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Regular Session, 2012
SENATE BILL NO. 548
BY SENATORS RISER, ALARIO, MORRELL, GARY SMITH AND WALSWORTH
ECONOMIC DEVELOPMENT. Creates the Competitive Projects Payroll Incentive
Program which grants rebates of up to 15% of qualifying payroll to certain businesses and
rebates of sales tax or capital expenditures if DED determines it will result in significant
positive economic benefit to the state. (7/1/12)
AN ACT1
To enact Chapter 54 of Title 51 of the Louisiana Revised Statutes of 1950, to be comprised2
of R.S. 51:3111, relative to the creation of the Competitive Projects Payroll Incentive3
Program; to provide for contract for the payment of rebates to certain qualified4
businesses; to provide for procedures and requirements for the execution of such5
contracts and the payment or repayment of such rebates; and to provide for related6
matters.7
Be it enacted by the Legislature of Louisiana:8
Section 1. Chapter 54 of Title 51 of the Louisiana Revised Statutes of 1950,9
comprised of R.S. 51:3111 is hereby enacted to read as follows: 10
CHAPTER 54. COMPETITIVE PROJECTS PAYROLL11
INCENTIVE PROGRAM12
§3111. Competitive Projects Payroll Incentive Program13
A. Definitions. For purposes of this Section, the following words or terms14
as used in this Chapter shall have the following meaning, unless a different15
meaning appears from the context:16
(1) "Basic health benefits plan" means coverage for basic hospital care,17 SB NO. 548
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coverage for physician care, and coverage for health care which is determined1
by the Department of Economic Development to have a value of at least one2
dollar and twenty-five cents per hour and which is the same coverage as is3
provided to employees employed in a bona fide executive, administrative, or4
professional capacity by the employer who are exempt from the minimum wage5
and maximum hour requirements of the federal Fair Labor Standards Act, 296
U.S.C.A. §201, et seq.7
(2) "Board" means the Board of Commerce and Industry.8
(3) "Business" means any individual, firm, joint venture, association,9
corporation, estate, partnership, business trust, receiver, syndicate, or any other10
legal business entity.11
(4) "Department" means the Department of Economic Development.12
(5) "Headquarter jobs" means permanent full-time executive,13
administrative, or professional jobs based at a principal or regional office14
located in Louisiana, in which are located the principal or regional executive15
officers normally constituting a principal or regional headquarters providing16
corporate governance. Such principal or regional executive officers include but17
shall not be limited to chief executive officer, chief operating officer, and other18
senior level officers or appropriate regional equivalents.19
(6) "New Jobs" means permanent full-time direct new jobs based at the20
facilities designated in the contract and filled by residents of the state.21
(7) "New payroll" means payment by the business to its employees for22
new jobs, exclusive of benefits and defined as wages under Louisiana23
Employment Security Law (La. R.S. 23:1472(20)).24
(8) "Program" means the Competitive Projects Payroll Incentive25
Program.26
(9) "Qualified business" means a business certified by the secretary as27
meeting the eligibility requirements of Subsection B of this Section, approved28
by the board to participate in the program, and executing a contract providing29 SB NO. 548
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the terms and conditions for its participation.1
(10) "Secretary" means the secretary of the Department of Economic2
Development.3
(11) "Shared services center jobs" shall mean jobs of full time employees4
located in the state of Louisiana which are based at a business located in5
Louisiana that performs specific corporate operational tasks for the business,6
its affiliates, or customers, such as accounting, human resources, payroll, or7
purchasing.8
(12) "Significant positive economic benefit" means that net positive tax9
revenues to be generated as a result of the project taking into account both10
direct, indirect, and induced impacts based on standard economic impact11
methodology utilized by the department and the value of the rebate and any12
other state tax and financial incentives that are used by the department to13
secure the qualified business.14
B.(1) Eligibility Requirements. A business shall be eligible for15
participation in the program if all of the following requirements are met:16
(a) At least fifty percent of the total annual sales of the business from a17
Louisiana site or sites is to out-of-state customers or buyers, in-state customers18
or buyers but the product or service is resold by the purchaser to an out-of-state19
customer or buyer for ultimate use, or the federal government, or any20
combination thereof.21
(b) The activities of the business at a Louisiana site or sites includes22
corporate headquarters, clean technology, next generation automotive,23
aerospace, destination healthcare, research and development operations,24
pharmaceutical manufacturing, renewable energy, or other business sector25
targeted by the secretary as a focus of the department's economic development26
efforts.27
(c) The business offers, or will offer within ninety days of the effective28
date of qualifying for the incentive rebates pursuant to the provisions of this29 SB NO. 548
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Chapter, a basic health benefits plan to the individuals it employs as provided1
in Paragraph A(1) of this Section.2
(2) The secretary, at his discretion, may include sales by affiliates of the3
business in determining the percentage of sales meeting the requirements of4
Paragraph (1) of this Subsection.5
(3) With the exception of a business providing at least twenty-five new6
