Trends in Western State Business Incentives

STATE BUSINESS INCENTIVES TRENDS AND OPTIONS FOR THE FUTURE A CAPITOL RESEARCH SPECIAL REPORT

The Council Of State Governments

OCTO

BER

2011

TRENDS IN WESTERN STATE BUSINESS INCENTIVESThe Council of State Governments 2012

ExECUTIVE MANAgEMENTDavid AdkinsExecutive Director/CEO

Chris WhatleyCSG Washington, D.C., Office Director

Wendell M. HannafordCSG East Director

Colleen Cousineau CSG South Director

Michael H. McCabeCSG Midwest Director

Edgar RuizCSG West Director

EDIToRSMary BranhamManaging Editor, Print and Multimedia

Jennifer GinnAssociate Editor

Heather PerkinsSenior Membership, Marketing and Media Associate

gRAphIC DESIgNERSJessica HughesSenior Graphic Designer

Rebecca FieldSenior Graphic Designer

Chris PryorDesign Coordinator

Kelsey StamperGraphic Designer

Authors:Jennifer BurnettProgram Manager, Research Services and Special Projects

Cheryl DuvauchelleCSG-West

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Executive SummaryStates have been faced with high levels of unemployment, an increased demand for safety net services and a shrinking revenue base since the Great Recession began. Although the past year has brought some improvements, the number one question on state policymakers’ minds continues to be this: What can we do to encourage job growth? Traditionally, a key policy lever for development and job creation strat-egies was—and remains—tax and financial incentive programs designed to encourage new firms to start up or existing firms to grow or relocate.

This report takes a look at trends in the type and number of incen-tive programs being used by states in the West, along with a brief re-view of economic trends, including an evaluation of trends in employ-ment, unemployment and gross domestic product. A profile for each of the 13 Western states also is provided, highlighting successful incentive and development programs, oversight and accountability measures, and recent legislative activity.

The descriptive information included in each state profile was gathered from a review of state economic development agency and division websites and a survey of agency staff.

TABlE of CoNTENTS

Executive Summary ......................................................1

Trends in the Use of Tax and Financial Incentives in Western States .............................................................2

Figure 1: Western State Tax and Financial Incentives, 2010 .......................................3

The Big Picture: Economic Trends in the West ................4

Figure 2: Unemployment Rate, Year-over-Year Change, April 2011 – April 2012 .............................4

Figure 3: 2001–2011 Compound Annual GDP Rate ...4

Figure 4: Negative Equity Rates, 2Q 2011 ................5

State Profiles ................................................................6

State Profile Sample Page .......................................6

Alaska .....................................................................8

Arizona ..................................................................10

California ...............................................................12

Colorado ................................................................14

Hawaii ...................................................................16

Idaho .....................................................................18

Montana ...............................................................20

Nevada ..................................................................22

New Mexico ...........................................................24

Oregon ..................................................................26

Utah ......................................................................28

Washington ...........................................................30

Wyoming ..............................................................32

Appendix A: State Personal Income and GDP, 2011 .....34

Appendix B: Housing Measures, 2010–2011 ...............35

Appendix C: Employment and Unemployment Levels, 2011–2012 .................................................................36

Appendix D: State Financial Incentives for Business, 2010 ............................................................................37

Appendix E: State Tax Incentives for Business, 2010 ....38

Appendix F: A Guide For State Leaders to Evaluate Job Creation Proposals ................................................39

Appendix G: State Contact Information .......................40

Business Incentive and Economic Development programs in Western States

Thanks to the following for their contributions to this report:• Alaska Office of Economic Development• Arizona Commerce Authority• Business Oregon• California Governor's Office Business & Economic Development• Colorado Office of Economic Development & International Trade• Hawaii Department of Business, Economic Development and

Tourism• Hawaii Legislative Research Bureau• Idaho Department of Commerce• Montana Department of Commerce• Nevada Governor's Office of Economic Development• New Mexico Economic Development Department• Utah Governor's Office of Economic Development• Washington Department of Commerce• Wyoming Business Council

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Trends in the Use of Tax and financial Incentives in Western StatesOver the past three decades, states have developed various incentive programs designed to encourage economic activity in order to create, retain or expand business opportunities. In addition to tax and finan-cial incentives, some states have used customized, company-specific incentives to engage in bidding wars with other states, making interstate competition for industries and businesses increasingly intense.

From the 1970s into the late 1980s and early 1990s, the number of states across the country providing tax and financial incentives to businesses and the types of incentives being offered increased signifi-cantly. Over the past 10 years, the number of states offering incen-tives of varying degrees and types has become relatively stable.

In 1977, at least 28 states offered tax concessions or credits to businesses for equipment and machinery, goods in transit, manu-facturers’ inventories, raw materials in manufacturing and job creation. In 1998, the number of states offering those incentives had grown to 42; by 2010 that count stood at 44 states.

In the West in 2010, 12 of 13 states provided a tax exemption for at least one of the following: goods in transit, inventory and new equipment. Every Western state provided a tax exemption on raw materials used in manufacturing.

Nine states in the West offered an exemption on either personal or corporate income taxes in 2010, while seven allowed exemp-tions on excise taxes and six offered tax breaks on land or capital improvements. Nine states also provided tax incentives for the creation of jobs or for industrial investment.

The number of states across the country offering financial incentive programs also increased over the past three decades. In 1977, fewer than 20 states offered special low-interest loans for building construction, equipment, machinery, plant expansion and establishment of industrial plants in areas of high unemployment. By 1998, more than 40 states offered those incentives—a number that remained essentially the same during the next decade.

At least nine of the 13 Western states in 2010 provided state loans or loan guarantees for building construction, equipment or machinery, or financing aid for existing plant expansion. Ten Western states offered incentives for establishing industrial plants in areas of high unemployment.

The “New Energy Economy” has emerged as a key focus of state economic development programs, especially for Western states. Every Western state offers two or more types of incentives for renewable energy and at least one type of incentive for energy efficiency.

Making Incentives payGiven the significant amount of funding at stake—in some cases, upward of half a billion dollars per state economic development program per year—many states are now using a number of strate-gies to ensure their investments are paying off, including:• Specify qualifications for a tax break—States often require

companies to meet certain criteria—such as wages paid, jobs created, health insurance and other benefits provided, capital investment made and taxes created—to qualify for a tax break or incentive. Forty-three states have a rule for at least one of their incentive programs that addresses this type of qualifica-tion. Some states provide additional or stand-alone incentives for firms that create jobs in a particularly high-growth area or jobs that pay a high wage. In New Mexico, for example, an eli-gible employer may receive a tax credit for each new high-wage

job it creates under the High Wage Jobs Tax Credit. The credit equals 10 percent of the wages and benefits paid for each new job created.

• Strengthen the approval process—In Arizona, every company seeking a tax incentive is screened for eligibility before it can receive a benefit and typically a minimum of two agencies are involved when awarding incentives. In Wyoming, the state eco-nomic development staff does extensive diligence on each proj-ect and follows development of those projects throughout their lives. As required by the state’s constitution, the investments are with the governmental entities rather than companies directly; should the endeavor fail, the governmental entity retains the assets created.

• Public disclosure and online accountability—One strategy states increasingly are employing is the use of online transpar-ency and accountability systems. These systems provide the public with company-specific information on the amount of the tax subsidy, comparisons on the number of jobs promised and the number of jobs actually created, wage levels for employees, and the company’s compliance record with various state rules and regulations. For example, California’s Employment Training Panel posts annual reports online that detail where the panel’s funding was spent, including the name of companies receiving contracts, the amount of funding the company received and the number of new hires or employees trained.

A report by Good Jobs First1 found that 37 states provided online recipient disclosure for at least one key subsidy program, which is a significant improvement over 2007, when only about 23 states were doing so.

• Clawbacks—Some states penalize businesses that don’t comply with the requirements of the tax incentive using clawback provi-sions. At least 37 states use some form of clawback provision, ei-ther written into their statutes or defined by program guidelines.

• Post-Performance Awards—Providing incentive-based awards after a firm has met the criteria for an award ensures the state will see the return it specifies and creates more of a back-end accountability system. It also provides a true incentive for businesses to perform in the manner they have promised. If businesses cannot perform in that manner, states do not have to chase a business for reimbursement for a promise unfulfilled. In Utah, all state incentives are awarded on a post-performance basis so that companies must meet specific milestones, includ-ing generation of new state tax revenue, before incentives are disbursed.

• Program Evaluation—Regular and comprehensive evaluation of incentive programs and use of those evaluations to make policy and budget decisions leads to a more informed and effec-tive use of limited state dollars. A new report by the Pew Center on the States2 identifies three Western states—Arizona, Oregon and Washington—as leaders in the area of incentive program evaluation. Other common mechanisms states use include placing sunset

provisions in statute so tax incentive programs cannot continue without additional legislative action and closely monitoring pro-grams using performance audits. In Nevada, for example, audits are conducted for all incentives to affirm that the agreed upon number of workers have been hired or trained and pay levels are consistent with the incentive agreement. 1Good Jobs First, Show us the Subsidies: An Evaluation of State Government Online Disclosure of Economic Development Subsidies, 2010, http://www.goodjobsfirst.org/showusthesubsidies2The Pew Center on the States, Evidence Counts: Evaluating State Tax Incentives for Jobs and Growth, 2012, http://www.pewstates.org/research/reports/evidence-counts-85899378806

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Financial Incentives

State-Sponsored Industrial Development Authority * * * * * * * * * * 10

Privately Sponsored Development Credit Corporation * * * * * * * * * * * 11

State Authority or Agency Revenue Bond Financing * * * * * * * * * 9

State Authority or Agency General Obligation Bond Financing * * * * * * * 7

State Loans for Building Construction * * * * * * * * * 9

State Loans for Equipment, Machinery * * * * * * * * * * 10

State Loan Guarantees for Building Construction * * * * * * * * 8

State Loan Guarantees for Equipment, Machinery * * * * * * * * * 9

State Financing Aid for Existing Plant Expansion * * * * * * * * * 9

State Matching Funds for City and/or County IndustrialFinancing Programs * * * * * 5

State Incentive for Establishing Industrial Plants in Areas of High Unemployment * * * * * * * * * * 10

Tax Incentives

Corporate Income Tax Exemption * * * * * * * * * 9

Personal Income Tax Exemption * * * * * * * * * 9

Excise Tax Exemption * * * * * * * 7

Tax Exemption or Moratorium on Land, Capital Improvements * * * * * * 6

Tax Exemption or Moratorium on Equipment, Machinery * * * * * * * * * 9

Inventory Tax Exemption on Goods in Transit (Freeport) * * * * * * * * * * * * 12

Tax Exemption on Manufacturers’ Inventories * * * * * * * * * * * * 12

Sales/Use Tax Exemption on New Equipment * * * * * * * * * * * * 12

Tax Exemption on Raw Materials Used in Manufacturing * * * * * * * * * * * * * 13

Tax Incentive for Creation of Jobs * * * * * * * * * 9

Tax Incentive for Industrial Investment * * * * * * * * * 9

Tax Credits for Use of Specified State Products * * 2

Tax Stabilization Agreements for Specified Industries * * 2

Tax Exemption to Encourage Research and Development * * * * * * * * 8

Accelerated Depreciation of Industrial Equipment * * * * * * * * * 9

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Source: Site Selection Magazine, from State Business Incentives: Trends and Options for the Future, The Council of State Governments, 2011, http://knowledgecenter.csg.org/drupal/content/state-business-incentives-trends-and-options-future

Figure 1: Western State Tax and financial Incentives, 2010

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The Big picture: Economic Trends in the West

gross Domestic productNationally, real gross domestic product increased in 43 states and the District of Columbia in 2011, according to the U.S. Bureau of Economic Analysis. Durable goods manufacturing, professional, scientific and technical services, and information services were the leading contributors to real U.S. economic growth. Real U.S. GDP by state grew 1.5 percent in 2011, slowing down after a 3.1 percent increase in 2010. On a per capita basis, real GDP for the U.S. was $42,070 in 2011, while states nationally ranged from a high of $63,159 in Delaware to a low of $28,293 in Mississippi.

