SP0505
LD 1586
Session - 129th Maine Legislature
 
LR 1147
Item 1
Bill Tracking, Additional Documents Chamber Status

An Act To Promote Major Food Processing and Manufacturing Facility Expansion and To Create Jobs in Maine

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 36 MRSA §191, sub-§2, ¶HHH  is enacted to read:

HHH The disclosure to the joint standing committee of the Legislature having jurisdiction over taxation matters pursuant to section 5219-VV, subsection 4, paragraph B of the revenue loss, including the loss due to refundable credits, attributable to each taxpayer claiming the tax credit for major food processing and manufacturing facility expansion provided under that section, regardless of the number of persons eligible for the credit.

Sec. 2. 36 MRSA §5219-VV  is enacted to read:

§ 5219-VV Credit for major food processing and manufacturing facility expansions

1 Definitions.   As used in this section, unless the context otherwise indicates, the following terms have the following meanings.
A "Certified applicant" means a qualified applicant that has received a certificate of approval from the commissioner pursuant to this section.
B "Commissioner" means the Commissioner of Economic and Community Development.
C "Employees based in the State" means employees that perform 100% of employee-related activities for the employer at the facility in the State.
D "Facility" means a food processing and manufacturing facility, plant or mill, including one or more structures and including the equipment, machinery, fixtures and personal property located in, on, over, under and adjacent to those structures, by which the applicant, as determined by the commissioner at the time of application, processes, produces and manufactures food from agricultural products primarily grown and harvested in the State.
E "Full-time" means an average of at least 36 hours weekly during the period of measurement.
F "Headquarters" means the principal office from which a qualified applicant directs, and has directed for each of the past 5 years prior to application for a certificate of approval, its national or global business activities, as determined by the commissioner at the time of application.
G "Primarily grown and harvested in the State" means that not less than 95% of the agricultural products processed in the facility are grown and harvested in the State, except when such products are not reasonably available by reason of an act of God, pestilence, weather or other factors beyond the reasonable control of the applicant or applicant's suppliers.
H "Qualified applicant" means an applicant that, at the time an application for a certificate of approval is submitted, is itself, or is the parent or subsidiary of, an entity that satisfies all of the following criteria:

(1) The applicant is, and has been for each of the last 5 years prior to application for a certificate of approval, a corporation or limited liability company organized under the laws of this State;

(2) The applicant's headquarters are, and have been for each of the last 5 years prior to application for a certificate of approval, located in the State;

(3) The applicant intends to make a qualified investment in the State within 5 years following the date of the application;

(4) Construction of the applicant's facility begins no sooner than April 1, 2019 as evidenced by the date of issuance of an appropriate municipal building permit;

(5) The applicant employs or will employ upon start-up of the facility at least 40 full-time employees, of whom 100% are or will be employees based in the State; and

(6) The annual per capita personal income of at least 75% of the applicant's employees exceeds the income derived from employment threshold as published by the Department of Economic and Community Development for the county in which the facility is located.

I "Qualified investment" means an investment of at least $35,000,000 to design, permit, construct, modify, equip or expand the applicant's facility in the State. The investments and activities of a qualified applicant and other entities that are members of the qualified applicant's unitary business may be aggregated to determine whether a qualified investment has been made. A qualified investment does not include an investment made prior to April 1, 2019 or after December 31, 2024.
2 Procedures for application; certificate of approval.   The provisions of this subsection govern the procedures for providing for and obtaining a certificate of approval.
A A qualified applicant may apply to the commissioner for a certificate of approval. An applicant shall submit to the commissioner information demonstrating that the applicant is a qualified applicant. If a certified applicant undertakes to make an additional qualified investment, the certified applicant may apply to the commissioner for an additional certificate of approval.
B The commissioner, within 30 days of receipt of an application submitted pursuant to paragraph A, shall determine whether the applicant is a qualified applicant and shall issue either a certificate of approval or a written denial indicating why the applicant is not qualified. The certificate issued by the commissioner must describe the qualified investment and specify the total amount of qualified investment approved under the certificate.
C Upon issuance of a certificate of completion in accordance with paragraph F, the commissioner shall issue, on behalf of the State, a memorandum to the qualified applicant describing the benefits provided by this section at the time the certificate of completion is issued. The memorandum must provide that the certificate of completion does not prohibit the commissioner from revoking a certificate in accordance with paragraph E and does not prohibit the assessor from assessing and collecting an overpaid benefit in accordance with the provisions of this Title.
D A certified applicant shall obtain approval from the commissioner to transfer the certificate of approval or, if the certified applicant has obtained a certificate of completion, that certificate of completion to another person. A certificate of approval or certificate of completion may be transferred only if all or substantially all of the assets of the certified applicant are, or will be, transferred to that person or if 50% or more of the certified applicant's voting stock is, or will be, acquired by that person. The commissioner shall approve the transfer of the certificate of approval or the certificate of completion only if at least one of the following conditions is satisfied:

