SB 1027 — AN ACT CONCERNING THE DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT'S RECOMMENDATIONS REGARDING THE JOBSCT TAX REBATE PROGRAM AND CERTAIN AEROSPACE MANUFACTURING PROJECTS.

23-96 8 of 26 Senate Bill No.

1027 (c) of this section that employs at least twenty-five new discretionary FTEs in this state by December thirty-first of the calendar year that is twocalendaryearspriortothecalendaryearinwhichtherebateisbeing claimed shall be allowed a rebate equal to the sum of the amount calculated pursuant to subdivision (1) of subsection (e) of this section and the greater of the following:

(i) The lesser of the new discretionary FTEs (I) created in an opportunity zone or distressed municipality on December thirty-first of the calendar year that is two calendar years prior to the calendar year in SB1027which /the Filerebate No.is being claimed, or (II) maintained in an opportunity zone or distressed municipality in the previous calendar year, multiplied by fifty per cent of the income tax that would be paid on the average wage of the new discretionary FTEs, as determined by the applicable marginal rate set forth in chapter 229 for an unmarried individual based solely on such wages;

673 8 SB1027 File No.

673 which the rebate is being claimed, or (II) maintained in an opportunity zone or distressed municipality in the previous calendar year, multiplied by fifty per cent of the income tax that would be paid on the average wage of the new discretionary FTEs, as determined by the applicable marginal rate set forth in chapter 229 for an unmarried individual based solely on such wages;

(i) Seven hundred fifty dollars multiplied by the lesser of the new discretionary FTEs (I) created by December thirty-first of the calendar year that is two calendar years prior to the calendar year in which the rebatePublic isAct beingNo. claimed, or (II) maintained in the calendar year immediately prior to the calendar year in which the rebate is being claimed;

or23-96 (ii)For9 taxof creditsearned,claimed26 orSenate payableBill priorNo. to January 1, 2024, onethousandfivehundreddollarsmultipliedbythelesserof(I)thenew FTEs created by December 31, 2022, or (II) the new FTEs maintained in the calendar year immediately prior to the calendar year in which the rebate is being claimed.

(2)1027 Inrebate nois eventbeing shallclaimed, theor rebate(II) undermaintained this section exceed in any calendar year of the rebate period five thousand dollars multiplied by the lesser of the new discretionary FTEs (A) created by December thirty- first of the calendar year thatimmediately is two calendar years prior to the calendar year in which the rebate is being claimed,claimed; or (B) maintained in the SB1027 / File No.

673or 9(ii)For SB1027tax Filecreditsearned,claimed No.or payable prior to January 1,2024, onethousandfivehundreddollarsmultipliedbythelesserof(I)thenew FTEs created by December 31, 2022, or (II) the new FTEs maintained in the calendar year immediately prior to the calendar year in which the rebate is being claimed.

673(2) In no event shall the rebate under this section exceed in any calendar year of the rebate period five thousand dollars multiplied by the lesser of the new discretionary FTEs (A) created by December thirty- first of the calendar year that is two calendar years prior to the calendar year in which the rebate is being claimed, or (B) maintained in the calendar year immediately prior to thecalendarthe calendar year inwhichtherebate is being claimed.

(2) Notwithstanding the provisions of subdivision (4) of subsection (c) of this section, the commissioner may not approve an application in wholePublic orAct inNo. part if the full amount of rebates that such applicant may be paid pursuant to subsection (f) of this section would result in the aggregate amount of rebates issued pursuant to subsection (f) of this section exceeding ten million dollars in any fiscal year.

23-96 10 of 26 Senate Bill No.

1027 whole or in part if the full amount of rebates that such applicant may be paid pursuant to subsection (f) of this section would result in the aggregate amount of rebates issued pursuant to subsection (f) of this section exceeding ten million dollars in any fiscal year.

