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COMMITTEE REPORT
February 14, 2007
S. 408
S. Printed 2/14/07--S.
Read the first time February 7, 2007.
To whom was referred a Bill (S. 408) to amend Section 12-6-3360, as amended, Code of Laws of South Carolina, 1976, relating to the jobs tax credit, so as to provide that a county's, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, SECTION 1, page 1, by striking lines 30 and 31 and inserting:
/ year. A county's designation may not be lowered in credit amount more than one tier in the following calendar year. The counties are ranked using the last /
Renumber sections to conform.
Amend title to conform.
HUGH K. LEATHERMAN, SR. for Committee.
REVENUE IMPACT 1/
This bill would have no impact on general fund income tax revenue in FY2007-08. This bill would reduce general fund income tax revenue by an estimated $400,000 in FY2008-09.
Explanation
This bill would amend Section 12-6-3360(B) by adding a provision to prohibit a county's job tax credit designation from dropping more than one tier from the previous year as a result of the Department of Revenue's annual ranking and designation of counties. There was only one county whose job tax credit designation dropped more than one tier in calendar year 2007. In calendar year 2006, there were twelve counties designated as distressed counties with an $8,000 income tax credit for each eligible new job created. In calendar year 2007, one of those counties was designated as an under-developed county, two tiers lower than the previous year, with each eligible new job receiving a $3,500 tax credit. According to the Department of Commerce, one company in that county applied for and received approval for eligible job tax credits for 400 new jobs in 2006. Although the company has been approved for the job tax credits, the associated new jobs have not yet been created. Under the provision of this bill, if the same number of new jobs is created in that county during calendar year 2007, the jobs would be eligible for a tax credit of $4,500 per new job instead of the present $3,500 per new job. Multiplying 400 new qualified jobs by a tax credit increase of $1,000 per job would yield an estimated reduction in general fund income tax revenue of $400,000 in FY2008-09 as this credit is applicable one year after a job is created.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1-85(B) for an estimate of the shift in local property tax incidence by the Office of Economic Research.
TO AMEND SECTION 12-6-3360, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE JOBS TAX CREDIT, SO AS TO PROVIDE THAT A COUNTY'S DESIGNATION MAY NOT DROP MORE THAN ONE TIER IN THE FOLLOWING YEAR AS A RESULT OF THE ANNUAL RANKING AND DESIGNATION OF COUNTIES BY THE DEPARTMENT OF REVENUE.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-6-3360(B) of the 1976 Code, as last amended by Act 390 of 2006, is further amended to read:
"(B) The department shall rank and designate the state's counties by December thirty-first each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The county designations are effective for taxable years that begin in the following calendar year. A county's designation may not drop more than one tier in the following calendar year. The counties are ranked using the last three completed calendar years of per capita income data and the last thirty-six months of unemployment rate data that are available on November first, with equal weight given to unemployment rate and per capita income as follows:
(1)(a) The twelve counties with a combination of the highest unemployment rate and lowest per capita income are designated distressed counties. Notwithstanding any other provision of law, no more than twelve counties may be designated or classified as distressed and notwithstanding any other provision of this section, a county may be designated as distressed only by virtue of the criteria provided in this subitem.
(b) A category with the same criteria as provided in subitem (a) of this item is designated least developed county which consists of underdeveloped counties otherwise eligible for this category.
(2) The twelve counties with a combination of the next highest unemployment rate and next lowest per capita income are designated underdeveloped counties.
(3) The eleven counties with a combination of the next highest unemployment rate and the next lowest per capita income are designated moderately developed counties.
(4) The eleven counties with a combination of the lowest unemployment rate and the highest per capita income are designated developed counties.
(5)(a) A county, any portion of which is located within twenty-five miles of the boundaries of an applicable military installation or applicable federal facility as defined in Section 12-6-3450(1), shall receive the next increased credit designation for five years beginning with the year in which the military installation or federal facility became an applicable military installation or applicable federal facility as defined in Section 12-6-3450(1), with the additional requirement that the military installation must have reduced employment on the installation of at least three thousand employees.
(b) In addition to the designation in subitem (a), a county in which an applicable military installation or applicable federal facility is located is allowed an additional increased credit designation for five years beginning with the year the installation or facility meets the requirements.
(c) Notwithstanding the designations in Section 12-6-3360, Laurens, Cherokee, and Union Counties shall qualify for the next increased credit designation.
(d) In a county where less than five percent of the work force is in manufacturing, the credit allowed is one tier higher than the credit for which the county would otherwise qualify.
(e) For a job created in a county that is not traversed by an interstate highway, the credit allowed is one tier higher than the credit for which jobs created in the county would otherwise qualify. This subitem does not apply to a job created in a county eligible for a higher tier pursuant to another provision of this item.
(f) In a county in which one employer has lost at least 1,500 jobs in a calendar year, the credit allowed is one tier higher than the credit for which the county would otherwise qualify. The one-tier-higher credit allowed by this subsection is allowed for a three-year period beginning immediately following the year during which the jobs were lost. This subsection does not apply to a job created in a county eligible for a higher tier pursuant to another provision of this section.
(g) In a county which is at least one thousand square miles in size and which has had an unemployment rate greater than the state average for the past ten years and an average per capita income lower than the average state per capita income for the past ten years, and which is not included in any of the county classifications contained in subitems (a) through (f) of this item, the credit allowed is two tiers higher than the credit for which the county otherwise would qualify.
(h) In a county in which one employer has lost at least 1,500 jobs in calendar year 2006, the credit allowed is three tiers higher than the credit for which the county would otherwise qualify. The three-tier-higher credit allowed by this subsection is allowed for taxable years beginning in 2007 and 2008. This subsection does not apply to a job created in a county eligible for a higher tier pursuant to another provision of this section."
SECTION 2. This act takes effect upon approval by the Governor and applies to county designations beginning in 2007.
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