(1) The transferee is a member of the applicant's unitary affiliated group at the time of the transfer; or

(2) The commissioner finds that the transferee will, and has the capacity to, maintain operations of the facility in the State in a manner that meets the minimum qualifications for continued eligibility of benefits under this section after the transfer occurs.

If the commissioner approves the transfer of the certificate, the transferee, from the date of the transfer, must be treated as the certified applicant and as eligible to claim any remaining benefit under the certificate of approval or the certificate of completion that has not been previously claimed by the transferor as long as the transferee meets the same eligibility requirements and conditions for the credit as applied to the original certified applicant.

E The commissioner shall revoke a certificate of approval if the certified applicant or a person to whom a certificate of approval has been transferred pursuant to paragraph D fails to make a qualified investment within 5 years of the date of the certificate of approval. The commissioner shall revoke a certificate of approval or a certificate of completion if the applicant or transferee ceases operations of the facility in the State or the certificate of approval or certificate of completion is transferred to another person without approval from the commissioner pursuant to paragraph D. A certified applicant whose certificate of completion is revoked within 5 years after the date issued shall return within 60 days following revocation of the certificate to the State an amount equal to the total credits claimed for all tax years under this section. A certified applicant whose certificate of completion is revoked during the period from 6 years after through 10 years after the date the certificate was issued shall return within 60 days following revocation of the certificate to the State an amount equal to the total credits claimed under this section for the period from 6 years after through 10 years after the date the certificate was issued. The amount to be returned to the State under this paragraph is, for purposes of this Title, a tax subject to the collection and enforcement provisions contained in Part 1, including the application of applicable interest and penalties. The amount to be returned to the State must be added to the tax imposed on the taxpayer under this Part for the taxable year during which the certificate is revoked.
F Upon making the qualified investment and completing the facility and employment criteria in subsection 1, paragraph H, a certified applicant shall submit an application to the commissioner for a certificate of completion. If the commissioner determines that a qualified investment has been made, the applicant's facility is located in the State and 100% of the applicant's full-time employees, as measured at the time of application for the certificate of approval, are employees based in the State, the commissioner shall issue a certificate of completion to the certified applicant as soon as is practical. The certificate of completion must state the amount of qualified investment made by the certified applicant.

The commissioner may not issue certificates of approval under this subsection that total, in the aggregate, more than $100,000,000 of qualified investment or any individual certificate of approval for more than $85,000,000 of qualified investment.

3 Refundable credit allowed.   A certified applicant is allowed a credit as provided in this subsection.
A Subject to the limitations under paragraph B, beginning with the tax year during which the certificate of completion is issued or the tax year beginning in 2022, whichever is later, and for each of the following 19 tax years, a certified applicant is allowed a credit against the tax due under this Part for the taxable year in an amount equal to 2% of the certified applicant's qualified investment. If the certified applicant is a pass-through entity, the owner or owners of the certified applicant are allowed the credit. The credit allowed under this paragraph is refundable.
B The credit under this subsection is limited as follows.

(1) A credit is not allowed for any tax year during which the taxpayer does not meet or exceed the following employment targets as measured on the last day of the tax year.

(a) For each of the first 3 tax years for which the credit is claimed, there must be a total of at least 40 full-time employees based in the State whose jobs were added since the first day of the first tax year for which the credit was claimed.

(b) For each tax year after the 3rd tax year for which the credit is claimed, the taxpayer must employ a total of at least 60 full-time employees based in the State whose jobs were added since the first day of the first tax year for which the credit was claimed.

Jobs for additional full-time employees that are counted for determining eligibility for the credit under one certificate of completion may not be counted for determining eligibility for the credit under a separate certificate of completion. For purposes of this subparagraph, "additional full-time employees" does not include employees who are shifted to a certified applicant's facility in the State from an affiliated business in the State. The commissioner shall determine whether a shifting of employees has occurred. For purposes of this subparagraph, "affiliated business" has the same meaning as in section 6753, subsection 1-A.

