HOUSE BILL No. 6473

November 7, 2018, Introduced by Reps. Howrylak, Reilly, Johnson, Robinson, LaGrand and Rabhi and referred to the Committee on Tax Policy.

A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

by amending section 90h (MCL 125.2090h), as added by 2017 PA 109.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 90h. (1) The fund shall create and operate the good jobs

for Michigan program to authorize the transfer of the dedicated

portion of withholding tax capture revenues to authorized

businesses that provide certified new jobs in this state. The fund

shall develop and use a detailed application, approval, and

compliance process published and available on the fund's website.

(2) An eligible business may apply to the fund to enter into a

written agreement ~~which~~ that authorizes the payment of withholding

tax capture revenues under this chapter.

(3) The fund may request information, in addition to that

contained in an application, as may be needed to permit the fund to

discharge its responsibilities under this chapter.

(4) After receipt of an application, the fund may enter into

an agreement with an eligible business for withholding tax capture

revenues under this chapter if the fund determines that all of the

following are met:

(a) The eligible business proposes to create and maintain the

minimum number of certified new jobs at a facility in this state

and to pay an average annual wage that is described in section

90g(d).

(b) In addition to the jobs specified in subdivision (a), the

eligible business, if already located within this state, agrees to

maintain a number of full-time jobs equal to or greater than the

number of full-time jobs it maintained in this state ~~prior to~~

before the expansion, as determined by the fund.

sound.

(d) The expansion or location of the eligible business will

benefit the people of this state by increasing opportunities for

employment and by strengthening the economy of this state.

(e) The withholding tax capture revenues offered under this

chapter and paid from the good jobs for Michigan fund is an

incentive to expand or locate the eligible business in this state

and address the competitive disadvantages with sites outside this

state.

(f) An industry-recognized regional economic model cost-

benefit analysis reveals that the payment of withholding tax

capture revenues under this chapter to an eligible business will

result in an overall positive fiscal impact to the state.

(g) The eligible business will create the requisite number of

certified new jobs within not more than 5 years after entering into

the written agreement as determined by the fund.

(h) The eligible business will maintain the number of

certified new jobs throughout the duration of the period of time

that the authorized business receives withholding tax capture

revenues paid from the good jobs for Michigan fund. However, if the

authorized business fails to maintain the requisite number of

certified new jobs as provided in the written agreement, the

authorized business will forfeit the withholding tax capture

revenues for that calendar year.

(i) That the local governing body of the municipality in which

the facility is located approves the expansion or new location by

resolution.

(5) If the fund determines that the eligible business

satisfies all of the requirements of subsection (4), subject to

subsection (6), the fund shall determine the amount and duration of

the withholding tax capture revenues to be authorized under this

chapter and shall enter into a written agreement as provided in

this section. The duration of the withholding tax capture revenues

must not exceed 5 or 10 years, whichever is applicable based on the

average annual wage of the certified new jobs, from the date the

authorized business creates the certified new jobs as provided in

the written agreement. Subject to subsection (6), in determining

the maximum amount and maximum duration of the withholding tax

capture revenues authorized, the fund shall consider the following

factors, if applicable:

(a) The number of certified new jobs to be created.

(b) The degree to which the average annual wage of the

certified new jobs exceeds the prosperity region average wage.

if it were to expand or locate in this state versus a site outside

this state.

(d) The potential impact of the expansion or location on the

economy of this state.

(e) The estimated cost of the reimbursement of withholding tax

capture revenues under this chapter, the staff, financial, or

economic assistance provided by the municipality, or local economic

development corporation or similar entity, and the value of

assistance otherwise provided by this state.

(f) Whether the expansion or location will occur in this state

without the payment of withholding tax capture revenues offered

under this chapter.

(g) Whether the eligible business has made a written

commitment to fund some portion of costs for applicable training of

the individuals who will perform the full-time jobs that leads to a

professional or technical certification for these individuals.