For the 13 Western states, current dollar GDP in 2011 ranged from $37.6 billion in Wyoming and $38 billion in Montana to a high of $1.96 trillion in California and $355.1 billion in Wash-ington. All but three states in the region—Hawaii, Montana and Wyoming—saw positive growth in real GDP in 2011, with average regional growth of 1.5 percent. Oregon fared best in 2011, with 4.7 percent real GDP growth in 2011, while Wyoming saw a decrease of 1.2 percent. Every state in the West had a positive 2001-11 compound annual growth rate in GDP with average regional growth of 2.27 percent.

Across the 13 Western states, real estate3, mining, accommoda-tion and food services, durable goods manufacturing and govern-ment were the largest contributors to GDP in 2011. Durable goods manufacturing, information and mining were the largest contributors to real GDP growth from 2010 to 2011 for the region.

Unemployment and Employment Unemployment rates remain high across the nation, but this indicator is improving slowly. According to the U.S. Bureau of Labor Statistics, 48 states and the District of Columbia reported a year-over-year decrease in their unemployment rate in April 2012, with the national rate falling 0.9 percentage points to 8.1 percent.

In April 2012, Nevada reported the highest unemployment rate among Western states at 11.7 percent, while California had the second highest rate at 10.9 percent. Nevada, however, also had the most improved unemployment rate from April 2011 to April 2012—both in the region and nationally—dropping 1.9 percentage points. Arizona’s rate fell by 1.4 percentage points, the second highest drop in the region. Every state in the region saw an

Alaska -0.6

Arizona -1.4

California -0.9

Colorado -0.5

Hawaii -0.3

Idaho -1.0

Montana -0.7

Nevada -1.9

New Mexico -0.6

Oregon -1.0

Utah -1.0

Washington -1.2

Wyoming -0.7

Figure 2: Unemployment Rate, Year-over-year Change, April 2011 – April 2012

Source: U.S. Bureau of Labor Statistics, Year-over-Year Percentage Point Change in Unemployment Rates, April 2011-April 2012, Seasonally Adjusted, www.bls.gov

OREG

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4.5%

2.9%2.7%

2.4% 2.4% 2.3%2.0% 2.0%

1.8% 1.8%1.6% 1.5%1.6%

Source: U.S. Bureau of Economic Analysis, Compound Annual Gross Domestic Product Growth Rate, 2001-2011, www.bea.gov

Figure 3: 2001–2011 Compound Annual gDp growth Rate

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improvement in their rate over this time period. Wyoming at 5.3 percent and Utah at 6 percent reported the lowest unemployment rates in April 2012.

Also in April 2012, nonfarm payroll employment increased in 32 states and the District of Columbia, while it decreased in 18 states. Every state in the Western region except Montana saw employment gains from April 2011 to April 2012, with the region adding a total of 364,000 jobs with California, which accounted for 175,600 of those jobs.

Across the region from April 2011 to April 2012, the financial services sector contributed the most to the employment gains, increasing by 117, 600 positions. Much of those gains were in California, which added 80,600 positions. Only New Mexico lost jobs in this sector. Every state in the Western region had employ-ment gains in the area of education and health services; Hawaii remained the same. The region added 91,800 positions in this employment category, with California accounting for more than half of those positions, adding 46,500 jobs compared to the rest of the states combined at 45,300, April 2011 to April 2012.

The only employment category to report a net loss across the region over this time period was government, losing a total of 61,200 positions, with the vast majority of those losses taking place in California. The total government job losses in the region not counting California was 18,000 positions. Next to California’s loss of 43,200 positions in the government sector, Washington shed the next highest number of government employees, dropping 7,800 positions over the year.

housingOver the past five years, states—particularly those in the West—have been hit hard by high foreclosure rates and those higher rates continue to hamper economic recovery. While many states have seen improvement in the amount of foreclosure activity, the situation remains a difficult one. In 2011, the three states with the highest foreclosure rates were all in the West.

According to RealtyTrac, more than 6 percent of Nevada housing units—one in 16—had at least one foreclosure filing in 2011, giving it the nation’s highest state foreclosure rate for the fifth consecutive year. Arizona had the nation’s second highest state foreclosure rate for the third year in a row in 2011, with 4.14 percent of its housing units—one in 24—in some part of the foreclosure process. California came in with the third highest rate in 2011, as one in every 31 California housing units, or 3.19 percent, had at least one foreclosure filing during the year. Utah had the nation’s fifth highest state foreclosure rate, with 2.32 percent of its housing units—one in 43—with a foreclosure filing in 2011.

Although these three Western states still have elevated foreclosure rates, they are also among the most improved in the country. From 2010 to 2011, Nevada saw a 31 percent decrease in foreclosure activity and a significant 35 percent drop in activity from the third quarter of 2011 to the fourth quarter. In California, the foreclosure rate dropped almost 2 percentage points in two years, down to 3.19 percent in 2011 from 4.08 percent in 2010 and 4.75 percent in 2009.

Nationally, RealtyTrac reports show that 1.45 percent of U.S. housing units—one in 69—had at least one foreclosure filing dur-ing 2011, the lowest annual level since 2007.

ALASKA7.6%

MONTANA8.3%

HAWAII9.9%

NEW MEXICO13.6%

WASHINGTON17.2%

OREGON17.2%

COLORADO20.6%

UTAH20.9%

IDAHO23.0%

CALIFORNIA30.2%

ARIZONA48.7%

NEVADA60.4%

Source: Core Logic, 2nd Quarter 2011 Negative Equity Rates, www.corelogic.com

A companion indicator for foreclosures is the negative equity rate, or the percent of mortgages that exceed the value of the underlying property, commonly referred to as “underwater” mort-gages. Nationally in the second quarter of 2011, rates ranged from a low of 6.3 percent in New York and 6.9 percent in Oklahoma to a high of 60.4 percent in Nevada and 48.7 percent in Arizona. Alaska at 7.6 percent, Montana at 8.3 percent and Hawaii at 9.9 percent were the only three Western states to have a negative equity rate less than 10 percent.

Figure 4: Negative Equity Rates, 2Q 2011

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WESTERN STaTE PRofilE SamPlE }

} Agency/Department Title} Website Address

PRogRam iNfoRmaTioN

} State Individual Income Taxes»Tax Rate Range

• Low• High

»Income Brackets• Lowest • Highest

»Number of Tax Brackets

} Corporate Income Tax Rates »Tax Rate Percentages»Lowest Tax Bracket»Highest Tax Bracket»Number Of Tax Brackets

} Excise Tax Rates»General Sales And Gross Receipts Tax»Motor Fuel Excise Tax Rates: Cents Per Gallon

• Gasoline: Rate• Diesel: Rate• Gasohol: Rate

Source: Federation of Tax Administrators as assembled in CSG’s 2012 The Book of the States, www.csg.org/bookofthestates

KEy Tax RaTES

} Per Capita Personal Income»2011 Per Capita Personal Income»Percent of National Average»Percent Change from 2010»2001–11 Compound Annual Growth Rate

} Current Dollar GDP»2011 Current Dollar GDP» U.S. Rank: 1 = highest GDP; 50 = lowest GDP

} Real GDP» 2011 Growth Rate» 2001–11 Compound Annual Growth Rate

} Largest Industry Contributors to GDP: »U.S. Bureau of Economic Analysis industry categories

} Largest Industry Contributors to GDP Growth, 2010–11

Source: U.S. Bureau of Economic Analysis, www.bea.gov

EcoNomic iNdicaToRS

The descriptive information provided in each state profile—successful incentive and development pro-grams, oversight and accountability measures and recent legislative highlights—was gathered from a review of state economic development agency and division websites and a survey of agency staff. Economic indicators and key tax rates were collected from the U.S. Bureau of Economic Analysis and the Federation of Tax Administrators.

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States were asked to report one to three business incentive programs, including tax or financial incentives, that were self-defined as successful.

Example: Under the Idaho Business Advantage program, businesses that invest a minimum of $500,000 in new facilities and create at least 10 new jobs averaging $40,000 annually plus benefits may qualify for a variety of incentives. Those benefits include an enhanced investment tax credit, new jobs tax credits and a real property improvement tax credit.

SuccESSful iNcENTivE aNd dEvEloPmENT PRogRamS

States were asked to cite oversight and accountability measures they have for their tax and financial incentive programs and the steps they had taken to help ensure those incentives brought the state a positive return on investment.

Example: In Utah, to ensure that state guidelines for compliance are met, incentives are based on the following “three pillars of success and sustainability”: · Post-performance: Incentives are disbursed after the company has met contractual performance benchmarks, such as job

creation and payment of new state taxes. · Single Taxpayer: Incentive amounts are based on new state taxes generated by the project. · Competition: Incentives must make Utah competitive with other locations.

ovERSighT aNd accouNTabiliTy mEaSuRES

Legislative highlights during the past one to two legislative sessions related to economic development are listed here.

Example: The New Mexico legislature this year passed four significant bills to help spur job creation in line with the Economic Develop-ment Department’s strategic planning goals. The first increased Job Training Incentive Program funding for the 2013 fiscal year from $1.2 million to $7.9 million. The second was a tax reform package that will help boost the construction and manufacturing sectors by curbing tax pyramiding that will end double and triple taxation on these industries. Another was the Angel Investment Tax Credit Extension to incentivize investments into New Mexico startup companies and keep homegrown, high-tech businesses in the state. Lastly, as part of the Martinez administration’s regulatory reform efforts, the state passed a bill to streamline the regulatory process for geothermal permitting.

REcENT lEgiSlaTivE highlighTS

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ECoNoMIC INDICAToRS pER CApITA pERSoNAl INCoME• 2011: $45,529• Percent of National Average: 109%• Percent Change from 2010: 2.9%• 2001-2011 Compound Annual

Growth Rate: 3.5%

CURRENT DollAR gDp• 2011: $51.4 billion• U.S. Rank: 44

REAl gDp• 2011 Growth Rate: 2.5%• 2001-2011 Compound Annual

Growth Rate: 2.3%

lARgEST INDUSTRY CoNTRIBUToRS To gDpMining (24.5% of GDP), Government (19.3% of GDP)

lARgEST INDUSTRY CoNTRIBUToRS To gDp gRoWTh, 2010-11Mining (contributed 1.91 percentage points), Health care and social assistance (contributed 0.36 percent-age points)

KEY TAx RATESSTATE INDIVIDUAl INCoME TAxES

Alaska does not have a state personal income tax

CoRpoRATE INCoME TAx RATES• Tax Rate: 1.0% - 9.4%• Lowest Tax Bracket: $9,999• Highest Tax Bracket: $90,000• Number of Tax Brackets: 10

ExCISE TAx RATES• General Sales and Gross Receipts Tax: 0.0%• Motor Fuel Tax Rates (cents per gallon)

» Gasoline: 8.0 » Diesel: 8.0 » Gasohol: 8.0

AlASKA

Department of Commerce, Community and Economic Development www.dced.state.ak.us

} Department of Commerce, Community and Economic Development} www.dced.state.ak.us

PRogRam iNfoRmaTioN

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AlASKAAlaska’s economic development, finance and tax organiza-tions provide a range of incentive programs to initiate new business and commercial investment. Specific programs include:

Alaska Regional Economic Assistance Program Loan ProgramsThe Division of Economic Development serves as a lender of last resort offering direct lending in commercial fishing, fisheries enhancement, capstone avionics, small business and rural development. The Alaska Industrial Development and Export Authority provides financing to in-state businesses

through its umbrella bond program. It assists businesses in securing long-term financing for capital projects and assists business and industry involved in international trade.

