Industrial tax credit bills approved by lawmakers
CHARLESTON — On the eve of the start of the 2022 legislative session, lawmakers concluded a two-day special session Tuesday by passing several bills aimed at luring large industrial manufacturers to West Virginia.
The West Virginia House of Delegates passed six bills Tuesday morning, including Senate Bill 1001, the West Virginia Industrial Advancement Act. The bill passed 91-2, with Delegates Chris Pritt, R-Kanawha, and Laura Kimble, R-Harrison, being the only no votes.
The bill now heads to the desk of Gov. Jim Justice, who called the special session Saturday night. The state Senate passed SB 1001 Monday in a 30-1 vote with Sen. Owens Brown, D-Ohio, the only no vote.
SB 1001 creates several tax incentives that kick in when large capital and labor-intensive industrial manufacturers make certain investments and employment commitments.
The West Virginia Industrial Advancement Act creates a tax credit equal to 50% of the qualified manufacturing investment of a company.
The projects that would qualify for the tax credit require a minimum investment of $2 billion in property for use as an industrial site and the hiring of at least 500 full-time jobs within the first 36 months of the tax year the incentive is offered.
The credit could be used to reduce either personal income tax liability or corporate net income tax liability for eligible certificate holders. The bill also includes an already available consumer sales and use tax credit to cover the cost of equipment and materials for constructing and expanding the industrial sites. The bill includes claw back provisions should the approved companies not meet their commitments.
The House took nearly 1 1/2 hours on the bill Tuesday, with comments ranging from full-throated enthusiasm from Republican members to cautious support from Democratic members. Del. Mark Zatezalo, R-Hancock, said the project will be good for West Virginia’s future.
“This is the start of something really good,” Zatezalo said. “This is not the end of anything. The hard work starts now. We have lots of work to do. If we keep doing what we’re doing right now, working hard, we’ll succeed because we have the baseline load of energy, and we have a good location.”
“Because of the policies we have enacted here in recent years, we’re finally getting the types of looks similar to what we have here before us,” House Majority Whip Paul Espinosa, R-Jefferson. “For me, it’s not really a difficult call at all when you look at the economic impact figures.”
Democratic House members all voted for the bill, but many raised concerns about the timing of the bill, how quickly the bill moved through the legislative process, the promises of the company involved, and whether the project would use out-of-state construction workers.
“I’m troubled with what the rush is,” said Delegate Phillip Diserio, D-Brooke. “We’re completely silent about who is going to build these very large facilities…These jobs can be essential to our construction workers, the families, and provide opportunities for our laid-off coal miners and other West Virginians who need good jobs.”
“I stand up in support of this bill, but I do so cautiously,” said Delegate Lisa Zukoff, D-Marshall. “I’m excited about the opportunities…but I’m also a little scared. This is a huge deal for our state. The largest we’ve ever had. I’m concerned about the hyperbole that we hear.”
Sources said SB 1001 and other bills passed Tuesday are aimed at luring NUCOR, a North Carolina-based steel manufacturer, to the state. West Virginia economic officials are negotiating a memorandum of understanding with NUCOR, which is interested in building a steel mill in Mason County and a transloading facility in Weirton.
NUCOR’s investment in the state would come to $2.7 billion, allowing them to pull down as much as $1.35 billion in tax credits. Justice plans to announce the economic development project Wednesday night during his State of the State address.
The other bills passed Tuesday transfer $315 million to the Department of Economic Development to provide matching funds for the NUCOR project, the largest amount the state has ever offered for a project. Once the company reaches certain dollar amount thresholds of investment, the state would kick in a certain portion of matching funds.
During debate on these bills, Democratic House members pointed out that it would not be possible to provide the $315 million without using federal COVID-19 dollars from President Joe Biden’s American Rescue Plan. Those funds are backfilling the state agencies from where the funding is coming.
“The problem with this particular funding source is it comes from the coronavirus funds in the American Rescue Plan, which was very wisely presented to the U.S. Congress by Joe Biden and passed by the Congress,” said Delegate John Doyle, D-Jefferson. “I found it interesting in one of the meetings listening to one of (Justice’s) minions say we’re not laundering the money. I would suggest that if we’re not laundering it, at the very least we’re dry cleaning it.”
According to a West Virginia University study cited by state officials, the NUCOR facilities could generate as much as $24.4 billion in economic activity in West Virginia during a 10-year period, including $438 million in taxes during the same period. The projects could provide approximately 800 full-time jobs, with a three-year rolling average of salaries at the company for non-executive workers coming to more than $96,000 per year. The projects could also require about 1,000 construction jobs during a two-year period.
A fiscal note provided by the state Department of Revenue Tuesday said the West Virginia Industrial Advancement Act would provide no negative fiscal effect to the state.
“There is no net fiscal cost associated with passage of this bill given the parameters necessary to qualify for such tax incentives,” the note stated. “The investment necessary to qualify for the tax incentives very rarely occurs. Such investment will produce additional economic activity in the region and additional tax revenues for State and local governments beyond the value of the tax incentives.”
Another bill approved by lawmakers Tuesday would transfer $15 million from the nearly $400 million in tax surplus money for the current fiscal year to the Department of Economic Development for a separate economic development project. Senate Bill 1006 would transfer those dollars to the department’s economic development and closing fund for a possible project in Morgantown that will be announced during the governor’s State of the State address Wednesday.
(Adams can be contacted at email@example.com)