Agenda Item 84
May 10,2016
Public Hearing
MEMORANDUM
May 6,2016
TO:
FROM:
County Council
AI
I
G
Josh Hamlin, Legislative AttorntM
SUBJECT:
Public Hearing:
Expedited Bill 14-16, Taxation New Jobs Tax Credit and
Enhanced New Jobs Tax Credit Amount of Tax Credit - Term of Credit
Expedited Bill 14-16, Taxation- New Jobs Tax Credit and Enhanced New Jobs Tax Credit
- Amount of Credit - Term of Credit, sponsored by Lead Sponsor Council President at the request
ofthe County Executive, was introduced on April 19. A Government Operations and Fiscal Policy
Committee worksession is tentatively scheduled for May 12 at 9:30 a.m.
Bill 14-16 would change to term during which the Enhanced New Jobs Tax Credit may be
claimed from 12 taxable years to 24 taxable years.
Background
Under State law, the County may provide by law for a property tax credit for certain
businesses that create at least 25 new, permanent, full-time jobs. The County may also provide for
an "enhanced" property tax credit for certain businesses that expend at least $150 million to obtain
at least 700,000 square feet ofnew or expanded business premises (through purchase, construction,
or lease), and employ at least I, I 00 individuals full-time, including at least 500 in new, permanent
full-time jobs. Individuals in all of these positions must receive an employer-provided subsidized
health care benefit package, be paid at least 150% ofthe federal minimum wage,
I
and work in the
new or expanded premises, or in newly renovated premises neighboring the new or expanded
premises.
The County has implemented this authority, and provided for a "New Jobs Tax Credit and
Enhanced New Jobs Tax Credit" (see ©6-l0). These credits are applied against the business'
County property tax, in amounts and for terms set forth in the law. In general terms, the amount
of the New Jobs Tax Credit decreases over the first six taxable years that it is allowed, and is not
allowed after the sixth taxable year. The Enhanced New Jobs Tax Credit is 58.5% of the property
tax imposed on the
increase in assessment
of the new or expanded premises and any substantially
renovated real property adjoining or neighboring the new or expanded premises. Under current
law, the Enhanced credit may be claimed in each of the first 12 taxable years after the Director
certifies eligibility. The fiscal impact of these two credits since 1999 is shown in the Tax
Expenditure Report prepared by the Department of Finance (see ©11-l2).
150% of the federal minimum wage of $7.25 per hour is $ 10.88. Under County law, effective July I, 2017, the
County minimum wage will
be
$11.50 per hour.
I
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In 2012, the General Assembly amended the State enabling law (see ©13-16), changing
the 12-year period in which the Enhanced credit is allowed to 24 years. This Bill will amend the
County law to be consistent with that change to State law.
This packet contains:
Expedited Bill 14-16
Legislative Request Report
Memo from County Executive
County Code, Chapter 52, Article
X
Tax Expenditure Report - New Jobs Tax Credit
2012 Maryland Laws Ch. 128
(H.B.
592)
Fiscal and Economic Impact statement
Circle
#
1
4
5
6
11
l3
16
F:\LAw\BILLS\1614 Taxation-New Jobs Tax Credit\PH Memo.Docx
2
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Expedited Bill No.:.... . :. 14..:. .-. . :. 16=--_ _ _ __
.
Concerning: Taxation - New Jobs Tax
Credit and Enhanced New Jobs Tax
Credit - Amount of Tax Credit - Term
of Credit
Revised: April 13. 2016 Draft No.
Introduced:
April 19. 2016
Expires:
October 19. 2017
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: --:...N=o.:..:.;ne=--_ _ _ _ __
ChI _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the request of the County Executive
AN EXPEDITED ACT
to:
(1)
change the term of the Enhanced New Jobs Tax Credit; and
(2)
generally amend the law governing the Enhanced New Jobs Tax Credit
By amending
Montgomery County Code
Chapter 52, Taxation
Article X, New Jobs Tax Credit and Enhanced New Jobs Tax Credit
Section 52-72
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface bracketsD
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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ExPEDITED BILL
No.
14-16
1
Sec.
1.