Grants/loans and equity partneringThe Commercial Fishing and Agriculture Bank provides loans to fishing, tourism, natural resources and agriculture-based projects. Alaska Growth Capital provides financing to nontraditional borrowers/businesses that use innovative technology, are in rural Alaska and are minority-owned.

SUCCESSfUl INCENTIVE AND DEVElopMENT pRogRAMS

Each incentive program has its own procedures for oversight in Alaska. For example, recent legislation is designed to strengthen oversight of Alaska’s tax credits for films by mov-ing the administration of the program to the Department of Revenue, and installing a four-member board—called the Alaska Film Incentive Review Commission—to approve applications by majority vote. The commission must evalu-ate the impact of the film production on Alaska’s economy, employment, fiscal and environmental health.

In addition, the legislation will tighten transparency and accountability controls by imposing additional reporting requirements on the number of applications received and approved, credits applied for and given, all expenses, number of residents and nonresidents employed, third-party credit sellers, and information on the buyers and certificates issued.

oVERSIghT AND ACCoUNTABIlITY MEASURES

RECENT lEgISlATIVE hIghlIghTSThe legislature introduced and passed two pieces of legisla-tion designed to promote economic development and ac-celerate energy production in Alaska in the 2012 legislative session.

Senate Bill 25, the Alaska Sustainable Strategy for Energy Transmission and Supply, creates opportunity for new energy infrastructure in the state. The bill establishes a new fund in the Industrial Development and Export Authority for financing energy development throughout Alaska. The authority can now make direct loans to borrowers for energy

projects and insure project obligations by offering a loan or bond guarantee.

Senate Bill 66 incentivizes development in low-income communities by providing new ways to generate capital for entrepreneurs. The bill creates a new markets tax credit assistance guarantee and loan program with the Industrial Development and Export Authority, allowing the authority to issue guarantees and finance projects in low-income areas or otherwise serving low-income populations.

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Growth Rate: 2.8%



Growth Rate: 2.0%

lARgEST INDUSTRY CoNTRIBUToRS To gDpReal estate and rental and leasing (14.4% of GDP), Government (12.6% of GDP)

lARgEST INDUSTRY CoNTRIBUToRS To gDp gRoWTh, 2010-2011Durable goods and manufacturing (contributed 0.60 percentage points), Finance and insurance (contrib-uted 0.37 percentage points)

KEY TAx RATESSTATE INDIVIDUAl INCoME TAxES Tax Rate Range• Low: 2.59%• High: 4.54%

Income Brackets• Lowest: $10,000 (minimum tax of $50)• Highest: $150,001

Number of Tax Brackets: 5

CoRpoRATE INCoME TAx RATES• Tax Rate: 6.968% • Lowest Tax Bracket: Flat rate

(minimum tax of $50)• Highest Tax Bracket: Flat rate• Number of Tax Brackets: 1



· The diesel rate specified is the fuel use tax rate on large trucks. Small vehicles are subject to the 18 cents tax rate and leaking underground storage tax (LUST).

Arizona Commerce Authority www.azcommerce.com

ARIZoNA

} Arizona Commerce Authority} www.azcommerce.com

PRogRam iNfoRmaTioN

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The Small Business Capital Investment Tax Credit This credit was established in July 2006. The main objective of the investment program is to expand early stage invest-ments in targeted Arizona small businesses. The program accomplishes this goal by providing tax credits to investors who make capital investment in small businesses certified by the Arizona Commerce Authority. The commerce authority may authorize up to $20 million in tax credits to qualified investors through June 30, 2016.

The investment program has registered the following successes: 120 small businesses have been certified, 76 small businesses have received a qualified investment, and 458 investments were qualified and therefore received an al-location of tax credits. Those investments totaled more than $31 million of capital for small businesses and yielded $10.1 million in tax credits to the investors.

Job Training ProgramAnother noteworthy program idea is the Job Training

Program, a job-specific reimbursable grant program that supports the design and delivery of customized training plans for employers creating new jobs or increasing the skill and wage levels of current employees. Under a Net New Grant, an employer creating new jobs can apply for a grant to be reimbursed for up to 75 percent of its eligible training expenses. Under the Incumbent Grant, an employer seeking to supplement its current training plan and increase the skill level of existing employees may apply for a grant to receive up to 50 percent of eligible training expenses reimbursed.

From October 2010 to date, the program has seen the fol-lowing successes: 79 grants have been awarded totaling more than $13.6 million for job training; approximately 1,950 new employees and 11,000 incumbent workers were trained.


Generally speaking, every company seeking a tax incentive is screened for eligibility before it can receive a benefit. Typi-cally, a minimum of two agencies are involved when award-ing incentives. The program themselves also have built-in ac-countability. Most programs require the company to achieve the goal prior to receiving an incentive. A number of other

programs have clawback provisions to ensure goals are at-tained. The state benefits through the job creation/retention aspects of the programs, clients paying a minimum qualifying wage to employees as well as the capital investment made by the companies. In addition, some programs require the company to match its award dollar for dollar.


RECENT lEgISlATIVE hIghlIghTSArizona’s new Competitiveness Package, established under House Bill 2001, provides the most sweeping economic development legislation seen in decades. Features of the package allow businesses to: • Earn income tax credits up to $9,000 for each new job

under the Quality Jobs Program; • Obtain renewable energy income tax credits and property

tax reductions;• Receive up to $1.5 million in reimbursable grants to train

employees;• Leverage up to a 34 percent research and development tax

credit;• Take advantage of Arizona's 100 percent electable sales

factor for multi-state corporations;

• Benefit from a 30 percent reduction in Arizona’s corporate income tax rate;

• Capitalize on Arizona’s reduced commercial property as-sessment ratio—18 percent by 2017; and

• Improve their bottom line by a 15 percent increase in per-sonal property exemptions.

In addition, Gov. Jan Brewer and the Arizona Legislature cre-ated the Arizona Commerce Authority in 2011. The commerce authority is an economic development organization designed to attract and retain businesses and create quality jobs for Arizona and its residents using a public-private approach.

ARIZoNA

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Growth Rate: 2.8%


REAl gDp• 2011 Growth Rate: 2%• 2001-2011 Compound Annual

Growth Rate: 1.6%

lARgEST INDUSTRY CoNTRIBUToRS To gDpReal estate and rental and leasing (15% of GDP), Government (11.5% of GDP)

lARgEST INDUSTRY CoNTRIBUToRS To gDp gRoWTh, 2010-11Durable goods manufacturing (contributed 0.63 per-centage points), Professional, scientific and technical services (contributed 0.56 percentage points)

KEY TAx RATESSTATE INDIVIDUAl INCoME TAxES Tax Rate Range• Low: 1%• High: 9.3%

Income Brackets• Lowest: $7,316• Highest: $48,029


CoRpoRATE INCoME TAx RATES• Tax Rate: 8.84% • Lowest Tax Bracket: Flat rate • Highest Tax Bracket: Flat rate• Number of Tax Brackets: 1



· California imposes an additional 1 percent tax on taxable income over $1 million, making the maximum rate 10.3 percent over $1 million.

· The minimum corporation franchise tax in California is $800. The additional alternative minimum tax is levied at a 6.65 percent rate.

· The general sales and gross receipts tax rate may be adjusted annually according to a formula based on balances in the unappropriated general fund and the school foundation fund.

· Motor fuel tax rates include pre-paid sales tax; Gasoline is subject to 2.25 percent sales tax; and Diesel is subject to 9 percent sales tax.

Governor’s Office of Business and Economic Development (GO-Biz) www.business.ca.gov

CAlIfoRNIA

} Governor’s Office of Business and Economic Development (GO-Biz)} www.business.ca.gov

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Employment Training Panel The Employment Training Panel assists employer efforts to train workers and maintain skilled workforces capable of responding to changing business and industry needs. Training funds are available to all California manufacturing companies, companies that face out-of-state competition and businesses that are expanding or relocating to California from other states or countries. In addition to the manufactur-ing industry and California’s small business employers, the panel also prioritizes nanotechnology, biotechnology and life sciences, goods movement and transportation.

The California Alternative Energy and Advanced Transportation Financing Authority This program provides financing for facilities that use alternative energy sources and technologies. The authority also provides financing for facilities needed to develop and commercialize advanced transportation technologies that conserve energy, reduce air pollution, and promote economic

development and jobs. The authority takes direction from its board in deciding which projects to assist.

GO-BizGov. Jerry Brown created the Governor’s Office of Business and Economic Development, known as GO-Biz, to serve as California’s single point of contact for economic develop-ment and job creation efforts. Now, as part of the governor’s budget, the state’s economic development entities have been realigned under GO-Biz; those include the Infrastructure Bank, the California Film Commission, the California Travel and Tourism Commission, Small Business Loan Guarantee Program and the Small Business Development Centers. This streamlining of state programs places a stronger emphasis on job creation and promoting California as a place to do business. In 2011, California created more than 263,000 new jobs—the most in the nation and almost 60,000 more than the next closest state, Texas.


The Employment Training Panel and the California Alterna-tive Energy & Advanced Transportation Authority each have boards that oversee a stringent application process. For the transportation authority, all applicants and awards, as well as the applicant scoring and decision process, are made public. Applicants must show the property to be purchased will be used to design, manufacture, produce or assemble an eligible

advanced transportation technology or alternative source product—including energy efficiency—component or system. Each applicant is required to meet the “net benefits test” showing the new project will create jobs in California. Ap-plicants are awarded the sales and use tax exemption by the transportation authority and are all publicly disclosed on the authority’s website and in annual report documents.


RECENT lEgISlATIVE hIghlIghTSThe legislature passed these bills during the 2011-12 legisla-tive session:• Assembly Bill 155 ensures that online retailers do not re-

ceive an unfair tax advantage over brick-and-mortar busi-nesses by requiring major online retailers to pay sales tax.

• Assembly Bill 1069 extends the Film and Television Tax Credit, a critical component of California’s diverse indus-try mix.

• Senate Bill 16 requires the Department of Fish and Game to expedite the processing of renewable energy permits.

• Assembly Bill 900 streamlines the California Environmen-tal Quality Act process for major job-creating projects.

• Senate Bill 617 begins the process of regulatory reform by requiring state agencies to identify burdensome or over-lapping regulations.

CAlIfoRNIA

14


Growth Rate: 2.2%


REAl gDp• 2011 Growth Rate: 2%• 2001-2011 Compound Annual

Growth Rate: 1.6%

lARgEST INDUSTRY CoNTRIBUToRS To gDpGovernment (12.8% of GDP), Real estate and rental and leasing (11.8% of GDP)

lARgEST INDUSTRY CoNTRIBUToRS To gDp gRoWTh, 2010-11 Information (contributed 0.47 percentage points), Professional, scientific and technical services (con-tributed 0.41 percentage points)

KEY TAx RATESSTATE INDIVIDUAl INCoME TAxES Tax Rate Range• Low: 4.63%• High: — %

Income Brackets• Lowest: Flat rate• Highest: Flat rate


CoRpoRATE INCoME TAx RATES• Tax Rate: 4.63% • Lowest Tax Bracket: Flat rate • Highest Tax Bracket: Flat rate• Number of Tax Brackets: 1



www.colorado.gov/cs/Satellite/OEDIT/OEDIT/1162927366334

ColoRADo

} Office of Economic Development and International Trade} www.colorado.gov/cs/Satellite/OEDIT/OEDIT/1162927366334

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Job Creation Performance Incentive Fund The fund provides performance-based incentive payments to qualifying companies that have created net new jobs paying above-average wages and that have maintained such positions for at least one year. The program is designed to support and encourage new business development, business expansions and relocations that generate new jobs through-out the state.

