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,

551114.

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.