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Lawmakers consider industry tax credit for steel manufacturer

NUCOR being courted with tax credit, could build in Weirton and Mason County

NUCOR — Proposed tax breaks and incentives offered by Gov. Jim Justice could allow a company, such as NUCOR, to bring a steel mill and transloading facility to West Virginia. --Contributed/NUCOR

CHARLESTON — Members of the West Virginia Senate and House of Delegates convened in special session Monday to consider a heavy industry tax credit for major industry, including a steel manufacturer who could locate a facility in Weirton.

Gov. Jim Justice issued a proclamation Saturday night calling the Legislature into special session Monday morning.

The proclamation included six bills, including tax incentives based on certain investments and employment commitments aimed at new and current heavy industries that require substantial investments of capital and labor.

One of the companies being courted with the tax credit is North Carolina-based NUCOR, a steel manufacturer, according to multiple sources who declined to be named due to not having the authority to speak about the specifics of the deal.

Lawmakers are dancing around the name of companies the tax credit is aimed at due to the deal not being final and the governor planning to announce the projects during his State of the State address Wednesday night when the 2022 regular session begins. A request for comment from NUCOR was not returned.

Sources said NUCOR is interested in building two facilities in Mason County and Weirton, a $2.8 billion investment. The Mason County facility would be a sheet mill, while the Weirton project would be a transloading facility.

The projects would result in approximately 800 full-time jobs and approximately 1,000 construction jobs during a two-year period.

The House Finance Committee met Monday afternoon in the House Chamber so committee members and non-committee members could learn more about the bill. Brian Abraham, chief of staff to Justice, said the bill was needed to secure the manufacturer, which could have a facility up and running in the next 24 months.

“I believe this to be the largest single investment in West Virginia history in terms of infrastructure and manufacturing,” Abraham said. “We’re trying to get a deal done with a … Fortune 500 company to come to West Virginia.”

The West Virginia Industrial Advancement Act would create a tax credit equal to 50% of the qualified manufacturing investment of a company. The tax credit is for industrial taxpayers and qualified labor-intensive heavy industry manufacturing projects involving 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.

A qualified manufacturer has 72 months to meet the minimum requirements, otherwise the tax credits end and the state claws back the taxes that would have been due before the tax credits kicked in. 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 allows for a consumer sales and use tax credit to cover the cost of equipment and materials for constructing and expanding the industrial sites. The state already has a manufacturers sales tax exemption, though the West Virginia Industrial Advancement Act would expand upon that.

The bill would allow a company, such as NUCOR, to pull down as much as $1.35 billion in tax credits. According to West Virginia University, the company 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. According to a presentation from the company to lawmakers Sunday evening, the three-year rolling average of salaries at the company for non-executive workers is more than $96,000 per year.

Lawmakers are also considering several bills to take money from the nearly $400 million in surplus tax revenue and funds from other state agencies for the Department of Economic Development. The money being taken from the agencies would be backfilled with available federal COVID-19 dollars.

The transfer of funding to the Department of Economic Development will allow the state to also offer $315 million in matching funds for the project, the largest amount the state has ever offered for a project. The deal is part of a memorandum of understanding between the company and the state.

The company would need to invest a minimum of $500 million in order to get the first $125 million. After the company makes another $750 million investment, the state would provide $150 million. Once the company leases or purchases the facility or property in the Northern Panhandle, the state would provide $40 million in matching funds.

“There is a considerable amount of money involved here,” said Delegate Marty Gearheart, R-Mercer. “How did we arrive at the amount of dollars that would need to be extended to this manufacturing entity and the negotiations that have been going on for several months?”

“By negotiating with them and determining what they felt was the state’s level of investment they felt comfortable with in coming to West Virginia and obligating the money,” Abraham said.

The Senate quickly worked to pass its bills, including its version of the West Virginia Industrial Advancement Act, Senate Bill 2001. The bill passed 30-1 with Sen. Owens Brown, D-Ohio, as the only no vote.

“I’m for economic development, but it’s a matter of principle,” Brown said. “They say ‘haste makes waste.’ I do not see why this should rush through without actually looking at it. I’ve read this bill and it’s quite complicated; a lot of tax provisions here and there, and a lot of money will be leaving our state.”

Last September, NUCOR announced intentions to build a 3-million-ton sheet mill plant and was scouting locations in Ohio, Pennsylvania and West Virginia. The plant would serve markets in the east coast and Midwest. According to financial statements, NUCOR announced $2.13 billion in net earnings during the third quarter of 2021. Strong demand for steel products has caused a backlog in manufacturing.

“This mill will allow us to competitively meet the growing need that many of our customers, particularly in the automotive market, have for high quality steel with a lower carbon footprint,” said Leon Topalian, president and CEO of Nucor Corp., in an earlier statement.

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