DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part of the
legislative instrument. The keyword, one-liner, abstract, and digest do not constitute part of the law
or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 444 Engrossed 2019 Regular Session McFarland
Abstract: Establishes the "La. Rural Jobs Act" and allows a premium tax credit for investment
made in certain rural businesses. The maximum amount of investment authority permitted
by the Dept. of Revenue is $150 million and the maximum amount of investor contributions
is capped at $112,500,000 for certification and allocation of tax credits.
Present law taxes insurers based on the amount of premiums, known as "premium tax".
Proposed law establishes the "La. Rural Jobs Act" for purposes of a tax credit which may be claimed
against insurance premium tax. Eligibility for the credit is based on the investment of private capital
in a rural business located in the state.
Proposed law defines "rural business" as a business with fewer than 100 employees, which maintains
its principal operations in one or more rural areas of the state, and is engaged in a business with
certain NAICS codes.
Proposed law defines a "rural growth fund" as an entity certified as a business investment company
pursuant to federal law and certified by the Dept. of Revenue. Further defines a "La. bank" as a
bank, savings bank, or savings and loan association that is a member of the Federal Deposit
Insurance Corporation and is operating in this state with a main office or one or more branches in
this state.
Proposed law defines the types of investments required for tax credit eligibility.
Proposed law requires a rural business obtaining a rural growth fund investment to maintain its
operating deposit account at the same La. bank participating in the loan unless the bank agrees to
waive this requirement or, if no La. bank is participating in the loan, then the rural business shall
maintain its operating deposit account at the La. bank that makes the loan.
Proposed law excludes a loan secured by accounts receivable or inventory of a rural business or any
loan secured by property of a rural business from being considered a rural growth investment.
However, proposed law provides for an exception to the loan secured by property of a rural business
if the La. bank has an outstanding loan to the rural business, a La. bank participates in the loan, or
prior to making the loan, the rural growth fund and the chief executive officer of the rural business
makes certain certifications. A rural growth fund shall submit the certification to the department
prior to making a rural growth investment secured by immovable property or other movable property. Proposed law authorizes a maximum of $150 million of investment authority and $112,500,000 of
investor contributions for certification and allocation for the purpose of earning tax credits. The
department shall begin accepting applications on Oct. 1, 2019.
Proposed law requires that investments eligible for the award of tax credits be certified by the Dept.
of Revenue. If an applicant applies for approval as a rural growth fund, the department shall inform
the entity within 30 days of application whether the application is certified or denied. In the case of
denial, the entity shall have the right to provide additional information regarding the application
within 15 days of receipt of the denial. If an application is subsequently approved, the application
shall be considered approved as of its original submission date and shall receive the pro rata
allocation the application would have received if it was approved on the original date of submission.
Proposed law provides that the amount of the tax credit shall be equal to the investor contribution
and shall be allowed to be taken in an amount equal to 1/5 each year beginning with the 3rd year
through the 7th year of the investment. The total of all such credits taken cannot exceed the
taxpayer's state premium tax liability for the tax year for which the credit is claimed; however,
unused credits may be carried forward for up to 10 years. The credit can only be sold, transferred,
or allocated to a related entity that has an insurance premium tax liability at the time the rural growth
fund application was originally submitted.
Proposed law excludes taxes collected from healthcare premium assessments paid by Medicaid-
enrolled managed care organizations from state premium tax liability under proposed law.
Proposed law provides for the Dept. of Revenue to recapture any tax credit if the rural growth fund
exits the program when the rural growth fund has not invested 100% of its investment authority in
investments in La., including at least 50% of its investment authority in rural businesses that
maintain their principal business operations in rural parishes within 2 years of the closing date, fails
to maintain investments equal to at least 100% of its investment authority, including at least 50%
of its investment authority in rural businesses that maintain their principal business operations in
rural parishes until the 7th anniversary of the closing date, makes a distribution or payment that
results in the rural growth fund having less than 100% of its investment authority invested in rural
growth investments in the state or available for investment in rural growth investments or held in
case or other marketable securities, or makes an investment in certain rural business.
Proposed law requires reporting by each rural growth fund to the Dept. of Revenue, the House
Committee on Ways and Means, and the Senate Committee on Revenue and Fiscal Affairs within
5 days of each anniversary closing date. Additionally requires the rural growth fund to submit a
redacted annual report to the House Committee on Ways and Means and Senate Committee on
Revenue and Fiscal Affairs which includes bank statements evidencing each rural growth investment
within 15 business days of submitting any report required pursuant to proposed law.
Proposed law authorizes a rural growth fund to apply to exit the program on or after the seventh
anniversary of the closing date.
Proposed law requires the Dept. of Revenue to notify the Dept. of Insurance of the name of any insurance company allocated tax credits, as well as the amount of any credits.
Proposed law authorizes the Dept. of Revenue to promulgate rules to implement the provisions of
proposed law in accordance with the Administrative Procedure Act.
Effective upon the signature of the governor or lapse of time for gubernatorial action.
(Adds R.S. 47:6016.2)
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the original
bill:
1. Define "Louisiana bank" and "rural parish" for purposes of proposed law.
2. Add requirement that a rural business obtaining a rural growth fund investment maintain
its operating deposit account at the La. bank participating in the loan.
3. Exclude certain loans from being considered rural growth investments.
4. Require the rural growth fund and the chief executive officer of the rural business to
make certain certifications before a loan secured by property of a rural business can
qualify as a rural growth investment.
5. Exclude taxes collected from healthcare premium assessments paid by Medicaid-enrolled
managed care organizations from state premium tax liability under proposed law.
6. Specify when applications that were originally denied and subsequently approved are
considered approved and set forth the applications's pro rata allocation.
7. Add authorization for the recapture of credits if the rural growth fund does not invest at
least 50% of its investment authority in rural businesses that maintain their principal
business operations in rural parishes.
8. Add provisions relative to the amount of the payment due to the department when a rural
growth fund exits the program.
9. Require the rural growth fund to submit a redacted annual report to the House
Committee on Ways and Means and Senate Committee on Revenue and Fiscal Affairs
which includes bank statements evidencing each rural growth investment.