SB636: Bill Text

LRB-5438/1

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1995 - 1996 LEGISLATURE

1995 Senate BILL 636

March 19, 1996 - Introduced by Senators Petak, Schultz, Rude, Welch, Zien and Rosenzweig, cosponsored by Representatives Albers, Brandemuehl and Freese, by request of Governor Tommy G. Thompson. Referred to Committee on Business, Economic Development and Urban Affairs.

SB636,2,2 An Act to repeal 71.07 (2dj) (d), 71.07 (2ds) (c), 71.28 (1dj) (d), 71.28 (1ds) (c), 71.47 (1dj) (d), 71.47 (1ds) (c), 560.71 (1) (cm), 560.72 (4), 560.723, 560.725 (1) (a) to (h), 560.73 (1) (c) 6., 560.735 (3), 560.75 (3), 560.763 (1) (a), 560.763 (2), 560.763 (3) and 560.79; to renumber and amend 560.725 (1) (intro.); to amend 20.835 (2) (cm), 20.835 (2) (cn), 71.07 (2dd) (a) 1., 71.07 (2dj) (am) 1., 71.07 (2dj) (am) 3., 71.07 (2dj) (am) 8m., 71.07 (2dj) (h), 71.07 (2dL) (ar), 71.07 (2ds) (h), 71.10 (4) (gd), 71.10 (4) (ge), 71.10 (4) (i), 71.28 (1dd) (a) 1., 71.28 (1dj) (am) 1., 71.28 (1dj) (am) 3., 71.28 (1dj) (am) 8m., 71.28 (1dj) (h), 71.28 (1dL) (ar), 71.28 (1ds) (h), 71.30 (3) (eb), 71.30 (3) (ec), 71.30 (3) (f), 71.47 (1dd) (a) 1., 71.47 (1dj) (am) 1., 71.47 (1dj) (am) 3., 71.47 (1dj) (am) 8m., 71.47 (1dj) (h), 71.47 (1dL) (ar), 71.47 (1ds) (h), 71.49 (1) (eb), 71.49 (1) (ec), 71.49 (1) (f), 560.70 (4), 560.70 (6), 560.71 (3) (a), 560.72 (2) (c), 560.72 (3), 560.725 (2), 560.725 (3), 560.73 (1) (f), 560.73 (1) (g), 560.73 (3), 560.735 (1) (a), 560.735 (1) (b), 560.735 (1) (c), 560.735 (6) (a) (intro.), 560.735 (6) (a) 2., 560.735 (6) (a) 3., 560.735 (6) (b), 560.74 (2), 560.745 (1) (a), 560.745 (1) (b), 560.745 (2) (a), 560.763 (title) and 560.797 (1) (c); to repeal and recreate 560.71 (1) (e); and to create 71.07 (2dd) (f), 71.28 (1dd) (f), 71.47 (1dd) (f), 560.71 (1m) and 560.735 (6) (c) of the statutes; relating to: the development zone program, development zones tax credits and making an appropriation.

Analysis by the Legislative Reference Bureau

Development zone program changes

The department of development (DOD) administers the development zone program. Under the program, DOD certifies for a tax credit a person conducting economic activity in an area of the state that DOD has designated as a development zone. In order to be designated as a development zone, an area must be nominated by a local governing body, defined as the governing body of one or more cities, villages or towns or the elected governing body of a federally recognized American Indian tribe or band in this state. Two or more local governing bodies, or a local governing body and the governing body of a county, may also nominate an area as a development zone. The area must fulfill at least 2 of a number of such criteria as having a high unemployment rate, low household incomes, falling property values and permanent layoffs in its workforce. The area must also fulfill other criteria related to its population size and the valuation of the property in the area in relation to the valuation of the property of the larger community of which it is a part. DOD must notify the joint committee on finance of every area that is nominated, and may not designate an area without the committee's approval if the committee schedules a meeting for review of the boundary of the area. DOD may designate up to 14 development zones in the state.

