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AN ACT relating to economic development. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 11.200 is amended to read as follows: 3
(1) There is created the Commission on Small Business Innovation and Advocacy. The 4
commission shall be a separate administrative body of state government within the 5
meaning of KRS 12.010(8). 6
(2) It shall be the purpose of the Commission on Small Business Innovation and 7
Advocacy to: 8
(a) Address matters of small business as it relates to government affairs; 9
(b) Promote a cooperative and constructive relationship between state agencies 10
and the small business community to ensure coordination and implementation 11
of statewide strategies that benefit small business in the Commonwealth; 12
(c) Coordinate and educate the small business community of federal, state, and 13
local government initiatives of value and importance to the small business 14
community; 15
(d) Create a process by which the small business community is consulted in the 16
development of public policy as it affects their industry sector; 17
(e) Aid the small business community in navigating the regulatory process, when 18
that process becomes cumbersome, time consuming, and bewildering to the 19
small business community; and 20
(f) Advocate for the small business, as necessary when regulatory 21
implementation is overly burdensome, costly, and harmful to the success and 22
growth of small businesses in the Commonwealth. 23
(3) The Commission on Small Business Innovation and Advocacy shall consist of 24
thirteen (13) members: 25
(a) Two (2) members representing each congressional district; and 26
(b) One (1) at-large member. 27 UNOFFICIAL COPY 23 RS BR 1120
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(4) All members shall be appointed by the Governor for a term of four (4) years, except 1
that the original appointments shall be staggered so that three (3) appointments shall 2
expire at one (1) year, three (3) appointments shall expire at two (2) years, and three 3
(3) appointments shall expire at three (3) years, and four (4) appointments shall 4
expire at four (4) years from the dates of initial appointment. 5
(5) The Governor shall appoint the chair and vice chair of the commission from the 6
appointed membership. 7
(6) The commission shall meet quarterly and at other times upon call of the chair or a 8
majority of the commission. 9
(7) A quorum shall be a majority of the membership of the commission. 10
(8) Members of the commission shall serve without compensation but shall be 11
reimbursed for their necessary travel expenses actually incurred in the discharge of 12
their duties on the commission, subject to Finance and Administration Cabinet 13
administrative regulations. 14
(9) The executive director of the Office of Entrepreneurship and [Small Business 15
]Innovation shall be the administrative head and chief executive officer of the 16
commission. The secretary of the Cabinet for Economic Development shall have 17
authority to hire staff, contract for services, expend funds, and operate the normal 18
business activities of the commission. 19
(10) The Commission on Small Business Innovation and Advocacy shall be 20
administratively attached to the Office of Entrepreneurship and [Small Business 21
]Innovation within the Cabinet for Economic Development. 22
Section 2. KRS 12.020 is amended to read as follows: 23
Departments, program cabinets and their departments, and the respective major 24
administrative bodies that they include are enumerated in this section. It is not intended 25
that this enumeration of administrative bodies be all-inclusive. Every authority, board, 26
bureau, interstate compact, commission, committee, conference, council, office, or any 27 UNOFFICIAL COPY 23 RS BR 1120
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other form of organization shall be included in or attached to the department or program 1
cabinet in which they are included or to which they are attached by statute or statutorily 2
authorized executive order; except in the case of the Personnel Board and where the 3
attached department or administrative body is headed by a constitutionally elected 4
officer, the attachment shall be solely for the purpose of dissemination of information and 5
coordination of activities and shall not include any authority over the functions, 6
personnel, funds, equipment, facilities, or records of the department or administrative 7
body. 8
I. Cabinet for General Government - Departments headed by elected officers: 9
(1) The Governor. 10
(2) Lieutenant Governor. 11
(3) Department of State. 12
(a) Secretary of State. 13
(b) Board of Elections. 14
(c) Registry of Election Finance. 15
(4) Department of Law. 16
(a) Attorney General. 17
(5) Department of the Treasury. 18
(a) Treasurer. 19
(6) Department of Agriculture. 20
(a) Commissioner of Agriculture. 21
(b) Agricultural Development Board. 22
(c) Kentucky Agricultural Finance Corporation. 23
(7) Auditor of Public Accounts. 24
II. Program cabinets headed by appointed officers: 25
(1) Justice and Public Safety Cabinet: 26
(a) Department of Kentucky State Police. 27 UNOFFICIAL COPY 23 RS BR 1120
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1. Office of Administrative Services. 1
a. Division of Operational Support. 2
b. Division of Management Services. 3
2. Office of Operations. 4
a. Division of West Troops. 5
b. Division of East Troops. 6
c. Division of Special Enforcement. 7
d. Division of Commercial Vehicle Enforcement. 8
3. Office of Technical Services. 9
a. Division of Forensic Sciences. 10
b. Division of Information Technology. 11
(b) Department of Criminal Justice Training. 12
(c) Department of Corrections. 13
(d) Department of Juvenile Justice. 14
(e) Office of the Secretary. 15
(f) Office of Drug Control Policy. 16
(g) Office of Legal Services. 17
(h) Office of the Kentucky State Medical Examiner. 18
(i) Parole Board. 19
(j) Kentucky State Corrections Commission. 20
(k) Office of Legislative and Intergovernmental Services. 21
(l) Office of Human Resource Management. 22
1. Division of Human Resource Administration. 23
2. Division of Employee Management. 24
(m) Department of Public Advocacy. 25
(n) Office of Communications. 26
1. Information Technology Services Division. 27 UNOFFICIAL COPY 23 RS BR 1120
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(o) Office of Financial Management Services. 1
1. Division of Financial Management. 2
(p) Grants Management Division. 3
(2) Energy and Environment Cabinet: 4
(a) Office of the Secretary. 5
1. Office of Legislative and Intergovernmental Affairs. 6
2. Office of Legal Services. 7
a. Legal Division I. 8
b. Legal Division II. 9
3. Office of Administrative Hearings. 10
4. Office of Communication. 11
5. Mine Safety Review Commission. 12
6. Office of Kentucky Nature Preserves. 13
7. Kentucky Public Service Commission. 14
(b) Department for Environmental Protection. 15
1. Office of the Commissioner. 16
2. Division for Air Quality. 17
3. Division of Water. 18
4. Division of Environmental Program Support. 19
5. Division of Waste Management. 20
6. Division of Enforcement. 21
7. Division of Compliance Assistance. 22
(c) Department for Natural Resources. 23
1. Office of the Commissioner. 24
2. Division of Mine Permits. 25
3. Division of Mine Reclamation and Enforcement. 26
4. Division of Abandoned Mine Lands. 27 UNOFFICIAL COPY 23 RS BR 1120
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5. Division of Oil and Gas. 1
6. Division of Mine Safety. 2
7. Division of Forestry. 3
8. Division of Conservation. 4
9. Office of the Reclamation Guaranty Fund. 5
(d) Office of Energy Policy. 6
1. Division of Energy Assistance. 7
(e) Office of Administrative Services. 8
1. Division of Human Resources Management. 9
2. Division of Financial Management. 10
3. Division of Information Services. 11
(3) Public Protection Cabinet. 12
(a) Office of the Secretary. 13
1. Office of Communications and Public Outreach. 14
2. Office of Legal Services. 15
a. Insurance Legal Division. 16
b. Charitable Gaming Legal Division. 17
c. Alcoholic Beverage Control Legal Division. 18
d. Housing, Buildings and Construction Legal Division. 19
e. Financial Institutions Legal Division. 20
f. Professional Licensing Legal Division. 21
3. Office of Administrative Hearings. 22
4. Office of Administrative Services. 23
a. Division of Human Resources. 24
b. Division of Fiscal Responsibility. 25
(b) Office of Claims and Appeals. 26
1. Board of Tax Appeals. 27 UNOFFICIAL COPY 23 RS BR 1120
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2. Board of Claims. 1
3. Crime Victims Compensation Board. 2
(c) Kentucky Boxing and Wrestling Commission. 3
(d) Kentucky Horse Racing Commission. 4
1. Office of Executive Director. 5
a. Division of Pari-mutuel Wagering and Compliance. 6
b. Division of Stewards. 7
c. Division of Licensing. 8
d. Division of Enforcement. 9
e. Division of Incentives and Development. 10
f. Division of Veterinary Services. 11
(e) Department of Alcoholic Beverage Control. 12
1. Division of Distilled Spirits. 13
2. Division of Malt Beverages. 14
3. Division of Enforcement. 15
(f) Department of Charitable Gaming. 16
1. Division of Licensing and Compliance. 17
2. Division of Enforcement. 18
(g) Department of Financial Institutions. 19
1. Division of Depository Institutions. 20
2. Division of Non-Depository Institutions. 21
3. Division of Securities. 22
(h) Department of Housing, Buildings and Construction. 23
1. Division of Fire Prevention. 24
2. Division of Plumbing. 25
3. Division of Heating, Ventilation, and Air Conditioning. 26
4. Division of Building Code Enforcement. 27 UNOFFICIAL COPY 23 RS BR 1120
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(i) Department of Insurance. 1
1. Division of Health and Life Insurance and Managed Care. 2
2. Division of Property and Casualty Insurance. 3
3. Division of Administrative Services. 4
4. Division of Financial Standards and Examination. 5
5. Division of Licensing. 6
6. Division of Insurance Fraud Investigation. 7
7. Division of Consumer Protection. 8
(j) Department of Professional Licensing. 9
1. Real Estate Authority. 10
(4) Transportation Cabinet: 11
(a) Department of Highways. 12
1. Office of Project Development. 13
2. Office of Project Delivery and Preservation. 14
3. Office of Highway Safety. 15
4. Highway District Offices One through Twelve. 16
(b) Department of Vehicle Regulation. 17
(c) Department of Aviation. 18
(d) Department of Rural and Municipal Aid. 19
1. Office of Local Programs. 20
2. Office of Rural and Secondary Roads. 21
(e) Office of the Secretary. 22
1. Office of Public Affairs. 23
2. Office for Civil Rights and Small Business Development. 24
3. Office of Budget and Fiscal Management. 25
4. Office of Inspector General. 26
5. Secretary's Office of Safety. 27 UNOFFICIAL COPY 23 RS BR 1120
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(f) Office of Support Services. 1
(g) Office of Transportation Delivery. 2
(h) Office of Audits. 3
(i) Office of Human Resource Management. 4
(j) Office of Information Technology. 5
(k) Office of Legal Services. 6
(5) Cabinet for Economic Development: 7
(a) Office of the Secretary. 8
1. Office of Legal Services. 9
2. Department for Business and Community Development. 10
a. Development and Retention Division - West Kentucky. 11
b. Development, Retention, and Administrative Division - 12
Central and East Kentucky. 13
c. Community and Workforce Development Division. 14
3. Department for Financial Services. 15
a. Kentucky Economic Development Finance Authority. 16
b. Finance and Personnel Division. 17
c. IT and Resource Management Division. 18
d. Compliance Division. 19
e. Program[Incentive] Administration Division. 20
f. Bluegrass State Skills Corporation. 21
4. Office of Strategy[Marketing] and Public Affairs. 22
a. Marketing and Communications Division. 23
b. Research and Strategy[Graphics Design] Division. 24
5. [Office of Workforce, Community Development, and Research. 25
6. ]Office of Entrepreneurship and [Small Business ]Innovation. 26
a. Commission on Small Business Innovation and Advocacy. 27 UNOFFICIAL COPY 23 RS BR 1120
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(6) Cabinet for Health and Family Services: 1
(a) Office of the Secretary. 2
1. Office of the Ombudsman and Administrative Review. 3
2. Office of Public Affairs. 4
3. Office of Legal Services. 5
4. Office of Inspector General. 6
5. Office of Human Resource Management. 7
6. Office of Finance and Budget. 8
7. Office of Legislative and Regulatory Affairs. 9
8. Office of Administrative Services. 10
9. Office of Application Technology Services. 11
10. Office of Data Analytics. 12
(b) Department for Public Health. 13
(c) Department for Medicaid Services. 14
(d) Department for Behavioral Health, Developmental and Intellectual 15
Disabilities. 16
(e) Department for Aging and Independent Living. 17
(f) Department for Community Based Services. 18
(g) Department for Income Support. 19
(h) Department for Family Resource Centers and Volunteer Services. 20
(i) Office for Children with Special Health Care Needs. 21
(7) Finance and Administration Cabinet: 22
(a) Office of the Secretary. 23
(b) Office of the Inspector General. 24
(c) Office of Legislative and Intergovernmental Affairs. 25
(d) Office of General Counsel. 26
(e) Office of the Controller. 27 UNOFFICIAL COPY 23 RS BR 1120
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(f) Office of Administrative Services. 1
(g) Office of Policy and Audit. 2
(h) Department for Facilities and Support Services. 3
(i) Department of Revenue. 4
(j) Commonwealth Office of Technology. 5
(k) State Property and Buildings Commission. 6
(l) Office of Equal Employment Opportunity and Contract Compliance. 7
(m) Kentucky Employees Retirement Systems. 8
(n) Commonwealth Credit Union. 9
(o) State Investment Commission. 10
(p) Kentucky Housing Corporation. 11
(q) Kentucky Local Correctional Facilities Construction Authority. 12
(r) Kentucky Turnpike Authority. 13
(s) Historic Properties Advisory Commission. 14
(t) Kentucky Higher Education Assistance Authority. 15
(u) Kentucky River Authority. 16
(v) Kentucky Teachers' Retirement System Board of Trustees. 17
(w) Executive Branch Ethics Commission. 18
(x) Office of Fleet Management. 19
(8) Tourism, Arts and Heritage Cabinet: 20
(a) Kentucky Department of Tourism. 21
1. Division of Tourism Services. 22
2. Division of Marketing and Administration. 23
3. Division of Communications and Promotions. 24
(b) Kentucky Department of Parks. 25
1. Division of Information Technology. 26
2. Division of Human Resources. 27 UNOFFICIAL COPY 23 RS BR 1120
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3. Division of Financial Operations. 1
4. Division of Purchasing. 2
5. Division of Facilities. 3
6. Division of Park Operations. 4
7. Division of Sales, Marketing, and Customer Service. 5
8. Division of Engagement. 6
9. Division of Food Services. 7
10. Division of Rangers. 8
(c) Department of Fish and Wildlife Resources. 9
1. Division of Law Enforcement. 10
2. Division of Administrative Services. 11
3. Division of Engineering, Infrastructure, and Technology. 12
4. Division of Fisheries. 13
5. Division of Information and Education. 14
6. Division of Wildlife. 15
7. Division of Marketing. 16
(d) Kentucky Horse Park. 17
1. Division of Support Services. 18
2. Division of Buildings and Grounds. 19
3. Division of Operational Services. 20
(e) Kentucky State Fair Board. 21
1. Office of Administrative and Information Technology Services. 22
2. Office of Human Resources and Access Control. 23
3. Division of Expositions. 24
4. Division of Kentucky Exposition Center Operations. 25
5. Division of Kentucky International Convention Center. 26
6. Division of Public Relations and Media. 27 UNOFFICIAL COPY 23 RS BR 1120
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7. Division of Venue Services. 1
8. Division of Personnel Management and Staff Development. 2
9. Division of Sales. 3
10. Division of Security and Traffic Control. 4
11. Division of Information Technology. 5
12. Division of the Louisville Arena. 6
13. Division of Fiscal and Contract Management. 7
14. Division of Access Control. 8
(f) Office of the Secretary. 9
1. Office of Finance. 10
2. Office of Government Relations and Administration. 11
(g) Office of Legal Affairs. 12
(h) Office of Human Resources. 13
(i) Office of Public Affairs and Constituent Services. 14
(j) Office of Arts and Cultural Heritage. 15
(k) Kentucky African-American Heritage Commission. 16
(l) Kentucky Foundation for the Arts. 17
(m) Kentucky Humanities Council. 18
(n) Kentucky Heritage Council. 19
(o) Kentucky Arts Council. 20
(p) Kentucky Historical Society. 21
1. Division of Museums. 22
2. Division of Oral History and Educational Outreach. 23
3. Division of Research and Publications. 24
4. Division of Administration. 25
(q) Kentucky Center for the Arts. 26
1. Division of Governor's School for the Arts. 27 UNOFFICIAL COPY 23 RS BR 1120
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(r) Kentucky Artisans Center at Berea. 1
(s) Northern Kentucky Convention Center. 2
(t) Eastern Kentucky Exposition Center. 3
(9) Personnel Cabinet: 4
(a) Office of the Secretary. 5
(b) Department of Human Resources Administration. 6
(c) Office of Employee Relations. 7
(d) Kentucky Public Employees Deferred Compensation Authority. 8
(e) Office of Administrative Services. 9
(f) Office of Legal Services. 10
(g) Governmental Services Center. 11
(h) Department of Employee Insurance. 12
(i) Office of Diversity, Equality, and Training. 13
(j) Office of Public Affairs. 14
(10) Education and Labor Cabinet: 15
(a) Office of the Secretary. 16
1. Office of Legal Services. 17
a. Workplace Standards Legal Division. 18
b. Workers' Claims Legal Division. 19
c. Workforce Development Legal Division. 20
2. Office of Administrative Services. 21
a. Division of Human Resources Management. 22
b. Division of Fiscal Management. 23
c. Division of Operations and Support Services. 24
3. Office of Technology Services. 25
a. Division of Information Technology Services. 26
4. Office of Policy and Audit. 27 UNOFFICIAL COPY 23 RS BR 1120
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5. Office of Legislative Services. 1
6. Office of Communications. 2
7. Office of the Kentucky Center for Statistics. 3
8. Board of the Kentucky Center for Statistics. 4
9. Early Childhood Advisory Council. 5
10. Governors' Scholars Program. 6
11. Governor's School for Entrepreneurs Program. 7
12. Foundation for Adult Education. 8
(b) Department of Education. 9
1. Kentucky Board of Education. 10
2. Kentucky Technical Education Personnel Board. 11
3. Education Professional Standards Board. 12
(c) Board of Directors for the Center for School Safety. 13
(d) Department for Libraries and Archives. 14
(e) Kentucky Environmental Education Council. 15
(f) Kentucky Educational Television. 16
(g) Kentucky Commission on the Deaf and Hard of Hearing. 17
(h) Department of Workforce Development. 18
1. Career Development Office. 19
2. Office of Vocational Rehabilitation. 20
a. Division of Kentucky Business Enterprise. 21
b. Division of the Carl D. Perkins Vocational Training Center. 22
c. Division of Blind Services. 23
d. Division of Field Services. 24
e. Statewide Council for Vocational Rehabilitation. 25
f. Employment First Council. 26
3. Office of Employer and Apprenticeship Services. 27 UNOFFICIAL COPY 23 RS BR 1120
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a. Division of Apprenticeship. 1
4. Kentucky Apprenticeship Council. 2
5. Division of Technical Assistance. 3
6. Office of Adult Education. 4
7. Office of the Kentucky Workforce Innovation Board. 5
(i) Department of Workplace Standards. 6
1. Division of Occupational Safety and Health Compliance. 7
2. Division of Occupational Safety and Health Education and 8
Training. 9
3. Division of Wages and Hours. 10
(j) Office of Unemployment Insurance. 11
(k) Kentucky Unemployment Insurance Commission. 12
(l) Department of Workers' Claims. 13
1. Division of Workers' Compensation Funds. 14
2. Office of Administrative Law Judges. 15
3. Division of Claims Processing. 16
4. Division of Security and Compliance. 17
5. Division of Specialist and Medical Services. 18
6. Workers' Compensation Board. 19
(m) Workers' Compensation Funding Commission. 20
(n) Kentucky Occupational Safety and Health Standards Board. 21
(o) State Labor Relations Board. 22
(p) Employers' Mutual Insurance Authority. 23
(q) Kentucky Occupational Safety and Health Review Commission. 24
(r) Workers' Compensation Nominating Committee. 25
(s) Office of Educational Programs. 26
(t) Kentucky Workforce Innovation Board. 27 UNOFFICIAL COPY 23 RS BR 1120
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(u) Kentucky Commission on Proprietary Education. 1
(v) Kentucky Work Ready Skills Advisory Committee. 2
(w) Kentucky Geographic Education Board. 3
III. Other departments headed by appointed officers: 4
(1) Council on Postsecondary Education. 5
(2) Department of Military Affairs. 6
(3) Department for Local Government. 7
(4) Kentucky Commission on Human Rights. 8
(5) Kentucky Commission on Women. 9
(6) Department of Veterans' Affairs. 10
(7) Kentucky Commission on Military Affairs. 11
(8) Office of Minority Empowerment. 12
(9) Governor's Council on Wellness and Physical Activity. 13
(10) Kentucky Communications Network Authority. 14
Section 3. KRS 141.310 is amended to read as follows: 15
(1) Every employer making payment of wages on or after January 1, 1971, shall deduct 16
and withhold upon the wages a tax determined under KRS 141.315 or by the tables 17
authorized by KRS 141.370. 18
(2) If wages are paid with respect to a period which is not a payroll period, the amount 19
to be deducted and withheld shall be that applicable in the case of a miscellaneous 20
payroll period containing a number of days, including Sundays and holidays, equal 21
to the number of days in the period with respect to which the wages are paid. 22
(3) If wages are paid by an employer without regard to any payroll period or other 23
period, the amount to be deducted and withheld shall be that applicable in the case 24
of a miscellaneous payroll period containing a number of days equal to the number 25
of days, including Sundays and holidays, which have elapsed since the date of the 26
last payment of wages by the employer during the calendar year, or the date of 27 UNOFFICIAL COPY 23 RS BR 1120
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commencement of employment with the employer during the year, or January 1 of 1
the year, whichever is the later. 2
(4) In determining the amount to be deducted and withheld under this section, the 3
wages may, at the election of the employer, be computed to the nearest dollar. 4
(5) The tables mentioned in subsection (1) of this section shall consider the standard 5
deduction. 6
(6) The department may permit the use of accounting machines to calculate the proper 7
amount to be deducted from wages when the calculation produces substantially the 8
same result as set forth in the tables authorized by KRS 141.370. Prior approval of 9
the calculation shall be secured from the department at least thirty (30) days before 10
the first payroll period for which it is to be used. 11
(7) The department may, by administrative regulations, authorize employers: 12
(a) To estimate the wages which will be paid to any employee in any quarter of 13
the calendar year; 14
(b) To determine the amount to be deducted and withheld upon each payment of 15
wages to the employee during the quarter as if the appropriate average of the 16
wages estimated constituted the actual wages paid; and 17
(c) To deduct and withhold upon any payment of wages to the employee during 18
the quarter the amount necessary to adjust the amount actually deducted and 19
withheld upon the wages of the employee during the quarter to the amount 20
