Cabinet for Economic Development
Governor Beshear Unveils Economic Incentives Legislation
Focus on existing Kentucky companies, job creation and investment
FRANKFORT, Ky. (June 10, 2009) – Gov. Steve Beshear today unveiled details of his economic incentives legislation, intended to modernize the state’s economic development capabilities. The proposed legislation will be sponsored by Rep. Tommy Thompson of Owensboro.
The bill is designed to update the state’s antiquated economic incentive toolbox with a focus on helping Kentucky’s existing businesses, luring major tourism development projects to the state and securing necessary funding for a proposed advanced battery manufacturing complex in Hardin County, all of which would create jobs and hundreds of millions of dollars in investment for Kentucky.
“My goal is to ensure that Kentucky’s economic and tourism development programs are on the cutting edge,” said Gov. Beshear. “This legislative package will give Kentucky options for retaining our existing companies at a time when their options are limited. Additionally, it will demonstrate to site selectors Kentucky’s willingness to adapt to current economic conditions.”
The legislation was developed as a result of months of intensive consultations with legislators, local economic development organizations, site selection consultants and existing Kentucky businesses. Most of the issues contained in the legislation were approved by both chambers during the recently completed legislative session, but failed to move forward for final passage due to timing constraints.
“Investments in education and jobs are key to Kentucky’s economic recovery and progress,” said Rep. Thompson. “This legislative initiative will enhance Kentucky’s competitive position so that we can capitalize on future opportunities that will emerge during the recovery, and grow our great Commonwealth.”
In summary, the proposed economic incentives legislation introduced today includes:
Economic Development Incentive Programs
· Amends the Kentucky Reinvestment Act to assist existing manufacturers making significant capital investments to retool Kentucky facilities in order to remain competitive, preventing loss of jobs to competitor states.
· Consolidates the existing “K-credits” (Kentucky Jobs Development Act, Kentucky Industrial Development Act, Kentucky Rural Economic Development Act and Kentucky Economic Opportunity Zone) administered by the Cabinet for Economic Development into a single, more flexible tax incentive program for new and expanding businesses, while retaining the unique features that allow distressed counties to compete.
· Transitions the existing Metropolitan College program to a tax credit program. The Metropolitan College program is a public-private partnership between the Commonwealth and UPS that has provided more than 10,000 UPS workers a free college education since its inception in 1998.
· Expands the Kentucky Enterprise Initiative Act to allow electronic processing equipment purchases of at least $50,000 to become eligible for sales tax reimbursement. Currently only available for construction and research and development equipment, the amended program would better assist high-tech, knowledge-based firms.
· Provides a sales and use tax refund for companies that are heavy users of computer and telecommunications equipment investing a minimum of $100 million, similar to current sales tax exemption for new machinery and equipment used in manufacturing.
· Creates a small business income tax credit program for companies with 50 or fewer employees creating at least one new job and investing $5,000. Program would have an annual cap of $3 million.
· Authorizes the transfer or lease of the Glendale property in Hardin County for proposed advanced battery manufacturing complex.
· Amends definitions related to development area to allow previously undeveloped areas to qualify for Tax Increment Financing (TIF) incentives. Project must include an arena with seating of 5,000.
· Extends term for Bowling Green Transpark local TIF.
· Reduces minimum investment for Signature TIF from $200 million to $150 million and changes timing of increment release which cannot occur until minimum investment is met.
· Allows railroad crossings and spurs that access industrial parks and shortlines that intersect roads to qualify for funds from the industrial access road fund.
Tourism Development Incentive Programs
· Increases total credit cap for the Historic Preservation Program from $3 million to $5 million and makes the credit refundable or transferable.
· Amends the Tourism Development Act by increasing recovery to 50% of approved cost for lodging on Kentucky Fair and Exposition Center property and federal recreational land with 20-year recovery instead of 10.
· Creates film and theater production income tax credits to be approved by the Film Office, Secretary of the Tourism, Arts and Heritage Cabinet and Kentucky Tourism Development Finance Authority. Eligible projects can recover up to 20% of approved cost for production of documentaries, commercials, full-length films and Broadway productions with a specific minimum investment requirement for each category.
· Helps Kentucky attract a NASCAR Sprint Cup Series Race at Kentucky Speedway in Northern Kentucky by allowing the project to recover 25 percent of approved cost and 100 percent of outstanding amount under previously approved agreement. Project must invest $30 million, bring one premier event annually to the site and have seating capacity of 65,000 or more.
· Exempts qualifying horse events from pari-mutuel tax to improve the state’s chances of hosting future Breeders’ Cup World Championships and other major meets.
· Amends the enacted budget and authorizes expenditure of funds for the University of Kentucky’s Commonwealth Stadium and new baseball stadium. Private funds will be utilized for the project.
“By developing new programs to address identified gaps in our economic development toolbox, as well as streamlining and modernizing our existing programs to make them more flexible, transparent and competitive, we will give the Commonwealth a competitive advantage in attracting new investment and job creation,” said Gov. Beshear.