(2) An approved qualified business that has fewer than twenty-five new FTEs created in each of two consecutive calendar years or, if such business is approved by the commissioner pursuant to subdivision (4) of subsection (c) of this section, fewer than twenty-five new discretionary FTEs in each of two consecutive calendar years shall forfeit all remaining rebate allocations, unless the commissioner recognizes mitigating circumstances of a regional or national nature, SB1027including, /but Filenot No.limited to, a recession.

673 10 SB1027 File No.

673 including, but not limited to, a recession.

The approved qualified business shall claim such rebatePublic asAct aNo. credit against the taxes due under chapter 208 or 228z or as an offset of the tax imposed under chapter 207.

23-96 11 of 26 Senate Bill No.

1027 rebate as a credit against the taxes due under chapter 208 or 228z or as an offset of the tax imposed under chapter 207.

(1) "Aerospace manufacturing project" means a project involving the production of helicopters in this state that, if certified by the commissioner as provided in subsection (b) of this section, will require (A)primaryhelicopterproductionforcurrentUnitedStatesgovernment SB1027programs /specified Filein No.the assistance agreement, as of the date of the assistance agreement, to be carried out at one or more facilities in this state, (B) the undertaking and maintaining of primary production for helicopters to be produced during the term of the assistance agreement under one or more future United States government programs specified in the assistance agreement under production contracts entered into by the eligible taxpayer after April 28, 2022, to becarried out at one or more facilities in this state, and (C) minimum requirements for total employment inthisstate, average employeewagesinthis state, supplier spend and capital expenditures by an eligible taxpayer in furtherance of such project continuing through at least June 30, 2042;

673(2) 11"Annual SB1027recapture Fileamount" means the total project tax benefits Public Act No.

67323-96 programs12 specified in the assistance agreement, as of the26 dateSenate ofBill theNo. assistance agreement, to be carried out at one or more facilities in this state, (B) the undertaking and maintaining of primary production for helicopters to be produced during the term of the assistance agreement under one or more future United States government programs specified in the assistance agreement under production contracts entered into by the eligible taxpayer after April 28, 2022, to becarried out at one or more facilities in this state, and (C) minimum requirements for total employment inthisstate, average employeewagesinthis state, supplier spend and capital expenditures by an eligible taxpayer in furtherance of such project continuing through at least June 30, 2042;

(2)1027 "Annual recapture amount" means the total project tax benefits utilized by an eligible taxpayer divided by ten;

(3) "Assistance agreement" means a contract entered into between the commissioner andaneligibletaxpayer inaccordance withwithsubsection subsection (c) of this section, including any amendments to or extensions of such contract;

and (E) development of diversification strategies, including plans for regional diversification strategies and consultants required for the completion of SB1027such /strategies Fileand No.plans;

673 12 SB1027 File No.

673 such strategies and plans;

(B) Seventy-one million one hundred thousand dollars for the compliancePublic yearAct endingNo. June 30, 2024;

23-96 13 of 26 Senate Bill No.

1027 compliance year ending June 30, 2024;

SB1027(9) /"Company" Filemeans No.an entity with a place of business or a wholly- owned subsidiary located in this state and the direct and indirect subsidiaries and affiliates of such entity;

673(10) 13"Compliance SB1027year" Filemeans each twelve-month period commencing July first and continuing through June thirtieth of the following year, provided the initial compliance year shall commence on Public Act No.

67323-96 (9)14 "Company" means an entity with a place of business26 orSenate aBill wholly-No. owned subsidiary located in this state and the direct and indirect subsidiaries and affiliates of such entity;

(10)1027 "Compliance year" means each twelve-month period commencing July first and continuing through June thirtieth of the following year, provided the initial compliance year shall commence on July 1, 2022, and end on June 30, 2023, and the last compliance year shall commence on July 1, 2031, and end on June 30, 2032.

(i) A minimum level of full-time employees in this state that is not less than an average of seven thousand three hundred seventy-five for each compliance year if the eligible taxpayer has entered into a production contract for one United States government program SB1027specified /in Filethe No.assistance agreement;

673and 14(ii) SB1027A Fileminimum level of full-time employees in this state that is not less than an average of seven thousand five hundred for each compliance year if the eligible taxpayer has entered into production Public Act No.