that would be required to be deducted and withheld during the quarter if the 21
payroll period of the employee was quarterly. 22
(8) The department may provide by regulation, under the conditions and to the extent it 23
deems proper, for withholding in addition to that otherwise required under this 24
section and KRS 141.315 in cases in which the employer and the employee agree to 25
the additional withholding. The additional withholding shall for all purposes be 26
considered tax required to be deducted and withheld under this chapter. 27 UNOFFICIAL COPY 23 RS BR 1120
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(9) Effective January 1, 1992, any employer required by this section to withhold 1
Kentucky income tax who assesses and withholds from employees the job 2
assessment fee provided in KRS 154.24-110 may offset a portion of the fee against 3
the Kentucky income tax required to be withheld from the employee under this 4
section. The amount of the offset shall be four-fifths (4/5) of the amount of the 5
assessment fee withheld from the employee or the Commonwealth's contribution of 6
KRS 154.24-110(3) applies. If the provisions in KRS 154.24-150(3) or (4) apply, 7
the offset, the offset shall be one hundred percent (100%) of the assessment. 8
(10) Any employer required by this section to withhold Kentucky income tax who 9
assesses and withholds from employees an assessment provided in KRS 154.22-070 10
or KRS 154.28-110 may offset the fee against the Kentucky income tax required to 11
be withheld from the employee under this section. 12
(11) Any employer required by this section to withhold Kentucky income tax who 13
assesses and withholds from employees the job assessment fee provided in KRS 14
154.26-100 may offset a portion of the fee against the Kentucky income tax 15
required to be withheld from the employee under this section. The amount of the 16
offset shall be four-fifths (4/5) of the amount of the assessment fee withheld from 17
the employee, or if the agreement under KRS 154.26-090(1)(f)2. is consummated, 18
the offset shall be one hundred percent (100%) of the assessment fee. 19
(12) Any employer required by this section to withhold Kentucky income tax who 20
assesses and withholds from employees the wage[job development] assessment fee 21
provided in Section 20 of this Act[KRS 154.23-055] may offset a portion of the fee 22
against the Kentucky income tax required to be withheld from the employee under 23
this section. The amount of the offset shall be equal to the amount of the Kentucky 24
income tax credit authorized for the assessed employee who is entitled to receive a 25
simultaneous adjustment resulting from an approved jobs retention project as 26
provided in Section 20 of this Act[the Commonwealth's contribution as determined 27 UNOFFICIAL COPY 23 RS BR 1120
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by KRS 154.23-055(1) to (3)]. 1
(13) Any employer required by this section to withhold Kentucky income tax who 2
assesses and withholds from employees the job development assessment fee 3
provided in KRS 154.32-090 may offset the state portion of the assessment against 4
the Kentucky income tax required to be withheld from the employee under this 5
section. 6
(14) Any employer required by this section to withhold Kentucky income tax may be 7
required to post a bond with the department. The bond shall be a corporate surety 8
bond or cash. The amount of the bond shall be determined by the department, but 9
shall not exceed fifty thousand dollars ($50,000). 10
(15) Any employer required by this section to withhold Kentucky income tax who 11
assesses and withholds from employees an assessment provided in KRS 154.27-080 12
may offset the assessment against the Kentucky income tax required to be withheld 13
from the employee under this section. 14
(16) The Commonwealth may bring an action for a restraining order or a temporary or 15
permanent injunction to restrain or enjoin the operation of an employer's business 16
until the bond is posted or the tax required to be withheld is paid or both. The action 17
may be brought in the Franklin Circuit Court or in the Circuit Court having 18
jurisdiction of the defendant. 19
(17) An approved company and any associated loan-out entity under Subchapter 61 of 20
KRS Chapter 154 required to withhold Kentucky income tax from employees on 21
all qualified payroll expenditures shall withhold at the maximum rate provided in 22
KRS 141.020, and remit and certify the withheld amount to the department. 23
Section 4. KRS 141.350 is amended to read as follows: 24
The amount deducted and withheld as tax under KRS 141.310 and 141.315 during any 25
calendar year upon the wages of any individual and the amount of credit described in 26
KRS 154.22-070(2), [154.23-055, ]154.24-110, 154.24-150(3) and (4), Section 20 of this 27 UNOFFICIAL COPY 23 RS BR 1120
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Act, 154.26-100(2), 154.27-080, 154.28-110, or 154.32-090 shall be allowed as a credit 1
to the recipient of the income against the tax imposed by KRS 141.020, for taxable years 2
beginning in the calendar year. If more than one (1) taxable year begins in the calendar 3
year, the amount shall be allowed as a credit against the tax for the last taxable year so 4
beginning. 5
Section 5. KRS 141.383 is amended to read as follows: 6
(1) As used in this section: 7
(a) "Above-the-line production crew" has the same meaning as in KRS 154.61-8
010; 9
(b) "Approved company" has the same meaning as in KRS 154.61-010; 10
(c) "Authority" has the same meaning as in KRS 154.61-010; 11
(d) "Below-the-line production crew" has the same meaning as in KRS 154.61-12
010; 13
(e) "Loan-out entity" has the same meaning as in Section 30 of this Act; 14
(f) "Qualifying expenditure" has the same meaning as in KRS 154.61-010; 15
(g)[(f)] "Qualifying payroll expenditure" has the same meaning as in KRS 16
154.61-010; 17
(h)[(g)] "Secretary" has the same meaning as in KRS 154.61-010; and 18
(i)[(h)] "Tax incentive agreement" has the same meaning as KRS 154.61-010. 19
(2) (a) There is hereby created a tax credit against the tax imposed under KRS 20
141.020 or 141.040 and 141.0401, with the ordering of credits as provided in 21
KRS 141.0205. 22
(b) The incentive available under paragraph (a) of this section is: 23
1. A refundable credit for applications approved prior to April 27, 2018; 24
2. A nonrefundable and nontransferable credit for applications approved on 25
or after April 27, 2018, but before January 1, 2022; and 26
3. A refundable credit for applications approved on or after January 1, 27 UNOFFICIAL COPY 23 RS BR 1120
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2022, if the provisions of paragraph (c) of this subsection are met. 1
(c) 1. The total tax incentive approved under KRS 154.61-020 shall be limited 2
to: 3
a. One hundred million dollars ($100,000,000) for calendar year 4
2018 and each calendar year through the calendar year 2021; and 5
b. Seventy-five million dollars ($75,000,000) for the calendar year 6
2022 and each calendar year thereafter. 7
2. [Beginning January 1, 2022, ]To qualify for the refundable credit, all 8
applicants shall: 9
a. Begin filming or production in Kentucky within six (6) months of 10
approval by[filing an application with] the authority; and 11
b. Complete filming or production in Kentucky within two (2) years 12
of their production start date. 13
(3) [Beginning January 1, 2022, ]An approved company may receive a refundable tax 14
credit if: 15
(a) The department has received notification from the authority that the approved 16
company has satisfied all requirements of KRS 154.61-020 and 154.61-030; 17
and 18
(b) The approved company has provided a detailed cost report and sufficient 19
documentation to the authority, which has been forwarded by the authority to 20
the department, that: 21
1. The purchases of qualifying expenditures were made after the execution 22
of the tax incentive agreement; and 23
2. The approved company or loan-out entity has withheld income tax as 24
required by KRS 141.310 on all qualified payroll expenditures, and 25
remitted and certified the withheld amount to the department. 26
(4) Interest shall not be allowed or paid on any refundable credits provided under this 27 UNOFFICIAL COPY 23 RS BR 1120
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section. 1
(5) The department may promulgate administrative regulations under KRS Chapter 2
13A to administer this section. 3
(6) On or before September 1, 2010, and on or before each September 1 thereafter, for 4
the immediately preceding fiscal year, the department shall report to the authority 5
and the Interim Joint Committee on Appropriations and Revenue the names of the 6
approved companies and the amounts of refundable income tax credit claimed. 7
(7) No later than September 1, 2021, and by September 1 every four (4) years 8
thereafter, the department and the Cabinet for Economic Development shall 9
cooperatively provide historical data related to the tax credit allowed in this section 10
and KRS 154.61-020 and 154.61-030, including data items beginning with tax 11
credits claimed for taxable years beginning on or after January 1, 2018: 12
(a) The name of the taxpayer claiming the tax credit; 13
(b) The date that the application was approved and the date the filming or 14
production was completed; 15
(c) The taxable year in which the taxpayer claimed the tax credit; 16
(d) The total amount of the tax credit, including any amount denied, any amount 17
applied against a tax liability, any amount refunded, and any amount 18
remaining that may be claimed on a return filed in the future; 19
(e) Whether the taxpayer is a Kentucky-based company as defined in KRS 20
154.61-010; 21
(f) Whether the taxpayer films or produces a: 22
1. Feature-length film, television program, or industrial film; 23
2. National touring production of a Broadway show; or 24
3. Documentary; 25
(g) Whether the filming or production was performed: 26
1. Entirely in an enhanced county; or 27 UNOFFICIAL COPY 23 RS BR 1120
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2. In whole or in part in any Kentucky county other than in an enhanced 1
incentive county; 2
(h) The amount of qualifying expenditures incurred by the taxpayer; 3
(i) The amount of qualifying payroll expenditures paid to: 4
1. Resident below-the-line crew; and 5
2. Nonresident below-the-line production crew; 6
including the number of crew members in each category; 7
(j) The amount of qualifying payroll expenditures paid to: 8
1. Resident above-the-line crew; and 9
2. Nonresident above-the-line crew; 10
including the number of crew members in each category; and 11
(k) A brief description of the type of motion picture or entertainment production 12
project. 13
(8) The information required to be reported under this section shall not be considered 14
confidential taxpayer information and shall not be subject to KRS Chapter 131 or 15
any other provisions of the Kentucky Revised Statutes prohibiting disclosure or 16
reporting of information. 17
Section 6. KRS 154.12-2035 is amended to read as follows: 18
(1) The cabinet shall maintain a searchable electronic database on its website[Web site] 19
containing information on the cost and status of the programs listed in subsection 20
(3)(a) of this section. The database shall include all projects approved at any time in 21
the last five (5) years and shall include for each, where applicable, the following 22
information: 23
(a) The name of the program, the recipient or participant, the type of project, and 24
its location by county; 25
(b) Total and approved costs of the project or investment, and the amount of 26
incentives or other benefits authorized; 27 UNOFFICIAL COPY 23 RS BR 1120
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(c) For the Kentucky Business Investment Program and the Kentucky Enterprise 1
Initiative Act, the amount of incentives or other benefits actually recovered as 2
self-reported by the recipient; 3
(d) The number of new jobs estimated and, for the Kentucky Business Investment 4
Program, actually created, along with wage information for those jobs; 5
(e) Project status and the date and nature of the most recent activity; and 6
(f) Any other comparable data or information necessary to achieve transparency 7
and accountability for the specified programs. 8
(2) In addition to the electronic database required in subsection (1) of this section, the 9
cabinet shall prepare an annual report on the programs listed in subsection (3) of 10
this section and make it available on the Cabinet for Economic Development 11
website[Web site] by November 1 of each year. The report shall include all projects 12
approved in the preceding fiscal year and shall provide for these projects the 13
information specified in subsection (1) of this section plus aggregate data for each 14
program, summary evaluations of program activity and effectiveness, and anything 15
required by statute to be reported for any particular program. The report shall also 16
list all projects that were approved in prior years but active at any time in the 17
preceding fiscal year, although for these projects the report need not provide further 18
data. 19
(3) The following programs shall be subject to the reporting requirements of this 20
section: 21
(a) The electronic database required in subsection (1) of this section shall include 22
the Bluegrass State Skills Corporation, grants-in-aid and skills training 23
investment credit; Kentucky Business Investment Program; Kentucky 24
Enterprise Initiative Act; Office of Entrepreneurship and [Small Business 25
]Innovation programs; Incentives for Energy-related Business Act; Kentucky 26
Economic Development Finance Authority small business and direct loan 27 UNOFFICIAL COPY 23 RS BR 1120
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programs; Kentucky Industrial Revitalization Act; Kentucky Reinvestment 1
Act; Kentucky Small Business Tax Credit; economic development bonds; 2
Kentucky Industrial Development Act; Kentucky Jobs Development Act; 3
Kentucky Jobs Retention Act; the Kentucky Rural Economic Development 4
Act; and 5
(b) The annual report required by subsection (2) of this section shall include all 6
programs listed in paragraph (a) of this subsection plus the Kentucky 7
Investment Fund Act, and tax increment financing, state participation projects. 8
(4) The cabinet shall coordinate with any other agency necessary to supply the 9
information required by this section. 10
Section 7. KRS 154.12-204 is amended to read as follows: 11
As used in KRS 154.12-205 to 154.12-208, unless the context requires otherwise: 12
(1) "Agribusiness" has the same meaning as in KRS 154.32-010; 13
(2) "Alternative fuel production" has the same meaning as in KRS 154.32-010; 14
(3) "Applicant" means a business or industry that has made application for a grant-in-15
aid or skills training investment credit as authorized by KRS 154.12-205 to 154.12-16
208; 17
(4) "Approved company" means any qualified company seeking to sponsor an 18
occupational upgrade training program or skills upgrade training program for the 19
benefit of one (1) or more of its employees, which is approved by the corporation to 20
receive grant-in-aid or skills training investment credits as provided by KRS 21
154.12-205 to 154.12-208; 22
(5) "Approved costs" means costs confirmed as eligible by the corporation, including: 23
(a) Fees or salaries required to be paid to instructors who are employees of the 24
approved company, instructors who are full-time, part-time, or adjunct 25
instructors with an educational institution, and instructors who are consultants 26
on contract with an approved company in connection with an occupational 27 UNOFFICIAL COPY 23 RS BR 1120
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upgrade training program or skills upgrade training program sponsored by an 1
approved company; 2
(b) The cost of supplies and materials used exclusively in an occupational 3
upgrade training program or skills upgrade training program sponsored by an 4
approved company; 5
(c) Employee wages to be paid in connection with an occupational upgrade 6
training program or skills upgrade training program sponsored by an approved 7
company; and 8
(d) All other costs of a nature comparable to those described in this subsection; 9
(6) "Board" means the board of directors of the Bluegrass State Skills Corporation; 10
(7) "Carbon dioxide or hydrogen transmission pipeline" has the same meaning as in 11
KRS 154.32-010; 12
(8) "Coal severing and processing" has the same meaning as in KRS 154.32-010; 13
(9) "Corporation" means the Bluegrass State Skills Corporation, or BSSC; 14
(10) "Educational institution" means a public or nonpublic secondary or postsecondary 15
institution or an independent provider within the Commonwealth authorized by law 16
to provide a program of skills training or education beyond the secondary school 17
level or to adult persons without a high school diploma or its equivalent; 18
(11) "Employee" means any person: 19
(a) Who is currently a permanent full-time employee of the qualified company; 20
(b) Who is a resident of Kentucky, as that term is defined in KRS 141.010; and 21
(c) Who is paid the minimum base hourly wage plus employee benefits equal to 22
or greater than fifteen percent (15%) of the minimum base hourly wage. If the 23
qualified company does not provide employee benefits equal to at least fifteen 24
percent (15%) of the minimum base hourly wage, the qualified company may 25
still qualify if it provides the full-time employee total hourly compensation 26
equal to or greater than one hundred fifteen percent (115%) of the minimum 27 UNOFFICIAL COPY 23 RS BR 1120
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base hourly wage through increased hourly wages combined with at least one 1
(1) company-paid employee benefit; 2
(12) "Energy-efficient alternative fuel production" has the same meaning as in KRS 3
154.32-010; 4
(13) "Gasification production" has the same meaning as in KRS 154.32-010; 5
(14) "Grant-in-aid" means funding that is provided to qualified companies by the BSSC 6
for the development or expansion of a program as provided in this chapter; 7
(15) "Headquarters" has the same meaning as in KRS 154.32-010; 8
(16) "Hospital" has the same meaning as in KRS 154.32-010; 9
(17) "Manufacturing" has the same meaning as in KRS 154.32-010; 10
(18) "Minimum base hourly wage" means the minimum wage amount paid to an 11
employee by a qualified company, which shall not be less than one hundred fifty 12
percent (150%) of the federal minimum wage; 13
(19) "Nonretail service or technology" means the same as in KRS 154.32-010; 14
(20) "Occupational upgrade training" means employee training sponsored by a qualified 15
company that is designed to qualify the employee for a promotional opportunity 16
with the qualified company; 17
(21) "Program" or "program of skills training or education consistent with employment 18
needs" means a coordinated course of instruction which is designed to prepare 19
individuals for employment in a specific trade, occupation, or profession. Such 20
instruction may include: 21
(a) Classroom instruction; 22
(b) Classroom-related field, shop, factory, office, or laboratory work; and 23
(c) Basic skills, entry level training, job upgrading, retraining, and advance 24
training; 25
(22) (a) "Qualified company" means any corporation, limited liability company, 26
partnership, limited partnership, sole proprietorship, business trust, or any 27 UNOFFICIAL COPY 23 RS BR 1120
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other legal entity through which business is conducted that is engaged in or is 1
planning to be engaged in one (1) or more of the following activities within 2
the Commonwealth: 3
1. Manufacturing; 4
2. Agribusiness; 5
3. Nonretail service or technology; 6
4. Headquarter operations, regardless of the underlying business activity of 7
the company; 8
5. Alternative fuel, gasification, energy-efficient alternative fuel, or 9
renewable energy production; 10
6. Carbon dioxide or hydrogen transmission pipeline; 11
7. Coal severing and processing; or 12
8. Hospital operations. 13
(b) "Qualified company" does not include companies where the primary activity 14
to be conducted within the Commonwealth is forestry, fishing, the provision 15
of utilities, construction, wholesale trade, retail trade, real estate, rental and 16
leasing, accommodation and food services, or public administration services; 17
(23) "Renewable energy production" means the same as in KRS 154.32-010; 18
(24) "Skills upgrade training" means employee training sponsored by a qualified 19
company that is designed to provide the employee with new skills necessary to 20
enhance productivity, improve performance, or retain employment, including but 21
not limited to technical and interpersonal skills, and training that is designed to 22
enhance computer skills, communication skills, problem solving, reading, writing, 23
or math skills of employees who are unable to function effectively on the job due to 24
deficiencies in these areas, are unable to advance on the job, or who risk 25
displacement because their skill deficiencies inhibit their training potential for new 26
technology; 27 UNOFFICIAL COPY 23 RS BR 1120
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(25) "Skills training investment credit" means the credit against Kentucky income tax 1
imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by 2
KRS 141.0401, as provided in this subchapter; and 3
(26) "Technical assistance" means professional and any other assistance provided by 4
qualified companies to an educational institution, which is reasonably calculated to 5
support directly the development and expansion of a particular program as defined 6
herein. 7
Section 8. KRS 154.12-207 is amended to read as follows: 8
(1) The corporation may, subject to appropriation from the General Assembly or from 9
funds made available to the corporation from any other public or private source, 10
provide grants-in-aid to qualified companies, not in excess of five[two] hundred 11
thousand dollars ($500,000)[($200,000)] per grant-in-aid. Such grants-in-aid shall 12
be used exclusively for programs which are consistent with the provisions of this 13
chapter. 14
(2) The corporation may, in accordance with KRS 154.12-204 to 154.12-208, award a 15
skills training investment credit to an approved company. The amount of the skills 16
training investment credit awarded by the corporation shall be an amount not to 17
exceed fifty percent (50%) of the amount of approved costs incurred by the 18
approved company in connection with its program of occupational upgrade training 19
or skills upgrade training, the credit amount not to exceed two thousand dollars 20
($2,000) per trainee and, in the aggregate, not to exceed five[two] hundred thousand 21
dollars ($500,000)[($200,000)] for each approved company per fiscal year. The 22
corporation shall only approve one (1) application per fiscal year for each approved 23
company. 24
(3) To apply for a grant-in-aid or a skills training investment credit, a qualified 25
company shall submit an application to the Bluegrass State Skills Corporation 26
before commencing its program of skills upgrade or occupational upgrade training. 27 UNOFFICIAL COPY 23 RS BR 1120
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Each application shall contain information the corporation requires, including but 1
not limited to: 2
(a) A proposal for a program of skills upgrade training, occupational upgrade 3
training, and education; 4
(b) A description of each component of the proposed training program and the 5
number of employee training hours requested; and 6
(c) A statement of the total anticipated costs and expenses of the program, 7
