H&A US Legislative and Incentive Update Spring 2015

US LEGISLATIVE &
INCENTIVE UPDATE
SPRING 2015
HICKEY & ASSOCIATES
SITE SELECTION, INCENTIVES AND WORKFORCE SOLUTIONS

© 2015 Hickey & Associates. All Rights Reserved. 2
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Hickey & Associates is a global site selection, public incentive
advisory and labor analytics company with active projects in
the Americas, Asia, Europe, Australia and Africa. Utilizing
state-of-the-art tools and techniques, H&A assists businesses
in determining the best location to expand, relocate or
consolidate anywhere in the world.
Over the past three decades, H&A’s incentive advisory team has identified, negotiated, captured and
administered over $2 billion in economic incentives for our corporate clients. Offering experience in every
major sector, Hickey & Associates has developed proprietary models, innovative tools, high-tech resources
that streamline the process of incentive identification, negotiation and delivery, ultimately ensuring clients
receive the most value with limited risk.
Our site selection and public incentives experts are based in key strategic markets to maximize your business
goals with enhanced local knowledge and client service. With fifteen offices across the U.S., H&A ensures our
service is always aligned with each unique local environment. Internationally, our locations in Mexico City, São
Paulo, London, Berlin, Shanghai, Hong Kong, and Sydney ensure global site considerations are well covered.
ABOUT HICKEY & ASSOCIATES

CONTENTS
4 Introduction
5 State Legislative & Incentive Summary
9 2016 US State Budget Status
10 Incentive Compliance Changes
11 Sales Tax Credit Guide

The H&A team tracks all major state legislative activities related to business incentives and economic development policies
around the United States. The H&A US Legislative and Incentive Update - Spring 2015 summarizes this information,
showing how states are embracing the competitive economic climate by introducing and promoting incentives to attract
the highest value industries to their communities.
The following report covers the changes directly affecting state incentive programs. With all fifty states having a legislative
session this year, there has been significant activity seen around the country dealing specifically with incentives and
economic development policies. Several states, including Arizona, Georgia, Idaho, Maryland, Mississippi, New Mexico,
South Dakota, Utah, Virginia, Wyoming, and West Virginia have all already adjourned for the 2015 regular session.
Understanding the details of these changes will help businesses capture increased incentive values and avoid potential
hurdles and challenges in the future.
INTRODUCTION

STATE
LEGISLATIVE &
INCENTIVE
SUMMARY

US LEGISLATIVE & INCENTIVE UPDATE SPRING 2015
This map highlights the states with pending or recently completed legislative
actions on business incentives and economic development policies during the
first quarter of 2015. The legislative actions include, but not limited to, new tax
incentives, expired legislation, changes to current incentives, and many others.
STATES WITH UPDATES
STATES WITH
LEGISLATIVE UPDATES

ALABAMA
Governor Robert Bentley signed into law three incentive
bills earlier this year to overhaul Alabama’s economic
development tools. The Alabama Jobs Act will credit
eligible companies 3% of the previous year’s wages paid
to new employees for a period of 10 years. Companies
would also be eligible for an investment credit of 1.5%
of investment into an eligible project that creates at least
50 new jobs in qualifying industries. A portion of the tax
credit may be transferred to allow for additional capital.
Another bill was the Alabama Veterans and Rural Jobs
Act which identifies 55 of the 67 counties in Alabama as
rural areas. Companies who invest in these rural areas
and create at least 25 jobs could qualify for tax breaks
of 4% of the wages paid. Additionally, if the company’s
new hires are comprised of at least 12% veterans, they
could qualify to receive an extra 0.5% of wages paid. The
Alabama Reinvestment and Abatements Act, the third
bill, encourages existing companies to reinvest in their
facilities. It offers abatements of state ad valorem taxes and
local non-educational property taxes for up to 20 years.
Companies must invest $2 million or more to qualify.
ARIZONA
Through the budget and appropriations process, the
Arizona legislature took direct aim at the state’s incentive
programs. With budget concerns at hand, the legislature
reallocated $100 million in carry over funds from the
Arizona Commerce Authority (ACA) to different state
programs, and reduced the Arizona Competes Fund
budget to $20 million in 2016, and further to $15 million
in 2017. The deal-closing fund formerly had $25 million in
annual funding. The legislature also eliminated the 0.1%
Job Training Tax, and subsequently terminated funding for
the Arizona Job Training Grant Program as of December
31, 2015. Since the passing of the legislation, the program
is not currently accepting any new applications.
Meanwhile, the Arizona legislature is considering a bill to
extend the renewable energy tax credits and exceptions
for data centers. It would expand the $5 million sales tax
credit to include international operations centers that
invest $1.25 billion or more. The House approved the bill,
and it is now awaiting Senate approval.
CALIFORNIA
The California Film Commission unanimously passed its
first draft regulations on the distribution of $330 million in
film tax credits. While the current system allocates the tax
credits in a lottery, the new regulations would allocate tax
credits based on a jobs ratio. The credit would be set at
20%, with a 5% bonus if the filming is done outside of the
Los Angeles area, if visual effects are done in the state, or
if music scoring is done in California.
For the California Competes Tax Credit Program, the final
round of funding for fiscal year 2014-15 was closed on April
6th, with a total of $151.1 million allocated to businesses
through the three rounds of the current fiscal year.