67323-96 specified15 inof the26 assistanceSenate agreement;Bill No.

and1027 (ii) A minimum level of full-time employees in this state that is not less than an average of seven thousand five hundred for each compliance year if the eligible taxpayer has entered into production contracts for two United States government programs specified in the assistance agreement.

SB1027(17) /"Production" Filemeans the various operations related to the Public Act No.

67323-96 1516 SB1027of File26 Senate Bill No.

6731027 (17) "Production" means the various operations related to the completion of a helicopter, including, but not limited to, procurement, engineering, manufacture, assembly, integration and testing;

(21) "Regular place of business" means any bona fide office, factory, warehouse or other space in this state at which a supply company is doing business in its own name in a regular and systematic manner and which place is continuously maintained, occupied and used by the supply company in carrying on its business through its employees regularly ininattendance attendance to carry onthesupply company'sbusinessin the supply company's own name.

(25)Public (A)Act "Supplier spend requirement" means, for compliance years SB1027 / File No.

67323-96 1617 SB1027of File26 Senate Bill No.

6731027 (25) (A) "Supplier spend requirement" means, for compliance years commencing on or after July 1, 2022, and prior to July 1, 2032, the total annual spend by the wholly-owned subsidiary and by the company, on behalf of the wholly-owned subsidiary, with supply companies in this state of not less than:

In order to receive such certification, an eligible taxpayer shall apply to the commissioner, in a form acceptable to the commissioner and including such information as prescribed by the commissioner, including, but not limitedPublic to,Act (A)No. a detailed plan outlining the aerospace manufacturing project, (B) the term of such project, and (C) the estimated expenditures for such project.

The23-96 commissioner18 mayof require26 suchSenate eligibleBill taxpayer SB1027 / File No.

6731027 17limited SB1027to, File(A) No.a detailed plan outlining the aerospace manufacturing project, (B) the term of such project, and (C) the estimated expenditures for such project.

673The commissioner may require such eligible taxpayer to submit such additional information as may be necessary to evaluate the application.

(C) The minimum requirements the eligible taxpayer agrees to meet duringPublic eachAct complianceNo. year;

(D)23-96 The19 commitment by the eligible taxpayer to (i) maintain the headquarters, as set forth in the assistance agreement, of the26 wholly-Senate ownedBill subsidiary or its successor in this state, (ii) operate its primary helicopter production facility for its current United States government SB1027 / File No.

6731027 18during SB1027each Filecompliance No.year;

673(D) The commitment by the eligible taxpayer to (i) maintain the headquarters, as set forth in the assistance agreement, of the wholly- owned subsidiary or its successor in this state, (ii) operate its primary helicopter production facility for its current United States government programs, as of the date of the assistance agreement, in this state, and (iii) to undertake and maintain its primary production of helicopters to be produced during the term of the assistance agreement under one or more future United States government programs specified in the assistance agreement in this state under production contracts entered into by the eligible taxpayer after April 28, 2022;

(3) The commissioner may amend the assistance agreement [shall] to providePublic thatAct theNo. project tax benefit be earned [and utilized] during the first eight years of the term of any production contract and utilized within the first nine years of the term of any production contract, provided no project tax benefit may be earned [or utilized] beyond the benefit period or utilized beyond one year after the end of the benefit period.

(4)23-96 Any20 eligible taxpayer that enters into an assistance agreement with the commissioner under this subsection may, in the event of any26 SB1027Senate /Bill File No.

6731027 19provide SB1027that Filethe No.project tax benefit be earned [and utilized] during the first eight years of the term of any production contract and utilized within the first nine years of the term of any production contract, provided no project tax benefit may be earned [or utilized] beyond the benefit period or utilized beyond one year after the end of the benefit period.

673(4) Any eligible taxpayer that enters into an assistance agreement with the commissioner under this subsection may, in the event of any disputed claimunder suchassistance agreement, bring anactionagainst this state to the superior court for the judicial district of Hartford for the purpose of having such claim determined, provided notice of such disputed claim is first given to the commissioner in the manner and method described in such assistance agreement.

(d) (1) The assistance agreement shall provide for the offset of sales andPublic useAct taxNo. amounts otherwise payable by the eligible taxpayer under the provisions of chapter 219.

23-96 21 of 26 Senate Bill No.

1027 and use tax amounts otherwise payable by the eligible taxpayer under the provisions of chapter 219.

(2) Subsequent to a production contract taking effect for helicopters SB1027to /be Fileproduced No.during the term of the assistance agreement, not later than sixty days after the end of each compliance year or, if the eligible taxpayer requestsandthe commissioner approvesanextendeddate,not later than such extended date, the eligible taxpayer shall certify, subject to a third-party audit performed in accordance with the Department of Economic and Community Development audit guide or such protocols as may be set forth in the assistance agreement, the actual employment, wages, supplier spend and capital expenditure amounts to the commissioner in accordance with the requirements of the assistance agreement.

673 20 SB1027 File No.

673 to be produced during the term of the assistance agreement, not later than sixty days after the end of each compliance year or, if the eligible taxpayer requestsandthecommissioner approvesanextendeddate,not later than such extended date, the eligible taxpayer shall certify, subject to a third-party audit performed in accordance with the Department of Economic and Community Development audit guide or such protocols as may be set forth in the assistance agreement, the actual employment, wages, supplier spend and capital expenditure amounts to the commissioner in accordance with the requirements of the assistance agreement.

(e) (1) If the results of the audit performed pursuant to subdivision (2) of subsection (d) of this section reveal that the eligible taxpayer was unablePublic toAct utilizeallofthesalesanduseNo. tax offset to whichit wasentitled under the assistance agreement for a compliance year against its sales and use tax liability, the assistance agreement shall permit the eligible taxpayer to claim the excess amount as a refundable tax credit, not to exceed five million dollars for each compliance year, against the corporation business tax.

23-96 22 of 26 Senate Bill No.

1027 unable to utilizeallofthesalesanduse tax offset to whichit wasentitled under the assistance agreement for a compliance year against its sales and use tax liability, the assistance agreement shall permit the eligible taxpayer to claim the excess amount as a refundable tax credit, not to exceed five million dollars for each compliance year, against the corporation business tax.

SB1027(2) /If Filethe No.amount of the refundable tax credit exceeds the eligible taxpayer's corporation business tax liability for the applicable income year, the Commissioner of Revenue Services shall treat such excess as an overpayment and shall refund the amount of such excess, without interest, to the eligible taxpayer.

673 21 SB1027 File No.

673 (2) If the amount of the refundable tax credit exceeds the eligible taxpayer's corporation business tax liability for the applicable income year, the Commissioner of Revenue Services shall treat such excess as an overpayment and shall refund the amount of such excess, without interest, to the eligible taxpayer.

(3) Not later than thirty days after the commissioner receives an audit performed pursuant to subdivision (2) of subsection (d) of this section or as provided for in the assistance agreement, during each year of the benefitPublic period,Act theNo. Department of Economic and Community Development shall issue the eligible taxpayer a credit voucher that sets forth the amount of the refundable tax credit permitted pursuant to this subsection and the income year for which such credit may be claimed.

23-96 23 of 26 Senate Bill No.

1027 benefit period, the Department of Economic and Community Development shall issue the eligible taxpayer a credit voucher that sets forth the amount of the refundable tax credit permitted pursuant to this subsection and the income year for which such credit may be claimed.

(2) The project tax benefit utilized by the eligible taxpayer under subsections(d)and(e)ofthissectionshallbesubject to recapture during the contract years commencing on or after July 1, 2032, and ending on June 30, 2042, if the eligible taxpayer fails to satisfy during such time period certain annual thresholds relating to employee head count, SB1027average /wages, Filesupplier No.spend and capital expenditures, as detailed in theassistanceagreement,andsuchotherrequirementsincluding(A)the maintenance of the wholly-owned subsidiary's headquarters, as set forth in the assistance agreement, in this state, (B) the maintenance and operation of the company's primary helicopter production facility for its current United States government programs, as of the date of the assistance agreement, in this state, (C) the undertaking and maintaining in this state of the company's primary production for helicopters to be produced during the term of the assistance agreement under one or more of its future United States government programs specified in the assistance agreement under production contracts entered into by the eligible taxpayer after April 28, 2022, and (D) the maintenance of diversity and workforce training programs by the company in accordance with the terms of the assistance agreement.

673Public 22Act SB1027 File No.

67323-96 average24 wages, supplier spend and capital expenditures, as detailed in theassistanceagreement,andsuchotherrequirementsincluding(A)the maintenance of the26 wholly-ownedSenate subsidiary'sBill headquarters,No. as set forth in the assistance agreement, in this state, (B) the maintenance and operation of the company's primary helicopter production facility for its current United States government programs, as of the date of the assistance agreement, in this state, (C) the undertaking and maintaining in this state of the company's primary production for helicopters to be produced during the term of the assistance agreement under one or more of its future United States government programs specified in the assistance agreement under production contracts entered into by the eligible taxpayer after April 28, 2022, and (D) the maintenance of diversity and workforce training programs by the company in accordance with the terms of the assistance agreement.

1027 (3) If the eligible taxpayer enters into a production contract with the United States government for one helicopter program specified in the assistance agreement, the targeted job requirement shall be seven thousand two hundred fifty, and the minimum job requirement shall be six thousand for each of the years subject to the recapture under subdivision (2) of this subsection.

SB1027(g) /The Fileaggregate amount of the project tax benefit granted by the commissioner under this section shall not exceed (1) six million two hundred fifty thousand dollars for each compliance year or fifty million dollars during the term of the assistance agreement if the eligible taxpayerhasenteredintoaproductioncontractafterApril28,2022,with the United States government for one helicopter program specified in the assistance agreement, and (2) nine million three hundred seventy- five thousand dollars for each compliance year or seventy-five million dollars during the term of the assistance agreement if the eligible taxpayer has entered into production contracts after April 28, 2022, with the United States government for two helicopter programs specified in Public Act No.

67323-96 2325 SB1027of File26 Senate Bill No.

6731027 (g) The aggregate amount of the project tax benefit granted by the commissioner under this section shall not exceed (1) six million two hundred fifty thousand dollars for each compliance year or fifty million dollars during the term of the assistance agreement if the eligible taxpayerhasenteredintoaproductioncontractafterApril28,2022,with the United States government for one helicopter program specified in the assistance agreement, and (2) nine million three hundred seventy- five thousand dollars for each compliance year or seventy-five million dollars during the term of the assistance agreement if the eligible taxpayer has entered into production contracts after April 28, 2022, with the United States government for two helicopter programs specified in the assistance agreement.

ThisApproved actJune shall26, take2023 effectPublic asAct followsNo. and shall amend the following sections:

Section23-96 126 fromof passage26 32-7t Sec.

2 from passage 32-4p SB1027 / File No.

673 24 SB1027 File No.

673 CE Joint Favorable C/R FIN FIN Joint Favorable SB1027 / File No.

673 25 SB1027 File No.

673 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 24 $ FY 25 $ Department of Economic & GF - See Below See Below See Below Community Development Note:

GF=General Fund Municipal Impact:

None Explanation The bill, which extends by one year the timeline under which an eligible aerospace company must use the tax benefits provided in PA 22-4, AAC Certain Aerospace Manufacturing Projects.

While this may result in a shift in the timing of the revenue loss under the program (from FY 32 to FY 33), it does not affect the overall magnitude.

The Out Years The impact of the bill is limited to FY 32 and FY 33 only.

SB1027 / File No.

673 26 SB1027 File No.

673 OLR Bill Analysis SB 1027 AN ACT CONCERNING THE DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT'S RECOMMENDATIONS REGARDING THE JOBSCT TAX REBATE PROGRAM AND CERTAIN AEROSPACE MANUFACTURING PROJECTS.

