all credit vouchers that have been 342
issued under this subsection. 343
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(f) (1) The eligible taxpayer shall pay the total amount of project tax 344
benefit that was utilized by the eligible taxpayer for a particular 345
compliance year and any penalty set forth in the assistance agreement if 346
the commissioner determines that the eligible taxpayer failed to satisfy 347
any of the minimum requirements for such compliance year. 348
(2) The project tax benefit utilized by the eligible taxpayer under 349
subsections (d) and (e) of this section shall be subject to recapture during 350
the contract years commencing on or after July 1, 2032, and ending on 351
June 30, 2042, if the eligible taxpayer fails to satisfy during such time 352
period certain annual thresholds relating to employee head count, 353
average wages, supplier spend and capital expenditures, as detailed in 354
the assistance agreement, and such other requirements including (A) the 355
maintenance of the wholly-owned subsidiary's headquarters, as set 356
forth in the assistance agreement, in this state, (B) the maintenance and 357
operation of the company's primary helicopter production facility for its 358
current United States government programs, as of the date of the 359
assistance agreement, in this state, (C) the undertaking and maintaining 360
in this state of the company's primary production for helicopters to be 361
produced during the term of the assistance agreement under one or 362
more of its future United States government programs specified in the 363
assistance agreement under production contracts entered into by the 364
eligible taxpayer after the effective date of this section, and (D) the 365
maintenance of diversity and workforce training programs by the 366
company in accordance with the terms of the assistance agreement. 367
(3) If the eligible taxpayer enters into a production contract with the 368
United States government for one helicopter program specified in the 369
assistance agreement, the targeted job requirement shall be seven 370
thousand two hundred fifty, and the minimum job requirement shall be 371
six thousand for each of the years subject to the recapture under 372
subdivision (2) of this subsection. If the eligible taxpayer enters into 373
production contracts with the United States government for two 374
helicopter programs specified in the assistance agreement, the targeted 375
job requirement shall be seven thousand seven hundred fifty, and the 376
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minimum job requirement shall be seven thousand for each of the years 377
subject to the recapture under subdivision (2) of this subsection. The 378
annual recapture amount shall be (A) repaid if the number of actual jobs 379
in any year subject to the recapture is less than the minimum job 380
requirement, and (B) prorated at ninety per cent value of the annual 381
recapture amount if the number of actual jobs is equal to or greater than 382
the minimum job requirement but less than the targeted job 383
requirement. In addition to the recapture job obligation, the 384
commissioner may require other criteria, including, but not limited to, 385
wage requirements, with respect to the recapture of the remaining ten 386
per cent of the annual recapture amount. In no event shall the amount 387
of the recapture exceed the annual recapture amount. 388
(g) The aggregate amount of the project tax benefit granted by the 389
commissioner under this section shall not exceed (1) six million two 390
hundred fifty thousand dollars for each compliance year or fifty million 391
dollars during the term of the assistance agreement if the eligible 392
taxpayer has entered into a production contract after the effective date 393
of this section with the United States government for one helicopter 394
program specified in the assistance agreement, and (2) nine million 395
three hundred seventy-five thousand dollars for each compliance year 396
or seventy-five million dollars during the term of the assistance 397
agreement if the eligible taxpayer has entered into production contracts 398
after the effective date of this section with the United States government 399
for two helicopter programs specified in the assistance agreement. 400
(h) The commissioner shall not enter into any assistance agreement 401
under subsection (c) of this section after January 31, 2023. 402
(i) The commissioner may make revisions to the terms of the 403
assistance agreement to address a scenario where a delay, not caused by 404
the eligible taxpayer, prevents the eligible taxpayer from entering into 405
one or more production contracts by June 30, 2024. Such revisions may 406
include changes to the timing of (1) the benefit period, (2) the 407
compliance years, (3) the contract years, (4) the minimum requirements, 408
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and (5) the recapture period, and other conforming changes, provided 409
in all cases, the project tax benefit shall be earned and utilized during 410
the first eight years of the term of any such production contract. 411
(j) The commissioner may from time to time amend, supplement or 412
modify the terms of the assistance agreement consistent with the 413
provisions of this section. 414
This act shall take effect as follows and shall amend the following
sections:
Section 1 from passage New section