including a breakdown of the costs associated with equipment, personnel, 8
facilities, and materials. 9
(4) Approval of the grant-in-aid and skills training investment credit application by the 10
board shall be based upon the following criteria: 11
(a) The program must be within the scope of KRS 154.12-204 to 154.12-208; 12
(b) Participants in the program must qualify as an employee as defined by KRS 13
154.12-204; 14
(c) The program must involve an area of skills upgrade training, occupational 15
upgrade training, and education which is needed by a qualified company and 16
for which a shortage of qualified individuals exists within the 17
Commonwealth; and 18
(d) The grant-in-aid and skills training investment credit must be essential to the 19
success of the program as the resources are inadequate to attract the technical 20
assistance and financial support necessary from a qualified company. 21
(5) After a review of applications for grant-in-aid and skills training investment credits, 22
the corporation may designate the qualified company as an approved company and 23
approve the maximum amount of grants and skills training investment credits the 24
approved company is eligible to receive. The maximum amount of skills training 25
investment credits approved for all qualified companies by the corporation shall not 26
exceed two million five hundred thousand dollars ($2,500,000) for each fiscal year. 27 UNOFFICIAL COPY 23 RS BR 1120
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Skills training investment credits that remain unallocated by the corporation at the 1
end of its fiscal year shall lapse and shall not be carried forward to a new fiscal 2
year. 3
(6) The approved company shall complete all programs of skills upgrade training or 4
occupational upgrade training within one (1) year from the date of approval by the 5
corporation and shall certify the completion of these programs to the corporation. 6
Once they are completed and certified and all required documentation is provided 7
and received by the corporation, the corporation shall disburse the grant funds or 8
notify the approved company of the final authorized skills training investment 9
credit. 10
Section 9. KRS 154.12-223 is amended to read as follows: 11
(1) There is created within the Cabinet for Economic Development the Department for 12
Business and Community Development, which shall be headed by a commissioner 13
appointed by the Governor. The department shall work with each Kentucky county 14
and community in: 15
(a) Providing customer service and project management with new and existing 16
industries; 17
(b) Overseeing programs and initiatives designed to support new investment, job 18
creation, and retention across the state; 19
(c) Providing sufficient technical resources to create and maintain a database to 20
facilitate sales transactions between Kentucky businesses;[ and] 21
(d) Administering activities related to business site selection; and 22
(e) Collaborating with community partners and other agencies on workforce 23
and economic development opportunities. 24
(2) The department shall include the following divisions, each of which shall be 25
headed by a director appointed by the secretary pursuant to KRS 12.050: 26
(a) The Development and Retention Division – West Kentucky; 27 UNOFFICIAL COPY 23 RS BR 1120
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(b) The Development, Retention, and Administrative Division – Central and 1
East Kentucky; and 2
(c) The Community and Workforce Development Division[The following 3
programs shall be attached to the Department for Business Development: 4
(a) The Kentucky port and river development program created by KRS 65.510 to 5
65.530, KRS 139.483, and KRS 154.80-100 to 154.80-130; and 6
(b) The Waterway Marina Development Program established by KRS 154.80-7
310]. 8
Section 10. KRS 154.12-224 is amended to read as follows: 9
(1) There is created in the Cabinet for Economic Development the Department for 10
Financial Services. The department shall be headed by a commissioner appointed 11
by the secretary pursuant to KRS 154.10-050. The department shall coordinate 12
administration and monitoring of all financial assistance, tax credit, and related 13
programs available for business and industry and shall provide all budgeting, 14
accounting, personnel services, and information technology necessary for proper 15
administration of the cabinet and cabinet programs. 16
(2) The department shall include the following divisions, each of which shall be headed 17
by a director appointed by the secretary pursuant to KRS 12.050: 18
(a) The Finance and Personnel Division, which shall provide financial, personnel, 19
facility, and contract administration services; 20
(b) The Compliance Division, which shall monitor incentives and collect and 21
maintain data on incentives after they are awarded; 22
(c) The Program[Incentive] Administration Division, which shall coordinate 23
necessary documentation and assist the Department for Business and 24
Community Development in preparing recommendations and finalizing 25
documents for presentation to the authority or other body for consideration 26
and approval; and 27 UNOFFICIAL COPY 23 RS BR 1120
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(d) The IT and Resource Management Division, which shall coordinate facility 1
services and internal information technology needs. 2
(3) The department shall include the Kentucky Economic Development Finance 3
Authority. 4
(4) The department shall include the Bluegrass State Skills Corporation established by 5
KRS 154.12-205. 6
Section 11. KRS 154.12-275 is amended to read as follows: 7
(1) There is created in the Cabinet for Economic Development the Office of 8
Strategy[Marketing] and Public Affairs. The office shall be headed by an executive 9
director appointed by the secretary pursuant to KRS 154.10-050. The office shall 10
administer activities related to research, strategy, communications, and marketing 11
services. 12
(2) The office shall include the following divisions, each of which shall be headed by a 13
director appointed by the secretary pursuant to KRS 12.050: 14
(a) The Marketing and Communications Division; and 15
(b) The Research and Strategy[Graphics Design] Division. 16
Section 12. KRS 154.12-277 is amended to read as follows: 17
(1) There is created in the Cabinet for Economic Development the Office of 18
Entrepreneurship and [Small Business ]Innovation. The office shall be headed by an 19
executive director appointed by the secretary pursuant to KRS 154.10-050. The 20
office shall be responsible for various forms of entrepreneurship and 21
innovation[small business] assistance, including but not limited to providing 22
customer service and project management with small and minority businesses, 23
assisting export development, administering the innovation assistance set forth in 24
KRS 154.12-278, introducing entrepreneurs to individual investors and to 25
investment capital firms interested in start-up and early-stage financing, and 26
collecting, summarizing, and disseminating information helpful to [small 27 UNOFFICIAL COPY 23 RS BR 1120
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]businesses, including information on market research, federal, state, and local 1
minority business programs, government procurement opportunities, and the 2
availability of managerial assistance. 3
(2) The office shall include the Commission on Small Business Innovation and 4
Advocacy established in KRS 11.200. 5
Section 13. KRS 154.12-278 is amended to read as follows: 6
(1) As used in this section, "cluster" and "knowledge-based" shall have the same 7
meaning as in KRS 164.6011. 8
(2) The Office of Entrepreneurship and [Small Business ]Innovation shall: 9
(a) Implement the Kentucky Innovation and Commercialization Center Program 10
as set forth in KRS 154.12-300 to 154.12-310; 11
(b) Monitor the return on investments and effectiveness of the Kentucky 12
Innovation Act initiatives as set forth in the Strategic Plan for the New 13
Economy and prepare an annual report by November 1 of each year. The 14
report shall be available on the Cabinet for Economic Development web page 15
as required by KRS 154.12-2035; 16
(c) Oversee the modernization initiative in KRS 154.12-274; 17
(d) Assist the cabinet in the recruitment of research and development companies; 18
(e) Assist the cabinet in the attraction of high-technology research and 19
development centers; 20
(f) Support growth and creation of knowledge-based, innovative companies; 21
(g) Build the infrastructure for innovative businesses and promote networks of 22
technology-driven clusters and research intensive industries; 23
(h) Administer the high-tech construction pool and the high-tech investment pool; 24
(i) Recommend projects to the Kentucky Economic Development Finance 25
Authority for funding through the high-tech construction pool and high-tech 26
investment pool; and 27 UNOFFICIAL COPY 23 RS BR 1120
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(j) Review and approve the annual plan which details the annual allocation of 1
funds from the Science and Technology Funding Program. As used in this 2
paragraph, the Science and Technology Funding Program means the 3
Kentucky enterprise fund, the Rural Innovation Program, the Kentucky 4
Commercialization Program, The Regional Technology 5
Corporations/Innovation and Commercialization Center Satellites, the 6
Experimental Program to Stimulate Competitive Research/Kentucky Science 7
and Engineering Foundation, Small Business Innovation Research and Small 8
Business Technology Transfer grants, and other government grant programs 9
and funding programs as determined by the executive director of the Office of 10
Entrepreneurship and [Small Business ]Innovation. 11
(3) The high-tech construction pool shall be used for projects with a special emphasis 12
on the creation of high-technology jobs and knowledge-based companies. The 13
executive director, in administering the high-tech construction pool, shall 14
recommend distribution of funds and projects to the Kentucky Economic 15
Development Finance Authority for its approval. The executive director shall 16
recommend any designated amount of pool funds to be set aside for any match 17
requirements. Any funds used for matching purposes may include public and 18
private funds. 19
(4) The high-tech investment pool shall be used to build and promote technology-20
driven industries and research-intensive industries, as well as their related suppliers, 21
with the goal of creating clusters of innovation-driven industries in Kentucky. The 22
executive director, in administering the high-tech investment pool, shall be 23
authorized to recommend funds to be used to support loans and grants, or to secure 24
an equity or related position. 25
(5) The Kentucky Economic Development Finance Authority shall ensure in their 26
approval of funding of projects that the highest priority is given to knowledge-based 27 UNOFFICIAL COPY 23 RS BR 1120
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companies in fulfillment of the purposes and intentions of the purposes of this 1
section. 2
Section 14. KRS 154.12-310 is amended to read as follows: 3
(1) The Kentucky Innovation and Commercialization Centers are private-public 4
partnerships, operating as a cohesive statewide infrastructure to support the 5
implementation of key Kentucky Innovation Act initiatives. 6
(2) The organization of the ICCs shall be a statewide network of Kentucky innovative 7
hubs, with the location and services provided for each hub determined by the 8
executive director of the Office of Entrepreneurship and [Small Business 9
]Innovation. 10
(a) The Office of Entrepreneurship and [Small Business ]Innovation shall be the 11
central headquarters for the Kentucky innovative hubs and has primary 12
responsibility for the following: 13
1. Managing and administering the ICC Program; 14
2. Establishing uniform program application, protocol, and operating 15
guidelines when appropriate; 16
3. Supporting the protocol by creating and funding centralized services to 17
be distributed throughout the network; and 18
4. Identifying those issues, opportunities, and challenges that have 19
statewide implications. 20
(b) The regional affiliates are responsible for fulfilling the duties as set forth in 21
KRS 154.12-305 relating to the implementation of the region's innovation 22
strategic plan and supporting the implementation of the Kentucky Innovation 23
Act initiatives in the region or subregion; 24
(c) The satellites are responsible for generating technology business development 25
in their assigned geographic area, acting as a bridge between individuals and 26
businesses needing critical early state concept and development work and the 27 UNOFFICIAL COPY 23 RS BR 1120
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affiliate centers that can provide this support. 1
The affiliates and satellites provide a valuable assurance for equal access to the 2
Kentucky Innovation Act initiatives and funding, and provide an opportunity for 3
full participation in rural and remote, as well as metropolitan, areas of the state. 4
(3) The executive director of the Office of Entrepreneurship and [Small Business 5
]Innovation shall have all the powers and authority, not explicitly prohibited by 6
statute, necessary and convenient to carry out and effectuate the purposes of KRS 7
154.12-300 to 154.12-310. 8
(4) The executive director of the Office of Entrepreneurship and [Small Business 9
]Innovation may, in effectuating the provisions of KRS 154.12-300 to 154.12-310, 10
contract with a science and technology organization as defined in KRS 164.6011 to 11
administer and manage the ICC Program. 12
Section 15. KRS 154.20-190 is amended to read as follows: 13
(1) As used in this section: 14
(a) "Authority" means the Kentucky Economic Development Finance Authority; 15
(b) "Qualifying former hospital" means a hospital facility: 16
1. At a location that closed within thirty-six (36) months prior to an 17
application for a loan; and 18
2. For which the former owner or new owner has obtained a certificate of 19
need to open a new hospital or other health facility as defined in KRS 20
216B.015 that provides inpatient care at the closed location; and 21
(c) "Rural hospital" means any hospital or qualifying former hospital located 22
within a county of the Commonwealth having a population of less than fifty 23
thousand (50,000) according to the most recent annual estimates of the 24
resident population issued by the United States Census Bureau. 25
(2) (a) The rural hospital operations and facilities revolving loan fund is established. 26
The authority shall provide loans to a rural hospital not to exceed one million 27 UNOFFICIAL COPY 23 RS BR 1120
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dollars ($1,000,000) for any project within a rural hospital and shall not 1
exceed more than two million dollars ($2,000,000) every five (5) years. 2
(b) Any loan issued by the authority shall not exceed a twenty (20) year term and 3
shall be utilized by the Cabinet for Economic Development to assist a rural 4
hospital in providing needed direct health care services for the citizens of the 5
Commonwealth by: 6
1. Maintaining or upgrading the hospital's facilities; 7
2. Maintaining or increasing the current staff of the rural hospital; 8
3. Reopening a qualifying former hospital; or 9
4. Providing health care services that are not currently available to citizens. 10
(c) The authority shall consider a group with multiple locations eligible under this 11
section as if each separate location is a separate entity for purposes of 12
determining eligibility and applicable loan limits. 13
(3) The Cabinet for Economic Development shall: 14
(a) Determine the terms and conditions of each loan, including the repayment to 15
be deposited back in the revolving loan fund for issuance of future loans to 16
other rural hospitals; 17
(b) Monitor the performance of the rural hospital; and 18
(c) By November[October] 1, 2023[2020], and by each November[October] 1 19
thereafter, report to the Interim Joint Committee on Appropriations and 20
Revenue information about each outstanding loan issued, including: 21
1. The name and location of the rural hospital; 22
2. The amount of principal originally loaned; 23
3. The terms of the loan and whether the rural hospital is currently meeting 24
those terms; and 25
4. How the rural hospital used the loan related to facilities, staff, or 26
additional services. 27 UNOFFICIAL COPY 23 RS BR 1120
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(4) (a) The fund created in subsection (2) of this section shall be a trust and agency 1
account. 2
(b) The Cabinet for Economic Development shall administer the fund. 3
(c) The fund shall consist of appropriations, contributions, donations, gifts, or 4
federal funds. 5
(d) Notwithstanding KRS 45.229, any moneys remaining in the fund at the close 6
of the fiscal year shall not lapse but shall be carried forward into the 7
succeeding fiscal year. 8
(e) Any interest earnings of the fund shall become a part of the fund and shall not 9
lapse. 10
(f) Moneys deposited in the fund are hereby appropriated for the sole purpose of 11
providing loans to rural hospitals. 12
Section 16. KRS 154.20-230 is amended to read as follows: 13
As used in KRS 154.20-230 to 154.20-240: 14
(1) "Application" means a document submitted by small businesses and investors, on a 15
form supplied by the authority, for the purpose of requesting certification to 16
participate in the program and to apply for a credit; 17
(2) "Authority" means the Kentucky Economic Development Finance Authority; 18
(3) "Commonwealth" means the Commonwealth of Kentucky; 19
(4) "Credit" means the nonrefundable angel investor tax credit established by KRS 20
141.396 and awarded by the authority pursuant to KRS 154.20-236; 21
(5) "Department" means the Department of Revenue; 22
(6) "Enhanced incentive counties" has the same meaning as in KRS 154.32-010; 23
(7) "Entity" means any corporation, limited liability company, business development 24
corporation, partnership, limited partnership, sole proprietorship, association, joint 25
stock company, receivership, trust, professional service organization, or other legal 26
entity through which business is conducted; 27 UNOFFICIAL COPY 23 RS BR 1120
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(8) "Fee" means a nonrefundable application fee in an amount set by the authority, to 1
be collected by the authority to offset the cost of administering KRS 154.20-230 to 2
154.20-240; 3
(9) "Full-time employee" means a person that is required to work a minimum of thirty-4
five (35) hours per week and is subject to the tax imposed by KRS 141.020; 5
(10) "Knowledge-based" has the same meaning as in KRS 164.6011; 6
(11) (a) "Qualified activity" means any knowledge-based activity related to the new 7
economy focus areas of the Office of Entrepreneurship and [Small Business 8
]Innovation, including but not limited to: 9
1. Bioscience; 10
2. Environmental and energy technology; 11
3. Health and human development; 12
4. Information technology and communications; and 13
5. Materials science and advanced manufacturing. 14
(b) A "qualified activity" does not include any activity principally engaged in by 15
financial institutions, commercial development companies, credit companies, 16
financial or investment advisors, brokerage or financial firms, other 17
investment funds or investment fund managers, charitable and religious 18
institutions, oil and gas exploration companies, insurance companies, 19
residential housing developers, retail establishments, or any activity that the 20
authority determines in its discretion to be against the public interest, against 21
the purposes of KRS 154.20-230 to 154.20-240, or in violation of any law. 22
Notwithstanding this paragraph, an entity involved in other technological 23
advances may be deemed to be engaged in qualified activity, as determined by 24
the executive director of the Office of Entrepreneurship and [Small Business 25
]Innovation; 26
(12) "Qualified investment" means an investment meeting the requirements of KRS 27 UNOFFICIAL COPY 23 RS BR 1120
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154.20-234 for qualified investments, and certified pursuant to KRS 154.20-236; 1
(13) "Qualified investor" means an individual investor meeting the requirements of KRS 2
154.20-234 for qualified investors, and certified pursuant to KRS 154.20-236; and 3
(14) "Qualified small business" means an entity meeting the requirements of KRS 4
154.20-234 for qualified small businesses, and certified pursuant to KRS 154.20-5
236. 6
Section 17. KRS 154.20-583 is amended to read as follows: 7
(1) A qualified lender of a commercial loan to an eligible company shall not be eligible 8
to apply for inducements until final approval has been made by the qualified lender 9
and funding has been completed in accordance with the commercial loan. 10
(2) Commercial loan proceeds shall be spent by the eligible company on approved 11
costs within three (3) years of final approval, unless an extension is required by the 12
qualified lender or necessitated by circumstances beyond the control of the eligible 13
company or the qualified lender. 14
(3) The eligible company shall submit all documentation, including documentation 15
evidencing expenditures, as required by the qualified lender. 16
(4) Qualified lenders may provide applications to an eligible company and then decide, 17
regardless of further processing or underwriting results, to not provide final 18
approval so long as the decision is not prohibited by state or federal law. If the 19
qualified lender decides not to proceed, the qualified lender shall provide the 20
application to a cooperative lender for further review and possible assignment to 21
one (1) or more other qualified lenders. 22
(5) A qualified lender that is unable to fund the entire amount requested in an 23
application shall submit all or any portion of the requested amount to a cooperative 24
lender for further review and possible assignment of the unfunded portion to one (1) 25
or more qualified lenders. 26
Section 18. KRS 154.20-586 is amended to read as follows: 27 UNOFFICIAL COPY 23 RS BR 1120
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(1) The eligible company shall: 1
(a) Apply for all other available assistance that is not a commercial loan, 2
including disaster relief assistance and insurance proceeds; 3
(b) Notify the qualified lenders immediately upon application of other assistance; 4
and 5
(c) Provide an update on the status of that assistance when requested by the 6
qualified lenders. 7
(2) The eligible company may assign any other available assistance to the qualified 8
lender. 9
(3) The qualified lender shall use the other available assistance to first pay any fees or 10
other amounts outstanding to reduce the principal balance of the commercial loan. 11
(4) The eligible company may apply for other programs administered by the Cabinet 12
for Economic Development for which it meets the relevant program specific 13
eligibility. 14
Section 19. KRS 154.20-589 is amended to read as follows: 15
(1) (a) There is hereby established in the State Treasury a trust and agency account to 16
be known as the western Kentucky risk assistance fund. 17
(b) The fund shall be maintained by the Cabinet for Economic Development. 18
(c) Amounts deposited in the fund shall be used as required under subsection (2) 19
of this section. 20
(d) Notwithstanding KRS 45.229, moneys not expended at the close of a fiscal 21
year shall not lapse but shall be carried forward into the next fiscal year. 22
(e) Any interest earnings of the fund shall become a part of the fund and shall not 23
