Report Title:
Economic Development and Fiscal Accountability Act
Description:
Increases state fiscal accountability by providing for assessments of the cost effectiveness of development subsidies. Requires an analysis of state expenditures for economic development. Requires a unified economic development budget. Establishes subsidy limits and job quality standards.
HOUSE OF REPRESENTATIVES |
H.B. NO. |
871 |
TWENTY-SECOND LEGISLATURE, 2003 |
||
STATE OF HAWAII |
||
|
A BILL FOR AN ACT
relating to fiscal accountability, SUBSIDY LIMITS, AND JOB QUALITY STANDARDS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:
"Chapter
economic development and fiscal accountability
§ -1 Short title. This Act shall be known and may be cited as the "Economic Development and Fiscal Accountability Act".
§ -2 Findings and purpose. (a) The legislature finds:
(1) Although the State and counties have granted numerous economic development subsidies in the last twenty-five years, the real wage levels and healthcare coverage of working families have declined;
(2) When workers receive low wages and poor benefits, these jobs often impose hidden costs upon the State, in the form of medicaid, food stamps, earned income tax credits, and other forms of public assistance to the working poor and their families;
(3) Citizen participation in economic development has been impeded by a lack of readily accessible information regarding expenditures and outcomes; and
(4) It is necessary to collect, analyze, and make public information regarding those expenditures for economic development, and to enact certain safeguards for their use.
(b) The purpose of this chapter is to improve the effectiveness of economic development expenditures and to ensure that these expenditures raise living standards for working families in Hawaii.
§ -3 Definitions. As used in this chapter, unless the context clearly requires otherwise:
"Corporate parent" means any person, association, corporation, joint venture, partnership, or other entity, that owns or controls fifty per cent or more of a recipient corporation.
"County" includes any agency, board, commission, office, public benefit corporation, or public authority of a county of the State.
"Date of subsidy" means the date that a granting body provides the initial monetary value of a development subsidy to a recipient corporation. If the subsidy is for the installation of new equipment, the date shall be the date the corporation puts the equipment into service. If the subsidy is for improvements to property, the date shall be the date the improvements are finished, or the date the corporation occupies the property, whichever is earlier.
"Development subsidy" means any expenditure of public funds with a value of at least $25,000, for the purpose of stimulating economic development within the State, including bonds, grants, loans, loan guarantees, enterprise zones, empowerment zones, tax increment financing, grants, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits.
"Full-time job" means a job in which an individual is employed by a recipient corporation for at least thirty-five hours per week.
"Granting body" means any agency, board, office, public benefit corporation, or authority of the State or any county that provides a development subsidy.
"Part-time job" means a job in which an individual is employed by a recipient corporation for less than thirty-five hours per week.
"Project site" means the site of a project for which any development subsidy is provided.
"Property-taxing entity" means any entity which levies taxes upon real or personal property.
"Recipient corporation" means any person, association, corporation, joint venture, partnership, or other entity that receives a development subsidy.
"Small business" means a corporation whose corporate parent, and all subsidiaries thereof, employed fewer than twenty full-time employees, or had total gross receipts of less than $1,000,000 during the previous calendar year.
"State" means an agency, board, commission, office, public benefit corporation, or public benefit authority of the State.
"Subsidy value" means the face value of all development subsidies provided to a recipient corporation.
"Temporary job" means a job in which an individual is hired for a season, or for a limited period of time.
§ -4 Unified economic development budget. Notwithstanding chapter 37 or any other law to the contrary, the department of budget and finance shall submit an annual unified economic development budget to the legislature no later than three months after the end of the State's fiscal year. The report shall present all types of expenditures for economic development during the prior fiscal year, including:
(1) The amount of uncollected state tax revenues resulting from every corporate tax credit, abatement, exemption, and reduction provided by the State or county, including gross receipts, income, sales, use, raw materials, excise, property, utility, and inventory taxes;
(2) The name of each corporate taxpayer which claimed any tax credit, abatement, exemption, or reduction with a value of $5,000 or more, together with the dollar amount received by each such corporation;
(3) Any tax credit, abatement, exemption, or reduction received by a corporation of less than $5,000 each shall not be itemized. The department of budget and finance shall report an aggregate dollar amount of these expenditures and the number of companies so aggregated for each tax expenditure; and
(4) All state appropriated expenditures for economic development, including line-item budgets for every state-funded entity concerned with economic development.