Two separate areas may be designated as one development zone, but each of the 2 areas must fulfill all of the criteria that a single area must fulfill. In a 1st class city, however, up to 4 separate areas may be designated as one development zone. Development zone designations are effective for 84 months, but the nominating governing body may request up to 3 12-month extensions. Whenever DOD designates a development zone, it places a limit on the total tax credits that may be claimed by persons within the zone. The total tax credits that may be claimed by all persons in all of the designated zones is $21,155,000. The governing body nominating an area that is designated as a development zone must assist DOD in administering the program, with respect to the development zone that it nominated, and must appoint a 5-member advisory board to assist it in doing so and in implementing the development zone plan that the governing body included with its nomination application.

This bill makes a number of changes to the development zone program. The definition of a local governing body is expanded to include the governing body of one or more counties. The number of development zones that DOD may designate in the state is increased to 20 over the life of the program, and the total tax credits that may be claimed in all zones is increased to $33,155,000. The criteria that an area must fulfill to be designated as a development zone are changed somewhat, although they still relate to such factors as the unemployment rate, low household incomes, falling property values and permanent layoffs in its workforce. An area must fulfill 3 instead of 2 of those criteria. DOD is no longer required to notify the joint committee on finance of an area's nomination. Up to 8 separate areas in a 1st class city may be designated as one development zone. The governing body of a county may nominate up to 4 separate areas as one development zone. An area that is located in a metropolitan statistical area must contain less than 10%, instead of 5%, of the valuation of the property of the city, village or town in which it is located. If such an area is located in a 1st class city, it may not have more than 10%, instead of 5%, of the city's population. If such an area is located in a village, town or city that is not a 1st class city, its population may not be less than 1,000, instead of 4,000, or more than 10,000. An area that is not located in a metropolitan statistical area has no such limitations under the bill. Under current law, such an area must have a population that is at least 1,000 but not more than 5,000. The duration of a development zone is changed from 84 months to 10 years, and a nominating governing body may request one 5-year extension. A governing body is not required to appoint an advisory board to assist it in administering the program or implementing its development zone plan. DOD is no longer required to prepare an annual report on the effectiveness of the development zone program.

Development zones tax credits

Under current law, the development zones jobs credit applies only to the first year of an eligible employe's wages and is subject to a $600 maximum per employe. This bill extends the credit to the 2nd year and increases the maximum to $1,200.

Under current law, employes must be certified within 30 days after they begin employment if their employer is to be eligible for the development zones jobs credit. This bill extends that deadline to 90 days.

Under current law, claimants who are located on an Indian reservation and are American Indians, Indian businesses or tribal enterprises may receive a check from this state if their development zones jobs credit or development zones sales tax credit is more than the income tax or franchise tax that they otherwise owe and if the credit is based on activity in an enterprise development zone. This bill discontinues the requirement that the activity be in an enterprise development zone. The bill also allows other claimants to carry forward these 2 credits.

The bill also makes technical and minor substantive changes to the development zones tax credit.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB636, s. 1 Section 1. 20.835 (2) (cm) of the statutes is amended to read:

SB636,3,3 20.835 (2) (cm) Development zones jobs credit. A sum sufficient to make the payments under ss. 71.07 (2dj) (d) (h), 71.28 (1dj) (d) (h) and 71.47 (1dj) (d) (h).

SB636, s. 2 Section 2. 20.835 (2) (cn) of the statutes is amended to read:

SB636,4,3 20.835 (2) (cn) Development zones sales tax credit. A sum sufficient to make the payments under ss. 71.07 (2ds) (c) (h), 71.28 (1ds) (c) (h) and 71.47 (1ds) (c) (h).

SB636, s. 3 Section 3. 71.07 (2dd) (a) 1. of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,4,9 71.07 (2dd) (a) 1. "Day care center benefits" means benefits provided at a day care facility that is licensed under s. 48.65 or 48.69 and that for compensation provides care for at least 6 children or benefits provided at a facility for persons who are physically or mentally incapable of caring for themselves.

SB636, s. 4 Section 4. 71.07 (2dd) (f) of the statutes is created to read:

SB636,4,13 71.07 (2dd) (f) No credit may be allowed under this subsection unless it is claimed within 2 years of the unextended date under s. 71.75 on which the tax return was due.