COLORADO
The maximum award under the Advanced Industry
Investment Tax Credit has doubled to $750,000, and the
programbeganacceptingapplicationsfor2015consideration.
FLORIDA
The Enterprise Zones Tax Incentives Program is being
criticized by lawmakers in Florida, and may not be renewed
by the end of this year. In the last fiscal year, businesses
received $15.8M of incentives in 65 enterprise zones across
Florida resulting in the creation of 13,000 jobs.
ILLINOIS
The Illinois State Senate is considering a new bill in which
interactive digital media companies can be eligible for
an income tax credit worth 30% of eligible expenses
associated with a production in any given year.
LOUISIANA
The Louisiana legislature is looking to cap the total
amount of film tax credits issued each year to $300 million
and is examining a dozen different bills that take aim at
stricter compliance for the film tax credit incentive. The
Department of Economic Development released a critical
study estimating that the State only received a benefit of
23 cents on the dollar for each dollar in incentive awarded.
MICHIGAN
The Michigan House of Representatives voted 58 to 51 to
pass legislation that would end the state’s film incentive
program. The bill is expected to face some resistance in
the Senate, but if passed, would put a stop to the film
incentive program on October 1, 2015.
Democrats in the Senate introduced the Hire Heroes Act
in February for businesses to be eligible for up to $4,000
per worker in tax credits if they hire unemployed veterans.
Governor Rick Snyder announced the creation of the
Department of Talent and Economic Development with
an Executive Order in December 2014. The new agency
is a combination of the Michigan Economic Development
Corporation and the Michigan State Housing Development
Authority, and will officially launch December 2015.
MISSOURI
Missouri State Representatives reintroduced a bill to bring
back Missouri’s film tax credit after it expired in November
2013. The bill, in its current form, would provide a 20%
tax credit on expenditures with a 5% bonus available if
a majority of the filming is done in the State of Missouri.
Additionally, both the House and Senate passed a bill
to provide tax incentives for data centers and is now
awaiting Governor Jay Nixon’s signature. Nixon vetoed
a similar bill last year after he said it did not guarantee
the state a return on its investment. The new bill puts
a $25 million investment and 10 job floor to qualify for
the incentive for new data centers and $5 million and 5
new jobs floor for expanding data centers.
MARYLAND
Maryland’s newly elected Governor Larry Hogan created
the Maryland Economic Development and Business
ClimateCommission.TheGovernormadeacommitment
to open up the state for business and create new jobs.
Bills have been introduced that will improve customer
service training for employees and create programs to
prepare students to enter the workforce.
NEW JERSEY
New Jersey’s legislature is considering a bill that would
make Atlantic City the State’s 33rd Urban Enterprise
Zone (UEZ), generating property tax relief for city
residents. The bill also offers incentives for participating
businesses, which include tax credits and exemptions. A
plan to introduce a bill is also in motion that would prevent
companies from receiving incentives from the state if they
are behind on their payments to the government.
Another bill sitting in on the desk of Governor Chris
Christie would update a 2007 law by implementing
detailed performance indicators as a way to determine
if each tax expenditure for economic development
purposes has been effective in reaching specific goals.
Additionally, the bill would ensure stricter confidentiality
in the reporting process for businesses and mandate
the expiration of new tax incentives after 10 years.
NEW MEXICO
The New Mexico Agricultural Development and
Promotional Funds Program was introduced by
the New Mexico Department of Agriculture to fund
agricultural-product projects that are completed within
one year. Grants range from $500 to $10,000 for each
applicant, and up to $30,000 for groups. Another
program is the Specialty Crop Block Grant for projects
built around specialty crops. The grant ranges from
$20,000 to $75,000 per project, and the deadline is
April 20th, 2015.
New Mexico is introducing a new grant program to
encourage startup companies and increase job creation.
Applications will be accepted through May 1, 2015.