§ -5 Unified reporting of property tax reductions and abatements. (a) Each county shall annually submit a report to the department of budget and finance regarding any real property in the county's jurisdiction that has received a property tax abatement or reduction during the fiscal year. The report shall contain information including:
(1) The name of the property owner;
(2) The address of the property;
(3) The start and end dates of the property tax reduction or abatement;
(4) The schedule of the tax reduction;
(5) Each tax abatement, reduction, and exemption for the property; and
(6) The amount of property tax revenue not paid to the taxing entity as a result of the reduction or abatement.
(b) Each county shall also submit a report to the department of budget and finance setting forth the total property tax revenue not paid to that entity during the fiscal year as a result of all property tax reductions and abatements in the entity's jurisdiction.
(c) The reports required under subsections (a) and (b) shall be prepared on two forms approved by the department of budget and finance, and shall be submitted to the department by the property-taxing entity no later than three months after the end of the fiscal year.
(d) The department of budget and finance shall annually compile and publish all of the data contained in the reports required under subsections (a) and (b) in both written and electronic form, including publication on the department's website.
(e) If a county fails to submit required reports to the department of budget and finance within the prescribed time, the department shall notify the state comptroller, whereupon the state comptroller shall withhold further payments of any development subsidy to the delinquent county until the entity files its reports with the department.
§ -6 Application for economic development subsidies. (a) A development subsidy applicant shall complete an application for the subsidy on a form prepared by the department of business, economic development, and tourism. The information required on the application shall include the following:
(1) An application tracking number provided by the granting agency for the project;
(2) The name, street and mailing addresses, and phone number of the chief officer of the granting body provided by the granting agency;
(3) The name, street and mailing addresses, and phone number of the chief officer of the applicant's corporate parent;
(4) The name, street and mailing addresses, and phone number of the chief officer of the applicant;
(5) The street address of the project site;
(6) The three-digit North American industry classification system number of the project site;
(7) The total number of individuals employed by the applicant at the project site on the date of the application, broken down by full-time, part-time, and temporary positions;
(8) The total number of individuals employed in the State by the applicant's corporate parent, and all subsidiaries thereof, as of December 31 of the prior fiscal year, broken down by full-time, part-time, and temporary positions;
(9) The development subsidy or subsidies being applied for with the granting body, and the value of the subsidy or subsidies;
(10) The number of new jobs to be created by the applicant at the project-site, broken down by full-time, part-time, and temporary positions;
(11) The average hourly wage to be paid to all current and new employees at the project site, broken down by full-time, part-time, and temporary positions, and further broken down by wage groups as follows: $6.00 or less an hour, $6.01 to $7.00 an hour, $7.01 to $8.00 an hour, $8.01 to $9.00 an hour, $9.01 to $10.00 an hour, $10.01 to $11.00 an hour, $11.01 to $12.00 an hour, $12.01 to $13.00 an hour, $13.01 to $14.00 an hour, and $14.01 or more per hour;
(12) For project sites located in a metropolitan statistical area, as defined by the federal Office of Management and Budget, the average hourly wage paid to non-managerial employees in the State for the industries involved at the project, as established by the United States Bureau of Labor Statistics;
(13) For project sites located outside of metropolitan statistical areas, the average weekly wage paid to non-managerial employees in the county for industries involved at the project, as established by the United States Department of Commerce;
(14) The type and amount of health care coverage to be provided by the applicant within ninety days of commencement of employment at the project site, including any costs to be borne by the employees;
(15) A list of all development subsidies that the applicant is requesting, and the name of any other granting body from which such subsidies are sought;
(16) A statement as to whether the development subsidy may reduce employment at any other site controlled by the applicant or its corporate parent, within or outside of the State, resulting from automation, merger, acquisition, corporate restructuring, or other business activity;
(17) A statement as to whether or not the project involves the relocation of work from another address and if so, the number of full-time, part-time, and temporary jobs to be relocated, and the address from which they are to be relocated; and
(18) A certification by the chief officer of the applicant as to the accuracy of the application.
(b) If the granting body approves the application, it shall send a copy to the department of business, economic development, and tourism within fifteen days of the approval. If the application is not approved, the granting body shall retain the application in its records.
§ -7 Annual reports. (a) Each granting body shall file a progress report with the department of business, economic development, and tourism for each project for which a development subsidy has been granted, no later than February 1 of each year. The report shall include the following information:
(1) The application tracking number;
(2) The name, street and mailing addresses, phone number, and chief officer of the granting body;
(3) The name, street and mailing addresses, phone number, and chief officer of the recipient corporation;
(4) A summary of the number of jobs required, created, and lost, broken down by full-time, part-time, and temporary positions, and by wage groups as defined in section -6(a)(11);
(5) The type and amount of healthcare coverage provided to the employees at the project site, including any costs borne by the employees;
(6) The comparison of the total employment in the State by the recipient's corporate parent on the date of the application and the date of the report, broken down by full-time, part-time, and temporary positions;
(7) A statement as to whether the use of the development subsidy during the previous fiscal year reduced employment at any other site controlled by the recipient corporation or its corporate parent, within or outside of the State as a result of automation, merger, acquisition, corporate restructuring, or other business activity; and
(8) A signed certification by the chief executive officer of the recipient corporation as to the accuracy of the progress report.