SUMMARY Thisbilleliminatesarequirementthatbusinessesreceivingassistance from the JobsCT tax rebate program enter into a contract with the Department of Economic and Community Development (DECD).

It makes conforming changes by requiring that specified terms instead be incorporated in other program documents.

The bill also allows the DECD commissioner to amend the assistance agreement with an eligible aerospace company (authorized by PA 22-4) to allow the company one additional year to use the tax benefits provided in the act (i.e., in a helicopter contract’s first nine years, rather than its first eight, and no later than June 30, 2033, rather than June 30, 2032).

It similarly allows the aerospace company one additional year (i.e., until June 30, 2033) to use any carry-forward amounts (i.e., corporation business tax credits that exceed the annual maximum).

Lastly, the bill makes technical changes.

EFFECTIVE DATE:

Upon passage JOBS CT The JobsCT tax rebate program allows companies in specified industries to earn rebates against the insurance premiums, corporation business, and pass-through entity (PE) taxes for reaching certain job creation targets.

The rebate is based on (1) the number of new full-time equivalent employees (FTEs) the business creates and maintains, (2) these FTEs’ average wage, and (3) the state income tax that a single filer SB1027 / File No.

673 27 SB1027 File No.

673 would pay on this average wage.

Under current law, DECD must enter into a contract with a business approved for a rebate.

The contract must at least include the business’s consent for DECD to access data from other state agencies for audit and enforcement purposes.

Additionally, if the DECD commissioner approves the business for FTEs who earn less than the program’s general wage requirements (i.e., “discretionary FTEs”), the contract must include the required wage that the business must pay them.

The bill eliminates the requirement that the business enter into a contract with DECD and makes conforming changes.

Under the bill, (1) a business’s submission of a program application serves as consent for DECD to access data from state agencies and (2) discretionary FTEs’ wage requirements must be set out in the rebate allocation notice (a notice the DECD commissioner issues an approved business that certifies its eligibility to claim the rebate if it meets the terms stated in the notice).

AEROSPACE MANUFACTURING ASSISTANCE AGREEMENT PA 22-4 authorized the DECD commissioner to enter into an assistance agreement with an eligible aerospace company that intends to take ona qualifying helicopter productionproject inConnecticut.

The agreement may provide the company with up to $50 million or $75 millionintotaltax benefitsover itsterm,depending onwhether it enters into federal contracts for one or two helicopter programs, respectively.

These tax benefits may allow the company to first offset its sales and use tax liability and, if applicable, claim a corporation business tax credit, up to specified limits, for each year from FYs 23 to 32.

Benefit Period Under current law, the agreement must require that the company earn and use the tax benefits during the first eight years of any federal helicopter production contract but no later than the “benefit period,” which runs from the agreement’s effective date to June 30, 2032.

The bill allows the DECD commissioner to amend the agreement to SB1027 / File No.

673 28 SB1027 File No.

673 allow the company one additional year to use the tax benefits.

Specifically, the amendment may allow the company to use the tax benefits during the first nine years of a production contract’s term but no later than one year after the end of the benefit period (i.e., June 30, 2033).

It retains the requirement that the benefits be earned in the contract’s first eight years but no later than June 30, 2032.

Carry-forwards By law, the primary form of assistance to the company is a sales and use tax offset.

If the company is unable to use all of the offset in a given year, it may claim the excess as a refundable corporation business tax credit of up to $5 million in a given year.

If the excess amount exceeds $5 million, the company must carry forward the excess to future years until it is fully used.

Current law prohibits any carryforwards from extending beyond the end of the benefit period (i.e., June 30, 2032).

The bill instead allows the company to carry forward the excess amount for one additional year (i.e., to June 30, 2033).

COMMITTEE ACTION Commerce Committee Joint Favorable Change of Reference - FIN Yea 21 Nay 2 (03/09/2023) Finance, Revenue and Bonding Committee Joint Favorable Yea 51 Nay 0 (04/18/2023) SB1027 / File No.

673 29