headquarter jobs or shared service center jobs, a business primarily engaged7
in retail sales, real estate, professional services, natural resource extraction or8
exploration, financial services, or venture capital funds, shall not be eligible for9
this program. No business engaged in gaming or gambling shall be eligible for10
the program.11
C.(1) Applications. At the invitation of the secretary, a business may12
apply for a contract by submitting to the department such certified statements13
and substantiating documents as the department may require.14
(2) Certification. The secretary may certify eligibility of the business and15
request board approval of its participation in the program on terms and16
conditions specified by the secretary in a proposed contract, if the secretary17
determines that:18
(a) The business meets the eligibility requirements provided for in19
Subsection B of this Section.20
(b) Participation in the program is needed in a highly competitive site21
selection situation to encourage the business to locate or expand in the state.22
(c) Securing the project will result in a significant positive economic23
benefit to the state.24
(3) Approval; contract administration.25
(a)(i) Upon the board's approval of participation in the program by the26
business, the secretary shall execute the contract with the business, and provide27
a copy to the Department of Revenue prior to the payment of any benefits under28
the contract.29 SB NO. 548
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(ii) No new contract shall be approved on or after July 1, 2017, but1
contracts existing on that date may continue and be renewed.2
(b) The contract shall provide for a rebate to the qualified business3
based upon new payroll, and shall include the following provisions:4
(i) The percentage of new payroll eligible for rebate, up to a maximum5
of fifteen percent.6
(ii) The maximum amount of new payroll eligible for rebate.7
(iii) The number of new jobs and amount of new payroll required to be8
created and maintained, and any other performance obligations required to be9
met in order to remain qualified for participation in the program.10
(iv) Designation of the facility or facilities eligible for participation in the11
program.12
(v) Monitoring of performance and consequences for failure to perform13
and other contract violations.14
(vi) An initial term of the contract, which may be up to five years, and15
any renewal term available at the discretion of the secretary, which may be up16
to an additional five years.17
(4)(a) In addition, a qualified business shall be entitled to either the same18
sales and use tax rebates authorized in R.S. 51:1787 for capital expenditures for19
the facility or facilities designated in the contract, or the project facility expense20
rebate provided for in Subparagraph (c) of this Paragraph, if the employer21
meets the enterprise zone program hiring requirements and all other22
limitations, procedures, and requirements in R.S. 51:1787.23
(b) Any qualified business which receives a contract pursuant to this24
Chapter shall also be entitled to a rebate of local sales and use taxes under the25
same procedures and requirements provided for in R.S. 51:1787 for approval26
of rebates for the sales and use taxes of political subdivisions and law27
enforcement districts, including but not limited to the requirement that any28
such request for a rebate of local sales and use taxes be accompanied by an29 SB NO. 548
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endorsement resolution approved by the governing authority of the appropriate1
political subdivision or law enforcement district in whose jurisdiction the2
qualified business is or will be located.3
(c) In lieu of the sales and use tax rebate, a qualified business shall be4
entitled to a project facility expense rebate equal to one and one-half percent of5
the amount of qualified capital expenditures for the facility or facilities6
designated in the contract. For purposes of this Subparagraph, the term7
"qualified capital expenditures" means amounts classified as capital8
expenditures for federal income tax purposes related to the project plus9
exclusions from capitalization provided for in Internal Revenue Code Section10
263(a)(1)(A) through (L), minus the capitalized cost of land, capitalized leases11
of land, capitalized interest, capitalized costs of machinery and equipment, and12
the capitalized cost for the purchase of an existing building. When a qualified13
business purchases an existing building and capital expenditures are used to14
rehabilitate the building, the costs of the rehabilitation only shall be considered15
qualified capital expenditures. Additionally, a qualified business shall be16
allowed to increase its qualified capital expenditures to the extent the qualified17
business' capitalized basis is properly reduced by claiming a federal credit. A18
qualified business earns the project facility expense rebate in the qualified19
business' fiscal year in which the project is placed in service, but the qualified20
business may not claim the project facility expense rebate until the Department21
of Economic Development signs a project completion report or such other time22
as provided for by rule or regulation. The project completion report for the23
project facility expense rebate shall adhere to the same requirements found in24
R.S. 51:1787(A)(1)(a)(ii) for the sales and use tax rebate.25
D. Annual Certification of Eligibility. (1) The approved qualified26
business shall file applications for annual rebates with the Department of27
Economic Development. A corporate officer of the qualified business must sign28
documentation to certify its continued eligibility for the rebates, as provided in29 SB NO. 548
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Subsection B of this Section. The qualified business may be subjected to a1
