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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY MIRABITO, GEORGE, BRIGGS, BROWNLEE, CARROLL, CONKLIN, DEAN, DERMODY, FABRIZIO, FRANKEL, GIBBONS, GOODMAN, HANNA, HORNAMAN, KIRKLAND, KOTIK, LONGIETTI, MAHONEY, MUNDY, M. O'BRIEN, PASHINSKI, READSHAW, SCHMOTZER, STURLA, YOUNGBLOOD AND MULLERY, MAY 21, 2012 |
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| REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, MAY 21, 2012 |
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| AN ACT |
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1 | Amending Titles 58 (Oil and Gas) and 72 (Taxation and Fiscal |
2 | Affairs) of the Pennsylvania Consolidated Statutes, further |
3 | providing for distribution of unconventional gas well fee; |
4 | providing for the establishment, implementation and |
5 | administration of the Marcellus Shale Job Creation Tax |
6 | Credit; and imposing additional duties on the Department of |
7 | Community and Economic Development. |
8 | The General Assembly of the Commonwealth of Pennsylvania |
9 | hereby enacts as follows: |
10 | Section 1. Section 2314(c.1) of Title 58 of the Pennsylvania |
11 | Consolidated Statutes is amended by adding a paragraph to read: |
12 | § 2314. Distribution of fee. |
13 | * * * |
14 | (c.1) Additional distributions.--From fees collected under |
15 | this chapter and deposited in the fund for 2011 and each year |
16 | thereafter: |
17 | * * * |
18 | (7) Twenty-five million dollars to the Department of |
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1 | Community and Economic Development for the Marcellus Shale |
2 | Job Creation Tax Credit. |
3 | * * * |
4 | Section 2. Title 72 is amended by adding a part to read: |
5 | PART III |
6 | TAX CREDITS |
7 | Chapter |
8 | 31. Marcellus Shale Job Creation Tax Credit |
9 | CHAPTER 31 |
10 | MARCELLUS SHALE JOB CREATION TAX CREDIT |
11 | Sec. |
12 | 3101. Definitions. |
13 | 3102. Eligibility. |
14 | 3103. Application process. |
15 | 3104. Tax credits. |
16 | 3105. Prohibitions. |
17 | 3106. Penalties. |
18 | 3107. Annual reports. |
19 | 3108. Notice of availability of tax credits. |
20 | § 3101. Definitions. |
21 | The following words and phrases when used in this chapter |
22 | shall have the meanings given to them in this section unless the |
23 | context clearly indicates otherwise: |
24 | "Base period." As follows: |
25 | (1) Except as set forth in paragraph (2), the three |
26 | years immediately preceding the date on which a company may |
27 | begin creating new jobs which may be eligible for job |
28 | creation tax credits. |
29 | (2) If a company has been in business in this |
30 | Commonwealth for less than three years, the period which it |
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1 | has been in business in this Commonwealth. |
2 | "Department." The Department of Community and Economic |
3 | Development of the Commonwealth. |
4 | "Job creation tax credits." Tax credits for job creation for |
5 | which the department has issued a certificate under this |
6 | chapter. |
7 | "New job." A full-time job, the average hourly rate, |
8 | excluding benefits, for which must be at least 350% of the |
9 | Federal minimum wage, created within a municipality located in |
10 | this Commonwealth by a company within three years from the start |
11 | date. The term includes a job which was previously held by a |
12 | nonresident and is filled by a resident. The term does not |
13 | include a temporary or seasonal job. |
14 | "Nonresident." An individual who does not reside in this |
15 | Commonwealth. |
16 | "Qualified apprenticeship training program." A program |
17 | registered with the Apprenticeship and Training Council within |
18 | the Department of Labor and Industry that is in compliance with |
19 | applicable Federal and State laws and regulations and which |
20 | requires at least 2,000 but not more than 10,000 hours of on- |
21 | the-job apprenticeship training. |
22 | "Resident." Any natural person who is considered a resident |
23 | of this Commonwealth under the act of March 4, 1971 (P.L.6, |
24 | No.2), known as the Tax Reform Code of 1971. |
25 | "Start date." The date on which a company may begin creating |
26 | new jobs which may be eligible for job creation tax credits. |
27 | "Year one." A one-year period immediately following the |
28 | start date. |
29 | "Year three." A one-year period immediately following the |
30 | end of year two. |
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1 | "Year two." A one-year period immediately following the end |
2 | of year one. |
