Bill Summary for H 117 (2015-2016)

Summary date: 

Aug 6 2015

Bill Information:

View NCGA Bill Details2015-2016 Session
House Bill 117 (Public) Filed Tuesday, February 24, 2015
Intro. by S. Martin, Jeter, Collins, Steinburg.

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Bill summary

Senate committee substitute makes the following changes to the previous edition.

Except where indicated, deletes all of the provisions of the previous edition and replaces them with the following.

Part I. 

Amends the provisions of the Job Development Investment Grant Program (JDIG) as follows. Amends GS 143B-437.51, adding and defining the term high-yield project for the purposes of JDIG. Enacts new GS 143B-437.52(a)(6), adding a condition that must be met to receive grants from JDIG, requiring the local governments of projects that are located in a development tier three area to have participated in recruitment and offered incentives in a manner appropriate to the project. Amends the maximum yearly grant amount that can be awarded, capping it at $20 million (was, $15 million) for years when no high-yield project grant is awarded and increases the cap to $35 million for years in which a grant is awarded for a high-yield project. Provides that amounts awarded must be divided over two semiannual periods, with no more than 50% of the award amount being awarded in any one semiannual period. Provides that this limitation does not apply to high-yield projects. Amends GS 143B-437.53 to increase the minimum criteria for tier three areas to participate in JDIG, requiring 50 jobs to be created (was, 20 jobs). Amends the annual reporting requirement for the JDIG, now requiring a report, itemized by tier, of the number of unaccepted offers as well as the total award value of such offers, effective when the act becomes law. Amends calculations for determining JDIG awards amount moving to a tiered maximum award amount of withholding, such as 80% of withholding for projects in tier one areas and 75% for all other areas. Also amends amount required to be payable to Utility Accounts for specified tier ares. Sets out certain JDIG enhancements for high-yield projects if they meet job investment and creation benchmarks for three consecutive years, including increasing the amount that an award is calculated to 100% of withholdings and extending the term of the grant from 12 years to 20 years. Provides procedures for situations where a project fails to meet benchmarks after enhancements have been received. Amends the clawback provisions for when a project fails to maintain operations for at least 150% of the term of the grant to require appropriate portions of the grant to be recaptured (previously, only permitted the recapture). Also amends the basis for determining employment levels, requiring employment to be at the greater of the level of the employment on the date of the application for JDIG or the level on the date of the award (previously, was required to maintain levels of the year immediately preceding the base period). Extends the JDIG program until January 1, 2019 (was 2016). Makes changes to maximum grant liability the JDIG can take on; also expands the maximum amount to $50 million for the specified time period if a grant is awarded for a high-yield project, effective when the act becomes law. Directs the Department of Commerce to study factors that contribute to grant termination as compared to other states and report to specified legislative entities by March 1, 2016. Unless otherwise specified, the above provisions are effective July 1, 2015.

Part II.

Amends GS 143B-437.72(c) concerning matching requirements by local governments for funds disbursed from the One NC Fund, transitioning to a tiered system depending on the development tier area the local government is located in. 

Part III.

Amends GS 105-130.4(i) to phase in a single sales factor apportionment of taxable income for all corporations (previously, excluded public utilities) by the 2018 calendar year with changes to the formula taking place on January 1 of 2016 and 2017. Repeals specified provisions of GS 105-130.4 to conform to the phase-in. 

Part IV.

Retains all the provisions for Part IV from the previous edition, making technical changes and changing the effective date of the Part to October 1, 2015 (was, effective July 1, 2015). 

Part V.

Amends GS 105-164.3 to add and define the terms aviation gasoline and jet fuel for use in GS Chapter 105, Article 5, Sales and Use Tax. Further amends the Article to provide that the combined general rate of tax, as defined in this Article, applies to the gross receipts from the sale of both aviation gasoline and jet fuel. Provides that sales of aviation gasoline and jet fuel made to an interstate air business for use in commercial aircraft are exempt from retail sales and use tax, with this tax exemption expiring on January 1, 2020. Unless otherwise specified, effective January 1, 2016.

Enacts new GS 105-164.44M, Transfer to Division of Aviation, directing all tax proceeds collected from the sale of aviation gasoline and jet fuel to be transferred to the Highway Fund at the end of each fiscal year. Specifies permissible uses of these tax proceeds. Effective January 1, 2016.

Amends GS 105-164.3, adding and defining the terms qualified aircraft and qualified jet engine. Also amends GS 105-164.4, tax imposed on retailers to make the 4.75% sales tax applicable to boats, with a maximum tax amount of $1,500; an aircraft, with a maximum tax amount of $2,500; and a qualified jet engine. Deletes provisions that provided that aircraft or boats were only taxed at a rate of 3%, with a maximum amount of $1,500. Makes conforming changes to GS 105-467(a), removing boats, aircraft, and qualified jet engines from being subject to local sales tax. Adds provisions exempting service contracts for qualified aircraft or qualified jet engines from general sales tax. Also provides that parts and accessories for use in the repair or maintenance of qualified aircraft or jet engines are exempt from the retail sales and use tax. Amends GS 105-164.27A to allow purchasers of qualified jet engines to apply for a direct pay permit for taxes owed. Provides that the maximum tax imposed on qualified jet engines is $2,500. Requires permit holders to file a tax return and remit owed taxes monthly to the Secretary of the Department of Revenue. Unless otherwise specified, above provisions are effective October 1, 2015. 

Part VI.

Requires the Secretary of Revenue to allocate the net proceeds of local government sales and use taxes according to a uniform formula located at amended GS 105-472(a). The formula requires half of net tax proceeds to be allocated to taxing counties according to where the tax was collected (point of collection) and the remaining half of proceeds to be allocated to taxing counties according to their population (per capita).

The bill makes conforming changes so that local sales tax revenues, on food and non-food items alike, will be allocated according to this formula, including sales tax levied under SL 1967-1096, as amended; GS 105-469(a) (First One-Cent Local Government Sales and Use Tax); GS 105-486 (First One-Half Cent Local Government Sales and Use Tax); and GS 105-501 (Second One-Half Cent Local Government Sales and Use Tax).

Creates new GS 105-472(a1) to require counties to use the proceeds of the per capita allocation for public education and community colleges and to use the remaining proceeds of the point of collection allocation for any public purpose. The bill repeals the use provisions of GS 105-487 (First One-Half Cent Local Government Sales and Use Tax) and GS 105-502 (Second One-Half Cent Local Government Sales and Use Tax).

The bill also makes conforming changes to the hold harmless provisions of GS 105-522 and GS 105-523(b) and other technical changes.

This section becomes effective July 1, 2016, and applies to sales tax revenues collected on or after that date and distributed to counties and cities on or after September 1, 2016.

Part VII.

This act is effective when it becomes law, except as otherwise provided. 

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