limited audit by the Department of Economic Development to verify such2
eligibility at the company's expense. The approved contract between the3
qualified business and the Department of Economic Development shall4
authorize the continued rebate as long as the business remains a qualified5
business as defined in this Section and complies with the terms and performance6
obligations of its contract, as they existed at the time of such approval. If a7
qualified business fails to maintain the eligibility requirements for participation8
in the program or fails to meet all performance obligations of the contract, the9
secretary may suspend or terminate its participation in the program.10
(2) Upon approval of the application for annual rebates, the department11
shall send a certification letter to the Department of Revenue for payment of the12
rebate containing the proper entity to which the rebate should be issued and the13
amount of the rebate to be issued. The Department of Revenue may require the14
business to submit any such additional information as may be necessary to15
properly issue the rebate. Payment shall be made from the current collections16
of the taxes imposed by Title 47 of the Louisiana Revised Statutes of 1950, as17
amended.18
E. A taxpayer shall not receive any other incentive administered by the19
Department of Economic Development for any expenditures or jobs for which20
the taxpayer has received a rebate pursuant to this Section.21
F. The department may promulgate rules and regulations after approval22
of the House Committee on Ways and Means and the Senate Committee on23
Revenue and Fiscal Affairs meeting jointly within forty-five days of the24
publication of such proposed rules and regulations in the State Register.25
Section 2. This Act shall become effective on July 1, 2012; if vetoed by the governor26
and subsequently approved by the legislature, this Act shall become effective on July 1,27
2012, or on the day following such approval by the legislature, whichever is later.28 SB NO. 548
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The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Riley Boudreaux.
DIGEST
Riser (SB 548)
Proposed law creates the Competitive Projects Payroll Incentive Program which provides
a "qualified business" a contract to receive the following rebates under a five-year contract,
renewable for another five years:
1. A rebate of up to 15% of "new payroll" determined to be eligible for such rebate by
the secretary of the Department of Economic Development [DED] if the number of
new jobs and amount of "new payroll" required to be created and maintained, along
with any other performance obligations under the contract are met.
"New payroll" is defined as payment by the business to its employees for new jobs,
exclusive of benefits and defined as wages under Louisiana Employment Security
Law (La. R.S. 23:1472(20)).
2. The same rebates of state and local sales and use tax rebates authorized for
Enterprise Zone-eligible business purchases of material used in the construction or
improvement of, or addition to, a building and machinery and equipment used in the
enterprise as provided in R.S. 51:1787 for the qualified business' expenditures on its
facility at the facility or facilities designated by the department in the contract.
Or
In lieu of the sales and use tax rebate, a "project facility expense rebate" equal to one
and one-half percent of the amount of qualified business' "qualified capital
expenditures" on the facility or facilities designated by the department in the
contract.
"Qualified capital expenditures" is defined as amounts classified as capital
expenditures for federal income tax purposes plus certain exclusions from
capitalization in IRC §263(a)(1)(A) - (L), minus the capitalized cost or leases of
land, capitalized interest, capitalized costs of machinery and equipment, and the
capitalized cost for the purchase of an existing building. Only the capital
expenditures for rehabilitation of an existing building are considered "qualified
capital expenditures". Additionally, qualified capital expenditures may be increased
to the extent the qualified business' capitalized basis is properly reduced by claiming
a federal credit.
Proposed law defines a "qualified business" eligible for the rebate contracts as businesses
meeting all of the following criteria:
1. Businesses that the DED determines will have the following activities at its
Louisiana site: corporate headquarters; clean technology; next-generation
automotive; aerospace; destination healthcare; research and development operations;
pharmaceutical manufacturing; renewable energy; or other business sectors targeted
by the secretary as a focus of the department's economic development efforts.
2. Businesses which have, or will have within one year, sales of at least 50% of its total
sales to out-of-state customers or buyers, to in-state customers or buyers if the
product or service is resold by the purchaser to an out-of-state customer or buyer for
ultimate use, to the federal government or any combination thereof. The secretary
of DED, at his discretion, may include sales of affiliates of the business in
determining the 50% sale requirement. SB NO. 548
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3. Businesses which offer, or will offer within 90 days of the effective date of
qualifying for the rebates a "basic health benefits plan" to the individuals it employs.
"Basic health benefits plan" is defined in the same manner as for Enterprise Zone
employers, meaning coverage for basic hospital care, physician care, and health care
which is determined by the DED to have a value of at least $1.25 per hour and which
is the same coverage as is provided to employees employed in a bona fide executive,
administrative, or professional capacity who are exempt from the minimum wage
and maximum hour requirements.
