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Substitute House Bill No. 5430

PUBLIC ACT NO. 96-252

AN ACT CONCERNING CLUSTER-BASED ECONOMIC DEVELOPMENT.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) As used in section 4-70d of the general statutes, as amended by section 2 of this act, and sections 3 and 4 of this act, "economic cluster" means a grouping of industries linked together through customer, supplier or other relationships.

Sec. 2. Section 4-70d of the general statutes, as amended by section 1 of public act 95-250, is repealed and the following is substituted in lieu thereof:

(a) There is created a Connecticut Economic Conference Board. Said board shall consist of [ten members as follows: The Secretary of the Office of Policy and Management or his designee, the Commissioner of Economic and Community Development or his designee, the director of the legislative Office of Fiscal Analysis or his designee, and seven economists appointed as follows: One by the Governor, one by the president pro tempore of the Senate, one by the majority leader of the Senate, one by the minority leader of the Senate, one by the speaker of the House of Representatives, one by the majority leader of the House of Representatives and one by the minority leader of the House of Representatives] (1) THE GOVERNOR, OR HIS DESIGNEE; (2) THE COMMISSIONER OF ECONOMIC AND COMMUNITY DEVELOPMENT; (3) THE COMMISSIONERS OF FOUR STATE AGENCIES IN THE EXECUTIVE DEPARTMENT WHICH HAVE JURISDICTION OVER MATTERS OF IMPORTANCE TO ECONOMIC CLUSTERS, WHO SHALL BE APPOINTED BY THE GOVERNOR; (4) THE CHAIRPERSONS AND RANKING MEMBERS OF THE JOINT STANDING COMMITTEES OF THE GENERAL ASSEMBLY HAVING COGNIZANCE OF MATTERS RELATING TO THE DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT AND CAPITAL BONDING; (5) A REPRESENTATIVE OF EACH OF THE FOLLOWING AREAS: (A) TECHNOLOGY RESEARCH, DISCOVERY OR DEPLOYMENT, WHO SHALL BE APPOINTED BY THE PRESIDENT PRO TEMPORE OF THE SENATE; (B) WORKFORCE TRAINING, JOB RETENTION OR HUMAN RESOURCES, WHO SHALL BE APPOINTED BY THE MAJORITY LEADER OF THE SENATE; (C) FINANCIAL OR VENTURE CAPITAL, WHO SHALL BE APPOINTED BY THE MINORITY LEADER OF THE SENATE; (D) TELECOMMUNICATIONS, ENERGY, TRANSPORTATION OR OTHER PHYSICAL INFRASTRUCTURE, WHO SHALL BE APPOINTED BY THE SPEAKER OF THE HOUSE OF REPRESENTATIVES; (E) REGULATORY, TAXES OR OTHER FINANCIAL SERVICES, WHO SHALL BE APPOINTED BY THE MAJORITY LEADER OF THE HOUSE OF REPRESENTATIVES; (F) ENVIRONMENTAL, HOUSING, THE ARTS OR ANY OTHER ASPECT OF QUALITY OF LIFE, WHO SHALL BE APPOINTED BY THE MINORITY LEADER OF THE HOUSE OF REPRESENTATIVES; AND (6) TWO ECONOMISTS, WHO SHALL BE APPOINTED BY THE GOVERNOR. EACH MEMBER OF THE BOARD DESCRIBED IN SUBDIVISION (2), (3) OR (4) OF THIS SUBSECTION MAY DESIGNATE A DEPUTY TO REPRESENT HIM AS A MEMBER AT MEETINGS OF THE BOARD, WITH FULL POWERS TO ACT AND VOTE IN HIS BEHALF. ALL APPOINTMENTS UNDER SUBDIVISIONS (3), (5) AND (6) OF THIS SUBSECTION SHALL BE MADE BY OCTOBER 1, 1996. THE PERSONS INITIALLY APPOINTED UNDER SUBPARAGRAPHS (A) AND (D) OF SUBDIVISION (5) OF THIS SUBSECTION SHALL SERVE FOR A TERM OF THREE YEARS FROM OCTOBER 1, 1996, THE PERSONS INITIALLY APPOINTED UNDER SUBPARAGRAPHS (B) AND (E) OF SAID SUBDIVISION SHALL SERVE FOR A TERM OF TWO YEARS FROM OCTOBER 1, 1996, AND THE PERSONS INITIALLY APPOINTED UNDER SUBPARAGRAPHS (C) AND (F) OF SAID SUBDIVISION SHALL SERVE FOR A TERM OF ONE YEAR FROM OCTOBER 1, 1996. THEREAFTER ALL PERSONS APPOINTED UNDER SAID SUBDIVISION (5) SHALL SERVE FOR TERMS OF THREE YEARS FROM OCTOBER FIRST IN THE YEAR OF THEIR APPOINTMENT. ANY VACANCY UNDER SAID SUBDIVISION SHALL BE FILLED BY THE APPOINTING AUTHORITY. EACH MEMBER OF THE BOARD SHALL SERVE WITHOUT COMPENSATION. The board shall choose a chairman from among its members.