Job Growth Incentive Tax Credit This program provides a state income tax credit to businesses undertaking job creation projects that would not occur in Colorado without this program and that have created net new high-paying positions in the state. Requirements under the statute specify that a company must create at least 20 net new full-time positions during the credit period—60 consecutive months—with an average yearly wage of at least 110 percent of the county average wage rate where the business is located. A business located in an Enhanced Rural Enterprise Zone has to create at least five net new jobs in Colorado during the credit period with an average yearly wage of at least 110 percent of the county average wage rate where the business is located.

Economic Development Commission Strategic FundA business may receive funding consideration if it proposes to create net new full‐time permanent jobs in Colorado that are maintained for at least one year. In addition, a business must have:• A strong level of local matching commitments ($1-to-$1

requested);• A potential for economic spinoff benefits, such as at-

tracting suppliers, generating tourism/travel activity, high prestige or a large expansion initiative;

• Capital investment, relative to the number of jobs; signifi-cant capital investment is $100,000 or more per employee;

• A response to a special local economic event, such as replacing recent layoffs;

• Interstate competitive factors; and• Headquarters in Colorado.

The business must demonstrate feasibility and financial capability along with the ability to create the number of jobs committed.


Many of Colorado’s programs have strict requirements for receiving funding. For example, the Job Creation Perfor-mance Incentive Fund must pay above-average wages and maintain positions for at least one year to receive benefits. The Strategic Fund and other programs have similar require-ments. In addition, the legislature created the Colorado Economic Development Commission to promote economic

development in the state. The commission annually publishes online reports that identify new and ongoing initiatives and projects approved by the commission, including the name of the company receiving funding, the amount of money invested in the company and the status of that funding. Com-mission members make all policy and funding decisions.


RECENT lEgISlATIVE hIghlIghTSThe Colorado Office of Economic Development and Interna-tional Trade recently proposed a legislative agenda designed to provide a sustainable infrastructure for economic devel-opment programs, allowing for continuity, consistency and transparency. The agenda includes:• The Colorado Regional Partnership Strategy will develop

a proactive approach to create jobs and increase each region’s competitiveness by focusing on emerging and promising economic opportunities for its region.

• The Colorado Key Industry Strategy brings together indus-try partners, nonprofits, academia and business leaders to create industry-specific business plans to drive job growth, as well as identify policy initiatives and programs that can enhance the distinct Colorado advantage in each industry.

• The Colorado Business Retention and Expansion Program will develop stronger partnerships between the Office of Economic Development and local economic development organizations across Colorado to facilitate and support local stability and growth.

• Film Production Activities in Colorado will combine a 20 percent rebate with a senior loan guarantee program, attracting production companies and employing hundreds of workers while providing positive branding for Colorado and a boost to tourism.

• The Transparency Bill will streamline the reporting dates of all incentive programs offered by the Office of Eco-nomic Development and require a single annual report for efficiency both internally and externally.

ColoRADo

16


Growth Rate: 3.9%

CURRENT DollAR gDp• 2011: $67 billion• U.S. Rank: 38

REAl gDp• 2011 Growth Rate: -0.2%• 2001-2011 Compound Annual

Growth Rate: 1.8%

lARgEST INDUSTRY CoNTRIBUToRS To gDp Government (24.7% of GDP), Real estate and rental and leasing (16.3% of GDP)

lARgEST INDUSTRY CoNTRIBUToRS To NEgATIVE gDp gRoWTh, 2010-11 Real estate and rental and leasing (subtracted 0.76 percentage points), Agriculture, forestry, fishing and hunting (subtracted 0.18 percentage points)

KEY TAx RATESSTATE INDIVIDUAl INCoME TAxES Tax Rate Range• Low: 1.4%• High: 11%



CoRpoRATE INCoME TAx RATES• Tax Rate: 4.4% - 6.4% • Lowest Tax Bracket: $25,000 • Highest Tax Bracket: $250,001• Number of Tax Brackets: 4



· Hawaii taxes capital gains at 4 percent. Financial institutions pay a franchise tax or 7.92 percent of taxable income in lieu of the corporate income tax and general excise taxes.

Department of Business, Economic Development & Tourism http://hawaii.gov/dbedt

hAWAII

} Department of Business, Economic Development & Tourism } http://hawaii.gov/dbedt

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Enterprise Zones ProgramThe Hawaii Enterprise Zones Partnership was established to increase business activity and create jobs in areas with above average unemployment and/or below average income levels. Businesses within a designated enterprise zone and qualify-ing under the program—manufacturing, wholesaling, certain types of call centers, certain types of technology businesses and marine and aviation maintenance—are eligible for Gen-eral Excise Tax exemptions. They also are eligible for two different income tax credits:• A seven-year exemption from general excise taxes on

gross proceeds, an 80 percent first-year income tax credit, decreasing 10 percent each year thereafter during the next six years, and

• An additional income tax credit equal to 80 percent of unemployment taxes paid during the first year, decreasing by 10 percent each year during the next six years.

Employment and Training Fund ProgramThe fund was created to improve long-term employability of Hawaii's workers by developing their skills to meet the de-mands of an increasingly global community. Business-specific training, upgrade training, new occupational skills training,

management skills training and other similar activities are available to both employers and individuals. The program provides industry or employer-specific training programs in critical skill shortage and high-growth occupational areas. Training and retraining programs also are available to assist workers who have recently become unemployed or are likely to become unemployed.

Hawaii Film OfficeHawaii’s Film Office offers a number of incentives for filming and related activities in the state, including:• A 15 to 20 Percent Motion Picture, Digital Media and Film

Production Income Tax Credit: This is a refundable tax credit based on a production company’s Hawaii expendi-tures while producing a qualified film, television, commer-cial or digital media project. The credit equals 15 percent of qualified production costs incurred on Oahu, and 20 percent on the neighbor islands—Big Island, Kauai, Lanai, Maui and Molokai.

• Royalties Tax Exemption: Royalties derived from perform-ing arts products are excluded from a Hawaii taxpayer's income and not subject to state income tax.


Tax credits for film-related activities are only available post-production and require a detailed audit of production expenses before tax incentives can be received. Enterprise

zone benefits also require detailed reports each year, and businesses receiving the benefit must continue to create new jobs to qualify for ongoing assistance.


RECENT lEgISlATIVE hIghlIghTSThe House and Senate passed House Bill 2319 and transmit-ted it to the governor during the 2012 legislative session. The bill establishes a venture accelerator funding program under the Hawaii strategic development corporation to assist the

state’s technology businesses in competing for investment capital. The bill also appropriates funds and allocates up to $250,000 for project oversight of program awardees.

hAWAII

18


Growth Rate: 2.6%



Growth Rate: 2.7%


lARgEST INDUSTRY CoNTRIBUToRS To gDp gRoWTh, 2010-11Durable goods manufacturing (contributed 0.86 percentage points), Health care and social assistance industry (contributed 0.40 percentage points)




CoRpoRATE INCoME TAx RATES• Tax Rate: 7.6% • Lowest Tax Bracket: Flat rate • Highest Tax Bracket: Flat rate • Number of Tax Brackets: 8



· Idaho’s minimum tax on a corporation is $20. The $10 Permanent Building Fund Tax must be paid by each corporation in a unitary group filing a combined return.

· The motor fuel tax rate is reduced by the percentage of ethanol used in blending (reported rate assumes the maximum 10 percent ethanol).

Department of Commerce http://commerce.idaho.gov/

IDAho

} Department of Commerce } http://commerce.idaho.gov/

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Tax Exemptions for Equipment and New Manufacturing FacilitiesBusinesses purchasing equipment and raw materials used directly in manufacturing, processing and other industries earn a sales tax exemption. In addition, businesses that invest $3 million in new manufacturing facilities may receive partial or full property tax exemptions.

The Idaho Business AdvantageBusinesses that invest a minimum of $500,000 in new facili-ties and create at least 10 new jobs averaging $40,000 annual-ly plus benefits may qualify for a variety of incentives. Those

benefits include an enhanced investment tax credit, new jobs tax credits and a real property improvement tax credit.

Workforce Development Training Fund Idaho’s Workforce Development Training Program exists to help businesses expanding or relocating to Idaho. If a busi-ness produces products or services primarily sold outside the region where the business is located, it may be eligible to re-ceive training funds for full-time employees. These funds are designated to provide new employees with necessary skills or to upgrade the skills of current employees who are in danger of being laid off.


All incentives are controlled and governed by statute. Before incentive benefits are disbursed—usually claimed through a tax return—the business is fully informed what it must do to

qualify. The Idaho Tax Commission considers the statutory language on clawbacks and determines how and when they apply.


RECENT lEgISlATIVE hIghlIghTSThe Idaho Global Entrepreneurial Mission, an initiative of Gov. C.L. “Butch” Otter, passed both the Idaho House of Representatives and Senate and took effect July 1, 2012. The purpose of the initiative is to leverage private industry guid-ance and the talent and expertise of Idaho’s research univer-sities to commercialize innovative and viable technologies that will strengthen Idaho’s economy. The new program will be supported with a $5 million investment by the legislature that includes $2 million to strengthen university research, $2 million in ongoing funding for the Center for Advanced Energy Studies, a partnership between Idaho universities and the Idaho National Laboratory, and $1 million for a new Idaho Global Entrepreneurial Mission innovation grant program.

Idaho was one of the few states to provide tax relief to both individuals and corporations effective July 1, 2012.

House Bill 563 lowered the corporate income tax rate from 7.6 percent to 7.4 percent and the individual income tax rate from 7.8 percent to 7.4 percent, providing $35.7 million in tax relief. Both the corporate and individual rates were lowered in an effort to spur economic growth among businesses of all sizes—from large corporation to individual proprietorships.

The legislature also passed House Bill 417 in the 2012 session. This bill expands the private aircraft industry in Idaho by making businesses involved in the refurbishment and maintenance of private aircraft more competitive with the elimination of the sales tax on parts. The legislation is expected to result in more than 100 new jobs in the private sector over the next few years and spur continued growth in Idaho’s aviation industry.

IDAho

20


Growth Rate: 3.8%

CURRENT DollAR gDp• 2011: $38 billion• U.S. Rank: 48

REAl gDp• 2011 Growth Rate: Flat • 2001-2011 Compound Annual

Growth Rate: 1.8%


lARgEST INDUSTRY DETRACToRS To gDp gRoWTh, 2010-11 Agriculture, forestry, fishing and hunting industry (subtracted 0.53 percentage points), Government (subtracted 0.41 percentage points)




CoRpoRATE INCoME TAx RATES• Tax Rate: 6.75% • Lowest Tax Bracket: Flat rate • Highest Tax Bracket: Flat rate • Number of Tax Brackets: 1



· The minimum tax per corporation is $50; the $50 minimum applies to each corporation included on a combined tax return. Taxpayers with gross sales in Montana of $100,000 or less may pay an alternative tax of 0.5 percent on such sales, instead of the net income tax.

