GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

H	1 

HOUSE BILL 1748

Short Title:  Extend Jobs Tax Credit.	(Public)
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Sponsors: Representatives Mitchell; Robinson, Arnold, Berry, Bowman, Brawley, Flaherty, Grady, Joye, McCombs, and Miner. 
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Referred to:  Finance.
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May 26, 1994

A BILL TO BE ENTITLED
AN ACT TO EXTEND THE JOBS TAX CREDIT TO APPLY TO JOBS CREATED IN ANY COUNTY.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-130.40 reads as rewritten:
"§ 105-130.40.  Credit for creating jobs.
(a)	Credit. – A corporation that for at least 40 weeks during the taxable year has at least nine employees may qualify for a credit against the tax imposed by this Division by creating new full-time jobs with the corporation in this State during that year.  A corporation that hires an additional full-time employee during that year to fill a position located in this State is allowed a credit of two thousand eight hundred dollars ($2,800) for the additional employee.  A position is located in this State if (i) at least fifty percent (50%) of the employee's duties are performed in this State, or (ii) the employee is a resident of this State.  The credit may not be taken in the income year in which the additional employee is hired.  Instead, the credit shall be taken in equal installments over the four years following the income year in which the additional employee was hired and shall be conditioned on the continued employment by the corporation of the number of full-time employees the corporation had upon hiring the employee that caused the corporation to qualify for the credit.  If, in one of the four years in which the installment of a credit accrues, the number of the corporation's full-time employees falls below the number of full-time employees the company had in the year in which the corporation qualified for the credit or the position filled by the employee is moved to another county, the credit expires and the corporation may not take any remaining installment of the credit.  The corporation may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under subsection (e) of this section.
For the purposes of this section, a full-time job is a position that requires at least 1,600 hours of work per year and is intended to be held by one employee during the entire year.  A full-time employee is an employee who holds a full-time job.
(b)	Repealed by Session Laws 1989, c. 111, s. 1.
(b1)	Eligibility. – A corporation is eligible for the tax credit allowed by this section only if it obtained a credit under this section for taxable year 1988 or the Department of Commerce determines that it engages in the manufacturing of goods, or that it engages in an industrial activity such as the processing of foods, raw materials, chemicals and process agents, goods in process, or finished products.
					(e)	Limitations. – The sale, merger, acquisition, or bankruptcy of a business, or any other transaction by which an existing business reformulates itself as another business, does not create new eligibility in a succeeding business with respect to jobs for which the predecessor was not eligible under this section.  A successor corporation may, however, take any installment of or carried-over portion of a credit that its predecessor could have taken if it had taxable income.  Jobs transferred from one county in the State to another county in the State shall not be considered new jobs for purposes of this section.  A credit taken under this section may not exceed fifty percent (50%) of the tax imposed by this Division for the taxable year, reduced by the sum of all other credits allowed, except tax payments made by or on behalf of the corporation.  Any unused portion of the credit may be carried forward for the succeeding five years.
(f)	Substantiation. – Every corporation claiming the credit provided in this section shall maintain and make available for inspection by the Secretary any records the Secretary considers necessary to determine and verify the amount of the credit to which it is entitled.  The burden of proving eligibility for the credit and the amount of the credit shall rest upon the corporation, and no credit shall be allowed to a corporation that fails to maintain adequate records or to make them available for inspection."
Sec. 2.  G.S. 105-151.17 reads as rewritten:
"§ 105-151.17.  Credit for creating jobs.
	(a)	Credit. – A person who for at least 40 weeks during the taxable year has at least nine employees may qualify for a credit against the tax imposed by this Division by creating new full-time jobs with the business in this State during that year.  A person who hires an additional full-time employee during that year to fill a position located in this State is allowed a credit of two thousand eight hundred dollars ($2,800) for the additional employee.  A position is located in this State if (i) at least fifty percent (50%) of the employee's duties are performed in this State, or (ii) the employee is a resident of this State.  The credit may not be taken in the income year in which the additional employee is hired.  Instead, the credit shall be taken in equal installments over the four years following the income year in which the additional employee was hired and shall be conditioned on the continued employment by the taxpayer of the number of full-time employees the taxpayer had upon hiring the employee that caused the taxpayer to qualify for the credit.  If, in one of the four years in which the installment of a credit accrues, the number of the taxpayer's full-time employees falls below the number of full-time employees the taxpayer had in the year in which the taxpayer qualified for the credit or the position filled by the employee is moved to another county, the credit expires and the taxpayer may not take any remaining installment of the credit.  The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under subsection (e) of this section.
For the purposes of this section, a full-time job is a position that requires at least 1,600 hours of work per year and is intended to be held by one employee during the entire year.  A full-time employee is an employee who holds a full-time job.
(b)	Repealed by Session Laws 1989, c. 111, s. 2.
(b1)	Eligibility. – A taxpayer is eligible for the tax credit allowed by this section only if the taxpayer obtained a credit under this section for taxable year 1988 or the Department of Commerce determines that the taxpayer engages in the manufacturing of goods, or that he engages in an industrial activity such as the processing of foods, raw materials, chemicals and process agents, goods in process, or of finished products.
