 |
ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
AMENDED
tax credits; performance measures; reporting
Purpose
Prescribes performance measures for the Qualified Facility Income Tax Credit and the Credit for Agricultural Water Conservation Systems to be reported each year to the Joint Legislative Budget Committee (JLBC).
Background:
The Credit for Agricultural Water Conservation Systems is provided to purchase and install an agricultural water conservation system that is primarily designed to substantially conserve water on land used to: 1) produce crops, fruit or other agricultural products; 2) raise, harvest or grow trees; or 3) sustain livestock (A.R.S. § 43-1084).
The Qualified Facility Income Tax Credit is a refundable tax credit provided to an individual or a corporation for qualifying investment and employment in expanding or locating a qualified facility in Arizona. The qualified facility must produce new full-time employment positions at the location of the qualified facility. A taxpayer is subject to preapproval and postapproval by the Arizona Commerce Authority (ACA) (A.R.S. §§ 41-1512; 43-1083.03; and 43-1164.04).
The ACA must maintain annual records of the information provided on applications for qualified facilities as well as maintain annual data on the growth of qualified facilities and related employment and wages in Arizona. The ACA must annually prepare and publish a report summarizing the collected information. Copies of the annual report on qualified facilities are available to the public on request (A.R.S § 41-1512).
The Joint Legislative Income Tax Credit Review Committee (JLITCRC) is responsible for determining the original purpose of each existing income tax credit and establishing a standard for evaluating the success or failure of a tax credit. The standard for evaluation of the credits may include: 1) the history, rationale and estimated revenue impact; 2) the benefit to the state in terms of measurable economic development, new investments, creation of new jobs or retention of existing jobs; and 3) the complexity of the application, administration and approval process of the credit (A.R.S. § 43-221).
The JLITCRC met on December 19, 2019, and recommended the Qualified Facility Income Tax Credit be amended to include reporting on: 1) the number of employees hired by the qualified facility; and 2) the total capital expenditures invested as a result of the tax credit. JLITCRC also recommended the Credit for Agricultural Water Conservation Systems be amended to include requirements to report on: 1) the reduction of water usage as a result of the installation of a qualified water conservation system; and 2) the number of states where taxpayers receive a comparable credit (JLITCRC Annual Report).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Directs the ACA to include in their annual report on qualified facilities:
a) the aggregate number of full-time employees hired by all qualified facilities in Arizona during the preceding calendar year, including the number of full-time employees that were Arizona residents on the date of hire; and
b) the aggregate capital expenditures invested by all qualified facilities in Arizona as a result of the Qualified Facility Tax Credit.
2. Requires the ACA to transmit the annual report on qualified facilities to the JLBC.
3. Requires each claimant of the Credit for Agricultural Water Conservation Systems to report to the Arizona Department of Revenue (ADOR) on the reduction in water usage as a result of installing the agricultural water conservation system by May 15 of each year.
4. Requires information submitted by a claimant of the Agricultural Water Conservation System Tax Credit to be submitted on a form prescribed by ADOR.
5. Requires ADOR to annually report to JLBC by June 15 on the reduction in water usage as a result of installing the agricultural water conservation systems, as reported by all claimants.
6. Requires, beginning June 15, 2021, ADOR to report to JLBC on the number of states with a tax credit similar to the Agricultural Water Conservation System Tax Credit every two years.
7. Makes technical and conforming changes.
8. Becomes effective on January 1, 2021.
Amendments Adopted by Committee
· Makes a technical change.
Amendments Adopted by Committee of the Whole
1. Removes the requirement for each qualified facility to report outlined information to the ACA.
2. Directs the ACA to include outlined information in their annual report on qualified facilities and requires the ACA to transmit the report to the JLBC.
3. Extends, from March 1 to May 15, the date that a claimant of the Agricultural Water Conservation System Tax credit must submit outlined information to ADOR.
4. Requires information submitted by a claimant of the Agricultural Water Conservation System Tax Credit to be submitted on a form prescribed by ADOR.
5. Extends, from May 1 to June 15, the date that ADOR must report to JLBC on the reduction on water usage as a result of the tax credit.
6. Requires, beginning June 15, 2021, ADOR to report to JLBC on the number of states with a tax credit similar to the Agricultural Water Conservation System Tax Credit every two years, rather than annually.
7. Requires the ACA to include in their annual report on qualified facilities the number of full‑time employees that were Arizona residents on the date of hire.
8. Delays the effective date to January 1, 2020.
Senate Action
FIN 1/29/20 DPA 8-0-2
Prepared by Senate Research
February 6, 2020
MG/AJS/gs