Department of Commerce http://commerce.mt.gov/

MoNTANA

} Department of Commerce} http://commerce.mt.gov/

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MicroBusiness Finance ProgramMontana-based businesses with 10 or fewer employees and gross annual revenue of less than $1 million can apply for a microbusiness loan up to $100,000. Since the inception of the MicroBusiness Finance Program in 1991, more than 1,025 loans have been made across the state, totaling more than $20.3 million and creating approximately 2,250 jobs.

State Workforce Training ProgramThe Montana Department of Commerce manages a state-funded workforce training program. The match requirement is $1 of private funds for every $3 of state workforce grant funds. The ceiling is $5,000 and the maximum award amount depends on the number of jobs to be trained and availability of funding. The minimum compensation for an eligible em-

ployee varies by county, but should be in the $12.60 per hour with benefits range. The amount of funding available is about $1.3 million annually.

Customized Training for Employees—Commerce Community Development Block Grant ProgramGrant funding for employee training is available for new and expanding businesses of up to $370,000 per business. The maximum grant amount to a for-profit business or nonprofit organization for each employee trained is $5,000. To be eli-gible, an employee must be full-time and receive a minimum of $12.60 per hour compensation, including benefits, after training. A 1:1 match is required; the match can include costs associated with expanding or locating and establishing a business in Montana.


Every incentive program in the state is regularly audited for compliance and every firm that is awarded an incentive recieves at least one onsite visit by state staff. Each program has requirements that must be met to receive or continue to receive funding. For example, the Big Sky Economic Development Trust Fund program is a state-funded pro-

gram created by the 2005 legislature designed to aid in the development of good paying jobs for residents and promote long-term stable economic growth in Montana. Businesses receiving funds must create new full-time jobs that provide wages that meet or exceed the current average weekly wage of the county in which it is located.


RECENT lEgISlATIVE hIghlIghTSThe Montana State Small Business Credit Initiative Program was created using funds received from the U.S. Treasury De-partment as part of the Small Business Jobs Act of 2010. The federal act created the State Small Business Credit Initiative to strengthen state programs that support lending to small businesses and small manufacturers.

Montana will use $12.6 million to create a new loan participation program with the intent of generating at least

$10 in new small business lending for every $1 received in federal funds. The goal is to leverage this initial funding into more than $130 million in new lending within Montana. The major benefit to Montana is the creation or retention of jobs and increased economic activity for the state. It is anticipated that for every $75,000 of Small Business Credit Initiative Program loan funds, one job will be created or retained, thereby impacting approximately 186 Montana jobs.

MoNTANA

22


Growth Rate: 2.1%


REAl gDp• 2011 Growth Rate: 1.2% • 2001-2011 Compound Annual

Growth Rate: 2.4%

lARgEST INDUSTRY CoNTRIBUToRS To gDp Accommodation and food services (14% of GDP), Real estate and rental and leasing (12.8% of GDP)

lARgEST INDUSTRY CoNTRIBUToRS To gDp gRoWTh, 2010-11 Mining (contributed 1.02 percentage points), Ac-commodation and food services (contributed 0.56 percentage points)


No state personal income tax

CoRpoRATE INCoME TAx RATES

No state corporate income tax



· The general sales and gross receipts tax is scheduled to fall to 6.5% on July 1, 2013

· The motor fuel tax rates do not include local option taxes of 4.0 to 9.0 cents or inspection and clean-up fees.

Governor’s Office of Economic Development http://www.diversifynevada.com/

NEVADA

} Governor's Office of Economic Development} http://www.diversifynevada.com/

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Nevada has fewer incentive programs than other states due in large part to its tax structure. The state does not have any of the following: personal income tax, unitary tax, corporate income tax, inventory tax, estate and/or gift tax, franchise tax, inheritance tax or special intangible tax. The state does, however, offer sales tax abatements on capital equipment purchases, a sales and use tax deferral on capital equipment purchases, abatements on personal and modified business taxes and real property tax abatements for recycling.

In addition, the Nevada Train Employees Now Program provides short-term, skills-based intensive job training to assist new and expanding firms to reach their productivity goals quickly. A customized program is designed covering recruitment, hiring and job training. The state supports firms demonstrating a human relations commitment through a meaningful wage and fringe benefit policy.


Workforce training programs require an employer match for training funds and employers must pay a predetermined minimum wage to be eligible for funding. For all incentives, audits are conducted by program staff to affirm workers are being trained and hired and the appropriate pay levels are being met and/or equipment is being purchased as claimed.

This year, the state retained Brookings Mountain West and SRI to conduct the first in-depth analysis of the state’s economic potential in 11 years. The result is a much more fo-cused program centered on the development of key econom-ic clusters to build on existing economic assets and develop a parallel effort with education to align career pathways with cluster opportunities.


RECENT lEgISlATIVE hIghlIghTSDuring the 2011 session, the legislature passed Assembly Bill 449, which is driving a complete reorganization of economic development. The previous Commission on Economic De-velopment has become the Governor’s Office of Economic Development, reporting to the governor and a new board of directors. The bill called for an examination of the state’s economic strengths, weakness, opportunities and threats,

as well as a new State Plan for Economic Development. In addition, by approving the governor's budget, the legislature added 50 percent to the budget for economic development. Assembly Bill 202 provides for the partial abatement of some property taxes for eligible new manufacturing busi-nesses, including those that renovate an existing building or other structure.

NEVADA

24

NEW MExICo

ECoNoMIC TRENDS pER CApITA pERSoNAl INCoME• 2011: $34,575• Percent of National Average: 83%• Percent Change from 2010: 3.7%• 2001-2011 Compound Annual

Growth Rate: 3.4%



Growth Rate: 1.6%


lARgEST INDUSTRY CoNTRIBUToRS To gDp gRoWTh, 2010-2011 Durable goods manufacturing (contributed 0.73 percentage points), Health care and social assistance (contributed 0.17 percentage points)

CoMpARATIVE TAx INfoRMATIoNSTATE INDIVIDUAl INCoME TAxESTax Rate Range• Low: 1.7%• High: 4.9%Income Brackets• Lowest: $5,500• Highest: $16,001Number of Tax Brackets: 4

CoRpoRATE INCoME TAx RATES• Tax Rate: 4.8% - 7.6%• Lowest Tax Bracket: $500,000• Highest Tax Bracket: $1 million• Number of Tax Brackets: 3



New Mexico Economic Development Department http://www.gonm.biz/

} New Mexico Economic Development Department} http://www.gonm.biz/

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NEW MExICoJob Training Incentive Program One of New Mexico’s strongest business development incen-tives is the Job Training Incentive Program. The job Training Incentive Program funds classroom and on-the-job training for newly created jobs in expanding or relocating businesses for up to six months. The program reimburses 40 to 70 per-cent of employee wages. Custom training at a New Mexico public educational institution may also be covered. The New Mexico state legislature created the Job Training Incentive Program, formerly known as the Industrial Development Training Program or “in plant training,” in 1972. Since then, the job training program has supported the creation of 51,000 jobs for New Mexicans in more than 1,000 businesses across the state. In 2011, the program awarded $1.69 million to create 260 jobs with an average wage of $21.82

Office of Business AdvocacyGov. Susana Martinez and Economic Development Cabinet Secretary Jon Barela created the Office of Business Advo-cacy, a division of the New Mexico Economic Development Department, in January 2011 to serve as a case worker pro-gram to help businesses cut through red tape and navigate through the state regulatory and permitting process. Below are some of the companies the Office of Business Advocacy has assisted. The office has assisted 100 companies and has been credited with creating 625 jobs and for saving 265 jobs in its first year of operation.

High Wage Jobs Tax Credit A taxpayer who is an eligible employer may apply for and receive a tax credit for each new high-wage economic-base job. The credit amount equals 10 percent of the wages and benefits paid for each new economic-base job created. Qualified employers can take the credit for four years. The credit can be applied to the state portion of the gross receipts tax, compensating tax and withholding tax. Any excess credit will be refunded to the taxpayer. The credit cannot exceed $12,000 per year, per job.

Investment Tax Credit for Manufacturers Manufacturers may take a credit against gross receipts, compensating or withholding taxes equal to 5 percent of the value of qualified equipment imported and put into use in a manufacturing plant in New Mexico, provided the manufac-turer meets the criteria of hiring additional workers to earn the credit.

Rural Jobs Tax Credit This credit can be applied to taxes due on (state) gross receipts, corporate income or personal income tax for business located in rural New Mexico. To be eligible for the credit, companies must manufacture or produce a product in New Mexico, be a non-retail service company that exports a substantial percentage of services out of state—50 percent or more revenues and/or customer base. Certain green indus-tries also qualify.


The New Mexico Economic Development Department pub-lishes quarterly performance measures reports on its website. The report highlights the successes of the department, including job creation estimates and the department’s costs related to those jobs, and if the department met established performance measures and targets over the quarter in each of its major development programs.

Each incentive program also has strict requirements for re-ceiving benefits. For example, the High Wage Jobs Tax Credit

requires that an eligible employer create a new job and pay the new employee at least $28,000 annually in a community with a population of less than 40,000 or $40,000 annually in a community with a population of 40,000 or more to receive the credit. The new job must be occupied for at least 48 weeks by the employee. In addition, the newly created job must filled with a resident of New Mexico and that employee cannot be a relative of the employer or own more than 50 percent of the company.


The legislature this year passed four significant bills to help spur job creation in line with the Economic Development Department’s strategic planning goals. The first increased Job Training Incentive Program funding for the 2013 fiscal year from $1.2 million to $7.9 million. The second was a tax reform package that will help boost the construction and manufacturing sectors by curbing tax pyramiding that will

end double and triple taxation on these industries. Another was the Angel Investment Tax Credit Extension to incentiv-ize investments into New Mexico startup companies and keep homegrown, high-tech businesses in the state. Lastly, as part of the Martinez administration’s regulatory reform efforts, the state passed a bill to streamline the regulatory process for geothermal permitting.

RECENT lEgISlATIVE hIghlIghTS

26


Growth Rate: 2.6%



Growth Rate: 4.5%

lARgEST INDUSTRY CoNTRIBUToRS To gDpDurable goods manufacturing (26.1% of GDP), Government (16.3% of GDP)

lARgEST INDUSTRY CoNTRIBUToRS To gDp gRoWTh, 2010-2011 Durable goods manufacturing (contributed 3.94 percentage points), Health care and social assistance industry (contributed 0.35 percentage points)

KEY TAx RATESSTATE INDIVIDUAl INCoME TAxESTax Rate Range• Low: 5.0%• High: 9.9%Income Brackets• Lowest: $2,500• Highest: $125,000Number of Tax Brackets: 4

CoRpoRATE INCoME TAx RATES• Tax Rate: 6.6% - 7.6%• Lowest Tax Bracket: —• Highest Tax Bracket: $250,001• Number of Tax Brackets: 2



· Oregon’s minimum tax for C corporations depends on the Oregon sales of the filing group. The minimum tax ranges from $150 for corporations with sales under $500,000 and up to $100,000 for companies with sales of $100 million or above.

· The motor fuel tax rates do not include local option taxes of 1.0 to 3.0 cents

Business Oregon http://www.oregon4biz.com/

oREgoN

} Business Oregon} http://www.oregon4biz.com/

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Business OregonBusiness Oregon—the state’s economic development agency—works to create, retain, expand and attract business-es that provide sustainable, living-wage jobs for Oregonians through public-private partnerships, leveraged funding and support of economic opportunities for Oregon companies and entrepreneurs. Through this work, Business Oregon helped create 1,957 jobs and retained 3,760 jobs in the 2011 fiscal year.

