Wednesday, March 21, 2012

Amendment to Small Employer Quality Jobs Incentive Act

HB2326 modifies the Small Employer Quality Jobs Act by adding mining activities businesses to the definition of “basic industry”.  The bill further defines a “rural value-added area” and includes the basic industries in these areas under the act.  Establishments in these areas meeting the qualifications specified in the Small Employer Quality Jobs Incentive Act may receive quarterly payments for a 10 year period in an amount equal to the net benefit rate multiplied by the actual gross taxable payroll of new direct jobs as verified by the Tax Commission. The establishments in a rural value-added area which meet the qualifications specified in the act shall be required to meet a fifty percent (50%) out-of-state sales requirement.  The measure outlines additional requirements which provide that no average wage requirement shall exceed Twenty-five Thousand Dollars ($25,000.00) for those establishments in a rural value-added area.  This maximum wage threshold shall be indexed and modified periodically.
“Rural value-added area” means those areas experiencing a distressed economy which have establishments of basic industries that hold the promise of significant development of the rural economy as defined by a county in which:
A.      the per capita personal income, as determined by the Department, is eighty-five percent (85%) or less of the statewide average per capita personal income,
B.      the population has decreased over the previous ten (10) years, as determined by the State Data Center based on the most recent U.S. Department of Commerce data, or
C.      The unemployment rate exceeds the lesser of six percent (6%) or two (2) percentage points above the state average unemployment rate as certified by the Oklahoma Employment Security Commission.
The bill passed the Oklahoma House and is now in the Senate Finance Committee.
According to the Small Employer Quality Jobs Incentive Act “Basic industry” includes:
Manufacturing –
Industries classified under NAICS Manual Nos. 31, 32, 33, 5111 or 11331.
Research and Development and Testing Laboratories –
See NAICS Manual Nos. 541711, 541712 and 541380.
Central Administrative Offices, Corporate Offices and Technical Services -
See NAICS Manual Nos. 5611, 5612, 51821, 519130, 52232, 56142, 54191, 524291,
Certain jobs related to the mining of Oil and Gas
See NAICS No. 2111
Certain Warehouse/Distribution Operations –
Where 40% of inventory is shipped out of state.
Transportation by Air –
See NAICS Manual No. 4811 if corporate headquarters and some reservation activities are within the state or 75% of air transport sales are to out-of-state consumers.
Flight Training Services
See NAICS No. 611512
Federal Civilian Workforce of the Federal Aviation Administration
Where jobs are migrating to Oklahoma from other Federal sites, or expansion here
Other Support Activities for Air Transportation
See NAICS Manual No. 488190
Wind Power Electric Generation Equipment Repair & Maintenance
See NAICS Manual No. 811310
Support Activities for Rail and Water Transport
See NAICS Manual Nos. 4882, 4883
Sports Teams & Clubs
See NAICS Manual No. 711211
Services –
The program also covers the following service companies, if 75% of sales are out-of-state:
Motor Freight Transportation and Warehousing
See NAICS Nos. 493, 484, 4884-4889
Arrangement of Passenger Transportation
See NAICS Nos. 561510, 561520, 561599
Transportation of Freight or Cargo
See NAICS No. 541614
Certain Communications Services
See NAICS Nos. 51741 and 51791
Certain Refuse Systems that distribute methane gas
See NAICS No. 5622
Grocery Wholesale Distributing
See NAICS Nos. 4244 and 4245
Insurance Carriers
See NAICS No. 5241
Insurance Claims Processors Only
Included in NAICS Nos. 524210 and 524292
Adjustment and Collection Services
See NAICS No. 561440 (75% of loans to out-of-state debtors)
Mailing, Reproduction, Commercial Art, Photography and
Stenographic Services
See NAICS Nos. 541430, 541860, 541922, 561439 and 561492
Services to Dwellings and Other Buildings
NAICS No. 5617 (excluding 5617-30)
Miscellaneous Equipment Rental
See NAICS Nos. 5323 and 5324
Personnel Supply Services
See NAICS No. 5613
Computer Programming, Data Processing and Other Computer-
Related Services
See NAICS Nos. 5112, 5182, 5191, 519130, and 5415
Miscellaneous Business Services
See NAICS Nos. 561410 through 561439, 5616, 51911, and 813920
Offices of Real Estate Agents & Brokers
See NAICS No. 53120 (and 75% of transactions are out of state)
Medical and Diagnostic Laboratories
See NAICS No. 6215
Engineering, Management and Related Services
See NAICS Nos. 5412, 5414-5417, 54131, 54133, 54136, 54137, 54182, and 541990
Agricultural Production
See NAICS Nos. 112120, 112310
Professional Organizations
See NAICS No. 813920
Alternative Energy Structure Construction
See NAICS No. 237130
Alternative Energy Equipment Installation
See NAICS Nos. 238160, 238220
Electric Service Companies –
The program also applies to electric services companies within NAICS Nos.
221111-221122 - Exempt Electric Wholesale Generators, if 90% of energy input is consumed from in-state sources and 90% of sales are out-of-state.

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