lapse. 24
(f) Moneys deposited in the fund are hereby appropriated for the purposes set 25
forth in this section. 26
(2) The fund shall be used to pay a qualified lender on the unpaid principal balance of a 27 UNOFFICIAL COPY 23 RS BR 1120
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commercial loan in an amount up to the lesser of the first twenty-five percent (25%) 1
of the loss suffered on the unpaid principal balance on a commercial loan or one 2
million dollars ($1,000,000), as evidenced by the loss being determined by the 3
following method: 4
(a) The amount of loan loss reserve the lending institution establishes based on 5
the current expected credit losses methodology for estimating allowances for 6
credit losses, as reflected in an official, filed call report which reflects the 7
changes in the allowance for credit loss relating to the loan originated under 8
this section; or 9
(b) The amount of the estimated loss as documented by an updated appraisal of 10
the underlying collateral, or a change in economic value of the loan based on 11
expected cash flows. 12
(3) The western Kentucky risk assistance fund shall be used to provide loan loss 13
support payments to qualified lenders for commercial loans that, in the 14
aggregate, have outstanding principal balances not exceeding one hundred 15
million dollars ($100,000,000) and have been approved for enrollment in the 16
program following the application process set forth in subsections (4) and (5) of 17
this section. The one hundred million dollar ($100,000,000) maximum amount 18
for eligible loans shall be proportionally reduced as the loss payments are 19
disbursed[inducement on the first two hundred million dollars ($200,000,000) of 20
commercial loans made and applications submitted under subsection (4) of this 21
section]. 22
(4) The cabinet shall accept applications for inducements on a form created by the 23
cabinet, which shall include the following: 24
(a) The name of the qualified lender; 25
(b) The qualified lender's status of good standing by the Department of Financial 26
Institutions; 27 UNOFFICIAL COPY 23 RS BR 1120
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(c) The Kentucky address of the physical location of the qualified lender; 1
(d) The name, e-mail address, and phone number of an employee of the qualified 2
lender who can be contacted regarding questions about the application; and 3
(e) The amount of the commercial loan. 4
(5) (a) The cabinet shall accept applications for access to the western Kentucky risk 5
assistance fund only for a commercial loan that originated before December 6
31, 2027. 7
(b) Applications from qualified lenders shall be approved in the order in which 8
the applications are received, with each qualified lender being limited to a 9
maximum of applications totaling ten million dollars ($10,000,000) in 10
commercial loans. 11
(6) Once a loss has been suffered by a qualified lender, the cabinet shall accept requests 12
for loss payments from the western Kentucky risk assistance fund on a form created 13
by the cabinet that provides the following: 14
(a) The name of the qualified lender; 15
(b) The qualified lender's status of good standing by the Department of Financial 16
Institutions; 17
(c) The Kentucky address of the physical location of the qualified lender; 18
(d) The name, e-mail address, and phone number of an employee of the qualified 19
lender, who can be contacted regarding questions about the application; 20
(e) The amount of the commercial loan; 21
(f) The requested loss payment amount calculated in accordance with subsection 22
(2) of this section; and 23
(g) Documentation of the suffered loss. 24
(7) (a) An application for a loss payment may only be submitted for losses suffered 25
within five (5) years from the origination of the loan. 26
(b) Once a complete[the] loss application has been submitted to the cabinet, a 27 UNOFFICIAL COPY 23 RS BR 1120
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decision to approve or deny the application shall be made within thirty (30) 1
days of submission. 2
(c) Within sixty (60) days of a complete submission: 3
1. If approved, the amount due shall be issued to the qualified lender; or 4
2. If denied, an explanation shall be sent to the qualified lender for the 5
denial. 6
(8) Should the qualified lender, at any time after the receipt of a loss payment from the 7
western Kentucky risk assistance fund, collect more than seventy-five percent 8
(75%) of the previously considered uncollectable balance, any portion over 9
seventy-five percent (75%) shall be repaid to the cabinet for deposit into western 10
Kentucky risk assistance fund, however, no more than one million dollars 11
($1,000,000) shall be recovered. 12
(9) Inducements shall be paid in the order that requests for loss payments are received 13
in accordance with subsection (6) of this section, as long as moneys are available 14
in the fund from the initial funding or subsequent loss collection by qualified 15
lenders on commercial loans originating before December 31, 2027. 16
(10) An administrative fee equal to one percent (1%) of the approved inducement 17
amount shall be applied to the loss payment and may be deducted from the 18
approved inducement amount. 19
Section 20. KRS 154.25-040 is amended to read as follows: 20
(1) The approved company may require that each employee subject to the income tax 21
imposed by KRS 141.020, whose job was preserved or created as a result of the 22
project, as a condition of employment or the retention of employment, agree to pay 23
an assessment up to one hundred percent (100%) of the individual income tax rate 24
imposed by KRS 141.020 for[, not to exceed five percent (5%) of the gross wages 25
of] each employee subject to the income tax imposed by KRS 141.020. The 26
Commonwealth's wage assessment shall be equal to the following: 27 UNOFFICIAL COPY 23 RS BR 1120
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(a) Up to eighty percent (80%) of the individual income tax rate imposed by 1
KRS 141.020 if the project is located in a local jurisdiction where: 2
1. No local occupational license fee is imposed; 3
2. a. A local occupational fee greater than or equal to twenty percent 4
(20%) of the individual income tax rate in KRS 141.020 is 5
imposed; and 6
b. The local jurisdiction agrees to forgo the local wage assessment 7
of at least twenty percent (20%) of the individual income tax rate 8
imposed by KRS 141.020 via credits against the local 9
occupational license fee for the affected employees; or 10
3. a. A local occupational license fee less than twenty percent (20%) 11
of the individual income tax rate in KRS 141.020 is imposed; and 12
b. The local jurisdiction agrees to forgo the total amount of the 13
local occupational license fee as the local wage assessment; or 14
(b) Up to four (4) times the forgone local wage assessment rate if the project is 15
located in a local jurisdiction where: 16
1. a. A local occupational license fee greater than or equal to twenty 17
percent (20%) of the individual income tax rate in KRS 141.020 18
is imposed; and 19
b. The local jurisdiction agrees to forgo an amount of the local 20
occupational license fee that is less than twenty percent (20%) of 21
the individual income tax rate imposed by KRS 141.020 as the 22
local wage assessment; or 23
2. a. A local occupational license fee less than twenty percent (20%) 24
of the individual income tax rate in KRS 141.020 is imposed; and 25
b. The local jurisdiction agrees to forgo only a portion of the total 26
amount of the local occupational license fee as the local wage 27 UNOFFICIAL COPY 23 RS BR 1120
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assessment[unless: 1
(a) The local government or governments in which the project is located have a 2
local occupational license fee of less than one percent (1%) and agree to forgo 3
all of their local occupational license fee, in which case the assessment shall 4
equal four percent (4%) plus the percentage of the local occupational license 5
fee; 6
(b) The local government or governments in which the project is located have a 7
local occupational license fee of less than one percent (1%) and agree to 8
forego a portion of their local occupational license fee, in which case the 9
assessment shall equal the percentage that the local government or 10
governments agree to forego plus a percentage that is four (4) times the 11
percentage the local government or governments agree to forego; 12
(c) The local government or governments in which the project is located have a 13
local occupational license fee equal to or greater than one percent (1%), and 14
the local government or governments agree to forego an amount less than one 15
percent (1%), in which case the assessment shall equal the percentage that the 16
local government or governments agree to forego plus a percentage that is 17
four (4) times the percentage the local government or governments agree to 18
forego; or 19
(d) The local government or governments in which the project is located have no 20
local occupational license fee, in which case the assessment shall equal four 21
percent (4%)]. 22
(2) Each assessed employee shall be entitled to a credit against the Kentucky income 23
tax required to be withheld under KRS 141.310 in the form of a simultaneous 24
adjustment equal to the Commonwealth's assessment outlined in subsection (1) of 25
this section[ four-fifths (4/5) of the assessment, unless: 26
(a) The assessment is calculated under subsection (1)(a) of this section, in which 27 UNOFFICIAL COPY 23 RS BR 1120
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case the credit shall be equal to the total assessment less the occupational 1
license fee; or 2
(b) The assessment is calculated under subsection (1)(d) of this section, in which 3
case the credit shall be equal to one hundred percent (100%) of the 4
assessment]. 5
(3) Each employee assessed under subsection (1) of this section also shall be entitled to 6
a credit against the local occupational license fee in the form of a simultaneous 7
adjustment of the local occupational license fee withholding equal to the local wage 8
assessment outlined in subsection (1) of this section[one-fifth (1/5) of the 9
assessment, unless the wage assessment is calculated under subsection (1)(a) of this 10
section, in which case the credit shall equal the same amount as the local 11
occupational license fee]. 12
(4) If an approved company elects to impose the assessment as a condition of 13
employment or the retention of employment, the approved company shall deduct 14
the assessment from each paycheck of each employee subject to the provisions of 15
subsections (2) and (3) of this section. 16
(5) Any approved company collecting an assessment shall make its payroll books and 17
records available to the authority at such reasonable times as the authority shall 18
request and shall file with the authority the documentation respecting the 19
assessment the authority may require. 20
(6) Any assessment of the wages of the employees of an approved company shall 21
permanently lapse upon expiration or termination of the agreement unless the 22
agreement has been amended to extend the termination as a result of a supplemental 23
project. 24
(7) By October 1 of each year, the Department of Revenue shall certify to the authority, 25
in the form of an annual report, aggregate tax credits claimed on tax returns filed 26
during the taxable year ending June 30 of that year and wage assessment fees taken 27 UNOFFICIAL COPY 23 RS BR 1120
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during the prior calendar year by approved companies with respect to their jobs 1
retention projects under this subchapter, and shall certify to the authority, within 2
one hundred eighty (180) days from the date an approved company has filed its 3
state tax return, when an approved company has taken tax credits equal to its total 4
inducements. 5
Section 21. KRS 154.31-010 is amended to read as follows: 6
As used in this subchapter: 7
(1) "Agreement" means an agreement entered into pursuant to KRS 154.31-030 8
between the authority and an approved company; 9
(2) "Alternative fuel production" has the same meaning as in KRS 154.32-010; 10
(3) "Approved company" means an eligible company that has received approval from 11
the authority for a sales and use tax incentive under this subchapter; 12
(4) "Approved recovery amount" means the maximum sales and use tax incentive 13
recoverable by an approved company as established in the agreement; 14
(5) "Authority" means the Kentucky Economic Development Finance Authority; 15
(6) "Carbon dioxide or hydrogen transmission pipeline" has the same meaning as in 16
KRS 154.32-010; 17
(7) "Coal severing and processing" means activities resulting in the eligible company 18
being subject to the tax imposed by KRS Chapter 143; 19
(8) "Department" means the Department of Revenue; 20
(9) "Economic development project" means: 21
(a) 1. The acquisition or construction of a new facility; or 22
2. The expansion or rehabilitation of an existing facility; or 23
(b) The installation and equipping of a facility; 24
by an eligible company at a specific site in the Commonwealth to be used in an 25
activity conducted by the approved company; 26
(10) "Electronic processing" means the use of technology having electronic, digital, 27 UNOFFICIAL COPY 23 RS BR 1120
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magnetic, wireless, optical, electromagnetic, or similar capabilities, now in 1
existence or later developed to perform a service or technology activity; 2
(11) (a) "Eligible company" means any corporation, limited liability company, 3
partnership, limited partnership, sole proprietorship, business trust, or other 4
legal entity with a proposed economic development project that is primarily 5
engaged in or planning to be engaged in one (1) or more of the following 6
activities within the Commonwealth: 7
1. Manufacturing; 8
2. Nonretail service or technology activities; 9
3. Agribusiness; 10
4. Headquarters operations; 11
5. Alternative fuel, gasification, energy-efficient alternative fuel or 12
renewable energy production; 13
6. Carbon dioxide or hydrogen transmission pipelines; 14
7. Coal severing and processing; 15
8. Hospital operations; or 16
9. In operating or developing a tourism attraction. 17
(b) "Eligible company" does not include any company whose primary activity to 18
be conducted within the Commonwealth is forestry, fishing, the provision of 19
utilities, construction, wholesale trade, retail trade, real estate, rental and 20
leasing, educational services, food services, or public administration services; 21
(12) "Eligible expenses" means the amount expended for: 22
(a) Building and construction materials permanently incorporated as an 23
improvement to real property as part of an economic development project; or 24
(b) Equipment used for research and development or electronic processing at an 25
economic development project; 26
if the Kentucky sales and use tax imposed by KRS Chapter 139 is paid on the 27 UNOFFICIAL COPY 23 RS BR 1120
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purchase of the materials or equipment at the time of purchase; 1
(13) "Energy-efficient alternative fuel production" has the same meaning as in KRS 2
154.32-010; 3
(14) (a) "Equipment" means tangible personal property which is subject to 4
depreciation under Sections 167 and 168 of the Internal Revenue Code, 5
including assets which are expensed under Section 179 of the Internal 6
Revenue Code, and that is used in the operation of a business. 7
(b) "Equipment" does not include any tangible personal property used to 8
maintain, restore, mend, or repair machinery or equipment, consumable 9
operating supplies, office supplies, or maintenance supplies; 10
(15) "Gasification process" has the same meaning as in KRS 154.32-010; 11
(16) "Headquarters" means the principal office where the principal executives of the 12
entity are located and from which other personnel, branches, affiliates, offices, or 13
entities are controlled; 14
(17) "Hospital" has the same meaning as in KRS 154.32-010; 15
(18) "Manufacturing" has the same meaning as in KRS 154.32-010; 16
(19) "Nonretail service and technology" has the same meaning as in KRS 154.32-010; 17
(20) "Project term" means the time for which an agreement shall be in effect. The project 18
term shall be established in the agreement and shall not exceed seven (7) years; 19
(21) "Renewable energy production" has the same meaning as in KRS 154.32-010;[ and] 20
(22) (a) "Research and development" means experimental or laboratory activity that 21
has as its ultimate goal the development of new products, the improvement of 22
existing products, the development of new uses for existing products, or the 23
development or improvement of methods for producing products. 24
(b) "Research and development" does not include testing or inspection of 25
materials or products for quality control purposes, efficiency surveys, 26
management studies, consumer surveys or other market research, advertising 27 UNOFFICIAL COPY 23 RS BR 1120
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or promotional activities, or research in connection with literary, historical, or 1
similar projects; and 2
(23) "Tourism attraction" has the same meaning as tourism attraction project in 3
KRS 148.851. 4
Section 22. KRS 154.32-010 is amended to read as follows: 5
(1) "Activation date" means the date established in the tax incentive agreement that is 6
within two (2) years of final approval; 7
(2) "Affiliate" means the following: 8
(a) Members of a family, including only brothers and sisters of the whole or half 9
blood, spouse, ancestors, and lineal descendants of an individual; 10
(b) An individual, and a corporation more than fifty percent (50%) in value of the 11
outstanding stock of which is owned, directly or indirectly, by or for that 12
individual; 13
(c) An individual, and a limited liability company of which more than fifty 14
percent (50%) of the capital interest or profits are owned or controlled, 15
directly or indirectly, by or for that individual; 16
(d) Two (2) corporations which are members of the same controlled group, which 17
includes and is limited to: 18
1. One (1) or more chains of corporations connected through stock 19
ownership with a common parent corporation if: 20
a. Stock possessing more than fifty percent (50%) of the total 21
combined voting power of all classes of stock entitled to vote or 22
more than fifty percent (50%) of the total value of shares of all 23
classes of stock of each of the corporations, except the common 24
parent corporation, is owned by one (1) or more of the other 25
corporations; and 26
b. The common parent corporation owns stock possessing more than 27 UNOFFICIAL COPY 23 RS BR 1120
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fifty percent (50%) of the total combined voting power of all 1
classes of stock entitled to vote or more than fifty percent (50%) of 2
the total value of shares of all classes of stock of at least one (1) of 3
the other corporations, excluding, in computing the voting power 4
or value, stock owned directly by the other corporations; or 5
2. Two (2) or more corporations if five (5) or fewer persons who are 6
individuals, estates, or trusts own stock possessing more than fifty 7
percent (50%) of the total combined voting power of all classes of stock 8
entitled to vote or more than fifty percent (50%) of the total value of 9
shares of all classes of stock of each corporation, taking into account the 10
stock ownership of each person only to the extent the stock ownership is 11
identical with respect to each corporation; 12
(e) A grantor and a fiduciary of any trust; 13
(f) A fiduciary of a trust and a fiduciary of another trust, if the same person is a 14
grantor of both trusts; 15
(g) A fiduciary of a trust and a beneficiary of that trust; 16
(h) A fiduciary of a trust and a beneficiary of another trust, if the same person is a 17
grantor of both trusts; 18
(i) A fiduciary of a trust and a corporation more than fifty percent (50%) in value 19
of the outstanding stock of which is owned, directly or indirectly, by or for the 20
trust or by or for a person who is a grantor of the trust; 21
(j) A fiduciary of a trust and a limited liability company more than fifty percent 22
(50%) of the capital interest, or the interest in profits, of which is owned 23
directly or indirectly, by or for the trust or by or for a person who is a grantor 24
of the trust; 25
(k) A corporation, a partnership, or a limited partnership if the same persons own: 26
1. More than fifty percent (50%) in value of the outstanding stock of the 27 UNOFFICIAL COPY 23 RS BR 1120
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corporation; and 1
2. More than fifty percent (50%) of the capital interest, or the profits 2
interest, in the partnership or limited partnership; 3
(l) A corporation and a limited liability company if the same persons own: 4
1. More than fifty percent (50%) in value of the outstanding stock of the 5
corporation; and 6
2. More than fifty percent (50%) of the capital interest or the profits in the 7
limited liability company; 8
(m) A partnership or limited partnership and a limited liability company if the 9
same persons own: 10
1. More than fifty percent (50%) of the capital interest or profits in the 11
partnership or limited partnership; and 12
2. More than fifty percent (50%) of the capital interest or the profits in the 13
limited liability company; 14
(n) An S corporation and another S corporation if the same persons own more 15
than fifty percent (50%) in value of the outstanding stock of each corporation; 16
S corporation designation being the same as that designation under the 17
Internal Revenue Code of 1986, as amended; 18
(o) An S corporation and a C corporation, if the same persons own more than 19
fifty percent (50%) in value of the outstanding stock of each corporation; S 20
and C corporation designations being the same as those designations under the 21
Internal Revenue Code of 1986, as amended; or 22
(p) Two (2) or more limited liability companies, if the same persons own more 23
than fifty percent (50%) of the capital interest or are entitled to more than fifty 24
percent (50%) of the capital profits in the limited liability companies; 25
(3) "Agribusiness" means the processing of raw agricultural products, including but not 26
limited to timber and industrial hemp, or the performance of value-added functions 27 UNOFFICIAL COPY 23 RS BR 1120
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with regard to raw agricultural products; 1
(4) "Alternative fuel production" means a Kentucky operation that primarily produces 2
alternative transportation fuels for sale. The alternative fuel production may 3
produce electricity as a by-product if the primary function of the operations remains 4
the production and sale of alternative transportation fuels; 5
(5) "Alternative transportation fuels" has the same meaning as in KRS 152.715; 6
(6) "Approved company" means an eligible company that has received final approval 7
to receive incentives under this subchapter; 8
(7) "Approved costs" means the amount of eligible costs approved by the authority at 9
final approval; 10
(8) "Authority" means the Kentucky Economic Development Finance Authority 11
established by KRS 154.20-010; 12
(9) "Biomass resources" has the same meaning as in KRS 152.715; 13
(10) "Capital lease" means a lease classified as a capital lease by the Statement of 14
Financial Accounting Standards No. 13, Accounting for Leases, issued by the 15
Financial Accounting Standards Board, November 1976, as amended; 16
(11) "Carbon dioxide or hydrogen transmission pipeline" means the in-state portion of a 17