Section 52-72(b) is amended as follows:
52-72. Amount of tax credit; pass-through to lessees.
2
3
4
(a)
The new jobs tax credit that a taxpayer may claim against County
property taxes under this Article is the following percentage of the
property tax imposed on the assessment of the new or expanded
premIses:
(1)
52% during the fIrst and second taxable years in which a credit is
allowed;
(2) 39% during the third and fourth taxable years in which a credit is
allowed; and
(3) 26% during the fIfth and sixth taxable years in which a credit is
allowed.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
After the sixth taxable year, the Finance Director must not allow a new jobs
tax credit under this Article.
(b) The enhanced new jobs tax credit that a taxpayer may claim against
County property taxes under this Article is 58.5% of the property tax
imposed on the increase in assessment of:
(1) the new or expanded premises; and
(2) any
substantially
renovated
real
property
adjoining
or
19
20
neighboring the new or expanded premises.
A renovation is
F:\LAW\BILLS\16I4 Taxation-New Jobs Tax Credit\BiIl I.Doc
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EXPEDITED BILL
No. 14-16
21
22
23
substantial for purposes of this subsection if the renovation
results
in
a complete rehabilitation of at least 50% of each
building on the property.
The taxpayer may claim this credit
in
each of the fIrst [12] 24 taxable years
after the Director certifIes that the taxpayer is eligible for the credit.
(c)
A lessor of real property must reduce the amount of taxes for which an
eligible business entity is contractually liable under a lease or rental
agreement by the amount of any tax credit allowed under this Article.
Section 2. Expedited Effective Date
24
25
26
27
28
29
30
31
32
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on the date on which it
becomes law.
Approved:
33
34
Nancy Floreen, President, County Council
35
Approved:
Date
36
Isiah Leggett, County Executive
37
This is a correct copy ofCouncil action.
Date
38
Linda
L.
Lauer, Clerk of the Council
Date
F:\LAW\BILLS\1614 Taxation-New Jobs TaxCredit\BiU l.Doc
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LEGISLATIVE REQUEST REPORT
Expedited Bill 14-16
Taxation
-
New Jobs Tax Credit and Enhanced New Jobs Tax Credit
-
Amount ofTax Credit
-
Term of
Credit
DESCRIPTION:
This Bill would amend County law by changing the tenn of the
Enhanced New Jobs Tax Credit from 12 to 24 years, as is currently
allowed under State law.
In 2012, the State changed the tenn during which the Enhanced New
Jobs Tax Credit may be claimed by an eligible taxpayer.
Align the County law with the State law.
Department of Finance
To be requested.
To be requested.
Subject to the general oversight of the County Executive and the
County Council.
Unknown
Michael J. Coveyou, Chief, Division of Treasury, Department of
Finance
None
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIP ALITIES:
PENALTIES:
None
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~~I
..... I·
~
OFFICES OF THE COUNTY EXECUTIVE
Isiah Leggett
County Executive
Rockville. Maryland 20850
MEMORANDUM
April 5, 2016
")
~
TO:
FROM:
SUBJECT:
Nancy Floreen, Council President
Wah
Leggett, County Executive
~
~
New Jobs
Tax
Credit Legislative Amendment
I am recommending an amendment to Chapter 52-72 of the County Code to
change the term ofthe Enhanced New Jobs Tax Credit from twelve to twenty-four years, as is
currently allowed under State law. I believe this change is consistent with our
shared
priority of
attracting and retaining key industries within the County to promote sustainable economic
growth and new job creation.
I urge the Council to support this legislation. My staff are available to respond to
any questions you may have on this amendment or provide additional clarification.
Attachments
cc: Timothy L. Firestine, Chief Administrative Officer
Joseph F. Beach, Director, Department ofFinance
Jennifer
A.
Hughes, Director, Office ofManagement
and
Budget
Patrick Lacefield, Director, Public Information Office
Sally Sternbach, Acting Director, Department of Economic Development
Joy Nurmi, Special Assistant to the County Executive
Bonnie Kirkland, Assistant Chief Administrative Officer
Lily
Qi,
Assistant Chief Administrative Officer
Michael Coveyou, Chief, Division of Treasury, Department of Finance
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MONTGOMERY COUNTY CODE
Article X. New Jobs Tax Credit and Enhanced New Jobs Tax
Credit.