Strategic Reserve FundForgivable loans of $4.3 million from the governor’s strategic reserve fund assisted 19 projects in the 2011 fiscal year, creat-ing and retaining 509 jobs in 2011, with a total of 934 jobs esti-mated by the projects’ completion. The total estimated personal income tax expected from these jobs is $31.9 million.

Enterprise ZonesIn exchange for locating or expanding in an enterprise zone, businesses receive exemption from local property taxes on new plant and equipment for at least three years, but up to

five years, in the standard program. In addition, some zones can offer special incentives for investments in long-term rural facilities or electronic commerce operations.

The Oregon Investment AdvantageThis income tax exemption program helps businesses start or locate in a number of Oregon counties by providing a multi-year deduction for all income-based taxes related to new business operations, potentially eliminating state business tax liability during that multi-year period.

Film & Video IncentivesOregon offers a number of incentive programs for film and video productions taking place in the state. Incentive pro-grams rebate 20 percent of the production’s Oregon-based goods and services and an additional cash payment of up to 16.2 percent of wages paid to production personnel.


Various incentive programs in Oregon require regular reporting on performance. For example, the legislature requires the state Legislative Revenue Officer to prepare a report that evaluates the performance of enterprise zones and related tax incentives. Specifically, the report examines

the effects of the property tax incentive on the state and local economies, public finance and government services and a statistical analysis of changes in measures of community economic hardship over time for those local areas that have enterprise zones.


RECENT lEgISlATIVE hIghlIghTSThe legislature approved a substantial increase in funding for the Governor’s Strategic Reserve Fund, the state’s most flexible and effective economic development incentive. The legislature’s $10 million in recapitalization of the Infrastruc-

ture Finance Authority’s Special Public Works Fund will allow the state to help more Oregon communities meet their most pressing infrastructure needs.

oREgoN

28


Growth Rate: 2.8%



Growth Rate: 2.9%

lARgEST INDUSTRY CoNTRIBUToRS To gDpGovernment (13.1% of GDP), Finance and insur-ance (11.2% of GDP)

lARgEST INDUSTRY CoNTRIBUToRS To gDp gRoWTh, 2010-11Information (contributed 0.37 percentage points), Wholesale trade (contributed 0.34 percentage points)

KEY TAx RATESSTATE INDIVIDUAl INCoME TAxESTax Rate Range• Low: 5%• High: —Income Brackets• Lowest: Flat rate• Highest: Flat rateNumber of Tax Brackets: 1

CoRpoRATE INCoME TAx RATES• Tax Rate: 5%• Lowest Tax Bracket: Flat rate• Highest Tax Bracket: Flat rate• Number of Tax Brackets: 1


» Gasoline: » Diesel: » Gasohol:

· The general sales and gross receipts tax includes a statewide tax of 1.25 percent levied by local govern-ments in Utah. Food sales are subject to local taxes.

Governor's Office of Economic Development http://business.utah.gov/

UTAh

} Governor's Office of Economic Development} http://business.utah.gov/

PRogRam iNfoRmaTioN

29

The Governor’s Office of Economic Development provides financial incentives for business relocation and expansion to select companies that create new, high-paying jobs to help improve the standard of living, increase the tax base, attract and retain top-level management, and diversify the state economy. Incentive programs include:

Economic Clusters InitiativeUtah's Economic Cluster Initiative is designed around proven economic principles where collaboration among organiza-tions offers sustainable advantages to local economies. The initiative facilitates the development of clustered business environments—groups of related businesses and organizations within industry sectors whose collective skills and collaboration provide a sustainable competitive advantage.

The economic development office serves as a catalyst to align resources and policies that contribute to successful economic clusters bringing industry, research, capital, talent, technology and government together around industry sectors that possess the greatest return on investment for the state. The average wage earned by an employee in a cluster-related indus-try is 57 percent higher than the state average monthly salary.

Business Resource CentersBusiness Resource Centers consolidate various business service providers in a single location so business owners have only one place to go to get their questions answered. Staff members are equipped to answer questions on business plan-ning, tax structure, personnel, training, marketing, locations, contracting, administrative services, mentoring and funding. The centers are tailored to the local community they serve and have service providers as partners who are experts in their fields to provide the answers to the business customer.

More than 1,000 unique business customers have visited Utah Business Resource Centers and created or retained hundreds of jobs and started 88 businesses. In addition, more than 2,000 business personnel visited all of the business part-ners operating out of the centers.

Corporate Recruitment and IncentivesThe mission of Corporate Recruitment and Incentives is to increase the number of quality jobs in Utah by helping existing companies expand and by recruiting new companies to the state. Financial incentives are available for business relocation and expansion for select companies that create new, high-paying jobs to help improve the standard of living, increase the tax base, attract and retain top-level manage-ment, and diversify the state economy.


The Governor’s Office Economic Development board and executive director decide the amount and duration of incentives through the Corporate Recruitment and Incen-tives program based on statutory guidelines and evaluation criteria, including the financial strength of the company, the number and salary of jobs created, amount of new state tax revenue, long-term capital investment, competition with other locations and whether the company is in a targeted cluster through the Economic Clusters Initiative.

To ensure that state guidelines for compliance are met, incentives are based on the following “three pillars of success and sustainability”: • Post-performance: Incentives are disbursed after the com-

pany has met contractual performance benchmarks, such as job creation and payment of new state taxes.

• Single Taxpayer: Incentive amounts are based on new state taxes generated by the project.

• Competition: Incentives must make Utah competitive with other locations.


UTAh

RECENT lEgISlATIVE hIghlIghTSDuring the 2012 legislative session, Gov. Gary R. Herbert signed three bills into law aimed at encouraging economic development. House Bill 318 provides funding to be used to promote business and economic development in rural Utah with the Business Expansion and Retention program. House Bill 28 creates the Economic Development Task Force which will review and make recommendations on how economic

production in the state can be increased and how more high-paying jobs can be created, how the state can attract more businesses and how regulatory or other barriers to economic production or economic development can be reduced or eliminated. Senate Bill 190 supports the growth of early stage life sciences companies by renewing expired research and development tax credits.

30


Growth Rate: 3.0%



Growth Rate: 2.0%


lARgEST INDUSTRY CoNTRIBUToRS To gDp gRoWTh, 2010-11Durable goods manufacturing (contributed 0.95 percentage points), Information (contributed 0.86 percentage points)


Washington does not have a personal income tax


Washington does not have a corporate income tax



Department of Commerce http://www.commerce.wa.gov/

WAShINgToN

} Department of Commerce} http://www.commerce.wa.gov/

PRogRam iNfoRmaTioN

31

Innovation Partnership ZonesThe Washington state Department of Commerce designated three new Innovation Partnership Zones in 2011 and reau-thorized nine others to help spur regional economic growth through key sectors such as manufacturing, global health and technology.

Craft3 Small Business Credit Initiative This initiative will provide loans up to $5 million to Washing-ton-based small businesses in underserved communities and Indian country, as well as to women- and minority-owned busi-nesses. Craft3, formerly Enterprise Cascadia, also will work with Washington’s network of community development financial institutions to finance smaller loans throughout the state.

Capital Access Program FundAdministered by the department of commerce, this program will facilitate bank loans primarily in the $50,000 to $100,000 range to small businesses that have faced challenges to get-ting the capital they need to grow and support jobs during the economic downturn. The program will provide additional insurance for banks to extend credit to small businesses.

W FundThis program is projected to be a more than $25 million venture fund organized to invest in early-stage technology, life science and information technology companies emerging from the University of Washington and other leading science research centers across Washington state. Fund recipients will be headquartered in Washington state, creating jobs and economic opportunity in key growth sectors.


In 2006, the legislature stated that periodic reviews of tax preferences—such as exemptions, exclusions or deductions from the base of a state tax; a credit against a state tax; a deferral of a state tax; or a preferential state tax rate—are needed to determine if their continued existence or modi-fication serves the public interest. The legislature enacted Engrossed House Bill 1069 to provide for an orderly process for the review of tax preferences. The legislation assigns spe-cific roles in the process to two different entities. The Citizen Commission for Performance Measurement of Tax Prefer-ences schedules tax preferences, holds public hearings and

comments on the reviews, while the Joint Legislative Audit and Review Committee conducts the reviews.

Detailed reports that review and analyze the performance of tax preference programs and whether programs meet pub-lic policy objectives are available online. Reports also make recommendations for the continuance, termination or modifi-cation of programs based on their performance and need. In addition, the state’s Department of Revenue provides detailed reports on its website identifying the dollar value of the tax preference claimed in addition to employee wage and benefit data for each tax preference recipient.


RECENT lEgISlATIVE hIghlIghTSGov. Chris Gregoire and the Washington state Department of Commerce in late 2011 launched a new program for the state’s small businesses seeking new sources of financing to grow and create jobs. The Department of Commerce was awarded $19.7 million from the U.S. Department of Treasury to launch the Washington Small Business Credit Initiative—three new programs designed to spur investment and lending to businesses throughout the state. The Small Business Credit Initiative could result in an estimated 3,000 to 6,000 direct and indirect jobs through 2016.

The funds target underserved communities, businesses that have faced challenges securing conventional business loans during the economic downturn and early-stage tech compa-nies. It is designed to use public funds efficiently, maximizing “bang for the buck” for Washington residents. Commerce anticipates every $1 the state invests will generate approxi-mately $15 to $18 in private lending or investment, injecting as much as $300 million into the state economy through 2016. Among the new funding streams for small business credit were the Craft3 Small Business Credit Initiative, Capital Access Program Fund and the W Fund.

WAShINgToN

32


Growth Rate: 4.2%


REAl gDp• 2011 Growth Rate: -1.2% • 2001-2011 Compound Annual

Growth Rate: 2.4%

lARgEST INDUSTRY CoNTRIBUToRS To gDpMining (29.4% of GDP), Government (13.8% of GDP)

lARgEST INDUSTRY DETRACToRS To gDp gRoWTh, 2010-11Mining (subtracted 1.69 percentage points), Con-struction (subtracted 0.44 percentage points)


Wyoming does not have a personal income tax


Wyoming does not have a corporate income tax



Wyoming Business Council http://www.wyomingbusiness.org/

WYoMINg

} Wyoming Business Council} http://www.wyomingbusiness.org/

PRogRam iNfoRmaTioN

33

Business Ready Community Grants These grants provide infrastructure grants to cities, counties and joint powers boards to facilitate business growth. They include readiness grants, which are generally used to build business parks; community enhancement grants, which add amenities to a community to help attract business; or busi-ness committed grants, which can construct a building for use by a company, though it will be owned by the governmental entity. More than $200 million has been awarded and more than 2,000 new jobs have been created over the seven years the program has been in place.

Job Training Grants Job training grants provide up to $4,000 per qualified worker in year one and $2,000 per worker thereafter to train em-ployees. Jobs must provide compensation above the average

of the county involved. The program annually provides train-ing for more than 4,000 workers and 400 companies.

Manufacturing Sales Tax ExemptionThis program provides exemptions from sales taxes for purchases associated with manufacturing expansion or new manufacturing investment in the state.

Cost ComparisonsWyoming sells itself primarily on its low cost of doing busi-ness as it has no income tax. Unable to provide much in the way of direct financial incentives, the state’s economic devel-opment program can do a cost-of-doing-business compari-son that generally demonstrates the benefits to a company exceed any upfront advantage another state may offer within five years or less.