(h) That the eligible business will make a good-faith effort

to employ, if qualified, Michigan residents at the facility.

(6) The fund shall determine the duration and amount of the

withholding tax capture revenues. In determining the duration of

the withholding tax capture revenues, the fund shall provide a

duration of up to 5 years for eligible businesses described in

section 90g(d)(ii) and ~~up to~~ a duration of up to 10 years for

eligible businesses described in section 90g(d)(i) or (iii). In

determining the amount of the withholding tax capture revenue

payments, the fund may approve a payment of not more than 50% of

the withholding tax capture revenues for an eligible business

described in section 90g(d)(ii) and a payment of up to 100% of the

withholding tax capture revenues for an eligible business described

in section 90g(d)(i) or (iii). The amount of withholding tax

capture revenues certified to be paid to an authorized business

~~shall~~ must be reduced by 5%, which ~~shall~~ must be retained by the

fund for additional administrative expenses under this chapter as

provided under section 90i.

(7) A written agreement between an eligible business and the

fund must include, but need not be limited to, all of the

following:

(a) A description of the business expansion or location that

is the subject of the written agreement.

(b) Conditions upon which the authorized business designation

is made.

business would not have added certified new jobs without the

withholding tax capture revenue payments authorized under this

chapter.

(d) An estimate of the amount of withholding tax capture

revenues expected to be generated for each calendar year of the

duration of the written agreement.

(e) A statement by the eligible business that a violation of

the written agreement may result in the revocation of the

designation as an authorized business, the loss or reduction of

future withholding tax capture revenue payments under this chapter,

or a repayment of withholding tax capture revenues received

pursuant to this chapter.

(f) A statement by the eligible business that a

misrepresentation in the application may result in the revocation

of the designation as an authorized business and the repayment of

withholding tax capture revenues received under this chapter plus a

penalty equal to 10% of the withholding tax capture revenue

payments received pursuant to this chapter.

(g) A method for measuring and verifying full-time jobs before

and after an expansion or location of an authorized business in

this state.

(h) A provision that the authorized business that is certified

under section 90i(2) for a payment from the good jobs for Michigan

fund shall file the required returns and reports under this chapter

and part 3 of the income tax act of 1967, 1967 PA 281, MCL 206.701

to 206.713, with the department of treasury, and shall provide any

other information reasonably requested by the fund or the

department of treasury.

(i) A maximum amount of withholding tax capture revenues that

the authorized business may claim before reduction of the 5%

payment described in section 90i for administrative expenses.

(8) Upon execution of a written agreement as provided in this

chapter, an eligible business is an authorized business. The fund

shall provide a copy of each written agreement to the department of

treasury. Upon execution of the written agreement, the transfer and

payment of withholding tax capture revenues as specified in this

chapter and in the written agreement is binding on this state. The

state treasurer shall calculate, based on the written agreements

received pursuant to this subsection, the amount of withholding tax

capture revenues collected as a result of the certified new jobs

created pursuant to those written agreements for each calendar year

and the percentage of that amount that needs to be transferred from

the general fund and deposited, in accordance with section 51f of

the income tax act of 1967, 1967 PA 281, MCL 206.51f, into the good

jobs for Michigan fund, where the fund shall issue payments to the

authorized business in the manner provided in section 90i.

(9) The fund shall not commit, and the department of treasury

shall not disburse, an amount of total withholding tax capture

revenues that exceeds $200,000,000.00, which includes the 5%

payment for administrative expenses as provided in section 90i. The

fund shall not execute more than 15 new written agreements each

calendar year for authorized businesses. If the fund approves fewer

than 15 written agreements in a calendar year, then any unused

written agreements ~~shall~~ carry forward into future calendar years,

and ~~shall be~~ are in addition to the annual limit that is otherwise

applicable. For purposes of this subsection, "total withholding tax

capture revenues" means the aggregate amount of withholding tax

capture revenues that may be distributed to authorized businesses

under all written agreements.

(10) The fund shall not designate an authorized business or