Sec. 52·69. Tax credits.
The Director of Finance must allow a new jobs tax credit or an enhanced new jobs tax
credit against the County property
tax
imposed on real property owned or leased by a business
entity or its affiliate and on personal property owned by that business entity or its affiliate if the
business entity qualifies for either credit under this Article. (1998 L.M.C., ch. 9,
§
1; 1999
L.M.C., ch. 16,
§ 1.)
Sec. 52·70. Definitions.
In
this Article, the following words have the meanings indicated:
(a)
Affiliate, Business Entity, New or Expanded Premises, New Permanent Full-Time
Position, and Notification Date have the meanings defined in Section 9-230, Tax-Property
Article, Maryland Code, or any successor provision.
(b)
Finance Director means the Director of the Department of Finance or the
Director's designee.
(c)
New Jobs Tax Credit means the credit granted under this Article to a qualified
business entity against the County property tax imposed on the new or expanded premises and
the personal property located on those premises.
(d)
Enhanced New Jobs Tax Credit means the credit granted under this Article to a
qualified business entity against the County property
tax
imposed on the new or expanded
premises that qualify under state law for an enhanced new jobs credit and the personal property
located on those premises. (1998 L.M.C., ch. 9,
§
1; 1999 L.M.C., ch. 16,
§ 1.)
Sec. 52-71. Eligibility for tax credit.
(a)
To qualify for a new jobs tax credit under this Article, a business entity must, on
1
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MONTGOMERY COUNTY CODE
or after July 1, 1998:
(1)
construct, or expand by at least 5,000 square feet, premises in the County
on which it conducts business by buying, building, or leasing new premises; and
(2)
employ at least
25
persons in new pennanent full-time positions located in
the new or expanded premises in the County during a 24-month period when it occupies the new
or expanded premises.
(b)
To qualify and be certified for an enhanced new jobs tax credit under this Article,
.a business entity must, on or after December 31, 1998:
(1)
notify the Finance Director as required under state law; and
meet all requirements under state law to qualify for an enhanced new jobs
(2)
tax credit.
(c)
if:
A business entity does not qualify for a new jobs tax credit or enhanced
tax
credit
the business entity has moved the operations which are located on new or
expanded premises from another county (including Baltimore City) in Maryland;
(1)
(2)
the business entity or another taxpayer has been given a tax credit or
exemption for the new or expanded premises during the same taxable year under any other state
or County law;
(3)
the new pennanent full-time positions are solely or primarily involved in
retail sales of goods or services, except when a small number of positions involved in retail sales
are incidental to the primary purpose of a building;
(4)
the business entity is a type of business entity that the County Council by
resolution before the Notification Date has made ineligible for a new jobs tax credit or enhanced
new jobs tax credit, or the new pennanent full-time positions are a type of position that the
Council by resolution before the Notification Date has made ineligible for a new jobs tax credit
or enhanced new jobs tax credit, or the new or expanded premises are located in a geographic
area that the Council by resolution before the Notification Date has made ineligible for a new
jobs
tax
credit or enhanced new jobs
tax
credit; or
(5)
the location of the new or expanded premises is inconsistent with any
applicable land use master plan.
To qualify for a credit against property tax imposed on personal property, a
(d)
business entity must certify that the personal property is located on premises that qualify for a
new jobs tax credit or enhanced new jobs tax credit under this Article. (1998 L.M.C., ch. 9,
§
1;
2
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MONTGOMERY COUNTY CODE
1999 L.M.C., ch. 16,
§
L)
Sec. 52-72. Amount of tax credit; pass-through to lessees.
(a)
The new jobs tax credit that a taxpayer may claim against County property taxes
under this Article is the following percentage of the property tax imposed on the assessment of
the new or expanded premises:
(1)
52% during the first and second taxable years in which a credit is allowed;
39% during the third and fourth taxable years in which a credit is allowed;
26% during the fifth and sixth taxable years in which a credit is allowed.
(2)
and
(3)
After the sixth taxable year, the Finance Director must not allow a new jobs tax credit
under this Article.
(b)
The enhanced new jobs tax credit that a taxpayer may claim against County
property taxes under this Article is 58.5% of the property tax imposed on the increase in
assessment of:
(1)
the new or expanded premises; and
(2)
any substantially renovated real property adjoining or neighboring the new
or expanded premises. A renovation is substantial for purposes of this subsection if the
renovation results in a complete rehabilitation of at least 50% of each building on the property.
The taxpayer may claim this credit in each of the first 12 taxable years after the Director
certifies that the taxpayer is eligible for the credit.
(c)
A lessor of real property must reduce the amount of taxes for which an eligible
business entity is contractually liable under a lease or rental agreement by the amount of any tax
credit allowed under this Article. (1998 L.M.C., ch. 9,
§
1; 1999 L.M.C., ch. 16,
§ 1.)
Sec. 52-73. Recapture of tax credit.
(a)
A business entity which does not satisfy all applicable requirements under this
Article to qualify for a tax credit during the three taxable years after any year when a credit was
allowed must repay the tax credit to the County after receiving notice from the Finance Director
3
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MONTGOMERY COUNTY CODE
that the credit must be repaid.
(b)
Interest must accrue on any repayable tax credit at the rate established for overdue
property taxes, beginning 30 days after the notice from the Finance Director.
(c)
Any unrepaid tax credit is a lien on real and personal property owned by the
business entity in the same manner as unpaid real property taxes under state and County law.
(1998 L.M.C., ch. 9,
§
1; 1999 L.M.C., ch. 16,
§ 1.)
Sec. 52-74. Administration of tax credit.
(a)
A business entity must apply for either
tax
credit on a form furnished by the
Finance Director, and must state which tax credit it intends to request and when and how it
expects to qualify for the credit.
(b)
When a business entity believes it has met all requirements for the tax credit, it
may apply for certification on a form furnished by the Director, and must provide sufficient
information to show that all requirements under this Article and applicable state law have been
met.
(c)
The Finance Director must:
(1)
determine the eligibility of the business entity for the tax credit;
(2)
notify the State Department of Assessments and Taxation that a business
entity has been approved for the
tax
credit; and
(3)
require submission of reports by the business entity during the three
taxable years after any year when the tax credit was earned to verify that the business entity
continues to satisfy all applicable requirements under this Article.
(d)
A person who submits a false or fraudulent application, or withholds information,
to obtain a tax credit under this Article has committed a Class A violation. In addition, the
person must repay the County for all amounts credited and all accrued interest and penalties that
would apply to those amounts as overdue taxes. A person who violates this subsection is liable
for all court costs and expenses of the County in any civil action brought by the County against
the violator. The County may collect any repayable
tax
credit, and otherwise enforce tbis
Article, by any appropriate legal action.
(e)
The County Executive may adopt regulations under method (2) to administer tbis
Article. (1998 L.M.C., ch. 9,
§
1; 1999 L.M.C., ch. 16,
§
1; 2001 L.M.C., ch. 28,
§§
12, 15 and
16.)
4
(j)
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MONTGOMERY COUNTY CODE
Editor's
note-The effective date of the amendments made to this section
by
2001
L.M.C., ch. 28,
§
12, is the same effective date as 1999 L.M.C., ch. 16,
§ 1.
5
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New Jobs Tax Credit
Description
This program consists of the New Jobs Tax Credit and the Enhanced New Jobs Tax Credit, and
benefits businesses that are planning to increase both their space and staff. A business seeking
either credit must notify the County of its intent to claim the credit
before
the expansion. This
credit is applied against the General County and Special Service Area real property taxes.
New Jobs Tax Credit
This is a six-year credit available to businesses that increase their space by at least 5,000 square
feet and their employee count by at least 25 new jobs. Businesses that are already resident in the
County or that are moving from outside of Maryland are eligible to apply. The credit is not
available to businesses that move to Montgomery County from another Maryland county or
Baltimore City, and it is not available to retailers. The 25 new jobs must be permanent full-time
positions and must last for at least 24 months. The new space must be occupied during the period
the business retains the 25 new employees. The credit is based on the increase in both real and
personal property tax assessments resulting from the business's expansion. The credit decreases
over six years, as follows:
Years
I
and 2: Credit 52% of tax attributable to the assessment increase
Years 3 and 4: Credit
=
39%
Years 5 and 6: Credit
=
26%
New Jobs Tax Credit recipients receive an additional State of Maryland tax credit which uses the
same calculation method. However, the State credit is given against one of the following taxes
and requires that recipients file Form 500CR with their State of Maryland Income Tax return:
• Corporate or personal income taxes
• Financial institutions franchise tax
• Insurance premiums tax
Enhanced New Jobs Tax Credit
This 12-year credit benefits large expansion projects and is available when businesses either:
1. Increase their space. by at least 250,000 square feet, and
either
(A) create 1,250 new
permanent, full-time positions
or
(B) create 500 new permanent, full-time positions in
addition to retaining at least 2,500 existing permanent, full-time positions, OR
2. Expend at least $150 million to obtain at least 700,000 square feet of new space and
employ at least 1,100 individuals, with at least 500 being in new, permanent, full-time
positions.
To qualify for the Enhanced New Jobs Tax Credit, a business must pay all these employees at
least 150% of the federal minimum wage and it must be engaged in one of the following
industries:
Manufacturing, mining, transportation, communications, agriculture, forestry or fishing
Research, development, testing or biotechnology
Computer programming, data processing, or other computer-related services
Central financial, real estate, or insurance services
Operation of central administrative offices or a company headquarters
Public utility, warehousing, or business services
- 10­
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A business has six years from the notification date to create and fill the required number of new
jobs and acquire and inhabit the new space. When this is accomplished and the business files a
completed application, the business will begin receiving the credit. The Enhanced Tax Credit,
like the regular New Jobs Tax Credit, is given against the local real and personal property tax
and is based on the amount of additional taxes due as a result of the expansion. Unlike the
regular New Jobs Tax Credit, however, the Enhanced Tax Credit is calculated at the same rate
for all 12 years. The rate is 58.5% of the additional local tax liability.
The State also will give a credit based on this additional local tax liability. The State credit is
31.5% for each of the 12 years and is given against the same State taxes as the regular New Jobs
Tax Credit (corporate or personal income taxes, the fmancial institutions franchise tax, or the
insurance premiums tax). Both the regular and enhanced State tax credits allow a business to
"roll" the credit for up to five years. This means that if the State tax credit is higher than the
amount of taxes due in any given year, the business can claim the difference for up to five years.
Both tax credits also contain a "recapture" provision that requires a business to repay the credits
if they fail to maintain the job and space requirements for three years. This provision is
applicable to each individual year, so that if a business maintains the requirements for 14 years, it
will have to repay only the last year of the credit.
Authority
Montgomery County Code, Chapter 52, Article X
Effective Date
July 1, 1998
Contact
Montgomery County Treasury in Rockville, MD at (240) 777-8931
Fiscal
Im~act:
LeyyYear
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
Amount
($)
1,284,939
1,379,483
1,391,761
1,344,424
1,342,339
1,449,507
1,444,926
2,479,151
2,501,136
2,743,060
2,911,520
2,465,987
863,011
109,749
35,220
30,137
Reci~ients
2
2
2
2
2
5
8
10
14
14
14
12
6
2
1
1
- 11 ­
@
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TAX CREDIT FOR BUSINESSES THAT CREATE NEW ... , 2012
Maryland
Laws•••
2012
Maryland Laws Ch.
128
(H.B.
592)
MARYLAND 2012 SESSION LAWS
REGULAR SESSION
Additions are indicated by Text; deletions by
::rext .
Vetoes are indicated by
~
;
stricken material by Text
Chapter
128
H.B. No.
592
TAX CREDIT FOR BUSINESSES THAT CREATE NEW JOBS--ENHANCED CREDIT--EXTENSION
AN ACT concerning
Tax Credit for Businesses That Create New Jobs--Enhanced Credit--Extension
FOR the purpose of extending the duration of certain property
tax
and State
tax
credits granted
to certain business entities that construct or expand certain business premises under certain
circumstances; declaring the intent ofthe General Assembly; providing for the application of this
Act; and generally relating to property and State
tax
credits granted to certain business entities.