pipeline, including appurtenant facilities, property rights, and easements, that is 18
used exclusively for the purpose of transporting carbon dioxide or hydrogen to the 19
point of sale, storage, or other carbon or hydrogen management applications; 20
(12) "Coal severing and processing" means activities resulting in the eligible company 21
being subject to the tax imposed by KRS Chapter 143; 22
(13) "Commonwealth" means the Commonwealth of Kentucky; 23
(14) "Confirmed approved costs" means: 24
(a) For owned economic development projects, the documented eligible costs 25
incurred on or before the activation date; or 26
(b) For leased economic development projects: 27 UNOFFICIAL COPY 23 RS BR 1120
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1. The documented eligible costs incurred on or before the activation date; 1
and 2
2. Estimated rent to be incurred by the approved company throughout the 3
term of the tax incentive agreement. 4
For both owned and leased economic development projects, "confirmed approved 5
costs" may be less than approved costs, but shall not be more than approved costs; 6
(15) "Department" means the Department of Revenue; 7
(16) "Economic development project" means: 8
(a) The acquisition, leasing, or construction of a new facility; 9
(b) The acquisition, leasing, rehabilitation, or expansion of an existing facility; or 10
(c) The installation and equipping of a facility; 11
by an eligible company. "Economic development project" does not include any 12
economic development project that will result in the replacement of facilities 13
existing in the Commonwealth, except as provided in KRS 154.32-060; 14
(17) (a) "Eligible company" means any corporation, limited liability company, 15
partnership, limited partnership, sole proprietorship, business trust, or any 16
other entity with a proposed economic development project that is engaged in 17
or is planning to be engaged in one (1) or more of the following activities 18
within the Commonwealth: 19
1. Manufacturing; 20
2. Agribusiness; 21
3. Nonretail service or technology; 22
4. Headquarters operations, regardless of the underlying business activity 23
of the company; 24
5. Alternative fuel, gasification, energy-efficient alternative fuel, or 25
renewable energy production; 26
6. Carbon dioxide or hydrogen transmission pipeline; 27 UNOFFICIAL COPY 23 RS BR 1120
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7. Coal severing and processing; or 1
8. Hospital operations. 2
(b) "Eligible company" does not include companies where the primary activity to 3
be conducted within the Commonwealth is forestry, fishing, the provision of 4
utilities, construction, wholesale trade, retail trade, real estate, rental and 5
leasing, educational services, accommodation and food services, or public 6
administration services; 7
(18) "Eligible costs" means: 8
(a) For owned economic development projects: 9
1. Start-up costs; 10
2. Nonrecurring obligations incurred for labor and nonrecurring payments 11
to contractors, subcontractors, builders, and materialmen in connection 12
with the economic development project; 13
3. The cost of acquiring land or rights in land and any cost incidental 14
thereto, including recording fees; 15
4. The cost of contract bonds and of insurance of all kinds that may be 16
required or necessary for completion of an economic development 17
project which is not paid by a contractor or otherwise provided for; 18
5. All costs of architectural and engineering services, including test 19
borings, surveys, estimated plans and specifications, preliminary 20
investigations, and supervision of construction, as well as for the 21
performance of all the duties required for construction of the economic 22
development project; 23
6. All costs which are required to be paid under the terms of any contract 24
for the economic development project; 25
7. All costs incurred for construction activities, including site tests and 26
inspections; subsurface site work; excavation; removal of structures, 27 UNOFFICIAL COPY 23 RS BR 1120
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roadways, cemeteries, and other surface obstructions; filling, grading, 1
and providing drainage and storm water retention; installation of utilities 2
such as water, sewer, sewage treatment, gas, electric, communications, 3
and similar facilities; off-site construction of utility extensions to the 4
boundaries of the real estate; construction and installation of railroad 5
spurs as needed to connect the economic development project to existing 6
railways; or similar activities as the authority may determine necessary 7
for construction of the economic development project; and 8
8. All other costs of a nature comparable to those described above; and 9
(b) For leased economic development projects: 10
1. Start-up costs; 11
2. Building/leasehold improvements; and 12
3. Fifty percent (50%) of the estimated annual rent for each year of the tax 13
incentive agreement. 14
Notwithstanding any other provision of this subsection, for economic development 15
projects that are not in enhanced incentive counties, the cost of equipment eligible 16
for recovery as an eligible cost shall not exceed twenty thousand dollars ($20,000) 17
for each new full-time job created as of the activation date; 18
(19) "Employee benefits" means payments by an approved company for its full-time 19
employees for health insurance, life insurance, dental insurance, vision insurance, 20
defined benefits, 401(k), or similar plans; 21
(20) "Energy-efficient alternative fuel production" means a Kentucky operation that 22
produces for sale energy-efficient alternative fuels; 23
(21) "Energy-efficient alternative fuels" means homogeneous fuels that: 24
(a) Are produced from processes designed to densify feedstock coal, waste coal, 25
or biomass resources; and 26
(b) Have an energy content that is greater than the feedstock coal, waste coal, or 27 UNOFFICIAL COPY 23 RS BR 1120
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biomass resource; 1
(22) "Enhanced incentive counties" means counties certified by the authority pursuant to 2
KRS 154.32-050; 3
(23) "Final approval" means the action taken by the authority authorizing the eligible 4
company to receive incentives under this subchapter; 5
(24) (a) "Full-time job" means a job held by a person who: 6
1. Is required to work a minimum of thirty-five (35) hours per week; and 7
2. a. Is subject to the Kentucky individual income tax imposed by KRS 8
141.020; or 9
b. Works remotely away from the economic development project if 10
the job meets all of the following conditions: 11
i. Is held by a Kentucky resident; 12
ii. Was created as a result of the economic development project; 13
and 14
iii. The payroll of this job is expensed to the economic 15
development project. 16
(b) "Full-time job" does not include a job held by a resident of any state with a 17
reciprocal agreement between the Commonwealth and the other state as 18
described in KRS 141.070; 19
(25) "Gasification process" means a process that converts any carbon-containing 20
material into a synthesis gas composed primarily of carbon monoxide and 21
hydrogen; 22
(26) "Gasification production" means a Kentucky operation that primarily produces for 23
sale: 24
(a) Alternative transportation fuels; 25
(b) Synthetic natural gas; 26
(c) Chemicals; 27 UNOFFICIAL COPY 23 RS BR 1120
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(d) Chemical feedstocks; or 1
(e) Liquid fuels; 2
from coal, waste coal, coal-processing waste, or biomass resources, through a 3
gasification process. The gasification production may produce electricity as a by-4
product if the primary function of the operations remains the production and sale of 5
alternative transportation fuels, synthetic natural gas, chemicals, chemical 6
feedstocks, or liquid fuels; 7
(27) "Headquarters" means the principal office where the principal executives of the 8
entity are located and from which other personnel, branches, affiliates, offices, or 9
entities are controlled; 10
(28) "Hospital" means a facility licensed by the Cabinet for Health and Family Services 11
under KRS Chapter 216B for the operation of a hospital and the basic services 12
provided by a hospital; 13
(29) "Incentives" means the incentives available under this subchapter, as listed in KRS 14
154.32-020(3); 15
(30) "Job target" means the annual average number of new full-time jobs that the 16
approved company commits to create and maintain at the economic development 17
project, which shall not be less than ten (10) new full-time jobs; 18
(31) "Kentucky gross receipts" has the same meaning as in KRS 141.0401; 19
(32) "Kentucky gross profits" has the same meaning as in KRS 141.0401; 20
(33) "Lease agreement" means an agreement between an approved company and an 21
unrelated entity conveying the right to use a facility, the terms of which reflect an 22
arms' length transaction. "Lease agreement" does not include a capital lease; 23
(34) "Leased project" means an economic development project site occupied by an 24
approved company pursuant to a lease agreement; 25
(35) "Manufacturing" means any activity involving: 26
(a) Processing, assembling, or production of any property, including the 27 UNOFFICIAL COPY 23 RS BR 1120
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processing resulting in a change in the conditions of the property and any 1
activity related to the processing, assembling, or production of property, 2
together with the storage, warehousing, distribution, and related office 3
facilities; or 4
(b) Production of vital medications, personal protective equipment, or equipment 5
necessary to produce personal protective equipment; 6
(36) (a) "Nonretail service or technology" means any activity where service or 7
technology is provided predominantly outside the Commonwealth and 8
designed to serve a multistate, national, or international market. 9
(b) "Nonretail service or technology" includes but is not limited to call centers, 10
centralized administrative or processing centers, telephone or Internet sales 11
order or processing centers, distribution or fulfillment centers, data processing 12
centers, research and development facilities, and other similar activities; 13
(37) "Owned project" means an economic development project owned in fee simple by 14
the approved company or an affiliate, or possessed by the approved company or an 15
affiliate pursuant to a capital lease; 16
(38) "Personal protective equipment" means protective clothing, helmets, gloves, face 17
shields, goggles, face masks, respirators, and other equipment designed to protect 18
the user from injury or the spread of infection or illness; 19
(39) "Preliminary approval" means the action taken by the authority preliminarily 20
approving an eligible company for incentives under this subchapter; 21
(40) "Renewable energy production" means a Kentucky operation that utilizes wind 22
power, biomass resources, landfill methane gas, hydropower, solar power, or other 23
similar renewable resources to generate electricity for sale to unrelated entities; 24
(41) "Rent" means the actual annual rent or fee paid by an approved company under a 25
lease agreement; 26
(42) "Start-up costs" means nonrecurring costs incurred to furnish and equip a facility 27 UNOFFICIAL COPY 23 RS BR 1120
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for an economic development project, including costs incurred for: 1
(a) Computers, furnishings, office equipment, manufacturing equipment, and 2
fixtures; 3
(b) The relocation of out-of-state equipment; and 4
(c) Cost of fixed telecommunications equipment; 5
as certified to the authority in accordance with KRS 154.32-030; 6
(43) "Synthetic natural gas" means the same thing as in KRS 152.715; 7
(44) "Tax incentive agreement" means the agreement entered into pursuant to KRS 8
154.32-040 between the authority and an approved company; 9
(45) "Term" means the period of time for which a tax incentive agreement may be in 10
effect, which shall not exceed fifteen (15) years for an economic development 11
project located in an enhanced incentive county, or ten (10) years for an economic 12
development project not located in any other county; 13
(46) "Vital medications" means any drug or biologic used to prevent or treat a serious 14
life-threatening disease or medical condition for which there is no other available 15
source with sufficient supply of that drug or biologic or alternative drug or biologic; 16
(47) "Wage" means the per hour earnings of a full-time employee, including wages, tips, 17
overtime, bonuses, and commissions, as reflected on the employee's federal form 18
W-2 wage and tax statement, but excludes employee benefits; and 19
(48) "Wage target" means the average total hourly compensation amount, including the 20
minimum wage and employee benefits, that the approved company commits to 21
meet for all new full-time jobs created and maintained as a result of the economic 22
development project, which shall not be less than: 23
(a) One hundred twenty-five percent (125%) of the federal minimum wage in 24
enhanced incentive counties; or 25
(b) One hundred fifty percent (150%) of the federal minimum wage in all other 26
counties. 27 UNOFFICIAL COPY 23 RS BR 1120
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Section 23. KRS 154.32-020 is amended to read as follows: 1
(1) The purposes of this subchapter are: 2
(a) To provide incentives for eligible companies and to encourage the location or 3
expansion of manufacturing facilities, agribusiness operations, nonretail 4
service or technology facilities, headquarters operations, alternative fuel 5
production facilities, gasification production facilities, energy-efficient 6
alternative fuel production facilities, renewable energy production facilities, 7
carbon dioxide or hydrogen transmission pipelines, coal severing and 8
processing, and hospital operations in the Commonwealth to advance the 9
public purposes of: 10
1. Creation of new jobs that, but for the incentives offered by the authority, 11
would not exist within the Commonwealth; 12
2. Creation of new sources of tax revenues for the support of public 13
services provided by the Commonwealth; 14
3. Improvement in the quality of life for Kentucky citizens through the 15
creation of sustainable jobs with higher salaries; and 16
4. Providing an economic stimulus to bolster in-state production of vital 17
medications and personal protective equipment; and 18
(b) To provide enhanced incentives for companies that locate in enhanced 19
incentive counties in recognition of the depressed economic conditions in 20
those counties and the increased need for the growth and development caused 21
by the depressed economic conditions. 22
(2) To qualify for the incentives provided by subsection (3) of this section, an approved 23
company shall: 24
(a) Incur eligible costs of at least one hundred thousand dollars ($100,000); 25
(b) Create at least ten (10) new full-time jobs and maintain an annual average 26
number of at least ten (10) new full-time jobs; and 27 UNOFFICIAL COPY 23 RS BR 1120
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(c) 1. Pay at least ninety percent (90%) of all new full-time employees whose 1
jobs were created as a result of the economic development project a 2
minimum wage of at least one hundred twenty-five percent (125%) of 3
the federal minimum wage in enhanced incentive counties, and one 4
hundred fifty percent (150%) of the federal minimum wage in other 5
counties throughout the term of the economic development project; and 6
2. Provide employee benefits for all new full-time jobs equal to at least 7
fifteen percent (15%) of the minimum wage requirement established by 8
subparagraph 1. of this paragraph. If the eligible company does not 9
provide employee benefits equal to at least fifteen percent (15%) of the 10
minimum wage requirement established by subparagraph 1. of this 11
paragraph, the eligible company may still qualify for incentives if it 12
provides the full-time employees hired as a result of the economic 13
development project total hourly compensation equal to or greater than 14
one hundred fifteen percent (115%) of the minimum wage requirement 15
established in subparagraph 1. of this paragraph through increased 16
hourly wages combined with employee benefits; or 17
(d) Produce vital medications, personal protective equipment, or equipment 18
necessary to produce personal protective equipment. 19
(3) The incentives available under this subchapter are as follows: 20
(a) Tax credits of up to one hundred percent (100%) of the Kentucky income tax 21
imposed under KRS 141.020 or 141.040 and the limited liability entity tax 22
imposed under KRS 141.0401 on the income, Kentucky gross profits, or 23
Kentucky gross receipts of the approved company generated by or arising 24
from the economic development project, as set forth in KRS 141.415 and 25
154.32-070; 26
(b) Authorization for the approved company to impose a wage assessment against 27 UNOFFICIAL COPY 23 RS BR 1120
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the gross wages of each new employee subject to the Kentucky income tax as 1
provided in KRS 154.32-090; and 2
(c) Notwithstanding any provision of law to the contrary, for any economic 3
development project with an eligible investment of more than two hundred 4
million dollars ($200,000,000), the authority may authorize approval to the 5
economic development project based upon terms and incentives applicable to 6
economic development project locating in an enhanced incentive county. 7
(4) The General Assembly hereby finds and declares that the authority granted in this 8
subchapter and the purposes accomplished hereby are proper governmental and 9
public purposes for which public moneys may be expended, and that the 10
inducement of the location of economic development projects within the 11
Commonwealth is of paramount importance to the economic well-being of the 12
Commonwealth. 13
Section 24. KRS 154.32-050 is amended to read as follows: 14
(1) The authority shall identify and certify or decertify enhanced incentive counties on 15
an annual basis as provided in this section. 16
(2) Each fiscal year, the authority shall: 17
(a) Obtain from the Department of Workforce Development in the Education and 18
Labor Cabinet, the final unemployment figures for the prior calendar year for 19
each county and for the Commonwealth as a whole; 20
(b) Identify those counties which have had: 21
1. A countywide unemployment rate that exceeds the statewide 22
unemployment rate in the most recent five (5) consecutive calendar 23
years; or 24
2. An average countywide rate of unemployment exceeding the statewide 25
unemployment rate by two hundred percent (200%) in the most recent 26
calendar year; and 27 UNOFFICIAL COPY 23 RS BR 1120
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(c) Certify the counties identified in paragraph (b) of this subsection as enhanced 1
incentive counties. 2
(3) A county not certified under subsection (2) of this section may also be certified by 3
the authority as an enhanced incentive county if the authority determines the county 4
is one (1) of the sixty (60) most distressed counties in the Commonwealth based on 5
the following criteria with equal weight given to each criterion: 6
(a) The average countywide rate of unemployment in the most recent three (3) 7
consecutive calendar years, using the information obtained under subsection 8
(2)(a) of this section; 9
(b) The percentage of adults twenty-five (25) years of age and older who have 10
attained at least a high school education or equivalent, on the basis of the most 11
recent data available from the United States Department of Commerce, 12
Bureau of the Census; and 13
(c) The quality of the roads in the county. Quality of roads shall be determined by 14
the access within a county to roads, ranked in descending order from best 15
quality to worst quality, as certified to the authority by the Kentucky 16
Transportation Cabinet as follows: 17
1. Two (2) or more interstate highways; 18
2. One (1) interstate highway; 19
3. A state four (4) lane parkway; 20
4. A four (4) lane principal arterial access to an interstate highway; 21
5. A state two (2) lane parkway; and 22
6. None of the preceding road types. 23
(4) (a) If the authority determines that an enhanced incentive county no longer meets 24
the criteria to be certified as an enhanced incentive county under this section, 25
the authority shall decertify that county. 26
(b) Any economic development project located in an enhanced incentive county 27 UNOFFICIAL COPY 23 RS BR 1120
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that was decertified by the authority after May 1, 2009, shall have until July 1 1
of the third year following the fiscal year in which the county was decertified 2
to obtain final approval from the authority. 3
(5) (a) As used in this subsection, "industrial park" means a regional industrial park 4
as defined in KRS 42.4588, or an industrial park created pursuant to an 5
interlocal agreement in which revenues are shared as provided in KRS 65.210 6
to 65.300. 7
(b) An economic development project undertaken in an industrial park that is 8
located in two (2) or more counties, one (1) of which is an enhanced incentive 9
county, may be approved for the enhanced incentive county incentives set 10
forth in this subchapter. 11
(6) A county not certified under subsection (2) or (3) of this section may be certified 12
by the authority as an enhanced incentive county if the county has been declared 13
a disaster relief area by any state or federal agency on or after December 1, 2021. 14
The enhanced county certification shall be effective for a period of two (2) years 15
from the date of certification by the authority. Following the two (2) year period, 16
if a county certified under this subsection does not meet the criteria under 17
subsections (2) and (3) of this section to be certified as an enhanced incentive 18
county, the county shall be decertified in accordance with subsection (4) of this 19
section. 20
Section 25. KRS 154.32-090 is amended to read as follows: 21
(1) An approved company or, with the authority's consent, an affiliate of an approved 22
company may impose wage assessments against employees as provided in this 23
section if a wage assessment is included in the incentives awarded to the approved 24
company in the tax incentive agreement. The level of wage assessment shall be 25
negotiated as part of the tax incentive agreement. 26
(2) If an economic development project is located in an enhanced incentive county, the 27 UNOFFICIAL COPY 23 RS BR 1120
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approved company or, with the authority's consent, an affiliate of the approved 1
company may require that each employee subject to the tax imposed by KRS 2
141.020, whose job is determined by the authority to be created as a result of the 3
economic development project, as a condition of employment, agree to an 4
assessment of up to one hundred percent (100%) of the individual income tax rate 5
imposed by KRS 141.020, and that assessment shall operate as the 6
Commonwealth's wage assessment. Although not required for an economic 7
development project located in an enhanced incentive county, a local jurisdiction 8
may agree to forgo all or a portion of its local occupational license fee as a local 9
wage assessment[five percent (5%) of taxable wages]. 10
(3) (a) If the economic development project is not located in an enhanced incentive 11
county, and is located in a local jurisdiction where: 12
1. No local occupational license fee is imposed;[ or] 13
2. a. A local occupational license fee greater than or equal to twenty 14
percent (20%) of the individual income tax rate in KRS 15
141.020[one percent (1%)] is imposed; and 16
b. The local jurisdiction agrees to forgo, as the local wage 17
assessment, at least twenty percent (20%) of the individual 18
income tax rate imposed by KRS 141.020[ one percent (1%)] via 19
credits against the local occupational license fee for the affected 20
employees; or 21
3. a. A local occupational license fee less than twenty percent (20%) 22
of the individual income tax rate in KRS 141.020 is imposed; and 23
b. The local jurisdiction agrees to forgo the total amount of the 24
local occupational license fee as the local wage assessment; then 25
(b) An approved company or, with the authority's consent, an affiliate of an 26
approved company may require that each employee subject to tax imposed by 27 UNOFFICIAL COPY 23 RS BR 1120
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KRS 141.020, whose job is determined by the authority to be created as a 1
result of the economic development project, as a condition of employment, 2
agree to pay an assessment of up to sixty percent (60%) of the individual 3
income tax rate imposed by KRS 141.020 and that assessment shall operate 4
as the Commonwealth's wage assessment[four percent (4%) of taxable 5
wages]. 6
(4) (a) If the economic development project is not located in an enhanced incentive 7
county, and is located in a local jurisdiction where: 8
1. a. A local occupational license fee greater than or equal to twenty 9
percent (20%) of the individual income tax rate in KRS 141.020 10
is imposed; and 11
b. The local jurisdiction agrees to forgo an amount of the local 12
occupational license fee that is less than twenty percent (20%) of 13
the individual income tax rate in KRS 141. 020 as the local wage 14
assessment; or 15
2. a. A local occupational license fee of lesser than twenty percent 16
(20%) of the individual income tax rate in KRS 141.020 is 17
imposed; and 18
b. The local jurisdiction agrees to forgo only a portion of the total 19
amount of the local occupational license fee as the local wage 20
assessment[If: 21
1. The economic development project is not located in an enhanced incentive county, 22
and is located in a jurisdiction where the local occupational license fee is less 23
than one percent (1%); and 24
2. The local jurisdiction agrees to forgo the total amount of the local occupational 25
license fee]; then 26
(b) An approved company or, with the authority's consent, an affiliate of an 27 UNOFFICIAL COPY 23 RS BR 1120
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approved company may require that each employee subject to tax imposed by 1
KRS 141.020, whose job is determined by the authority to be created as a 2
result of the economic development project, as a condition of employment, 3
agree to pay an assessment equal to three (3) times the forgone local wage 4
assessment rate and that assessment shall operate as the Commonwealth's 5
wage assessment[of up to three percent (3%) of taxable wages, plus a 6
percentage equal to the amount of the local occupational license fee the local 7
jurisdiction agrees to forgo]. 8
(5) [(a) If: 9
1. The project is not located in an enhanced incentive county and is located in a 10
county where the jurisdiction imposes a local occupational license fee of less than 11
one percent (1%); and 12
2. The local jurisdiction agrees to forgo only a portion of the total amount of the local 13
occupational license fee; then 14
(b) An approved company or, with the authority's consent, an affiliate of an approved 15
company may require that each employee subject to tax imposed by KRS 141.020, 16
whose job is determined by the authority to be created as a result of the economic 17
development project, as a condition of employment, agree to pay an assessment to 18
be determined as follows: 19
1. Divide the local occupational license fee that the local jurisdiction has agreed to 20
forgo by the total local occupational license fee imposed; 21
2. Multiply the result determined under subparagraph 1. of this paragraph by three 22
percent (3%); and 23
3. Add the result from subparagraph 2. of this paragraph to the local occupational 24
license fee that the local jurisdiction has agreed to forgo. 25
(6) (a) If: 26
1. The project is not located in an enhanced incentive county, and is located in a 27 UNOFFICIAL COPY 23 RS BR 1120
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county where the jurisdiction imposes a local occupational license fee equal to or 1
greater than one percent (1%); and 2
2. The local jurisdiction agrees to forgo the local occupational license fee in an 3
amount of less than one percent (1%); then 4
(b) An approved company or, with the authority's consent, an affiliate of an approved 5
company may require that each employee subject to tax imposed by KRS 141.020, 6
whose job is determined by the authority to be created as a result of the economic 7
development project, as a condition of employment, agree to pay an assessment to 8
be determined as follows: 9
1. Divide the local occupational license fee that the local jurisdiction has agreed to 10
forgo by one percent (1%); 11
2. Multiply the result determined under subparagraph 1. of this paragraph by three 12
percent (3%); and 13
3. Add the result from subparagraph 2. of this paragraph to the local occupational 14
license fee that the local jurisdiction has agreed to forgo. 15
(7) ] If the project is not located in an enhanced incentive county, and: 16
(a) Is located in a local jurisdiction that does not impose a local occupational 17
license fee, the local jurisdiction shall be required to provide some alternative 18
inducement satisfactory to the authority at the local level in order for a 19
preliminarily approved company to receive final approval. However, the 20
authority may waive this requirement if there are reasonable circumstances 21
that prevent the local jurisdiction from providing a reasonable inducement; or 22
(b) Is located in a local jurisdiction that does impose a local occupational license 23
fee, the jurisdiction may request that the authority waive the local 24
occupational license fee requirements established by subsection (3) or[,] (4) [, 25
(5), or (6) ]of this section if the local jurisdiction offers alternative 26
inducements of similar value satisfactory to the authority. The authority shall 27 UNOFFICIAL COPY 23 RS BR 1120
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review all requests for a waiver, and may waive the local occupational license 1
fee requirements and instead require the local jurisdiction to provide 2
alternative inducements of similar value if the authority determines that the 3
circumstances warrant an alternative contribution by the local jurisdiction. 4
(6)[(8)] Each employee paying the assessment shall simultaneously be entitled to a 5
credit against the Kentucky individual income tax required to be withheld under 6
KRS 141.310 equal to the state portion of the assessment and shall be entitled to a 7
credit against the local occupational license tax equal to the local portion of the 8
assessment. 9
(7)[(9)] If more than one (1) local jurisdiction imposes an occupational license fee, the 10
local jurisdiction portion of the assessment shall be prorated proportionately among 11
the taxes imposed by the local jurisdictions unless one (1) local jurisdiction agrees 12
to forgo the receipt of these taxes in an amount equal to the local jurisdiction 13
portion of the wage assessment, in which case no proration shall be made. 14
(8)[(10)] If a full-time employee subject to state tax imposed by KRS 141.020 is 15
already employed by the approved company at a site other than the site of the 16
economic development project, that full-time employee's job shall be deemed to 17
have been created when the full-time employee is transferred to the site of the 18
economic development project if the full-time employee's existing job is filled with 19
a new full-time employee. 20
(9)[(11)] If an approved company elects to impose the assessment as a condition of 21
employment, it shall be authorized to deduct the assessment from each payment of 22
wages to the employee. 23
(10)[(12)] Notwithstanding any other provision of the Kentucky Revised Statutes, if an 24
approved company elects not to deduct the assessment from each payment of wages 25
to the employee, but rather requests a reimbursement of state tax imposed by KRS 26
141.020 or local occupational tax in the aggregate after they have been paid to the 27 UNOFFICIAL COPY 23 RS BR 1120
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state or local jurisdiction, no interest shall be paid by the state or by the local 1
jurisdiction on that reimbursement. 2
(11)[(13)] No credit, or portion thereof, shall be allowed against any occupational 3
license fee imposed by or dedicated solely to the board of education in a local 4
jurisdiction. 5
(12)[(14)] An approved company imposing an assessment shall make its payroll, books, 6
and records available to the authority or the department upon request, and shall file 7
with the authority or department documentation pertaining to the assessment as the 8
authority or department may require. 9
(13)[(15)] Any assessment of the wages of employees of an approved company in 10
connection with their employment at an economic development project shall 11
permanently cease at the expiration of the tax incentive agreement. 12
Section 26. KRS 154.34-010 is amended to read as follows: 13
As used in this subchapter: 14
(1) "Affiliate" has the same meaning as in KRS 154.32-010; 15
(2) "Agribusiness" has the same meaning as in KRS 154.32-010; 16
(3) "Alternative fuel production" has the same meaning as in KRS 154.32-010; 17
(4) "Approved company" means an eligible company approved under KRS 154.34-070 18
for a reinvestment project; 19
(5) "Approved costs" means the eligible equipment and related costs approved by the 20
authority that may be recovered by an approved company through the incentives 21
authorized by this subchapter; 22
(6) "Authority" means the Kentucky Economic Development Finance Authority 23
created by KRS 154.20-010; 24
(7) "Capital lease" has the same meaning as in KRS 154.32-010; 25
(8) "Carbon dioxide or hydrogen transmission pipeline" has the same meaning as in 26
KRS 154.32-010; 27 UNOFFICIAL COPY 23 RS BR 1120
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(9) "Coal severing and processing" means activities resulting in an eligible company 1
being subject to the tax imposed by KRS Chapter 143; 2
(10) "Commonwealth" means the Commonwealth of Kentucky; 3
(11) "Department" means the Department of Revenue; 4
(12) (a) "Eligible company" means any corporation, limited liability company, 5
partnership, limited partnership, sole proprietorship, business trust, or any 6
other entity: 7
1. Employing or intending to employ a minimum of twenty-five (25) 8
persons on a full-time bases; and 9
2. Engaged in or planning to engage in one (1) or more of the following 10
activities: 11
a. Headquarter operations; 12
b. Manufacturing; 13
c. Agribusiness; 14
d. Nonretail service or technology; 15
e. Coal severing and processing; 16
f. Alternative fuel, gasification, energy-efficient alternative fuel, or 17
renewable energy production; 18
g. Carbon dioxide or hydrogen transmission pipeline operations; or 19
h. Hospital operations; 20
at the same facility located and operating within the Commonwealth on 21
a permanent basis for a reasonable period of time preceding the request 22
for approval of a reinvestment project by the authority, including 23
facilities where operations have been temporarily suspended and which 24
meet the standards under KRS 154.34-070 and related administrative 25
regulations promulgated by the authority. 26
(b) "Eligible company" does not include any company for which the primary 27 UNOFFICIAL COPY 23 RS BR 1120
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activity to be conducted within the Commonwealth is: 1
1. Forestry; 2
2. Fishing; 3
3. The provision of utilities; 4
4. Construction; 5
5. Wholesale trade; 6
6. Retail trade; 7
7. Real estate; 8
8. Rental and leasing; 9
9. Educational services; 10
10. Accommodation and food services; or 11
11. Public administration services; 12
(13) (a) "Eligible equipment and related costs" means: 13
1. Obligations incurred for labor and to vendors, contractors, 14
subcontractors, builders, suppliers, deliverymen, and materialmen in 15
connection with the acquisition, construction, equipping, rehabilitation, 16
and installation of a reinvestment project; 17
2. The cost of contract bonds and of insurance of all kinds that may be 18
required or necessary during the course of acquisition, construction, 19
equipping, rehabilitation, and installation of a reinvestment project 20
which is not paid by the vendor, supplier, deliveryman, contractor, or 21
otherwise provided; 22
3. All costs of architectural and engineering services, including estimates, 23
plans and specifications, preliminary investigations, and supervision of 24
construction, rehabilitation and installation, as well as for the 25
performance of all the duties required by or consequent upon the 26
acquisition, construction, equipping, rehabilitation, and installation of a 27 UNOFFICIAL COPY 23 RS BR 1120
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reinvestment project; 1
4. All costs required to be paid under the terms of any contract for the 2
acquisition, construction, equipping, rehabilitation, and installation of a 3
reinvestment project; 4
5. All costs required for the installation of utilities, including but not 5
limited to water, sewer, sewer treatment, gas, electricity, 6
communications, and access to transportation, and including off-site 7
construction of the facilities paid for by the approved company; and 8
6. All other costs of a nature comparable to those described in this 9
paragraph. 10
(b) "Eligible equipment and related costs" does not include costs related to the 11
replacement or repair of existing machinery or equipment resulting from 12
normal wear and usage of the machinery or equipment; 13
(14) "Energy-efficient alternative fuel production" has the same meaning as in KRS 14
154.32-010; 15
(15) "Enhanced incentive counties" has the same meaning as in KRS 154.32-010; 16
(16) "Equipment" means manufacturing machinery equipment, computers, furnishings, 17
fixtures, and other assets installed by the approved company as part of the 18
reinvestment project; 19
(17) "Final approval" means the action taken by the authority designating a preliminarily 20
approved eligible company as an approved company to receive incentives under 21
this subchapter; 22
(18) "Full-time employee" means a person who: 23
(a) Is required to work a minimum of thirty-five (35) hours per week; or 24
(b) Works remotely away from the reinvestment project if all the following 25
conditions are met: 26
1. Is a Kentucky resident; 27 UNOFFICIAL COPY 23 RS BR 1120
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2. Whose job was created or retained as a result of the reinvestment 1
project; and 2
3. Whose payroll is expensed to the reinvestment project; 3
(19) "Gasification production" has the same meaning as in KRS 154.32-010; 4
(20) "Headquarters" has the same meaning as in KRS 154.32-010; 5
(21) "Hospital" has the same meaning as in KRS 154.32-010; 6
(22) "Incentives" means the Kentucky tax credit as prescribed in this subchapter; 7
(23) "Kentucky gross profits" has the same meaning as in KRS 141.0401; 8
(24) "Kentucky gross receipts" has the same meaning as in KRS 141.0401; 9
(25) "Leased project" has the same meaning as in KRS 154.32-010; 10
(26) "Manufacturing" has the same meaning as in KRS 154.32-010; 11
(27) "Nonretail service or technology" has the same meaning as in KRS 154.32-010; 12
(28) "Personal protective equipment" has the same meaning as in KRS 154.32-010; 13
(29) "Preliminary approval" means the action taken by the authority designating an 14
eligible company as a preliminarily approved company; 15
(30) "Reinvestment agreement" means the agreement entered into pursuant to KRS 16
154.34-080 between the authority and an approved company with respect to a 17
reinvestment project; 18
(31) "Reinvestment project" means: 19
(a) A reinvestment in the facility of an eligible company and in the full-time 20
employees of an eligible company through the acquisition, construction, and 21
installation of new equipment and, with respect thereto, the construction, 22
rehabilitation, and installation of improvements to facilities necessary to 23
house the new equipment, including surveys; installation of utilities, including 24
water, sewer, sewage treatment, gas, electricity, communications, and similar 25
facilities; or off-site construction of utility extensions to the boundaries of the 26
real estate on which the facilities are located; 27 UNOFFICIAL COPY 23 RS BR 1120
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(b) The expenditure of at least one million dollars ($1,000,000) in eligible 1
equipment and related costs for leased projects and at least two million five 2
hundred thousand dollars ($2,500,000) in eligible equipment and related costs 3
for all other reinvestment projects; and 4
(c) A reinvestment in a facility in order to allow for the production of vital 5
medications, personal protective equipment, or equipment necessary to 6
produce personal protective equipment; 7
(32) "Renewable energy production" has the same meaning as in KRS 154.32-010; and 8
(33) "Vital medications" has the same meaning as in KRS 154.32-010. 9
Section 27. KRS 154.47-005 is amended to read as follows: 10
As used in this subchapter, unless the context clearly indicates otherwise: 11
(1) ["Approved network" means a flexible manufacturing network approved by the 12
cabinet in accordance with KRS 154.47-040; 13
(2) "Cabinet" means the Cabinet for Economic Development; 14
(3) ]"Center" means the Quicksand Wood Utilization Center located in Breathitt 15
County, Kentucky; 16
(2)[(4)] "Certified tree farmer" means a person whose tree farm is certified by the 17
Kentucky Tree Farm Committee and approved by the American Forest Foundation; 18
(3)[(5) "Flexible manufacturing network" or "network" means an affiliation of 19
secondary wood products businesses as provided by KRS 154.47-040; 20
(6)] "Forest steward" means a person whose forest property is certified as a stewardship 21
forest and approved by the Division of Forestry of the Department for Natural 22
Resources; 23
(4)[(7)] "Procurement area" means an area specified by the applicant in a radius of 24
miles from the applicant's site of operations from which the applicant acquires raw 25
wood products; 26
(5)[(8)] "Secondary wood products industry" means businesses that compose that 27 UNOFFICIAL COPY 23 RS BR 1120
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segment of the forest products industry that manufacture, assemble, process, or 1
produce wood into a finished or semifinished product; however, the "secondary 2
wood products industry" does not include primary wood products operations such 3
as logging, sawmilling, chip milling, veneer milling, or pulp milling. Businesses 4
that include both primary and secondary wood products operations are deemed to 5
be within the secondary wood products industry only in regard to their secondary 6
wood products operations; and 7
(6)[(9)] "Wood industry hub" or "hub" means a system in which the technical and 8
workforce training needs of the secondary wood products industry are integrated. 9
Section 28. KRS 154.60-010 is amended to read as follows: 10
As used in this subchapter: 11
(1) "Authority" means the Kentucky Economic Development Finance Authority; 12
(2) (a) "Average hourly wage" means the per-hour wage earned by a full-time 13
employee, including wages, tips, overtime, bonuses, and commissions, as 14
reflected on the employee's federal form W-2 wage and tax statement. 15
(b) "Average hourly wage" does not include employee benefits as defined in KRS 16
154.32-010, including health insurance and reimbursements; 17
(3) "Base employment" means: 18
(a) For the first application for which credits are approved, the number of full-19
time employees employed on the day prior to the work start date of the new 20
employee filling the earliest eligible position identified on the application; 21
(b) For subsequent applications, the number of full-time employees employed on 22
the day prior to the work start date of the new employee filling the earliest 23
eligible position identified on the initial approved application plus each 24
eligible position for which a credit has been approved; and 25
(c) For applications from businesses involved in mergers, acquisitions, or federal 26
tax identification number changes, base employment may be adjusted by the 27 UNOFFICIAL COPY 23 RS BR 1120
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Cabinet for Economic Development; 1
(4) "Eligible position" means each position that: 2
(a) Is filled by a full-time employee and that increases the total employment of 3
the small business above its base employment; and 4
(b) Carries an average hourly wage of no less than one hundred fifty percent 5
(150%) of the federal minimum wage; 6
(5) "Full-time employee" means a person employed by a small business for at least an 7
average of thirty-five (35) hours per week and subject to the state tax imposed by 8
KRS 141.020; 9
(6) "Qualifying equipment or technology" means equipment or technology that has 10
been approved by the Office of Entrepreneurship and [Small Business ]Innovation; 11
and 12
(7) "Small business" means any business entity organized for profit that has been 13
approved by the Office of Entrepreneurship and [Small Business ]Innovation, 14
including a sole proprietorship, partnership, limited partnership, corporation, 15
limited liability company, joint venture, association, or cooperative, that has fifty 16
(50) or fewer employees working more than thirty-five (35) hours per week, 17
whether within or outside the Commonwealth, at the time it applies. 18
Section 29. KRS 154.60-020 is amended to read as follows: 19
(1) The authority shall develop a Small Business Development Credit Program in 20
consultation with the Office of Entrepreneurship and [Small Business ]Innovation 21
to assist new or existing small businesses operating in the Commonwealth. The 22
nonrefundable credit shall be allowed against the taxes imposed by KRS 141.020 or 23
141.040, and 141.0401. The ordering of credits shall be as provided in KRS 24
141.0205. 25
(2) The authority shall determine the terms, conditions, and requirements for 26
application for the credit, in consultation with the Office of Entrepreneurship and 27 UNOFFICIAL COPY 23 RS BR 1120
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[Small Business ]Innovation, subject to the provisions of subsection (3) of this 1
section. The application shall contain identification information about the number 2
of eligible positions created and filled, a calculation of the base employment of the 3
small business, verification of investment of five thousand dollars ($5,000) or more 4
in qualifying equipment or technology, and other information the authority may 5
specify to determine eligibility for the credit. 6
(3) (a) The maximum amount of credits that may be committed in each fiscal year by 7
the authority and shared between the small business tax credit program and 8
the Selling Farmer Tax Credit Program shall be capped at three million dollars 9
($3,000,000). 10
(b) In order to be eligible to receive final approval for a credit, a small business 11
shall, within the twenty-four (24) month period immediately preceding the 12
application submission date: 13
1. Create and fill one (1) or more eligible positions over the base 14
employment; and 15
2. Invest five thousand dollars ($5,000) or more in qualifying equipment or 16
technology. 17
(c) Each eligible position that is created and filled shall be maintained for twelve 18
(12) months. If a full-time employee filling a newly created eligible position 19
ceases to be employed by the small business for any reason, that employee 20
shall be replaced within forty-five (45) days in order for the eligible position 21
to maintain its eligible status, in addition to meeting all other applicable 22
requirements. 23
(d) The small business shall submit all information necessary for the authority to 24
determine credit eligibility for each year, and the amount of credit for which 25
the small business is eligible. 26
(e) The maximum amount of credit for each small business for each year shall not 27 UNOFFICIAL COPY 23 RS BR 1120
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exceed twenty-five thousand dollars ($25,000). 1
(f) The credit shall be claimed on the tax return for the year during which the 2
credit was approved. Unused credits may be carried forward for up to five (5) 3
years. 4
Section 30. KRS 154.61-010 is amended to read as follows: 5
As used in this subchapter: 6
(1) "Above-the-line production crew" means employees involved with the production 7
of a motion picture or entertainment production whose salaries are negotiated prior 8
to commencement of production, such as actors, directors, producers, and writers; 9
(2) "Animated production" means a nationally distributed feature-length film created 10
with the rapid display of a sequence of images using 2-D or 3-D graphics of 11
artwork or model positions in order to create an illusion of movement; 12
(3) "Approved company" means an eligible company approved for incentives provided 13
under KRS 141.383 and 154.61-020; 14
(4) "Authority" means the Kentucky Economic Development Finance Authority 15
created in KRS 154.20-010; 16
(5) "Below-the-line production crew" means employees involved with the production 17
of a motion picture or entertainment production except above-the-line production 18
crew. "Below-the-line production crew" includes but is not limited to: 19
(a) Casting assistants; 20
(b) Costume design; 21
(c) Extras; 22
(d) Gaffers; 23
(e) Grips; 24
(f) Location managers; 25
(g) Production assistants; 26
(h) Set construction staff; and 27 UNOFFICIAL COPY 23 RS BR 1120
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(i) Set design staff; 1
(6) "Cabinet" means the Cabinet for Economic Development; 2
(7) "Commonwealth" means the Commonwealth of Kentucky; 3
(8)[(7)] "Compensation" means compensation included in adjusted gross income as 4
defined in KRS 141.010; 5
(9)[(8)] "Documentary" means a production based upon factual information and not 6
subjective interjections; 7
(10)[(9)] "Eligible company" means any person that intends to film or produce a 8
motion picture or entertainment production in the Commonwealth; 9
(11)[(10)] "Employee" has the same meaning as in KRS 141.010, and, for purposes of 10
this subchapter, also may include the employees or independent contractors of an 11
approved company or the employees of a loan-out entity engaged by an approved 12
company if they meet the requirements of KRS 141.310; 13
(12)[(11)] "Enhanced incentive county" has the same meaning as in KRS 154.32-010; 14
(13)[(12)] "Feature-length film" means a live-action or animated production that is: 15
(a) More than thirty (30) minutes in length; and 16
(b) Produced for distribution in theaters or via digital format, including but not 17
limited to DVD, Internet, or mobile electronic devices; 18
(14)[(13)] "Industrial film" means a business-to-business film that may be viewed by the 19
public, including but not limited to videos used for training or for viewing at a trade 20
show; 21
(15)[(14)] "Kentucky-based company" has the same meaning as in KRS 164.6011; 22
(16) "Loan-out entity" means a corporation, partnership, limited liability company, or 23
other entity through which an artist or other person is loaned out to perform 24
services for the approved company. A loan-out entity shall be registered and in 25
good standing with the Kentucky Secretary of State. Notwithstanding the business 26
organization, the loan-out entity and all employees of and other persons 27 UNOFFICIAL COPY 23 RS BR 1120
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performing services for the loan-out entity shall be subject to all applicable 1
provisions of the Kentucky personal income tax and any applicable payroll or 2
other tax provisions; 3
(17)[(15)] (a) "Motion picture or entertainment production" means: 4
1. The following if filmed in whole or in part, or produced in whole or in 5
part, in the Commonwealth: 6
a. A feature-length film; 7
b. A television program; 8
c. An industrial film; or 9
d. A documentary; or 10
2. A national touring production of a Broadway show produced in 11
Kentucky. 12
(b) "Motion picture or entertainment production" does not include the filming or 13
production of obscene material or television coverage of news or athletic 14
events; 15
(18)[(16)] "Obscene" has the same meaning as in KRS 531.010; 16
(19)[(17)] "Person" has the same meaning as in KRS 141.010; 17
(20)[(18)] (a) "Qualifying expenditure" means expenditures made in the 18
Commonwealth for the following if directly used in or for a motion picture or 19
entertainment production: 20
1. The production script and synopsis; 21
2. Set construction and operations, wardrobe, accessories, and related 22
services; 23
3. Lease or rental of real property in Kentucky as a set location; 24
4. Photography, sound synchronization, lighting, and related services; 25
5. Editing and related services; 26
6. Rental of facilities and equipment; 27 UNOFFICIAL COPY 23 RS BR 1120
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7. Vehicle leases; 1
8. Food; and 2
9. Accommodations. 3
(b) "Qualifying expenditure" does not include Kentucky sales and use tax paid by 4
the approved company on the qualifying expenditure; 5
(21)[(19)] "Qualifying payroll expenditure" means compensation paid to above-the-line 6
crew and below-the line crew while working on a motion picture or entertainment 7
production in the Commonwealth if the compensation is for services performed in 8
the Commonwealth; 9
(22)[(20)] "Resident" has the same meaning as in KRS 141.010; 10
(23)[(21)] "Secretary" means the secretary of the Cabinet for Economic Development; 11
(24)[(22)] "Tax incentive agreement" means the agreement entered into pursuant to KRS 12
154.61-030 between the authority and the approved company; and 13
(25)[(23)] "Television program" means any live-action or animated production or 14
documentary, including but not limited to: 15
(a) An episodic series; 16
(b) A miniseries; 17
(c) A television movie; or 18
(d) A television pilot; 19
that is produced for distribution on television via broadcast, cable, or any digital 20
format, including but not limited to cable, satellite, Internet, or mobile electronic 21
devices. 22
Section 31. KRS 154.61-020 is amended to read as follows: 23
(1) The purposes of KRS 141.383 and this subchapter are to encourage: 24
(a) The film and entertainment industry to choose locations in the 25
Commonwealth for the filming and production of motion picture or 26
entertainment productions; 27 UNOFFICIAL COPY 23 RS BR 1120
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(b) The development of a film and entertainment industry in Kentucky; 1
(c) Increased employment opportunities for the citizens of the Commonwealth 2
within the film and entertainment industry; and 3
(d) The development of a production and postproduction infrastructure in the 4
Commonwealth for film production and touring Broadway show production 5
facilities containing state-of-the-art technologies. 6
(2) The authority, together with the Department of Revenue, shall administer the tax 7
credit established by KRS 141.383, this section, and KRS 154.61-030. 8
(3) To qualify for the tax incentive provided in subsection (5) of this section, the 9
following requirements shall be met: 10
(a) For an approved company that is also a Kentucky-based company that: 11
1. Films or produces a feature-length film, television program, or industrial 12
film in whole or in part in the Commonwealth, the minimum combined 13
total of qualifying expenditures and qualifying payroll expenditures 14
shall be one hundred twenty-five thousand dollars ($125,000); 15
2. Produces a national touring production of a Broadway show in whole or 16
in part in the Commonwealth, the minimum combined total of 17
qualifying expenditures and qualifying payroll expenditures shall be 18
twenty thousand dollars ($20,000); or 19
3. Films or produces a documentary in whole or in part in the 20
Commonwealth, the minimum combined total of qualifying 21
expenditures and qualifying payroll expenditures shall be ten thousand 22
dollars ($10,000); and 23
(b) For an approved company that is not a Kentucky-based company that: 24
1. Films or produces a feature-length film, television program, or industrial 25
film in whole or in part in the Commonwealth, the minimum combined 26
total of qualifying expenditures and qualifying payroll expenditures 27 UNOFFICIAL COPY 23 RS BR 1120
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shall be two hundred fifty thousand dollars ($250,000); or 1
2. Films or produces a documentary in whole or in part in the 2
Commonwealth or that produces a national touring production of a 3
Broadway show, the minimum combined total of qualifying 4
expenditures and qualifying payroll expenditures shall be twenty 5
thousand dollars ($20,000). 6
(4) Beginning on January 1, 2022, the total tax incentive approved under KRS 141.383 7
and this subchapter shall be limited to seventy-five million dollars ($75,000,000) 8
for calendar year 2022 and each calendar year thereafter. 9
(5) (a) To qualify for the tax incentive available under KRS 141.383 and this 10
subchapter all applicants shall: 11
1. Begin filming or production in Kentucky within six (6) months of 12
approval by[filing an application with] the authority; and 13
2. Complete filming or production in Kentucky within two (2) years of the 14
filming or production start date. 15
(b) The tax credit shall be against the Kentucky income tax imposed under KRS 16
141.020 or 141.040, and the limited liability entity tax imposed under KRS 17
141.0401, and shall be refundable as provided in KRS 141.383. 18
(c) 1. For a motion picture or entertainment production filmed or produced in 19
its entirety in an enhanced incentive county, the amount of the incentive 20
shall be equal to thirty-five percent (35%) of the approved company's: 21
a. Qualifying expenditures; 22
b. Qualifying payroll expenditures paid to resident and nonresident 23
below-the-line production crew; and 24
c. Qualifying payroll expenditures paid to resident and nonresident 25
above-the-line production crew not to exceed one million dollars 26
($1,000,000) in payroll expenditures per employee. 27 UNOFFICIAL COPY 23 RS BR 1120
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2. a. To the extent the approved company films or produces a motion 1
picture or entertainment production in part in an enhanced 2
incentive county and in part a Kentucky county that is not an 3
enhanced incentive county, the approved company shall be eligible 4
to receive the incentives provided in this paragraph for those 5
expenditures incurred in the enhanced incentive county and all 6
other expenditures shall be subject to the incentives provided in 7
paragraph (d) of this subsection. 8
b. The approved company shall track the requisite expenditures by 9
county. If the approved company can demonstrate to the 10
satisfaction of the cabinet that it is not practical to use a separate 11
accounting method to determine the expenditures by county, the 12
approved company shall determine the correct expenditures by 13
county using an alternative method approved by the cabinet. 14
(d) For a motion picture or entertainment production filmed or produced in whole 15
or in part in any Kentucky county other than in an enhanced incentive county, 16
the amount of the incentive shall be equal to: 17
1. Thirty percent (30%) of the approved company's: 18
a. Qualifying expenditures; 19
b. Qualifying payroll expenditures paid to below-the-line production 20
crew that are not residents; and 21
c. Qualifying payroll expenditures paid to above-the-line production 22
crew that are not residents, not to exceed one million dollars 23
($1,000,000) in payroll expenditures per employee; and 24
2. Thirty-five percent (35%) of the approved company's: 25
a. Qualifying payroll expenditures paid to resident below-the-line 26
production crew; and 27 UNOFFICIAL COPY 23 RS BR 1120
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b. Qualifying payroll expenditures paid to resident above-the-line 1
production crew not to exceed one million dollars ($1,000,000) in 2
payroll expenditures per employee. 3
Section 32. KRS 154.61-030 is amended to read as follows: 4
(1) An eligible company shall, at least thirty (30) days prior to incurring any 5
expenditure for which recovery will be sought, file an application for tax incentives 6
with the authority. The application shall include: 7
(a) The name and address of the applicant; 8
(b) Verification that the applicant is a Kentucky-based company; 9
(c) The preliminary production script or a detailed synopsis of the script; 10
(d) The locations where the filming or production will occur; 11
(e) The anticipated date on which filming or production shall begin in Kentucky; 12
(f) The anticipated date on which the applicant will complete incurring 13
expenditures in Kentucky[production will be completed]; 14
(g) The total anticipated qualifying expenditures; 15
(h) The total anticipated qualifying payroll expenditures for resident and 16
nonresident above-the-line crew by county; 17
(i) The total anticipated qualifying payroll expenditures for resident and 18
nonresident below-the-line crew by county; 19
(j) The address of a Kentucky location at which records of the production will be 20
kept; 21
(k) An affirmation that if not for the incentive offered under this subchapter, the 22
eligible company would not film or produce the production in the 23
Commonwealth; and 24
(l) Any other information the authority may require. 25
(2) The authority shall notify the eligible company within thirty (30) days after 26
receiving the application of its status. 27 UNOFFICIAL COPY 23 RS BR 1120
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(3) Upon receipt of the application and any additional information submitted, the 1
authority shall consider all submitted information and, if appropriate, authorize the 2
execution of a tax incentive agreement between the authority and the approved 3
company, if the amount of anticipated tax credit from the application would not 4
make the total tax credit approved for the calendar year exceed the annual tax credit 5
cap under KRS 154.61-020(4). 6
(4) The tax incentive agreement shall include the following provisions: 7
(a) The duties and responsibilities of the parties; 8
(b) A detailed description of the motion picture or entertainment production for 9
which incentives are requested; 10
(c) The anticipated qualifying expenditures and qualifying payroll expenditures 11
for resident and nonresident above-the-line and below-the-line crews by 12
county; 13
(d) The minimum combined total of qualifying expenditures and qualifying 14
payroll expenditures necessary for the approved company to qualify for 15
incentives; 16
(e) That the approved company shall: 17
1. Begin filming or production in Kentucky within six (6) months of 18
approval by[filing an application with] the authority; and 19
2. Complete production in Kentucky within two (2) years of their 20
production start date; 21
(f) That the motion picture or entertainment production shall not include obscene 22
materials and shall not negatively impact the economy or the tourism industry 23
of the Commonwealth; 24
(g) That the execution of the agreement is not a guarantee of tax incentives and 25
that actual receipt of the incentives shall be contingent upon the approved 26
company meeting the requirements established by the tax incentive 27 UNOFFICIAL COPY 23 RS BR 1120
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agreement; 1
(h) That the approved company shall submit to the authority within one hundred 2
eighty (180) days of the completion of production in Kentucky for the motion 3
picture or entertainment production a detailed cost report of the qualifying 4
expenditures, qualifying payroll expenditures, and the latest version of the 5
production script at the time of cost report submission[final script]; 6
(i) That the approved company shall provide the authority with documentation 7
that the approved company or the associated loan-out entity has withheld 8
income tax as required by KRS 141.310 or the individual income tax rate 9
imposed by KRS 141.020 on all qualified payroll expenditures for which an 10
incentive under this subchapter is sought; 11
(j) That, if the authority determines that the approved company has failed to 12
comply with any of its obligations under the tax incentive agreement: 13
1. The authority may deny the incentives available to the approved 14
company; 15
2. Both the authority and the Department of Revenue may pursue any 16
remedy provided under the tax incentive agreement; 17
3. The authority may terminate the tax incentive agreement; and 18
4. Both the authority and the Department of Revenue may pursue any other 19
remedy at law to which it may be entitled; 20
(k) That the authority and the Department of Revenue shall monitor the tax 21
incentive agreement; 22
(l) That the approved company shall provide to the authority and the Department 23
of Revenue all information necessary to monitor the tax incentive agreement; 24
(m) That the authority may share information with the Department of Revenue 25
and the Interim Joint Committee on Appropriations and Revenue or any other 26
entity the authority determines is necessary for the purposes of monitoring 27 UNOFFICIAL COPY 23 RS BR 1120
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and enforcing the terms of the tax incentive agreement; 1
(n) That the motion picture or entertainment production shall contain an 2
acknowledgment that the motion picture or entertainment production was 3
produced or filmed in the Commonwealth of Kentucky; 4
(o) That the approved company shall include screen credits in its final production, 5
indicating the approved company received tax incentives from the 6
Commonwealth of Kentucky; 7
(p) Terms of default; 8
(q) The method and procedures by which the approved company shall request and 9
receive the incentive provided under KRS 141.383 and 154.61-020; 10
(r) That the approved company may be required to pay an administrative fee as 11
authorized under subsection (5) of this section; and 12
(s) Any other provisions deemed necessary or appropriate by the parties to the tax 13
incentive agreement. 14
(5) The authority may require the approved company to pay an administrative fee, the 15
amount of which shall be established by administrative regulation promulgated in 16
accordance with KRS Chapter 13A. The administrative fee shall not exceed one-17
half of one percent (0.5%) of the estimated amount of tax incentive sought or five 18
hundred dollars ($500), whichever is greater. 19
(6) Prior to commencement of activity as provided in a tax incentive agreement, the tax 20
incentive agreement shall be approved by the authority. Following approval by the 21
authority, the tax incentive agreement shall be submitted to the Government 22
Contract Review Committee established by KRS 45A.705 for review, as provided 23
in KRS 45A.695, 45A.705, and 45A.725. 24
(7) The authority shall notify the Department of Revenue following[upon] approval of 25
an approved company. The notification shall include the name of the approved 26
company, the name of the motion picture or entertainment production, the estimated 27 UNOFFICIAL COPY 23 RS BR 1120
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amount of qualifying expenditures, the estimated date on which the approved 1
company will complete filming or production in Kentucky, and any other 2
information required by the department. 3
(8) Within one hundred eighty days (180) days of completion of production in 4
Kentucky for the motion picture or entertainment production, the approved 5
company shall submit to the authority a detailed cost report of: 6
(a) Qualifying expenditures; 7
(b) Qualifying payroll expenditures for resident and nonresident above-the-line 8
crew by county; 9
(c) Qualifying payroll expenditures for resident and nonresident below-the-line 10
crew by county; and 11
(d) The latest version of the production script available at the time of cost report 12
submission[final script]. 13
(9) (a) Cabinet staff[The authority, together with the secretary,] shall review all 14
information submitted for accuracy and shall confirm that all relevant 15
provisions of the tax incentive agreement have been met. 16
(b) Upon confirmation that all requirements of the tax incentive agreement have 17
been met, cabinet staff[the authority and the secretary] shall review the latest 18
version of the production script available at the time of cost report 19
submission[final script], and if they determine that the motion picture or 20
entertainment production does not: 21
1. Contain visual or implied scenes that are obscene; or 22
2. Negatively impact the economy or the tourism industry of the 23
Commonwealth; 24
the authority shall forward the detailed cost report to the Department of 25
Revenue for calculation of the refundable credit. 26
(10) The Department of Revenue shall: 27 UNOFFICIAL COPY 23 RS BR 1120
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(a) Verify that the approved company withheld the proper amount of income tax 1
on qualifying payroll expenditures; and 2
(b) Notify the authority of the total amount of refundable credit available on 3
qualifying expenditures and qualifying payroll expenditures. 4
Section 33. KRS 164.6017 is amended to read as follows: 5
(1) The cabinets shall have all the powers and authority, not explicitly prohibited by 6
statute, necessary and convenient to carry out and effectuate the purposes of KRS 7
164.6019 to 164.6029, including but not limited to: 8
(a) Entering into contracts or agreements necessary or incidental to the 9
performance of its duties, functions, and responsibilities; and 10
(b) Soliciting, borrowing, accepting, receiving, and expending funds from any 11
public or private source, including but not limited to general fund 12
appropriations of the Commonwealth, grants, or contributions of money, 13
property, labor, or other things of value to be used to carry out the programs' 14
operations, functions, and responsibilities; and 15
(c) Notwithstanding the provisions in paragraph (a) of this subsection, the 16
executive director of the Office of Entrepreneurship and [Small Business 17
]Innovation shall approve the contracts issued by the cabinet regarding the 18
structure of programs and funding levels in those programs administered by a 19
science and technology organization and created in KRS 154.12-320. 20
(2) The cabinet may expend money in the funds created in KRS 164.6019 and 21
164.6027 for reasonable administrative expenses directly incurred in carrying out 22
the requirements of KRS 164.6019 to 164.6029. It is the intent of the General 23
Assembly that the funds created in KRS 164.6019 and 164.6027 be used, to the 24
fullest extent possible, to directly fund project costs. It is also the intent of the 25
General Assembly that the first priority of expenditures of any excess revenues 26
generated from the funds created in KRS 164.6019 and 164.6027 is to replenish 27 UNOFFICIAL COPY 23 RS BR 1120