Unless a business is providing at least 25 new "headquarter jobs" or "shared service
center jobs", the following businesses, are not eligible for rebates: retail sales, real
estate, professional services, natural resource extraction or exploration, financial
services or venture capital funds.
"Headquarter jobs" are defined as jobs of full time employees that are executive,
administrative, or professional jobs based at a principal or regional office located in
Louisiana, in which are located the principal or regional executive officers normally
constituting a principal or regional headquarters providing corporate governance.
Such principal or regional executive officers include but are not limited to chief
executive officer, chief operating officer, and other senior level officers or
appropriate regional equivalents.
"Shared services center jobs" are defined as jobs of full time employees residing in
the state which are based at a business located in Louisiana that performs specific
corporate operational tasks for the business, its affiliates or customers, such as
accounting, human resources, payroll, or purchasing.
Proposed law specifies that gaming or gambling businesses are not eligible for the program.
Proposed law requires the qualified business to apply to DED after being invited to
participate by the secretary of DED.
DED must determine if the applicant is an eligible "qualified business", that participation
in the program is needed in a highly competitive site selection situation to encourage the
business to locate or expand in the state, and that securing the project will result in a
"significant positive economic benefit" to the state. "Significant positive economic benefit"
is defined as net positive tax revenues to be generated as a result of the project taking into
account direct, indirect, and induced impacts based on standard economic impact
methodology utilized by DED and the value of the rebate and any other state tax and
financial incentives that are used by the department to secure the qualified business.
Proposed law requires DED to propose a contract for the applicant to the Board of
Commerce and Industry. Upon the Board's approval, the secretary must execute the contract.
The contract must provide a rebate to qualified businesses based upon new payroll. The
contract will have an initial term of up to five years. It may be renewed for an additional five
years provided that the qualified business has complied with all the terms of the contract and
has complied with the provisions of the proposed law.
Proposed law provides that no new contracts may be approved on or after July 1, 2017, but
contracts existing on that date may continue and be renewed.
Proposed law authorizes the contract tom provide for a rebate to the qualified business based
upon new payroll, and shall include the following provisions:
1. The percentage of new payroll eligible for rebate, up to a maximum of 15%.
2. The maximum amount of new payroll eligible for rebate. SB NO. 548
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3. The number of new jobs and amount of new payroll required to be created and
maintained, and any other performance obligations required to be met in order to
remain qualified for participation in the program.
4. Designation of the facility or facilities eligible for participation in the program.
5. Monitoring of performance and consequences for failure to perform and other
contract violations.
6. An initial term of the contract, which may be up to five years, and any renewal term
available at the discretion of the secretary, which may be up to an additional five
years.
Proposed law requires a qualified business to file applications for rebates with DED to show
its continued eligibility for the rebates. It may be subjected to a limited audit by DED to
verify its eligibility.
Proposed law requires the qualified business to file an application for an annual rebate with
the DED, which contains a sworn statement by a duly authorized officer of the qualified
business that the qualified business had complied with the contract and the proposed law
during the fiscal year. Upon approval of the application for the annual rebate, a certification
letter is sent to the Department of Revenue for payment of the rebate containing the proper
entity to which the rebate should be issued and the amount of the rebate to be issued. The
DOR may require the business to submit additional information necessary to properly issue
the rebate. The rebate is made from the current collections of the taxes imposed by Title 47.
Proposed law prohibits a taxpayer who participates in this program from receiving any other
incentive administered by DED for any expenditures for which the taxpayer has received a
rebate pursuant to the program.
Proposed law allows DED to promulgate rules and regulations after approval of the House
Ways and Means and Senate Revenue and Fiscal Affairs meeting jointly within 45 days of
their publication in the State Register.
Effective July 1, 2012.
(Adds R.S. 51:3111)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Revenue and Fiscal
Affairs to the original bill.
1. Prohibits granting new contracts on and after July 1, 2017, but allows
contracts existing on that date to continue and be renewed.
2. Defines "significant positive economic benefit" which the secretary must find
in order to grant the use of the single sales factor for calculating income and
franchise tax to an eligible business.
3. Changes the amount of personnel relocation costs which may be included in
the "relocation costs" upon which the rebate is based from 40% of such
personnel relocation costs to 60% of such personnel relocation costs.
4. Specifies that gaming or gambling businesses are not eligible for the SB NO. 548
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program.
5. Requires DED to send a certification letter to DOR upon contract approval
containing the proper entity to which the rebate should be issued and the
amount of the rebate to be issued.
6. Authorizes DOR to require the business to submit any additional information
necessary to properly issue a rebate.
7. Specifies payment of the rebate from collections of all the taxes imposed by
Title 47, not just income and franchise tax.