The House Revenue and Taxation Committee on Thursday advanced legislation aimed at helping persuade Big River Steel to expand its operations in Arkansas by giving it tax credits.
The committee recommended House approval of Senate Bill 688 by Sen. David Wallace, R-Leachville, over the objection of the state director for Americans for Prosperity. The House committee's action came a day after the Senate tax committee and Senate approved the bill.
Wallace has said Arkansas is in competition with Texas for a Big River Steel expansion.
Big River Steel's $1.3 billion mill near Osceola employs more than 400 people. In 2013, the Legislature authorized the state to issue $125 million in bonds for the construction of the steel mill in the first use of state authority under Amendment 82 to the Arkansas Constitution.
SB688 would pave the way for the Arkansas Economic Development Commission to "ensure a positive cost benefit to the state in the evaluation of a potential future steel project that meets other eligibility criteria," Rep. Monte Hodges, D-Blytheville, told the House committee. The bill "includes appropriate clawback" -- return of funds -- that would be determined by the commission based on its cost-benefit analysis during a year in which the jobs and salary thresholds aren't met, he said.
The state wouldn't grant the tax credits authorized under the bill until "the total capital investment has been made, and the jobs have to be in place," Hodges said.
The bill makes provisions for two types of projects.
Under 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 receive a positive cost-benefit analysis from the commission and Department of Finance and Administration before an incentive agreement is executed, the finance department said. A qualified manufacturing facility for steel specialty products would be required to invest at least $200 million, create at least 150 jobs with average wages of $75,000 a year and receive a positive cost-benefit analysis from the two state agencies before the same type of agreement is executed.
Under the bill, capital acquisition and financing necessary for either project must be secured by July 1, 2018, the finance department said. If either project were completed by June 30, 2020, the income tax credits could be used in fiscal 2021, the department said.
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.
David Ray, state director of Americans for Prosperity, said "a bill of this magnitude really ought to require more thorough vetting than it has currently received" after it was whisked through the Senate on Wednesday.
"At a price tag of $11 million [a year], you could reduce the corporate income tax rate by 0.1 percent with simply $7 million a year. That is something that would benefit all entities that pay the corporate income tax rather than just one particular industry or one particular company," he said.
A Section on 03/31/2017