Wyoming Business Council staff does extensive diligence on each project and follows development of those projects throughout their lives. As required by the state constitution, the investment is with the governmental entities rather than companies directly. The company will get a positive impact from these investments, but should the endeavor fail, the governmental entity retains the assets created.

With respect to the recently extended Manufacturing Sales Tax Exemption, any person utilizing the exemption must report the amount of sales or use tax exempted and the number of jobs created or impacted by the utilization of the exemption if requested by the Department of Revenue. The report must include a history of employment in terms of numbers of employees, full-time and part-time employees, and rates of turnover.


RECENT lEgISlATIVE hIghlIghTSThe Wyoming sales and use tax exemption for a sale or lease of qualified machinery to be used in the state directly and predominantly in manufacturing tangible personal property

was extended for six years, from Dec. 31, 2011, until Dec. 31, 2016.

WYoMINg

34

Current Dollar GDP Real GDP Per Capita Personal Income

2011(in $billions) U.S. Rank 2011 Growth

Rate2008-2011

Growth Rate 2011 Percent of National Average

United States $14,981.02 1.5% 0.7% $41,663Alabama $173.12 26 -0.8% -3.6% $34,650 83%Alaska $51.38 44 2.5% 8.9% $45,529 109%Arizona $258.45 20 1.5% -5.8% $35,875 86%Arkansas $105.85 34 0.3% -0.1% $34,014 82%California $1,958.90 1 2.0% -1.2% $44,481 107%Colorado $264.31 19 1.9% 1.4% $44,088 106%Connecticut $230.09 24 2.0% -0.5% $56,889 137%Delaware $65.76 40 1.6% 6.7% $41,635 100%Florida $754.26 4 0.5% -4.1% $39,563 95%Georgia $418.94 11 1.7% -2.2% $36,104 87%Hawaii $66.99 38 -0.2% -3.5% $43,053 103%Idaho $57.93 42 0.6% 0.2% $33,326 80%Illinois $670.73 5 1.3% 0.2% $44,140 106%Indiana $278.13 17 1.1% -0.4% $35,550 85%Iowa $148.99 30 1.9% 4.0% $40,470 97%Kansas $130.92 31 0.5% -0.7% $40,481 97%Kentucky $164.80 28 0.5% 0.4% $33,667 81%Louisiana $247.72 23 0.5% 11.9% $38,578 93%Maine $51.59 43 -0.4% -1.6% $37,973 91%Maryland $301.10 15 0.9% 2.2% $51,038 123%Massachusetts $391.77 12 2.2% 3.8% $53,621 129%Michigan $385.25 13 2.3% -2.4% $36,533 88%Minnesota $281.71 16 1.2% 1.1% $44,672 107%Mississippi $97.81 35 -0.8% -3.3% $32,176 77%Missouri $249.53 22 0.0% -2.7% $38,248 92%Montana $37.99 48 0.0% 0.1% $36,573 88%Nebraska $94.16 36 0.1% 2.8% $41,584 100%Nevada $130.37 32 1.2% -6.1% $38,173 92%New Hampshire $63.56 41 1.5% 3.9% $45,787 110%New Jersey $486.99 7 -0.5% -3.8% $53,181 128%New Mexico $79.41 37 0.2% 2.1% $34,575 83%New York $1,157.97 3 1.1% 2.9% $50,545 121%North Carolina $439.86 9 1.8% 1.9% $36,164 87%North Dakota $40.33 46 7.6% 19.7% $45,747 110%Ohio $483.96 8 1.1% -2.6% $37,791 91%Oklahoma $154.97 29 1.0% -0.2% $37,277 89%Oregon $194.74 25 4.7% 9.4% $37,909 91%Pennsylvania $578.84 6 1.2% 0.4% $42,478 102%Rhode Island $50.09 45 0.8% 0.6% $43,992 106%South Carolina $165.79 27 1.2% -2.0% $33,673 81%South Dakota $40.12 47 0.8% 0.4% $41,590 100%Tennessee $266.53 18 1.9% 1.4% $36,533 88%Texas $1,308.13 2 3.3% 6.8% $39,593 95%Utah $124.48 33 2.0% 4.3% $33,790 81%Vermont $25.91 50 0.5% 0.9% $41,832 100%Virginia $428.91 10 0.3% 2.5% $45,920 110%Washington $355.08 14 2.0% 0.9% $44,294 106%West Virginia $66.82 39 4.5% 8.1% $33,513 80%Wisconsin $254.82 21 1.1% 1.3% $40,073 96%Wyoming $37.62 49 -1.2% 0.6% $47,301 114%

AppENDIx A } STATE PERSONAL INCOME AND GDP

Source: U.S. Bureau of Economic Analysis, www.bea.gov

35

90+ Day Delinquency

Rate1

Foreclosure Inventory2

Negative Equity Rate3

Percent of Renters Cost

Burdened4

Percent of Homeowners

Cost Burdened4

Alabama 5.7% 1.3% 11.0% 54.0% 32.7%Alaska 2.3% 0.8% 7.6% 47.5% 32.2%Arizona 7.1% 2.7% 48.7% 53.2% 41.2%Arkansas 5.2% 1.4% 10.1% 49.7% 27.5%California 7.0% 2.7% 30.2% 57.2% 51.2%Colorado 4.1% 1.5% 20.6% 52.2% 37.6%Connecticut 7.2% 4.1% 13.1% 53.7% 41.4%Delaware 6.7% 3.1% 14.5% 55.2% 37.3%Florida 17.4% 11.9% 45.1% 60.4% 48.8%Georgia 8.0% 2.5% 30.2% 54.3% 38.2%Hawaii 6.6% 3.8% 9.9% 56.2% 50.2%Idaho 5.2% 2.1% 23.0% 50.9% 36.8%Illinois 9.2% 5.4% 21.7% 52.6% 39.8%Indiana 6.6% 3.5% 10.9% 51.4% 27.5%Iowa 4.2% 2.2% 9.0% 45.9% 24.8%Kansas 4.4% 1.7% 10.2% 45.4% 26.5%Kentucky 5.6% 2.8% 8.8% 49.5% 30.2%Louisiana 6.3% 2.4% n/a 53.3% 30.2%Maine 6.9% 4.2% n/a 49.4% 34.0%Maryland 8.0% 3.1% 23.6% 51.6% 38.1%Massachusetts 5.7% 1.8% 15.7% 50.8% 39.1%Michigan 6.5% 2.1% 35.6% 55.9% 36.4%Minnesota 4.6% 1.8% 16.3% 50.4% 33.4%Mississippi 7.6% 2.7% n/a 55.5% 35.4%Missouri 4.6% 1.5% 15.8% 50.1% 30.2%Montana 3.1% 1.4% 8.3% 45.7% 36.1%Nebraska 3.0% 1.0% 9.7% 44.8% 26.0%Nevada 13.4% 5.3% 60.4% 53.1% 45.2%New Hampshire 4.6% 1.7% 19.0% 50.7% 40.2%New Jersey 10.6% 6.4% 16.4% 54.3% 46.7%New Mexico 5.7% 3.3% 13.6% 48.3% 36.0%New York 7.9% 4.6% 6.3% 53.2% 41.4%North Carolina 5.9% 2.5% 11.8% 52.2% 34.5%North Dakota 1.7% 0.8% 7.3% 40.2% 19.1%Ohio 6.9% 3.5% 22.3% 51.9% 31.9%Oklahoma 5.3% 2.5% 6.9% 47.4% 28.8%Oregon 5.4% 2.7% 17.2% 54.3% 42.8%Pennsylvania 5.9% 2.6% 7.8% 50.7% 33.3%Rhode Island 7.5% 2.4% 21.5% 51.8% 43.6%South Carolina 6.7% 3.7% 15.6% 53.7% 34.0%South Dakota 2.7% 1.4% n/a 41.7% 25.5%Tennessee 6.3% 2.0% 14.6% 52.7% 33.3%Texas 4.8% 1.4% 10.0% 50.3% 32.6%Utah 5.0% 1.7% 20.9% 48.8% 35.5%Vermont 4.0% 2.4% n/a 54.2% 38.8%Virginia 4.1% 1.5% 23.3% 50.4% 35.2%Washington 6.2% 1.3% 17.2% 51.2% 40.9%West Virginia 4.1% 1.5% n/a 49.3% 25.6%Wisconsin 4.6% 2.3% 14.6% 49.4% 34.3%Wyoming 2.5% 0.7% n/a 40.0% 28.0%Puerto Rico n/a n/a n/a 53.6% 11.4%

AppENDIx B } HOUSING MEASURES, 2010–2011

n/a - not available1Mortgage Bankers Association, Percentage of mortgaged properties that are 90 days or more delinquent in payments, Dec. 2011, www.mbaa.org2RealtyTrac, Percentage of housing inventory in the foreclosure process, Dec. 2011, www.realtytrac.com3Core Logic, Percentage of mortgaged properties in negative equity (owing more on a mortgage than the home is valued) or within 5% of being in a negative equity position, 2Q 2011, www.corelogic.com4CSG calculations of U.S. Census Bureau, 2010 American Community Survey 1-Year Estimate data, www.census.gov. Cost-burdened is defined as a household or individual that spends 30 percent of more of income on housing costs.

36

AppENDIx C } EMPLOYMENT AND UNEMPLOYMENT LEVELS, 2011–2012

Employees on nonfarm payrolls Unemployment Rate

April 2012 (thousands)Percent Change April

2011-April 2012April 2012

Percentage Point Change April 2011-April 2012

Alabama 1874.3 0.2% 7.2% -2.0%Alaska 329.9 0.1% 6.9% -0.6%Arizona 2453.5 2.1% 8.2% -1.4%Arkansas 1170.1 -0.1% 7.2% -0.8%California 14237 1.2% 10.9% -0.9%Colorado 2291.8 1.8% 7.9% -0.5%Connecticut 1628.8 -0.1% 7.7% -1.3%Delaware 421 0.4% 6.8% -0.4%Florida 7325.3 0.7% 8.7% -1.9%Georgia 3915.7 0.6% 8.9% -0.9%Hawaii 600.9 1.7% 6.3% -0.3%Idaho 615.1 1.2% 7.7% -1.0%Illinois 5698.8 0.5% 8.7% -0.8%Indiana 2884.9 1.9% 7.9% -0.9%Iowa 1496.3 1.2% 5.1% -0.8%Kansas 1346.4 0.6% 6.1% -0.6%Kentucky 1822 1.8% 8.3% -1.3%Louisiana 1958.5 2.3% 7.1% -0.3%Maine 593.4 0.1% 7.2% -0.5%Maryland 2580.1 1.6% 6.7% -0.4%Massachusetts 3242.9 0.9% 6.3% -1.2%Michigan 3988.7 1.5% 8.3% -2.2%Minnesota 2701.8 0.9% 5.6% -1.0%Mississippi 1090.7 -0.2% 8.7% -1.9%Missouri 2668 0.4% 7.3% -1.3%Montana 428.2 -0.3% 6.1% -0.7%Nebraska 951.9 0.7% 3.9% -0.6%Nevada 1128.6 0.5% 11.7% -1.9%New Hampshire 623.5 -0.6% 5.0% -0.2%New Jersey 3889.3 1.0% 9.1% 0.1%New Mexico 808.3 0.3% 6.9% -0.3%New York 8807.4 1.5% 8.5% 0.0%North Carolina 3958.1 0.8% 9.4% -0.3%North Dakota 416.6 7.2% 3.0% 0.0%Ohio 5137.9 0.9% 7.4% -1.4%Oklahoma 1585.7 2.5% 5.0% -0.9%Oregon 1623.9 0.2% 8.5% -1.0%Pennsylvania 5727.7 0.7% 7.4% -0.5%Rhode Island 457.8 -0.9% 11.2% 0.1%South Carolina 1850.1 0.9% 8.8% -0.1%South Dakota 409.1 0.7% 4.3% 0.0%Tennessee 2695.8 1.6% 7.8% -1.6%Texas 10755.6 2.1% 6.9% -1.1%Utah 1231.1 2.4% 6.0% -1.0%Vermont 300.4 0.6% 4.6% -1.1%Virginia 3715.5 0.9% 5.6% -0.6%Washington 2854.1 1.4% 8.1% -1.2%West Virginia 759.7 0.8% 6.7% -0.1%Wisconsin 2732 -0.8% 6.7% -0.8%Wyoming 287.1 0.8% 5.3% -0.7%