(2) Cumulative credits under this subsection may not exceed $34,000,000 under any one certificate.

4 Reporting required.   A certified applicant, the commissioner and the assessor are required to make reports pursuant to this subsection.
A On or before March 1st of each year, a certified applicant shall file a report with the commissioner for the tax year ending during the immediately preceding calendar year, referred to in this paragraph as "the report year," containing the following information:

(1) The number of full-time employees based in the State of the certified applicant on the last day of the tax year ending during the calendar year immediately preceding the report year; and

(2) The incremental amount of qualified investment made in the report year.

The commissioner may prescribe forms for the annual report described in this paragraph. The commissioner shall provide copies of the report to the assessor and to the joint standing committee of the Legislature having jurisdiction over taxation matters at the time the report is received.

B By April 1st of each year, the commissioner shall report to the joint standing committee of the Legislature having jurisdiction over taxation matters aggregate data on employment levels and qualified investment amounts of certified applicants for each year that the certified applicant claimed a credit under this section, and the assessor shall report to the committee the revenue loss during the previous calendar year, including the loss due to refundable credits, as a result of this section for each taxpayer claiming the credit.

Notwithstanding any other provision of law to the contrary, the reports provided under this subsection are public records as defined in Title 1, section 402, subsection 3.

Sec. 3. Credit design evaluation. By February 28, 2024, the Office of Program Evaluation and Government Accountability, referred to in this section as "the office," shall complete and submit to the joint standing committee of the Legislature having jurisdiction over taxation matters and the Government Oversight Committee a tax expenditure design evaluation review of the credit for major food processing and manufacturing facility expansions established under the Maine Revised Statutes, Title 36, section 5219-VV, referred to in this section as "the tax expenditure." The review must include an assessment of:

1. The extent to which the design of the tax expenditure supports accomplishment of the tax expenditure's purposes, intent and goals;

2. The extent to which the design of the tax expenditure directs benefits to the intended beneficiaries; and

3. The extent to which the State's current or planned administration of the tax expenditure, including enforcement efforts, is efficient and effective.

The office shall include with the review recommended performance measures appropriate for analyzing the evaluation objectives established for full evaluations under the Maine Revised Statutes, Title 3, section 999, subsection 1, paragraph A and make recommendations regarding data that would be necessary to perform the analyses. The joint standing committee of the Legislature having jurisdiction over taxation matters may submit a bill to the Second Regular Session of the 131st Legislature regarding the credit for major food processing and manufacturing facility expansions.

Sec. 4. Legislative findings; purpose. The Legislature finds that it is in the best interest of the people of the State to encourage the location and expansion of major food processing and manufacturing facilities in the State and to encourage the recruitment and training of employees for these facilities. The Legislature further finds that the location and expansion of major food processing and manufacturing facilities in the State will create jobs, benefit small businesses that supply goods and services to the major food processing and manufacturing facilities and their employees, increase the tax base and provide many other direct and indirect economic benefits to the State.

The purpose of this credit is to create high-quality jobs in the State by encouraging major businesses to locate or expand their food processing and manufacturing facilities in this State.

SUMMARY

This bill, modeled on the tax credit for major business headquarters expansions, provides a tax credit to a food processing and manufacturing business that:

1. Is, and has been for the 5 years prior to application, a corporation or limited liability company organized under the laws of the State;

2. Has been headquartered in this State for the 5 years prior to application;

3. Pays at least 75% of its employees a salary that exceeds the income threshold for the county in which the facility that is the subject of the application is located;

4. Agrees to make an investment of at least $35,000,000 in the construction or expansion in this State of a facility for that business; and

5. Adds a total of 40 new full-time employees by the end of the first year of qualifying for the tax credit, maintains that number for the next 2 years and then adds 20 more full-time employees, maintaining a total of 60 full-time employees for each year after the 3rd year of qualifying for the tax credit. The employees added must be based in the State.

A business that qualifies is allowed a refundable tax credit equal to 2% of the amount of the qualified investment each tax year for 20 years. The total investment that may be approved for any one business may not exceed $85,000,000 and the total aggregate investment that may be approved is limited to $100,000,000. The maximum amount of tax credits that may be received by a business under one construction or expansion project is $34,000,000.


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