					(e)	Limitations. – The sale, merger, acquisition, or bankruptcy of a business, or any other transaction by which an existing business reformulates itself as another business, does not create new eligibility in a succeeding business with respect to jobs for which the predecessor was not eligible under this section.  A taxpayer may, however, take any installment of or carried-over portion of a credit that his predecessor could have taken if he had taxable income.  Jobs transferred from one county in the State to another county in the State shall not be considered new jobs for purposes of this section.  A credit taken under this section may not exceed fifty percent (50%) of the tax imposed by this Division for the taxable year, reduced by the sum of all other credits allowed, except tax payments made by or on behalf of the taxpayer.  Any unused portion of the credit may be carried forward for the succeeding five years.
(f)	Substantiation. – Every person claiming the credit provided in this section shall maintain and make available for inspection by the Secretary any records the Secretary considers necessary to determine and verify the amount of the credit to which the person is entitled.  The burden of proving eligibility for the credit and the amount of the credit shall rest upon the person, and no credit shall be allowed to any person who fails to maintain adequate records or to make them available for inspection."
Sec. 3.  G.S. 143B-437A reads as rewritten:
"§ 143B-437A.  Industrial Development Fund.
(a)	There is created in the Department of Commerce the Industrial Development Fund to provide funds to assist the local government units of the most economically distressed counties in the State in creating jobs in qualified industries.  As used in this section, the term 'qualified industry' means the manufacturing of goods or the processing of foods, raw materials, chemicals and process agents, goods in process, or finished products.  The Department of Commerce shall adopt rules providing for the administration of the program. Those rules shall include the following:
(1)	The funds shall be used for (i) installation of or purchases of equipment for qualified industries, (ii) structural repairs, improvements, or renovations of existing buildings to be used for expansion of qualified industries, or (iii) construction of or improvements to new or existing water, sewer, gas, or electrical utility distribution lines or equipment for existing or new or proposed industrial buildings to be used for qualified industrial operations.  To be eligible for funding, the water, sewer, gas, or electrical utility lines or facilities shall be located on the site of the building or, if not located on the site, shall be directly related to the operation of the specific qualified industrial activity.  However, the Secretary of Commerce may use up to one hundred thousand dollars ($100,000) to provide emergency economic development assistance in any county which is documented to be experiencing a major economic dislocation.
(2)	The funds shall be used by the city and county governments for projects that will directly result in the creation of new jobs.  The funds shall be expended at a rate of two thousand four hundred dollars ($2,400) per new job created up to a maximum of two hundred fifty thousand dollars ($250,000) per project.
(b)	Each year, on or before December 31, the Secretary of Commerce shall designate the most economically distressed counties in the State; this designation shall remain effective for the following calendar year. The Secretary of Commerce shall determine which counties are the most economically distressed counties in the State based on (i) rate of unemployment, (ii) per capita income, and (iii) relative population and work force growth or lack of growth, as determined by the Secretary of Commerce.
(c)	The Department of Commerce shall report annually to the General Assembly concerning the applications made to the fund and the payments made from the fund and the impact of the payments on job creation in the State. The Department of Commerce shall also report quarterly to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division on the use of the moneys in the fund, including information regarding to whom payments were made, in what amounts, and for what purposes.
(d)	As used in this section, 'major economic dislocation' means the actual or imminent loss of:
(1)	500 or more manufacturing jobs in the county; or
(2)	A number of manufacturing jobs which is equal to or more than ten percent (10%) of the existing manufacturing workforce in the county."
Sec. 4.  G.S. 153A-376(f) reads as rewritten:
"(f)	All program income from Economic Development Grants from the Small Cities Community Development Block Grant Program may be retained by recipient 'economically distressed counties', as designated under G.S. 143B-437A for the purposes of creating local economic development revolving loan funds.  Such program income derived through the use by counties of Small Cities Community Development Block Grant money includes but is not limited to: (i) payment of principal and interest on loans made by the county using Community Development Block Grant Funds; (ii) proceeds from the lease or disposition of real property acquired with Community Development Block Grant Funds; and (iii) any late fees associated with loan or lease payments in (i) and (ii) above.  The local economic development revolving loan fund set up by the county shall fund only those activities eligible under Title I of the federal Housing and Community Development Act of 1974, as amended (P.L. 93-383), and shall meet at least one of the three national objectives of the Housing and Community Development Act.  Any expiration of G.S. 143B-437A shall not affect this subsection as to designations of economically distressed counties made prior to its expiration."
Sec. 5.  G.S. 160A-456(e1) reads as rewritten:
"(e1)	All program income from Economic Development Grants from the Small Cities Community Development Block Grant Program may be retained by recipient cities in 'economically distressed counties', as designated under G.S. 143B-437A, for the purposes of creating local economic development revolving loan funds.  Such program income derived through the use by cities of Small Cities Community Development Block Grant money includes but is not limited to: (i) payment of principal and interest on loans made by the county using Community Development Block Grant Funds; (ii) proceeds from the lease or disposition of real property acquired with Community Development Block Grant Funds; and (iii) any late fees associated with loan or lease payments in (i) and (ii) above.  The local economic development revolving loan fund set up by the city shall fund only those activities eligible under Title I of the federal Housing and Community Development Act of 1974, as amended (P.L. 93-383), and shall meet at least one of the three national objectives of the Housing and Community Development Act.  Any expiration of G.S. 143B-437A shall not affect this subsection as to designations of economically distressed counties made prior to its expiration."
Sec. 6.  This act is effective for taxable years beginning on or after January 1, 1994.