(b) On all subsequent annual progress reports, the granting body shall indicate whether the recipient corporation is still in compliance with its job creation, wage, and benefit goals, and whether the corporate parent is still in compliance with its state employment requirement.
(c) Granting bodies and recipient corporations shall file annual progress reports for the duration of the subsidy, or not less than five years, whichever period is greater.
§ -8 Two-year report. (a) No later than fifteen days after the second anniversary of the date of subsidy, the granting body shall file a two-year progress report with the department of business, economic development, and tourism, and include the same information as required under section -7. The recipient corporation shall certify as to the accuracy of the report.
(b) The granting body shall state in the two-year report whether the recipient corporation has achieved its job creation, wage, and benefit goals, and whether the corporate parent has maintained ninety per cent of its employment in the State.
(c) The department of business, economic development, and tourism shall compile and publish all data from the progress reports in both written and electronic form, including publication on the department's website.
(d) The granting body and the department of business, economic development, and tourism shall have access at all reasonable times to the project site and the records of the recipient corporation to monitor the project and prepare progress reports.
(e) A recipient corporation that fails to provide the granting body with the information or access required under this section shall be subject to a fine of not less than $500 per day to commence within ten working days after the February 1 deadline, and of not less than $1,000 per day to commence twenty days after that deadline.
§ -9 Subsidy limit and job quality standards. (a) A granting body shall not award a development subsidy if the cost per job is greater than $35,000. The cost shall be determined by dividing the amount of the subsidy by the number of full-time jobs required under the application approved by the granting body.
(b) A granting body shall not grant a subsidy to an applicant unless the wages paid to employees at the project site are equal to or exceed eighty-five per cent of the average wage as established under section -6(a)(12) and (13); provided that for small businesses, the average wage shall equal or exceed seventy-five per cent of the wages established thereunder. The computation of wages under this section shall apply only to a recipient corporation that provides the health care coverage as approved in its application by the granting body.
§ -10 Recapture. (a) A recipient corporation shall fulfill its job creation, wage, healthcare, and other benefit requirements for the project site within two years of the date of subsidy. The recipient shall maintain its wage and benefit goals as long as the subsidy is in effect, or for five years, whichever is longer.
(b) The corporate parent of a recipient corporation shall maintain at least ninety per cent of its employment in the State as long as the development subsidy is in effect, or not less than five years, whichever is longer.
(c) If the requirements under subsections (a) and (b) are not fulfilled, the granting body shall recapture the development subsidy from the recipient corporation as follows:
(1) Upon a failure by the recipient corporation to create the required number of jobs, or to pay the required wages or benefits, the amount recaptured shall be based on the pro rata amount by which the unfulfilled jobs, wages, or benefits bear to the total amount of the development subsidy; and
(2) Upon a failure of the corporate parent to maintain ninety per cent of its employment in the State, the rate of recapture shall equal twice the percentage by which such employment is less than ninety per cent.
(d) The granting body shall provide notice and explanation to the recipient corporation of its intent to recapture the development subsidy and state the amount to be recaptured. The recipient corporation shall remit to the governing body the amount within sixty calendar days of the date of the notice.
(e) If a recipient corporation defaults on a development subsidy in three consecutive calendar years, the granting body shall declare the subsidy void, and shall so notify the department of business, economic development, and tourism and the recipient corporation. The recipient corporation shall pay back to the granting body all remaining value of the development subsidy it has not previously repaid within one hundred eighty calendar days of the date of the notice of such default.
§ -11 Private enforcement action. If a granting body fails to enforce any provision of this chapter, any individual who paid personal income taxes to the State in the calendar year prior to the year in dispute, or any organization representing those taxpayers, shall be entitled to bring a civil action in a court of competent jurisdiction in the State to compel enforcement under this chapter. The court shall award reasonable attorney's fees and costs to the prevailing taxpayer or organization.
§ -12 Public record disclosure. All records required to be prepared or maintained under this section, including applications, progress reports, recapture notices, and any other records or proceedings relating thereto, shall be subject to disclosure under chapter 92F."
SECTION 2. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.
SECTION 3. This Act shall take effect on July 1, 2003.
INTRODUCED BY: |
_____________________________ |