3 | § 3102. Eligibility. |
4 | In order to be eligible to receive job creation tax credits |
5 | under this chapter, a company must demonstrate to the department |
6 | the following: |
7 | (1) The company's financial stability and the project's |
8 | financial viability. |
9 | (2) The company's express intent to maintain operations |
10 | in this Commonwealth for a period of five years from the date |
11 | the company submits its tax credit certificate to the |
12 | Department of Revenue. |
13 | (3) The company is in conformity with industry laws and |
14 | regulations overseen and enforced by the Department of |
15 | Environmental Protection. |
16 | § 3103. Application process. |
17 | (a) Application.--A company must complete and submit to the |
18 | department a job creation tax credit application along with a |
19 | copy of the permit issued by the Department of Environmental |
20 | Protection providing that the company has obtained the necessary |
21 | permit allowing the company to drill in this Commonwealth or a |
22 | statement from the Department of Environmental Protection |
23 | stating the same. The Department of Environmental Protection |
24 | shall notify the Department of Labor and Industry, the |
25 | Department of Revenue and the department upon suspension or |
26 | revocation of drilling permits or other changes that affect the |
27 | company's ability to continuously drill in this Commonwealth. |
28 | (b) Applicant priority.--The department shall give priority |
29 | to eligible applicants that will place the following workers in |
30 | new jobs: |
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1 | (1) Workers who have completed a qualified |
2 | apprenticeship training program or a job training program |
3 | approved by the Department of Labor and Industry. |
4 | (2) Dislocated workers under the act of December 18, |
5 | 2001 (P.L.949, No.114), known as the Workforce Development |
6 | Act, who meet any one of the following conditions: |
7 | (i) Have been terminated or laid off or have |
8 | received notice of termination or layoff, and are |
9 | eligible for or have exhausted unemployment compensation |
10 | benefits. |
11 | (ii) Are unlikely to return to the industry or |
12 | occupation in which the individuals were employed. |
13 | (iii) Have been terminated or received notice of |
14 | termination as a result of the permanent closure or |
15 | relocation of a plant, facility or plant operation in |
16 | which the individuals were employed. |
17 | (iv) Are chronically unemployed. |
18 | (v) Have limited opportunities of employment in the |
19 | geographic area in which the individuals reside. |
20 | (vi) Are individuals who may face substantial |
21 | barriers to employment because of age or disability. |
22 | (3) Workers who have been unemployed for at least six |
23 | months. |
24 | (4) Underemployed workers who require skill training to |
25 | meet industry demands or increase employment opportunities. |
26 | (c) Approval.--If the department approves the company's |
27 | application, the department and the company shall execute a |
28 | commitment letter containing the following: |
29 | (1) A description of the project. |
30 | (2) The number of new jobs to be created. |
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1 | (3) The amount of private capital investment in the |
2 | project. |
3 | (4) The maximum job creation tax credit amount the |
4 | company may claim. |
5 | (5) A signed statement that the company intends to |
6 | maintain its operation in this Commonwealth for five years |
7 | from the start date. |
8 | (6) A signed statement from the company that the company |
9 | will provide to the department a list of workers which |
10 | satisfies the requirements of subsection (b) for which the |
11 | company will claim tax credit, including documentation of |
12 | each worker's status as a resident of this Commonwealth. |
13 | (7) Such other information as the department deems |
14 | appropriate. |
15 | (d) Commitment letter.--After a commitment letter has been |
16 | signed by both the Commonwealth and the company, the company |
17 | shall receive a job creation tax credit certificate and filing |
18 | information. |
19 | § 3104. Tax credits. |
20 | (a) Maximum amount.--A company may claim a tax credit of |
21 | $2,500 per new job created and up to the maximum job creation |
22 | tax credit amount specified in the commitment letter. |
23 | (b) Determination of new jobs created.-- |
24 | (1) New jobs shall be deemed created in year one to the |
25 | extent that the company's average employment by quarter |
26 | during year one exceeds the company's average employment |