NEW YORK
Governor Andrew Cuomo’s office released the much
anticipated annual report for the first year of the Start-
Up NY Program. A total of 62 colleges and universities
were approved to participate in 2014 creating 356 Tax-free
areas, consisting of 4,167,162 sq. ft., and new or expanded
businesses, consisting of 1847 acres. In 2014, 54 businesses
were approved for the program and committing to create
2,085 jobs and invest $91M within five years. Thirty-three
of the businesses are new to New York, 24 are start-up
businesses, 7 relocated to the state, and 2 are foreign
businesses. Thus far in 2015, four institutions have been
approved in the program, and 17 applications.
NORTH CAROLINA
Governor Pat McCrory announced new laws and changes
effective January 1, 2015, including the Omnibus Tax
Law, the Energy Modernization Act, and the Credit
for Military Training Act. The House also passed the
NC Competes Act, which will double the amount of
money currently going toward the Job Development
Investment Grant Fund. One bill under review would
lower corporate income taxes from 5% to 4% in 2016,
and to 3% in 2017. This bill would also tax companies for
products that they sell exclusively in North Carolina.
A second bill was filed to extend the nation’s highest
renewable energy tax credit at 35% to 2020. A final
bill proposes an increase in the Film Production Grant
Program from a cap of $10M to $60M. The same bill
would also restore the Historic Preservation Tax Credit
Program and provide tax credits for cigarette exports,
state port fees, motorsports and R&D.
PENNSYLVANIA
Newly-elected Pennsylvania Governor Tom Wolf
proposed several economic development changes in his
2015-2016 budget released in early March. These include
a new Made in Pennsylvania Job Creation Program, a
$5 million incentive program targeted at manufacturers
and appropriation increases for Pennsylvania First
Workforce Training, infrastructure projects, Keystone
Opportunity Zones and others.
The Governor’s budget would also halve the State
corporate income tax over 3 years, decrease property tax
rates and increase sales and personal income tax rates.
The proposal includes a $250 million investment in the
Business in Our Sites Program, which provides loans
for the acquisition and development of sites for business
use. Business in Our Sites is open for new applications
beginning April 1.
RHODE ISLAND
The New Qualified Jobs Incentive Act bill is in front of the
Rhode Island Legislature for a third year in a row, but with
the backing of the Speaker of the House, and with 47 out of
the 75 members of the House as co-sponsors, it is expected
to pass this year. The bill would provide a tax incentive to
employers that hire new full-time employees at a salary that
is at least 250% of state minimum wage. The program would
give an income tax reduction of 0.25% to large employers
for every 50 qualifying employees, and 0.25% to small
employers for every 10 qualifying employees.
TEXAS
Newly-elected Governor Greg Abbott announced that he
will end the Emerging Technology Fund (ETF), and split
the program’s $100 million funding equally between the
Texas Enterprise Fund (TEF) and a new initiative focused
on the public university system. The Governor also has a
goal to reduce the business franchise tax by $2 billion, and
property taxes by $2.2 billion across all property owners.
The administration is working on several changes to the TEF
program, which includes expediting the legislative process to
speed up the program’s approval timeline from 90 to 30 days.
WEST VIRGINIA
West Virginia eliminated its 0.1% franchise tax on January
1, 2015. The State maintained its 6.5% corporate income
tax rate, following a decrease between 2013 and 2014.
Governor Earl Ray Tomblin also signed legislation that
streamlines the process to receive well work permits on
newly purchased land.
National Council of State Legislatures
SITE TRENDS
Job Growth by the Numbers (Feb 2015)
CALIFORNIA
GEORGIA
NEW YORK
29,400
25,400
20,200

