LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 19 HLS 201ES 40
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: June 30, 2020 4:02 PM Author: PRESSLY
Dept./Agy.: Economic Development
Subject: Quality Jobs Program Analyst: Greg Albrecht
TAX/TAX REBATES EN DECREASE GF RV See Note Page 1 of 1
Extends eligibility requirements for certain industries to participate in the Quality Jobs Program (Item #18)
Present law allows ten years of payroll subsidy to qualifying firms of 4% or 6% of participating payroll depending on hourly
wage, as well as a choice of a sales tax rebate on qualifying expenditures or a refundable credit of 1.5% of qualifying capital
expenditures. Firms are required to offer a healthcare benefit.
Proposed law allows businesses classified as Covid-19 impacted retail trade, restaurants & bars, and accommodations, that
have no more than 50 employees nationwide including affiliates, to participate in the program with advance notification
filings from July 1, 2020 to December 31, 2021. Further defines covid-19 impacted eligible retail businesses. Eligibility to
earn benefits terminates after June 30, 2023.
Effective July 1, 2020.
EXPENDITURES 2020-21 2021-22 2022-23 2023-24 2024-25 5 -YEAR TOTAL
State Gen. Fd. INCREASE INCREASE INCREASE $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0
REVENUES 2020-21 2021-22 2022-23 2023-24 2024-25 5 -YEAR TOTAL
State Gen. Fd. DECREASE DECREASE DECREASE $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0
EXPENDITURE EXPLANATION
The expansion of the eligibility of the program to retail trade, restaurants & bars, and accommodations businesses will result
in additional applications within the next year and one-half. The workload increase could be material, in that LED would have
the additional qualifying determination of employee count, nationwide including affiliates. Depending on the number of
applications under the bill’s parameters additional resources may be required to administer the program expansion.
REVENUE EXPLANATION
Expansion of eligibility to the program to retail trade, restaurants & bars, and accommodations could result in substantial
state revenue losses. The pool of potentially eligible firms and hires/rehires is large. Workforce Commission data for the
fourth quarter of 2019 indicates nearly 17,945 retail trade employer units in the state with 226,979 employees, and 11,255
accommodation and food service employer units with 207,191 employees. Through May 23, 2020, approximately 34% of
retail trade employees and 66% of accommodation & food service employees statewide had filed for unemployment
compensation. Approximately 41,450 retail trade employees and 80,196 accommodation & food service employees were
receiving unemployment compensation by that point. These counts will stabilize, and decline as the economy recovers from
the coronavirus pandemic shock. That decline will be reflected in hiring/rehiring of employees regardless of the availability of
this program to those businesses. Thus, extension of the program to these businesses results in revenue losses associated
with the baseline of economic activity. The bill’s limitation to firms with no more than 50 employees nationwide, including
affiliates, likely greatly reduces the number of eligible firms for the bill’s program expansion.
The extent of qualifying participation in the program is speculative, but the size of the potentially eligible pool of firms
and employees suggests some state revenue loss exposure is possible. Various realities will influence actual state costs, such
as the fact that these business sectors are relatively low wage and provide low or no benefits for many of their employees,
and they would still have to meet the wage and health benefits requirements of the existing Quality Jobs Program to qualify.
In addition, the bill limits the program to those businesses with no more than 50 employees nationwide including affiliates.
However, the bill allows a 1.5 year window for firms to apply for the program. Thus, some additional program costs are
possible, and are illustrated with simple assumptions: each 1% of the potentially eligible firms qualifying for participation
(292) and being rebated 4% of the minimum amount of participating payroll (5 employees at $18/hour for 30 hours per
week for 52 weeks) results in $1.6 million per year of state payroll rebate cost exposure. Historically, nearly half of program
costs are payroll subsidies. However, given the relatively low average wages/benefits of the newly eligible firms targeted by
this bill, additional costs of this bill may be predominately investment credits and sales tax rebates rather than job-based
costs. Uncertainty as to the specific annual magnitude and timing of the effects of the bill should be acknowledged. Program benefit
realizations can vary materially from year-to-year depending upon the particular participants moving through the program. In addition,
the extent of participation of retail trade, restaurants & bars, and accommodations businesses as they return operations toward pre-
pandemic levels over the next year and one-half is highly uncertain.
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
John D. Carpenter
x 13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} Legislative Fiscal Officer
or a Net Fee Decrease {S}


Statutes affected:
HB19 Original: 51:2453(2)
HB19 Engrossed: 51:2453(2)
HB19 Enrolled: 51:2453(2)
HB19 Act 29: 51:2453(2)