SB636, s. 5 Section 5. 71.07 (2dj) (am) 1. of the statutes is amended to read:

SB636,4,19 71.07 (2dj) (am) 1. Modify "member of a targeted group", as defined in section 51 (d) of the internal revenue code as amended to December 31, 1995, to include persons unemployed as a result of a business action subject to s. 109.07 (1m) and persons specified under 29 USC 1651 (a) and to require a member of a targeted group to be a resident of this state.

SB636, s. 6 Section 6. 71.07 (2dj) (am) 3. of the statutes is amended to read:

SB636,4,23 71.07 (2dj) (am) 3. Modify the rule for certification under section 51 (d) (16) (A) of the internal revenue code to allow certification within the 30-day 90-day period beginning with the first day of employment of the employe by the claimant.

SB636, s. 7 Section 7. 71.07 (2dj) (am) 8m. of the statutes is amended to read:

SB636,5,6 71.07 (2dj) (am) 8m. For each person, whether or not he or she is a member of a targeted group, who is determined by the department of development to be a resident of the development zone in which he or she is employed, calculate a credit equal to 10% of the wages earned by such person during the first year 1st and 2nd years of the person's employment in the development zone, up to a maximum credit of $600 $1,200.

SB636, s. 8 Section 8. 71.07 (2dj) (d) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

SB636, s. 9 Section 9. 71.07 (2dj) (h) of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,5,13 71.07 (2dj) (h) For claims based on activity in a zone under s. 560.797, the The rules under sub. (2di) (b) and (c) as they apply to the credit under that subsection apply to the credit under this subsection.

SB636, s. 10 Section 10. 71.07 (2dL) (ar) of the statutes is amended to read:

SB636,5,25 71.07 (2dL) (ar) If the credit under par. (a) is claimed for an amount expended to acquire property, the property must have been acquired by the claimant after the place where the property is located was designated a development zone under s. 560.71 and the completed project must be placed in service after the claimant is certified for tax benefits under s. 560.765 (3) and the property must not have been previously owned by the claimant or a related person during the period the development zone is in existence or during the 2 years prior to the designation of the development zone under s. 560.71. No credit is allowed for an amount expended to acquire property until the property, either in its original state as acquired by the claimant or as subsequently constructed, rehabilitated, remodeled or repaired, is placed in service.

SB636, s. 11 Section 11. 71.07 (2ds) (c) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

SB636, s. 12 Section 12. 71.07 (2ds) (h) of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,6,7 71.07 (2ds) (h) For claims based on activity in a zone under s. 560.797, the The rules under sub. (2di) (b) and (c) as they apply to the credit under that subsection apply to the credit under this subsection.

SB636, s. 13 Section 13. 71.10 (4) (gd) of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,6,11 71.10 (4) (gd) Development zones jobs credit under s. 71.07 (2dj) if the credit is based on activity in a zone under s. 560.797.

SB636, s. 14 Section 14. 71.10 (4) (ge) of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,6,15 71.10 (4) (ge) Development zones sales tax credit under s. 71.07 (2ds) if the credit is based on activity in a zone under s. 560.797.

SB636, s. 15 Section 15. 71.10 (4) (i) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

SB636,6,25 71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland preservation credit under subch. IX, homestead credit under subch. VIII, farmland tax relief credit under s. 71.07 (3m), farmers' drought property tax credit under s. 71.07 (2fd), development zones sales tax credit under s. 71.07 (2ds) unless the credit is based on activity in a zone under s. 560.797, development zones jobs credit under s. 71.07 (2dj) unless the credit is based on activity in a zone under s. 560.797, earned income tax credit under s. 71.07 (9e), estimated tax payments under s. 71.09, and taxes withheld under subch. X.

SB636, s. 16 Section 16. 71.28 (1dd) (a) 1. of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,7,6 71.28 (1dd) (a) 1. "Day care center benefits" means benefits provided at a day care facility that is licensed under s. 48.65 or 48.69 and that for compensation provides care for at least 6 children or benefits provided at a facility for persons who are physically or mentally incapable of caring for themselves.

SB636, s. 17 Section 17. 71.28 (1dd) (f) of the statutes is created to read:

SB636,7,10 71.28 (1dd) (f) No credit may be allowed under this subsection unless it is claimed within 2 years of the unextended date under s. 71.75 on which the tax return was due.