BY repealing and reenacting, with amendments,
Article--Tax--Property
Section 9-230(d)
Annotated Code of Maryland
(2007 Replacement Volume and 2011 Supplement)
SECTION
1.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, That the Laws of Maryland read as
follows:
Article--Tax-Property
«MD TAX PROPERTY
§
9-230»
9-230.
(d)(I) For a business entity to qualifY for an enhanced property
tax
credit under this subsection, the business entity, along with
its affiliates, shall:
(i)
1.
obtain at least 250,000 square feet of new or expanded premises by purchasing newly constructed premises,
constructing new premises, causing new premises to
be
constructed, or leasing newly constructed premises;
2. continue to employ at least 2,500 individuals in existing permanent full-time positions paying at least 150% of
the federal minimum wage and located at premises in the State where the business entity, along with its affiliates,
is primarily engaged in one or more ofthe industries listed in paragraph (2) of this subsection; and
3. employ
at
least 500 individuals in new permanent full-time positions paying at least 150% ofthe federal minimum
wage and located in the new or expanded premises, and, if applicable, in newly renovated premises adjoining or
otherwise neighboring the new or expanded premises;
Wesn.A~V
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TAX CREDIT
FOR
BUSINESSES THAT CREATE NEW... , 2012 Maryland
Laws ...
(ii)
1.
obtain at least 250,000 square feet of new or expanded premises by purchasing newly constructed premises,
constructing new premises, causing new premises to be constructed, or leasing newly constructed premises; and
2. employ at least 1,250 individuals in new permanent full-time positions paying at least 150% of the federal
minimum wage and located in the new or expanded premises and, if applicable, in newly renovated premises
adjoining or otherwise neighboring the new or expanded premises; or
(iii)
in Montgomery County only:
1. expend at least $150 million to obtain at least 700,000 square feet of new or expanded premises by purchasing
newly constructed premises, constructing new premises, causing new premises to be constructed, or leasing newly
constructed premises; and
2. employ a total ofat least 1,100 individuals in full-time positions consisting ofboth full-time positions ofindefinite
duration and contract positions of definite duration lasting at least 12 months with an unlimited renewal option,
and including at least 500 individuals in new permanent full-time positions, with all positions:
A. receiving an employer provided subsidized health care benefits package;
B. paying at least 150% of the federal minimum wage; and
C. located in the new or expanded premises and, if applicable, in newly renovated premises adjoining or
otherwise neighboring the new or expanded premises.
(2) For a business entity to qualify for an enhanced property tax credit under this subsection, the business entity, along with
its affiliates, shall be primarily engaged in one or more of the following at the qualifying premises:
(i)
manufacturing or mining;
(ij)
transportation or communications;
(iii)
agriculture, forestry, or fishing;
(iv) research, development, or testing;
(v) biotechnology;
(vi) computer programming, data processing, or other computer-related services;
(vii) central services as defined in
§
6-101 of the Economic Development Article;
(viii) the operation of central administrative offices or a company headquarters as defined in
§
6-101 of the Economic
Development Article;
(ix) a public utility;
(x) warehousing; or
(xi) business services.
(3) To qualify for the enhanced property tax credit under this subsection, a business entity shall:
WESTi.AW
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TAX CREDIT FOR BUSINESSES THAT CREATE
NEW... ,
2012 Maryland
Laws...
(i) within a 6-year period beginning on the notification date, employ individuals in the number of new permanent full­
time positions required under paragraph
(l)
ofthis subsection;
Oi)
during the 6-year hiring period, obtain and occupy the new or expanded premises and, if applicable, the newly
renovated premises adjoining or otherwise neighboring the new or expanded premises; and
(iii)
during the 6-year hiring period, comply with all other requirements for the credits described in this subsection and
in any applicable local law.