27 | level during the company's base period, as adjusted for any |
28 | job held by a nonresident during the period which is no |
29 | longer held by a nonresident. |
30 | (2) New jobs shall be deemed created in year two to the |
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1 | extent that the company's average employment by quarter |
2 | during year two exceeds the company's average employment by |
3 | quarter during year one. |
4 | (3) New jobs shall be deemed created in year three to |
5 | the extent that the company's average employment by quarter |
6 | during year three exceeds the company's average employment by |
7 | quarter during year two. |
8 | (c) Applicable taxes.--A company may apply the tax credit to |
9 | 100% of the company's corporate net income tax, capital stock |
10 | and franchise tax or the capital stock and franchise tax of a |
11 | shareholder of the company if the company is a Pennsylvania S |
12 | corporation, personal income tax or the personal income tax of |
13 | shareholders of a Pennsylvania S corporation or any combination |
14 | thereof. |
15 | (d) Tax credit term.--A company may claim the job creation |
16 | tax credit for each new job created, as approved by the |
17 | department, for a period determined by the department but not to |
18 | exceed five years from the date the company first submits a job |
19 | creation tax credit certificate. |
20 | (e) Availability of tax credits.--Each fiscal year, |
21 | $25,000,000 in tax credits shall be made available to the |
22 | department and may be awarded by the department in accordance |
23 | with this chapter. |
24 | § 3105. Prohibitions. |
25 | The following actions with regard to job creation tax credits |
26 | are prohibited: |
27 | (1) Approval of jobs that have been created prior to the |
28 | start date, unless the job was held by a nonresident who has |
29 | been replaced by a resident. |
30 | (2) The assignment, transfer or use of credits by any |
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1 | other company, provided, however, that tax credits may be |
2 | assigned in whole or in part to an affiliated entity. As used |
3 | in this paragraph, the term "affiliated entity" means an |
4 | entity which is part of the same "affiliated group," as |
5 | defined by section 1504(a)(1) of the Internal Revenue Code of |
6 | 1986 (Public Law 99-514, 26 U.S.C. § 1504(a)(1)), as the |
7 | company awarded the credit. |
8 | § 3106. Penalties. |
9 | (a) Failure to create jobs.--A company which receives job |
10 | creation tax credits and fails to create the approved number of |
11 | new jobs within three years of the start date will be required |
12 | to refund to the Commonwealth the total amount of credit or |
13 | credits granted. |
14 | (b) Waiver.--The department may waive the penalties outlined |
15 | in subsection (a) if it is determined that a company's |
16 | operations were not maintained or the new jobs were not created |
17 | because of circumstances beyond the company's control. Such |
18 | circumstances include natural disasters or unforeseen industry |
19 | trends. |
20 | § 3107. Annual reports. |
21 | (a) Contents.--The department shall provide an annual report |
22 | on job creation tax credits which at a minimum shall include: |
23 | (1) A list of all job creation tax credit certificates |
24 | provided during the previous fiscal year. |
25 | (2) The name and location of each company receiving job |
26 | creation tax credit certificates. |
27 | (3) An analysis of the job creation tax credits' ability |
28 | to create jobs in this Commonwealth. |
29 | (4) Any other information that may be deemed relevant by |
30 | the department. |
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1 | (b) Submission.--The annual report shall be submitted to the |
2 | Governor, the Majority Leader of the Senate, the Minority Leader |
3 | of the Senate, the Majority Leader of the House of |
4 | Representatives and the Minority Leader of the House of |
5 | Representatives by March 1 of the first full year following the |
6 | effective date of this section and March 1 of each year |
7 | thereafter. |
8 | § 3108. Notice of availability of tax credits. |
9 | The department shall publish notice of the availability of |
10 | the job creation tax credit on its publicly accessible Internet |
11 | website and make information available annually to the |
12 | Department of Labor and Industry Workforce Investment Board for |
13 | distribution to local boards. |
14 | Section 3. This act shall take effect immediately. |
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