Source: U.S. Department of Labor, Bureau of Labor Statistics, www.bls.gov

37

AppENDIx D } STATE FINANCIAL INCENTIVES FOR BUSINESS, 2010AppENDIx C } EMPLOYMENT AND UNEMPLOYMENT LEVELS, 2011–2012

Source:Site Selection Magazine, from State Business Incentives: Trends and Options for the Future, The Council of State Governments, 2011, http://knowledgecenter.csg.org/drupal/content/state-business-incentives-trends-and-options-future

State

Alabama * * * * * * * * * * * * *

Alaska * * * * * * *Arizona * * * * * * * * * * * *Arkansas * * * * * * * * * * * * California * * * * * * * * * * * *Colorado * * * * * * * * * Connecticut * * * * * * * * * * * * *Delaware * * * * * * * * * * * * *Florida * * * * * * * * * * * * *Georgia * * * * * * * * * *Hawaii * * * * * * * * * * * * *Idaho * * * * * * * * *Illinois * * * * * * * * * * * * *Indiana * * * * * * * * * * * *Iowa * * * * * * * * * * * * *Kansas * * * * * * * * * * * *Kentucky * * * * * * * * * * * * *Louisiana * * * * * * * * * * * * *

Maine * * * * * * * * * * * *

Maryland * * * * * * * * * * * * *Massachusetts * * * * * * * * * * * * * *Michigan * * * * * * * * * * * * *Minnesota * * * * * * * * * * * * *Mississippi * * * * * * * * * * * *Missouri * * * * * * * * * * * * *Montana * * * * * * * * * * * * * *Nebraska * * * * * * * * * *Nevada * * * * * * * * New Hampshire * * * * * * *

New Jersey * * * * * * * * * * * New Mexico * * * * * * * * * * * *New York * * * * * * * * * * * * North Carolina * * * * * * * * * * * *North Dakota * * * * * * * * * * * Ohio * * * * * * * * * * * *Oklahoma * * * * * * * * * * * * * * *Oregon * * * * * * * * * *Pennsylvania * * * * * * * * * * * * * * *Rhode Island * * * * * * * * * * * * *South Carolina * * * * * * * * * * * * *South Dakota * * * * * * * * * * * *Tennessee * * * * * * * * * * * * *Texas * * * * * * * * * * Utah * * * * * * *Vermont * * * * * * * * *Virginia * * * * * * * * * * * * *Washington * * * * * * * * * * West Virginia * * * * * * * * * * * * *Wisconsin * * * * * * * * * * *Wyoming * * * * * State Totals 41 38 29 40 44 49 47 49 50 45 45 8 12 42 41 Puerto Rico * * * * * * * * * * * * * * *

Corporate In

come

Tax Exe

mption

Personal In

come

Tax Exe

mption

Excise

Tax Exe

mption

Tax Exe

mption O

r Morato

rium

On Land, Capita

l Improvements

Tax Exe

mption O

r Morato

rium

On Equipment, Mach

inery

Inventory Ta

x Exemptio

n On

Goods In Tr

ansit (F

reeport)

Tax Exe

mption O

n

Manufacturers’

Inventorie

s

Sales/Use

Tax Exe

mption

On New Equipment

Tax Exe

mption O

n Raw

Materials U

sed In

Manufactu

ring

Tax In

centiv

e For

Creation O

f Jobs

Tax In

centiv

e For

Industrial In

vestment

Tax Credits

For U

se O

f

Specified State Products

Tax Stabiliz

ation Agreements

For S

pecified In

dustries

Tax Exe

mption To

Encourage

Research

And Development

Accelerated D

epreciatio

n

Of Industr

ial Equipment

38

AppENDIx E } STATE TAX INCENTIVES FOR BUSINESS, 2010

State

Alabama * * * * * * *

Alaska * * * * * * * * * * *

Arizona * * * * * *

Arkansas * * * * * * * * * *

California * * * * * * * * * *

Colorado * * * * * * * * *

Connecticut * * * * * * * * * *

Delaware * * * * * * * *

Florida * * * * *

Georgia * * * *

Hawaii * * * * * * *

Idaho *

Illinois * * * * * * * *

Indiana * * * * * * * * * *

Iowa * * * * * * * * * *

Kansas * * * * * *

Kentucky * * * * * * * * *

Louisiana * * * * * * * * * *

Maine * * * * * * * *

Maryland * * * * * * * * * * *

Massachusetts * * * * * * * * * *

Michigan * * * * * * * *

Minnesota * * * * * * * * *

Mississippi * * * * * * * * * *

Missouri * * * * * * * * *

Montana * * * * * * * *

Nebraska * * * * * * * * * * *

Nevada * * * * *

New Hampshire * * * * * *

New Jersey * * * * * * * *

New Mexico * * * * * * * * * *

New York * * * * * * * * * *

North Carolina * *

North Dakota * * * * * * * * * *

Ohio * * * * * * * *

Oklahoma * * * * * * * * * *

Oregon * * * * * * * * * * *

Pennsylvania * * * * * * * * * * *

Rhode Island * * * * * * * * * * *

South Carolina * * * * *

South Dakota * * * * * * *

Tennessee * * * * * * * * *

Texas * * * * * * * * * * *

Utah * * *

Vermont * * * * * * * * *

Virginia * * * * * * * * *

Washington * * * * * * *

West Virginia * * * * * * * * *

Wisconsin * * * * * *

Wyoming * * * * * * * * *

State Totals 42 39 45 24 41 42 30 34 44 27 43

Puerto Rico * * * * * * * * * * *

State-Sponsored In

dustrial

Development Auth

ority

Privately Sponso

red

Development Credit C

orporatio

n

State Authorit

y Or A

gency

Revenue Bond Financing

State Authorit

y Or A

gency

General Oblig

ation Bond Financin

g

State Loans o

n

Building Constr

uction

State Loans F

or

Equipment/Mach

inery

State Loan Guarantees F

or

Building Constr

uction

State Loan Guarantees F

or

Equipment, Mach

inery

State Financing Aid Fo

r

Existing Plant E

xpansion

State M

atching Fu

nds For C

ity And/

Or County

Industrial/F

inancing Programs

State In

centiv

e For E

stablish

ing Industr

ial

Plants In Areas O

f High Unemploym

ent

Source:Site Selection Magazine, from State Business Incentives: Trends and Options for the Future, The Council of State Governments, 2011, http://knowledgecenter.csg.org/drupal/content/state-business-incentives-trends-and-options-future

39

AppENDIx E } STATE TAX INCENTIVES FOR BUSINESS, 2010

State legislators should use clearly written guidelines when considering business incentive packages. The following list of suggestions might be useful in designing state guides. Not all questions are appropriate to all programs and all states.

Evaluating Job Creation proposals for New Businesses:• Does the proposed job creation proposal fit within the framework of the state’s economic develop-

ment policy?• Does the proposal have specific missions and goals?• Are these goals likely to be achieved by this proposal?• Does the proposal provide for a way to monitor its success, including clearly defined outcomes?• Why is the proposal being created?• What are the projected short-term and long-term costs of the proposal?• Is there some way to provide a service other than through a government program?• Can a market problem be addressed by changing rules and regulations instead of creating a program?• Does the proposal help every business or only a small number of businesses?• If the proposal is targeted to a narrow sector of the economy, is it a sector the state wants to target?• Will the program help diversify the state’s economy?• Is there a provision for return of the state’s investment if certain criteria are not met?• Should government provide such services as direct financing or should the state provide more basic

services such as job training and information?• Is the legislature getting the right kind of data upon which to base programs and policy?

Evaluating Existing programs:• Is the program meeting its goals?• Has the program outlived its usefulness?• Has the program been monitored by the agency on a regular basis?• Has the state development agency surveyed businesses to see if they were satisfied with the assistance

they received through various state programs?• Is the agency overstating the multiplier effect of a particular program?• Has the agency calculated the actual costs of the program?• Are the benefits of a program being accurately interpreted? • Are the job creation figures accurate?• Is the program meeting acceptable criteria for state investment?• Has the program been audited?• Does the agency have a uniform and standard policy for collecting data such as job creation figures?• Has the agency conducted site visits to monitor its investment?• Is the state agency’s program evaluation based on verifiable data or on projections?• Has the economic impact of a project been accurately detailed?

AppENDIx f } A GUIDE FOR STATE LEADERS TO EVALUATE JOB CREATION PROPOSALS

40

State Name Title Agency Email Address

Alaska Wanetta AyersDivision Director, Division of Economic Development

Office of Economic Development [email protected]

ArizonaTiffany Frechette

Director, Financial Incentive Programs

Arizona Commerce Authority [email protected]

California Priscilla Yang Communications AssistantGovernor's Office Business & Economic Development

[email protected]

Colorado Kathy GreenDirector of Communications and Marketing

Colorado Office of Economic Devel-opment & International Trade

[email protected]

Hawaii Dave Young Communications DirectorDepartment of Business, Economic Development and Tourism

[email protected]

IdahoSusan Davidson

Manager for Business Attraction Department of Commerce [email protected]

Montana Karyl S. TobelAssistant Division Administrator, Business Resources Division

Montana Department of Commerce [email protected]

Nevada Michael Skaggs Deputy DirectorGovernor's Office of Economic Development

[email protected]

New Mexico Therese VarelaProgram Manager, Job Training Incentive Program

New Mexico Economic Develop-ment Department

[email protected]

Oregon Nathan BuehlerCommunications and Marketing Manager

Business Oregon [email protected]

Utah Jenni Osman Incentives CoordinatorGovernor's Office of Economic Development

[email protected]

Washington Mary Trimarco Business Development Manag-ing Director

Department of Commerce [email protected]

Wyoming Mark Willis Chief Operating Officer Wyoming Business Council [email protected]

AppENDIx g } STATE CONTACT INFORMATION

41

The Council Of State Governments

Headquarters Washington East Midwest South West

Lexington, Ky. Washington, D.C. New York, N.Y. Lombard, Ill. Atlanta, Ga. Sacramento, Calif.859.244.8000 202.624.5460 212.482.2320 630.925.1922 404.633.4826 916.553.4423

www.csg.org www.csgdc.org www.csgeast.org www.csgmidwest.org www.slcatlanta.org www.csgwest.org

The Council of State Governments is our nation’s only organization serving all three branches of state government. CSG is a region-based forum that fosters the exchange of insights and ideas to help state officials shape public policy. This offers unparalleled regional, national and international opportunities to network, develop leaders, collaborate and create problem-solving partnerships.

The Council of State Governments

42

The Council of State Governments

TRENDS IN WESTERN STATE BUSINESS INCENTIVES

Trends in Western State Business Incentives

Documents

site selection

largest industry

recent legislative

negative equity

largest industry

curbing tax

excise tax

gross receipts