(4)(i) Ifa business entity meets the requirements ofthis subsection and subsection (b) of this section and of applicable local
law adopted under subsection (b)(l) ofthis section, for each ofthe firstH
24
taxable years after
it
qualifies for the credit, a
property tax credit may be claimed against the county or municipal corporation property taxes that would otherwise be due.
(ii) The county or municipal corporation shall compute the amount ofthe property tax credit granted to equalS8.S% of
the amount of property tax imposed on the increase in assessment of:
1. the new or expanded premises;
2. newly renovated real property improvements adjoining or otherwise neighboring the new or expanded
premises, if the renovations are substantial, as defined in legislation enacted by the county or municipal
corporation to grant the credits under this subsection; and
3. the personal property located on the premises described in items 1 and 2 of this subparagraph.
(iii) The increase in assessment shall be measured from the notification date to the applicable annual assessment date
after the county or municipal corporation has certified that the business entity has qualified for the credit.
(S) On receipt ofnotification under subsection
(b
)(7) ofthis section that a business entity has been certified for an enhanced
property tax credit under this subsection, the Department shall compute and certifY to the Comptroller or, in the case of
the insurance premiums tax, the Maryland Insurance Commissioner the amount of the State tax credit authorized under this
subsection that may be claimed by the business entity or any of its affiliates against the individual or corporate income tax,
insurance premiums tax, or financial institution franchise tax that would otherwise be due to equal 31.S% of the amount of
property tax imposed on the increase in assessment of the real and personal property described in paragraph (4}(ii) of this
subsection for each ofthe first
-He
24
taxable years for which the credit is allowed.
(6) If a business entity or any of its affiliates claim the enhanced tax credits under this subsection for a certain premises, they
may not claim the tax credits under subsection (c) ofthis section.
«Note: MD TAX PROPERTY
§
9-230
»
SECTION 2. AND BE IT FURTHER ENACTED, That it is the intent ofthe General Assembly that the extension ofthe duration
of the tax credits provided under this Act shall apply to any business entity or affiliate of a business entity that qualified for
the tax credits before the effective date ofthis Act.
«Note: MD TAX PROPERTY
§
9-230
»
SECI'ION 3. AND BE
IT
FURTHER ENACTED, That this Act shall take effect
July
1, 2012,
and shall be applicable
to all taxable
years
beginning after December
31, 2012.
Approved April 10, 2012.
Effective date:
July
1, 2012.
weSTLAW
3
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MEMORANDUM
Ap.ril 25. 2016
TO:
Nancy Floreen, President, County Council
Jennifer
A.
Hughes, Director, Office ofManagement
Josepb F. Beach,
Director.
Department ofFinan
FROM:
SUBJECT:
Bud~
FEIS for BiB 14-16E. Taxation - New.Jobs Tax Credit and Enhanced New Jobs
Tax
Credit-Amount of Tax
Credit-
Tenn of
Credit
Please
find
attached the fiscal and economic impact statements for the above­
referenced legislation.
JAH:fz
cc: Bonnie Kirkland,
Assistant
ChiefAdministrative Officer
Lisa
Austin~
Offices oftile County Executive
Joy Nurmi, Special Assistant
to
the County Executive
Patrick Lacefield, Direetor, Public Information Office
Josepb F. Beacb, Director, Department of Finance
David Platt, Department of Finance
Jane Mukita, Office ofManagement and Budget
Alex Espinosa, Office ofManagement and Budget
Naeem Mia. Office of Management nnd Budget
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Fiscal Impact Statement
County Executive BiU 14-16E, Taxation - New Jobs Tax Credit and Enhanced New Jobs
Tax Credit-Amount of Tax Credit- Term Credit
1. Legislative Summary
This bill
extends the term
oftha Enhanced New Jobs Tax Credit (ENJTC) to 24 years
from
the
current
12
years.
2. An estimate ofchanges
in
County revenues and expenditures regardless of whether the
revenues or expenditures arc assumed in
the
recommended
or
approved budget. Includes
source of information, assumptions, and methodologies used.
Since the adoption of the
ENJTC
only one company
has
received the credit and the
estimate
ofthe annual
effect of
the credit is
reduced
revenues
of $1.7 million. This
estimate is predicated on the extension of that one credit. This credit will be
in
effect~
assuming no other companies receive the credit, through FY2027.
