LITTLE ROCK — A House panel on Wednesday advanced a bill that one of its sponsors said will be “the bipartisan jobs bill for 2013.”
The House Agriculture, Forestry and Economic Development Committee gave a “do pass” recommendation to House Bill 1832, titled The New Market Jobs Act.
The bill by Rep. Darrin Williams, D-Little Rock, and Sen. Jonathan Dismang, R-Searcy, would authorize the creation of community development entities, or CDEs, and allow them to sell insurance premium tax credits to insurance companies. The CDEs would use the proceeds from those sales to raise capital and invest in qualifying businesses located in low-income communities.
The money would have to be invested in the first year, but the tax credits would not go into effect until the third year. The tax credits would end after the third year. For every dollar a CDE receives, it would have to invest $1.50.
Businesses that participate would have to agree to create or retain jobs paying at least 115 percent of the federal poverty level for a family of four. Williams said he expects the bill to result in $250 million in investment in small businesses.
“I hope that each one of you all will be able to take this back to your districts and show that you have fulfilled your campaign promise of creating jobs,” Williams told the committee.
Grant Tennille, executive director of the Arkansas Economic Development Commission, testified that he had some concerns about the bill, though he said he was not endorsing it or opposing it.
Tennille said that if a business fails to create or retain the jobs it agreed to create or retain, the state has no mechanism for getting its money back because the tax credits go to insurance companies, not directly to the businesses that received the investments.
He acknowledged that if the insurance companies were to be held accountable, they would not want to invest, since they have no control over what the businesses do.
“I just want everyone to know on the front end, there’s some risk,” he said.
Williams said similar programs have been successful in other states, and that some have launched a second round of tax credits. He also said there are more safeguards in HB 1832 than in any program like it in the country.
In addition to its two primary sponsors, the bill has 68 co-sponsors, or more than half of the membership of the 135-member Legislature.
It goes next to the House.