A bill aimed at luring Big River Steel to expand its operations sailed through the Senate Revenue and Taxation Committee and the full Senate on Wednesday.
January was the first full month of operation for Big River Steel's $1.3 billion mill near Osceola, and the mill is expected to employ at least 435 employees with average salaries of $75,000 a year by June 30. In 2013, the Legislature authorized the state to issue $125 million in bonds for the steel mill in the first use of its authority under Amendment 82 to the Arkansas Constitution.
Senate Bill 688 by Sen. David Wallace, R-Leachville, would change existing law on income tax credits allowed for the purchase of waste reduction, reuse or recycling equipment to provide additional income tax incentives to steel manufacturers starting "qualified expansion projects" or starting the development and construction of a "qualified steel specialty products manufacturing facility."
Wallace told senators that Arkansas is in competition with Texas for a Big River Steel expansion.
"When we do this, we bring the second phase to the Arkansas Delta," he said before the Senate voted 29-1 to send SB688 to the House for further consideration. Sen. Bart Hester, R-Cave Springs, was the lone senator to vote against the bill.
A qualified expansion project would be required to invest at least $1 billion, create at least 500 jobs with average wages of $75,000 a year and provide a positive cost-benefit analysis before an incentive agreement is executed under the bill, said the state Department of Finance and Administration. A qualified steel specialty products manufacturing facility would be required to invest at least $200 million, create at least 150 jobs with average wages of $75,000 a year and provide a positive cost-benefit analysis before an incentive agreement is executed under the bill, the department said.
If either project were completed by June 30, 2020, the income tax credits could be used in fiscal 2021, the finance department said.
"We have been here for three months [during this year's regular session]," Senate Revenue and Taxation Committee Chairman Jake Files, R-Fort Smith, said Wednesday morning during the committee's meeting. "We've had countless bills.
"Why at this point does a shell bill be brought to us the last week of the session and now we're going to have jump through hoops to get it through all the phases before we go home of something of this magnitude? Is there a good reason for that or is it just we didn't get there until now?"
Joel DiPippa, a senior counsel at the finance department, said there were numerous negotiations "with the stakeholders as well as the agencies. At this point, there is no opposition to this bill as it applies to all qualified manufacturers of steel."
Income tax credits reducing general revenue by up to $11 million per year could be used on a "qualified expansion project," and credits reducing revenue by up to $6.5 million per year, depending on project costs, could be used on a "qualified steel special product manufacturing facility," the finance department said.
In 2014, the trustees for the Arkansas Teacher Retirement System authorized investing up to $125 million in the Big River Steel mill. Last year, the trustees authorized the system to spend an estimated $151 million to purchase a projected $280 million in state income tax credits for recycling equipment from Big River Steel. The system will sell the tax credits to the state for a projected $224 million over a 14-year period, system Executive Director George Hopkins said at that time.
Under SB688, if either project has a state public retirement system as a member, the system would be required to possess and control all tax credits earned and the public retirement system would sell the income tax credits back to the state for 80 percent of the face value of the credit. The bill includes claw back provisions and consequences for failure to meet the requirements of the projects, the finance department said.
Information for this article was contributed by Brian Fanney of the Arkansas Democrat-Gazette.
A Section on 03/30/2017