States tend to finalize budgets in the outset of a new year for the beginning
of their fiscal period on July 1st. As of March 31, 2015, seven states have
enacted budgets for 2016. Three of these states enacted a biennial budget
during the 2014 legislative session.
2016 US STATE
BUDGET STATUS
ENACTED FY 2016 BUDGET
ARIZONA | SOUTH DAKOTA | UTAH | WEST VIRGINIA
BIENNIAL BUDGET ENACTED IN 2014
KENTUCKY | VIRGINIA | WYOMING
AWAITING GOVERNOR’S ACTION
NEW MEXICO | NEW YORK

© 2015 Hickey & Associates. All Rights Reserved.© 2015 Hickey & Associates. All Rights Reserved. 11
With growing pressure on government to increase trans-
parency and improve the return on investment for their
incentive programs, H&A has identified a trend towards
increasing compliance standards for businesses. While
the burdens may initially appear onerous, H&A’s dedi-
cated compliance team can match operating expendi-
tures, investment and job creation with incentive award
covenants to ensure the full realization of award value.
The strengthening of regulations can often times increase
the available pool of incentives to trustworthy applicants,
working for the benefit of our clients.
The vast majority of incentive programs require a true return
on the state’s investment, in terms of jobs, investment, in-
creased tax revenue or some combination of the three. Two
states, Alabama and Oklahoma, have legislation pending
that would increase legislative oversight of all economic de-
velopment programs in the state. The packaging of award
data in a manner suitable for review by the legislature, as
suggested in these bills, may not immediately impact busi-
ness operations. However, it does suggest that the regula-
tory agencies may undertake actions outside of the legisla-
tive process to enhance the quality of the data they provide
to the legislature.
INCENTIVE
COMPLIANCE CHANGES
Several other states have seen legislation that works to
provide greater transparency to the general public. New
Jersey passed a bill through the Assembly Appropria-
tions Committee that would require the State Auditor
to audit all incentives granted since 2006 with a value of
greater than $1,000. The results of this audit, including
promised and realized jobs and amount of the incen-
tive, would be made public. Maryland also has consid-
ered legislation that would require companies to provide
compliance information directly, which is to be published
online. Salary including benefits, C-Suite compensation,
business activities, and location are additional fields that
would be publicized under the legislation for businesses
receiving more than $50,000 in incentives.
Increasing disclosure requirements is not the only focus of
pending legislation. A bill in Louisiana would require all
sellers of film tax credits to be included in a Public Regis-
try of Motion Picture Investor Tax Credit Brokers, with the
possibility of a monetary penalty or even jail time if not
followed. Finally, a bill passed the Nevada Senate that
amends the qualifications for a tax abatement to include
the creation of new jobs at a specified wage generating a
clawback, if wages are not met.
Clawbacks may be sought after the Oregon Department
of Justice’s investigation into Oregon’s Business Energy
Tax Credit Program revealed that developers missed key
deadlines to qualify for the tax credit program and sub-
mitted fraudulent invoices to hide the fact. At the crux
of this situation was the Energy Department accepting
far less documentation than would normally be required.
It would not be surprising if compliance procedures re-
mained rigid in the light of a potential investigation.

8.88%
#4
None
None
6.03
#36
5.49%
#43
6.68%
#28
7.94%
#13
8.44%
#8
8.16%
#12 7.30%
#16
7.41%
#15
6.62%
#30
5.83%
#40
6.79%
#26
8.19%
#9
8.76%
#6
8.16%
#11
8.91%
#3
9.24%
#2
7.07%
#20
7.78%
#14
6.78%
#27
7.19%
#17
5.43%
#44
6.00%
#37
8.18%
#10
7.00%
#21
7.11%
#19
6.34%
#32
8.84%
#7
5.50%
#42
6.07%
#35 5.63%
#41
6.00%
#37
9.45%
#1
6.90%
#25
7.13%
#18
6.99%
#23
6.63%
#29
8.85%
#5
6.14%
#34
None
6.25%
#33
7.00%
#21
6.35%
#31
6.97%
#24
6.00%
#37
5.75%
(#41)
None
States with no Sales Tax
States with Sales Tax Abatement
States with Sales Exemption
States with Manufacturing Sales Tax Exemption
4.35%
#45
None
SALES TAX CREDIT GUIDE
This map highlights existing Sales Tax Credit programs in US states. As shown below, the majority of the states
have a sales tax exemption or abatement program in place, with the exception of the five states which do
not levy sales taxes. A number of states have a specific program targeting manufacturers, as well as, other
industries, such as aerospace and the film industry.

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H&A US Legislative and Incentive Update Spring 2015

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