SB636, s. 18 Section 18. 71.28 (1dj) (am) 1. of the statutes is amended to read:

SB636,7,16 71.28 (1dj) (am) 1. Modify "member of a targeted group", as defined in section 51 (d) of the internal revenue code as amended to December 31, 1995, to include persons unemployed as a result of a business action subject to s. 109.07 (1m) and persons specified under 29 USC 1651 (a) and to require a member of a targeted group to be a resident of this state.

SB636, s. 19 Section 19. 71.28 (1dj) (am) 3. of the statutes is amended to read:

SB636,7,20 71.28 (1dj) (am) 3. Modify the rule for certification under section 51 (d) (16) (A) of the internal revenue code to allow certification within the 30-day 90-day period beginning with the first day of employment of the employe by the claimant.

SB636, s. 20 Section 20. 71.28 (1dj) (am) 8m. of the statutes is amended to read:

SB636,8,2 71.28 (1dj) (am) 8m. For each person, whether or not he or she is a member of a targeted group, who is determined by the department of development to be a resident of the development zone in which he or she is employed, calculate a credit equal to 10% of the wages earned by such person during the first year 1st and 2nd years of the person's employment in the development zone, up to a maximum credit of $600 $1,200.

SB636, s. 21 Section 21. 71.28 (1dj) (d) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

SB636, s. 22 Section 22. 71.28 (1dj) (h) of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,8,9 71.28 (1dj) (h) For claims based on activity in a zone under s. 560.797, the The rules under sub. (1di) (b) and (c) as they apply to the credit under that subsection apply to the credit under this subsection.

SB636, s. 23 Section 23. 71.28 (1dL) (ar) of the statutes is amended to read:

SB636,8,21 71.28 (1dL) (ar) If the credit under par. (a) is claimed for an amount expended to acquire property, the property must have been acquired by the claimant after the place where the property is located was designated a development zone under s. 560.71 and the completed project must be placed in service after the claimant is certified for tax benefits under s. 560.765 (3) and the property must not have been previously owned by the claimant or a related person during the period the development zone is in existence or during the 2 years prior to the designation of the development zone under s. 560.71. No credit is allowed for an amount expended to acquire property until the property, either in its original state as acquired by the claimant or as subsequently constructed, rehabilitated, remodeled or repaired, is placed in service.

SB636, s. 24 Section 24. 71.28 (1ds) (c) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

SB636, s. 25 Section 25. 71.28 (1ds) (h) of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,9,3 71.28 (1ds) (h) For claims based on activity in a zone under s. 560.797, the The rules under sub. (1di) (b) and (c) as they apply to the credit under that subsection apply to the credit under this subsection.

SB636, s. 26 Section 26. 71.30 (3) (eb) of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,9,7 71.30 (3) (eb) Development zones jobs credit under s. 71.28 (1dj) if the credit is based on activity in a zone under s. 560.797.

SB636, s. 27 Section 27. 71.30 (3) (ec) of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,9,11 71.30 (3) (ec) Development zones sales tax credit under s. 71.28 (1ds) if the credit is based on activity in a zone under s. 560.797.

SB636, s. 28 Section 28. 71.30 (3) (f) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

SB636,9,19 71.30 (3) (f) The total of farmers' drought property tax credit under s. 71.28 (1fd), farmland preservation credit under subch. IX, farmland tax relief credit under s. 71.28 (2m), the development zones sales tax credit under s. 71.28 (1ds) unless the credit is based on activity in a zone under s. 560.797, the development zones job credit under s. 71.28 (1dj) unless the credit is based on activity in a zone under s. 560.797 and estimated tax payments under s. 71.29.

SB636, s. 29 Section 29. 71.47 (1dd) (a) 1. of the statutes, as created by 1995 Wisconsin Act 27, is amended to read:

SB636,9,25 71.47 (1dd) (a) 1. "Day care center benefits" means benefits provided at a day care facility that is licensed under s. 48.65 or 48.69 and that for compensation provides care for at least 6 children or benefits provided at a facility for persons who are physically incapable of caring for themselves.

SB636, s. 30 Section 30. 71.47 (1dd) (f) of the statutes is created to read: