OLR Bill Analysis
AN ACT CONCERNING ECONOMIC DEVELOPMENT PROGRAMS FOR CERTAIN AEROSPACE AND DEFENSE PLANTS.
The law targets some business tax incentives to state designated economically distressed municipalities. But it also provides procedures for extending them to other municipalities. Until 2010, it provided a procedure for extending the incentives only to municipalities hit by defense cuts. The incentives are for improving property, acquiring machinery and equipment, and creating jobs. They are also for occupying vacant facilities that were vacant on July 1, 1998, and previously used to manufacture defense goods.
PA 10-162 provided a similar procedure for extending the tax incentives to municipalities hit by major aerospace and defense plant closings affecting at least 800 employees. In doing so, it extended the incentives to businesses occupying a facility that was vacant on July 1, 1998, and previously used as an aerospace or defense plant. This bill shifts the incentives to facilities that are vacant on or after the bill's effective date and employed at least 800 people. As under current law, it limits them to facilities that were used as aerospace or defense plants.
EFFECTIVE DATE: Upon passage
Extending Economic Development Benefits to Undesignated Municipalities
The law provides a procedure for extending geographically-targeted business tax incentives to municipalities hurt by defense cuts and aerospace and defense plant closings. The process for doing so requires the economic and community development commissioner to identify how these events affect the municipality and hold a public hearing on the findings. The period during which businesses and the municipality qualify for the incentives lasts two years, but the commissioner can renew the period for additional two-year periods.
The incentives are the property tax exemptions and the corporation business tax credits available to businesses in enterprise zones and targeted investment communities. The former equals 80% of the new or improved property's value and is good for five years. Service firms also qualify for an 80%, five-year exemption on any newly acquired machinery and equipment they install in a facility. As under the enterprise zone program, the state reimburses the municipalities for half of the revenue loss.
The same businesses that qualify for the property tax exemptions also qualify for corporation business tax credits equal to 25% of that portion of the tax attributable to the facility. (The law specifies how businesses must calculate that amount. )