3.
Revenue
and expenditure estimates covering
at
least
the
next 6 fiscal years.
Increased
tax credit
(or reduced
tax revenues) of approximately $1.7
million.for
the
next
6
fiscal years.
.
4. An actuarial analysis through the entire amortization period for each bill that would affect
retiree pension or group
insurance costs.
NA
5, An estimate of expenditures related to County's information technology (IT)
SY$tems,
including Enterprise Resource Planning (ERP) systems.
NA
. 6. Later actions
that
may affect future revenue and expenditures
if
the bill authorizes future
spending.
NA
7. An estimate
of the staff time
needed
to implement the hill.
None
8.
An
explanation of how the addition of
new staff
responsibilities
would affect
other
duties.
None (see #7)
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9.
An
estimate ofcosts when an additionaiappropriation is
needed.
NA
10, A description ofany variable
that
could affect revenue and cost estimates.
Ifother companies become eligible, the
credit
would
cost
mote.
11.
Ranges of
revenue
or
expenditures that are uncertain or difficult to
project
None
12. If
a
bill
is
likely
to have no
fiscal
imp~
why
that
is the case.
NA
13. Other
flScal
impacts or comments.
None
14. The following contributed to
and
concurred
with
this
analysis:·
Mike Coveyou, Finance Department
Jane
Mukira,
Office
ofManagement and Budget
Date
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Economic Impact Statement
BiD 14..16, Taxation- New Jobs Tax Credit and
Enhanced
New Jobs Tax Credit ­
Amendment
Background:
Tbis legislation would extend the term of the Enhanced New Jobs Tax Credit (ENJTC) to
twenty-four (24) taxable years from the current twelve (12) taxable years.
1.
The sources of information, assumptions, and methodologies used.
Based on data provided
by
the Treasury
Division~
Department of f'inance, there is one
company
currently receiving the
ENJTC. That company had 796 employees
at
the
time
they
intended to claim the ENJTC. When the
company
qualified for theENJTC.
employment reached 1,637 -an increase ofover one hundred percent. As of
July
2015. there were 1,668 employees. Based on
the
sample of one company, extending
the credit may increase employment by 800 employees which is the difference
between the number of employees before qualifying
for
the ENJTC and after
qualification.
Data provided
by
Treasury Division show that the company received $1.138 million
in
property
tax
credits in FY2004
and
$1.665 million in FY2015. That is, the
company received a credit of $695 per employee in FY2004 ($1.138 million/l,637)
and a credit of $998 per employee
in
FY2015
($1.66Sf1~668).
Once the company
qualified for the credit, employment increased
by
over one hundred percent.
2. A
description of any variable that could affect the economic impact estimates.
The variables that could affect the economic impact estimates are the number of
companies that qualify for the
ENJTC
and the increase in. employment attributed to
the
ENrIC.
Since the inception ofthe ENJTC, only one company has received the
ENJTC and employment increased
by
one hundred percent Therefore, extending the
credit could have a positive economic impact) but with a limited sample currently
receivingtbe credit. the
total
impa.ct on the County's economy is uncertain v.ith any
specificity.
3.
The
Bill's positive or negative effect,
if any on employme.nt, spending, savings,
investment, incomes, and property values
in
the County.
Given the very limited sample of companies that currently received the
ENJTC.
it
is
uncertain whether the extension ofthe credit\\'ill have a significant impact on
employment:, spending, savings,
il1vestment~
and property values in the County.
However~
the credit does provide an employment and retention incentive to a
company as well as other prospective employers. But without specific data on the
l1umber of companies that would receive the
credit~
such an impaJ...'1 is uncertain with
any specificity.
Page 1 of2
®
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Economic Impact Statement
Bill 14-16, Taxation - New Jobs Tax Credit and Enhanced New Jobs Tax Credit­
Amendment
4.
If
a
Bill
is
likely to have no economic impact,
why
is that the case?
See paragraph #3.
5.
The following contributed to or concurred with this analysis: David Platt and Rob
Hagedoorn,
Department
of
Finance.
Beach.
Director
epartment of Finance
Date
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