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general fund appropriations for those same purposes. 1
(3) The cabinet shall contract with a science and technology organization to administer 2
the programs created in KRS 164.6021 and 164.6029. The cabinet shall work with 3
the science and technology organization to adopt best practices for state investment 4
funds, and shall oversee and approve the application criteria, the process for 5
submission of an application, the types of equity investments permitted, the amount 6
of investments that should be made in each fiscal year, the category or categories of 7
investments that shall be made consistent with the cabinet's strategic plans, and the 8
structure and type of outside expertise or peer review used in the application review 9
process for the programs created in KRS 164.6021 and 164.6029. 10
(4) No member of the cabinet or the science and technology organization or other 11
administering entity, or their employees or outside experts or their closely related 12
family members, shall directly or indirectly financially benefit in any award, 13
contract, or agreement under the programs. 14
(5) The cabinet shall submit an annual report prior to November 1 to the Governor and 15
the General Assembly detailing its work related to the programs created in KRS 16
164.6021 and 164.6029. The annual report shall indicate progress made through 17
investments, and shall include but not be limited to reporting on the progress made 18
in achieving each program's purposes, qualitative and quantitative information 19
concerning the applications received, projects approved and undertaken, companies 20
served, and funding amounts invested in each project or program, as appropriate, 21
and findings and recommendations to increase each program's effectiveness in 22
achieving its purposes. 23
(6) All records related to the administration of the programs created in KRS 164.6021 24
and 164.6029 shall be deemed property of the cabinet and shall be deemed open 25
records and subject to public inspection under KRS 61.870 to 61.884. Any research 26
that involves or is a patent, trade secret, or other legally protectable interest shall be 27 UNOFFICIAL COPY 23 RS BR 1120
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exempt from inspection until such time as the intellectual property rights have been 1
fully protected. 2
Section 34. KRS 164.6021 is amended to read as follows: 3
(1) The Cabinet for Economic Development shall manage the Kentucky enterprise fund 4
to provide capital to small and medium-size, Kentucky-based companies to 5
undertake feasibility, concept development, research and development, or 6
commercialization work. 7
(2) The purpose of the Kentucky enterprise fund is to: 8
(a) Accelerate knowledge transfer and technological innovation, improve 9
economic competitiveness, and spur economic growth in Kentucky-based 10
companies; 11
(b) Support feasibility, concept development, research and development, or 12
commercialization activities that have clear potential to lead to commercially 13
successful products, processes, or services within a reasonable period of time; 14
(c) Stimulate growth-oriented enterprises within the Commonwealth; 15
(d) Encourage partnerships and collaborative projects between private enterprises, 16
Kentucky's colleges and universities, and research organizations; 17
(e) Promote research and development and commercialization activities that are 18
market-oriented; and 19
(f) Support small and medium-sized companies. 20
(3) The Kentucky enterprise fund shall be used to fund qualified companies in 21
accordance with this section as follows: 22
(a) Grants of up to fifty thousand dollars ($50,000) for companies exploring the 23
feasibility of technology commercialization or projects related to feasibility 24
studies, such as incubator and accelerator programs; 25
(b) Funding of up to two hundred fifty thousand dollars ($250,000) for companies 26
in the concept development phase of technology commercialization; 27 UNOFFICIAL COPY 23 RS BR 1120
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(c) Funding of up to five hundred thousand dollars ($500,000) for companies 1
advancing and promoting the program goals, as outlined in subsection (2) of 2
this section; and 3
(d) For new investments made on or after July 1, 2021, no qualified company can 4
receive a total investment from the fund in excess of up to five hundred 5
thousand dollars ($500,000). 6
(4) Beginning July 1, 2021, the cabinet shall allocate at least twenty percent (20%) of 7
the annual allotment of funds for the Kentucky enterprise fund to qualified 8
companies located in rural or enhanced incentive counties, as certified under KRS 9
154.32-050, and at least twenty percent (20%) of the annual allotment of funds to 10
qualified companies located in Opportunity Zones, as designated by the 11
Commonwealth and certified by the Secretary of the United States Treasury. 12
(5) For all funding totaling more than thirty thousand dollars ($30,000), the science and 13
technology organization or any entity designated by the executive director of the 14
Office of Entrepreneurship and [Small Business ]Innovation shall receive an equity 15
interest in the qualified company, such as a general or limited partnership interest, 16
limited liability company interest, common or preferred stock with or without 17
voting rights and without regard to seniority position, forms of subordinate or 18
convertible unsecured debt, or both, with warrants, rights, or other means of equity 19
conversion attached, a near equity interest such as a simple agreement for future 20
equity or "SAFE agreement", or other convertible debt instruments that are 21
determined to qualify as an adequate investment interest by the executive director 22
of the Office of Entrepreneurship and [Small Business ]Innovation. 23
Section 35. KRS 164.6023 is amended to read as follows: 24
(1) The science and technology organization shall have the authority, upon approval by 25
the cabinet, to review applications, qualify companies, and certify qualified 26
companies to receive funding from the Kentucky enterprise fund. 27 UNOFFICIAL COPY 23 RS BR 1120
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(2) The science and technology organization shall develop application criteria and an 1
application process subject to the following limitations. The proposed project shall 2
be likely to: 3
(a) Produce a measurable result and be technically sound; 4
(b) Lead to innovative technology or new knowledge; 5
(c) Lead to commercially successful products, processes, or services within a 6
reasonable period of time; or 7
(d) Show significant potential for stimulating economic growth and a reasonable 8
probability to enhance employment opportunities within the Commonwealth. 9
(3) The applicant shall provide to the science and technology organization an 10
application that shall include but not be limited to the following information: 11
(a) Verification that the applicant is an eligible company that meets the definition 12
of a Kentucky-based company and medium-size company or small company; 13
(b) A technology description and plan that is sufficient for outside expert review; 14
(c) A detailed financial analysis that includes the commitment of resources by the 15
applicant and others; 16
(d) Sufficient detail concerning proposed project partners, type and amount of 17
work to be performed and financing to be contributed by each partner, and 18
expected product or service with estimated costs to be reflected in the 19
negotiated contract or agreement; and 20
(e) A statement of the economic development potential of the project. 21
(4) The science and technology organization shall conduct an independent review with 22
the use of outside experts to evaluate each application. Following the application 23
review, the science and technology organization shall make a determination of the 24
application and may determine that the applicant is a qualified company as defined 25
in KRS 164.6011. 26
(5) Upon a qualified company's presentation of a legal agreement or contract meeting 27 UNOFFICIAL COPY 23 RS BR 1120
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the conditions under subsection (6) of this section, the science and technology 1
organization shall present the qualified company, the project partners, if any, and 2
the college or university in the Commonwealth, if any, with a certification 3
authorizing funding. 4
(6) Prior to receiving certification authorizing funding from the science and technology 5
organization, the qualified company shall: 6
(a) Negotiate an agreement and funding contract with a college or university in 7
the Commonwealth, if any, and with a project partner, if any, that is 8
satisfactory to the science and technology organization, to undertake the 9
commercialization work; and 10
(b) Provide assurance to the science and technology organization that the college 11
or university and the qualified company have negotiated the ownership and 12
disposition of patents, royalties, all other intellectual property rights, and 13
equity or related position relating to the contract between the qualifying 14
company and the college or university; 15
unless the requirement to partner with a college or university is recommended to be 16
waived by the science and technology organization. 17
(7) Prior to certifying a qualified company, the science and technology organization 18
may negotiate with the qualified company the ownership and disposition of patents, 19
royalties, all other intellectual property rights, and an equity, near equity such as a 20
simple agreement for future equity or "SAFE agreement", convertible debt, or 21
similar investment format that is approved by the executive director of the Office of 22
Entrepreneurship and [Small Business ]Innovation on behalf of the Kentucky 23
enterprise fund for the sole purpose of reinvesting and sustaining a revolving fund 24
to carry out the provisions of KRS 164.6021 and 164.6023. 25
(8) The science and technology organization, upon approval by the cabinet, shall set 26
forth guidelines as to when and how all areas of the state will be notified about the 27 UNOFFICIAL COPY 23 RS BR 1120
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program's availability and a program schedule, including but not limited to the 1
following: 2
(a) A review cycle including: 3
1. A deadline for submission of applications at least biannually; and 4
2. A deadline for reviewing applications of no more than one hundred 5
twenty (120) days after the application submission deadline; and 6
(b) A deadline, from the date an applicant is determined to be a qualified 7
company, by which certification shall be made. If certification is not made by 8
that deadline the funding voucher award is made void. 9
Section 36. KRS 174.205 is amended to read as follows: 10
The Water Transportation Advisory Board shall: 11
(1) Advise the Transportation Cabinet, the Cabinet for Economic Development, the 12
Governor's Office, and the General Assembly on matters relating to water 13
transportation; 14
(2) Recommend action to enable the Commonwealth to make best use of its waterways 15
and riverports for future economic growth; 16
(3) Assist in defining the duties and functions of positions within state government 17
responsible for water transportation; 18
(4) Recommend criteria for setting priorities for funding riverport marketing initiatives[ 19
under the riverport marketing assistance trust fund established in KRS 154.80-140]; 20
(5) Evaluate applications submitted by riverports for grants under the riverport 21
marketing assistance trust fund and make recommendations to the granting 22
authority on the disbursement of those funds; 23
(6) Recommend criteria for setting priorities for funding riverport improvements under 24
the riverport financial assistance trust fund established in KRS 174.210; and 25
(7) Evaluate applications submitted by riverports for grants under the riverport 26
financial assistance trust fund and make recommendations to the granting authority 27 UNOFFICIAL COPY 23 RS BR 1120
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on the disbursement of those funds. 1
Section 37. KRS 141.0205 is amended to read as follows: 2
If a taxpayer is entitled to more than one (1) of the tax credits allowed against the tax 3
imposed by KRS 141.020, 141.040, and 141.0401, the priority of application and use of 4
the credits shall be determined as follows: 5
(1) The nonrefundable business incentive credits against the tax imposed by KRS 6
141.020 shall be taken in the following order: 7
(a) The limited liability entity tax credit permitted by KRS 141.0401; 8
(b) The economic development credits computed under KRS 141.347, 141.381, 9
141.384, 141.3841, 141.400, [141.401, ]141.403, 141.407, 141.415, 154.12-10
207, and 154.12-2088; 11
(c) The qualified farming operation credit permitted by KRS 141.412; 12
(d) The certified rehabilitation credit permitted by KRS 171.397(1)(a); 13
(e) The health insurance credit permitted by KRS 141.062; 14
(f) The tax paid to other states credit permitted by KRS 141.070; 15
(g) The credit for hiring the unemployed permitted by KRS 141.065; 16
(h) The recycling or composting equipment credit permitted by KRS 141.390; 17
(i) The tax credit for cash contributions in investment funds permitted by KRS 18
154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 19
154.20-258; 20
(j) The research facilities credit permitted by KRS 141.395; 21
(k) The employer High School Equivalency Diploma program incentive credit 22
permitted under KRS 151B.402; 23
(l) The voluntary environmental remediation credit permitted by KRS 141.418; 24
(m) The biodiesel and renewable diesel credit permitted by KRS 141.423; 25
(n) The clean coal incentive credit permitted by KRS 141.428; 26
(o) The ethanol credit permitted by KRS 141.4242; 27 UNOFFICIAL COPY 23 RS BR 1120
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(p) The cellulosic ethanol credit permitted by KRS 141.4244; 1
(q) The energy efficiency credits permitted by KRS 141.436; 2
(r) The railroad maintenance and improvement credit permitted by KRS 141.385; 3
(s) The Endow Kentucky credit permitted by KRS 141.438; 4
(t) The New Markets Development Program credit permitted by KRS 141.434; 5
(u) The distilled spirits credit permitted by KRS 141.389; 6
(v) The angel investor credit permitted by KRS 141.396; 7
(w) The film industry credit permitted by KRS 141.383 for applications approved 8
on or after April 27, 2018, but before January 1, 2022; 9
(x) The inventory credit permitted by KRS 141.408; and 10
(y) The renewable chemical production credit permitted by KRS 141.4231. 11
(2) After the application of the nonrefundable credits in subsection (1) of this section, 12
the nonrefundable personal tax credits against the tax imposed by KRS 141.020 13
shall be taken in the following order: 14
(a) The individual credits permitted by KRS 141.020(3); 15
(b) The credit permitted by KRS 141.066; 16
(c) The tuition credit permitted by KRS 141.069; 17
(d) The household and dependent care credit permitted by KRS 141.067; 18
(e) The income gap credit permitted by KRS 141.066; and 19
(f) The Education Opportunity Account Program tax credit permitted by KRS 20
141.522. 21
(3) After the application of the nonrefundable credits provided for in subsection (2) of 22
this section, the refundable credits against the tax imposed by KRS 141.020 shall be 23
taken in the following order: 24
(a) The individual withholding tax credit permitted by KRS 141.350; 25
(b) The individual estimated tax payment credit permitted by KRS 141.305; 26
(c) The certified rehabilitation credit permitted by KRS 171.3961, 171.3963, and 27 UNOFFICIAL COPY 23 RS BR 1120
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171.397(1)(b); 1
(d) The film industry tax credit permitted by KRS 141.383 for applications 2
approved prior to April 27, 2018, or on or after January 1, 2022; 3
(e) The development area tax credit permitted by KRS 141.398; and 4
(f) The decontamination tax credit permitted by KRS 141.419. 5
(4) The nonrefundable credit permitted by KRS 141.0401 shall be applied against the 6
tax imposed by KRS 141.040. 7
(5) The following nonrefundable credits shall be applied against the sum of the tax 8
imposed by KRS 141.040 after subtracting the credit provided for in subsection (4) 9
of this section, and the tax imposed by KRS 141.0401 in the following order: 10
(a) The economic development credits computed under KRS 141.347, 141.381, 11
141.384, 141.3841, 141.400, [141.401, ]141.403, 141.407, 141.415, 154.12-12
207, and 154.12-2088; 13
(b) The qualified farming operation credit permitted by KRS 141.412; 14
(c) The certified rehabilitation credit permitted by KRS 171.397(1)(a); 15
(d) The health insurance credit permitted by KRS 141.062; 16
(e) The unemployment credit permitted by KRS 141.065; 17
(f) The recycling or composting equipment credit permitted by KRS 141.390; 18
(g) The coal conversion credit permitted by KRS 141.041; 19
(h) The enterprise zone credit permitted by KRS 154.45-090, for taxable periods 20
ending prior to January 1, 2008; 21
(i) The tax credit for cash contributions to investment funds permitted by KRS 22
154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 23
154.20-258; 24
(j) The research facilities credit permitted by KRS 141.395; 25
(k) The employer High School Equivalency Diploma program incentive credit 26
permitted by KRS 151B.402; 27 UNOFFICIAL COPY 23 RS BR 1120
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(l) The voluntary environmental remediation credit permitted by KRS 141.418; 1
(m) The biodiesel and renewable diesel credit permitted by KRS 141.423; 2
(n) The clean coal incentive credit permitted by KRS 141.428; 3
(o) The ethanol credit permitted by KRS 141.4242; 4
(p) The cellulosic ethanol credit permitted by KRS 141.4244; 5
(q) The energy efficiency credits permitted by KRS 141.436; 6
(r) The ENERGY STAR home or ENERGY STAR manufactured home credit 7
permitted by KRS 141.437; 8
(s) The railroad maintenance and improvement credit permitted by KRS 141.385; 9
(t) The railroad expansion credit permitted by KRS 141.386; 10
(u) The Endow Kentucky credit permitted by KRS 141.438; 11
(v) The New Markets Development Program credit permitted by KRS 141.434; 12
(w) The distilled spirits credit permitted by KRS 141.389; 13
(x) The film industry credit permitted by KRS 141.383 for applications approved 14
on or after April 27, 2018, but before January 1, 2022; 15
(y) The inventory credit permitted by KRS 141.408; 16
(z) The renewable chemical production tax credit permitted by KRS 141.4231; 17
and 18
(aa) The Education Opportunity Account Program tax credit permitted by KRS 19
141.522. 20
(6) After the application of the nonrefundable credits in subsection (5) of this section, 21
the refundable credits shall be taken in the following order: 22
(a) The corporation estimated tax payment credit permitted by KRS 141.044; 23
(b) The certified rehabilitation credit permitted by KRS 171.3961, 171.3963, and 24
171.397(1)(b); 25
(c) The film industry tax credit permitted by KRS 141.383 for applications 26
approved prior to April 27, 2018, or on or after January 1, 2022; and 27 UNOFFICIAL COPY 23 RS BR 1120
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(d) The decontamination tax credit permitted by KRS 141.419. 1
Section 38. KRS 154.20-170 is amended to read as follows: 2
(1) Industrial entities, agricultural business entities, business enterprises, or private 3
sector firms which are members of a business network within the meaning of KRS 4
154.1-010 and businesses that compose the secondary wood products industry as 5
defined in KRS 154.47-005(5)[(8)], shall be given priority consideration under state 6
economic development loan, grant, and incentive programs administered by the 7
Kentucky Economic Development Finance Authority. 8
(2) Notwithstanding the provisions of subsection (1) of this section, highest priority 9
consideration under state economic development loan, grant, and incentive 10
programs administered by the authority shall be given to those projects that are 11
located in counties of Kentucky which have had an average countywide rate of 12
unemployment of fifteen percent (15%) or greater in the most recent twelve (12) 13
consecutive months for which unemployment figures are available, on the basis of 14
the final unemployment figures calculated by the Department of Workforce 15
Development in the Education and Labor Cabinet. 16
Section 39. The following KRS sections are repealed: 17
141.401 Tax credit and income tax for companies with economic development projects 18
in qualified zones -- Computation of net income -- Administrative regulations. 19
154.12-276 Office of Workforce, Community Development, and Research -- Executive 20
director -- Duties of office. 21
154.23-005 Legislative findings for KRS 154.23-005 to 154.23-079. 22
154.23-010 Definitions for KRS 154.23-005 to 154.23-079. 23
154.23-015 Certification of qualified zones -- Use of census tracts -- Decertification of 24
census tracts -- Replacement of decertified noncontiguous tract with other 25
qualifying census tract. 26
154.23-020 Amendment of boundaries of qualified zones. 27 UNOFFICIAL COPY 23 RS BR 1120
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154.23-025 Standards for approval of companies and economic development projects -- 1
Commitments to be made by eligible companies. 2
154.23-030 Preliminary approval of eligible companies -- Designation of approved 3
companies. 4
154.23-035 Tax incentive agreements between authority and approved companies -- 5
Time limits -- Tax credits and assessments as inducements for approved companies 6
-- Assignment of tax incentive agreement -- Documentation of expenditures -- 7
Suspension of inducements -- Authority's remedies in case of failure to comply -- 8
Activation date -- Costs of counsel. 9
154.23-040 Service and technology agreements -- Time limits for meeting minimum 10
investment and employment requirements -- Inducements during term of 11
agreements -- Suspension or termination of inducements -- Approved costs -- 12
Reduction of inducements. 13
154.23-045 Application of eligible company to become approved company and expand 14
existing business -- Base levels for eligible credits -- Exemption of employees from 15
assessment -- Increase in number of employees at site -- Tax -- Additional 16
agreements. 17
154.23-050 Tax credit for approved company engaged in manufacturing, service, or 18
technology activities -- Reports by Department of Revenue to authority. 19
154.23-055 Assessment based on employee's gross wages -- Amount -- Credits against 20
taxes and fees -- Prorating of credits and assessments against occupational license 21
fees -- Availability of records -- Approval of assessment by local government -- 22
Cessation of assessments. 23
154.23-060 Applications for grant funds -- Approved company may apply inducements 24
toward purchase price of property and improvements. 25
154.23-065 Wage subsidies for recipients of Kentucky Transitional Assistance Program. 26
154.23-070 Administrative regulations. 27 UNOFFICIAL COPY 23 RS BR 1120
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154.23-075 Exemption from personal liability for directors and officers of authority. 1
154.23-079 Short title. 2
154.23-080 Deadline for new applications -- Governing law for outstanding approved 3
projects. 4
154.47-040 Flexible manufacturing networks. 5
154.47-065 Cabinet may establish benchmarks for performance measurement -- 6
Monitoring by Division of Forestry. 7
154.80-140 Riverport marketing assistance trust fund -- Contributions -- Purpose -- 8
Grants -- Semiannual report. 9
154.80-310 Kentucky Waterway Marina Development Program -- Powers of cabinet. 10