(b) THE GOVERNOR SHALL SCHEDULE AND CONVENE THE FIRST MEETING OF THE BOARD AFTER THE INITIAL APPOINTMENT OF MEMBERS UNDER SUBDIVISIONS (3), (5) AND (6) OF SUBSECTION (a) OF THIS SECTION. SUCH MEETING SHALL BE HELD NO LATER THAN NOVEMBER 1, 1996.

[(b) The board shall: (1) Upon request of the Governor or the Joint Committee on Legislative Management, provide economic advice to the Governor or the leadership of the General Assembly, and (2) hold an economic conference twice each year for the purpose of convening experts from the business, government and academic sectors to present to the Governor and the General Assembly information and opinions on the state of the economy in the state and the nation and the impact of economic conditions on state revenues.]

(c) NOT LATER THAN JANUARY 1, 1998, AND ANNUALLY THEREAFTER, THE BOARD SHALL SUBMIT A REPORT TO THE GOVERNOR, THE COMMISSIONER OF ECONOMIC AND COMMUNITY DEVELOPMENT AND THE GENERAL ASSEMBLY ON THE STATE OF ECONOMIC CLUSTERS IN THE STATE AND THE NATION. SUCH REPORT SHALL INCLUDE, BUT NOT BE LIMITED TO, ANALYSES OF (1) THE GROWTH, MATURITY AND DECLINE OF EXISTING ECONOMIC CLUSTERS AND (2) THE FORMATION OF NEW ECONOMIC CLUSTERS WHICH EMPLOY EMERGING TECHNOLOGIES. THE BOARD SHALL ANNUALLY HOLD AN ECONOMIC CLUSTER CONFERENCE FOR THE PURPOSE OF GATHERING INFORMATION FOR SUCH REPORT. THE BOARD SHALL INVITE TO THE CONFERENCE, BUSINESS LEADERS, GOVERNMENT OFFICIALS AND HIGHER EDUCATION FACULTY WHO WORK IN, SUPPORT OR STUDY ECONOMIC CLUSTERS.

Sec. 3. (NEW) Not later than July 1, 1997, and annually thereafter, the Commissioner of Economic and Community Development shall submit a report to the Connecticut Economic Conference Board and the joint standing committee of the General Assembly having cognizance of matters relating to the Department of Economic and Community Development, concerning the identification of existing economic clusters, the formation of new economic clusters and the measures taken during the preceding twelve months by the commissioner to encourage the growth of economic clusters.

Sec. 4. (NEW) Not later than August 1, 1997, and annually thereafter, the Commissioner of Economic and Community Development, the chairperson of the board of directors of the Connecticut Development Authority and the chairperson of the board of directors of Connecticut Innovations, Incorporated shall submit a report to the joint standing committee of the General Assembly having cognizance of matters relating to the Department of Economic and Community Development, in accordance with the provisions of section 11-4a of the general statutes, which details the amount of bond funds expended during the previous fiscal year on each economic cluster in the state by the state agency or quasi-public agency administered by such commissioner or chairperson.

Sec. 5. Section 12-412 of the general statutes is amended by adding subsection (91) as follows:

(NEW) (91) Sales of and the storage, use or other consumption of machinery, equipment, tools, materials, supplies and fuel used directly in the biotechnology industry. For the purposes of this subsection, "biotechnology" means the application of technologies, such as recombinant DNA techniques, biochemistry, molecular and cellular biology, genetics and genetic engineering, biological cell fusion techniques, and new bioprocesses, using living organisms, or parts of organisms, to produce or modify products, to improve plants or animals, to develop microorganisms for specific uses, to identify targets for small molecule pharmaceutical development, to transform biological systems into useful processes and products or to develop microorganisms for specific uses.

Sec. 6. Subdivision (a) of subsection (72) of section 12-81 of the general statutes, as amended by section 9 of public act 95-283, is repealed and the following is substituted in lieu thereof:

(72) (a) New machinery and equipment, as defined herein, acquired after October 1, 1990, and newly-acquired machinery and equipment, as defined herein, acquired on or after July 1, 1992, by the person claiming exemption under this subdivision, provided this exemption shall only be applicable in the five full assessment years following the assessment year in which such machinery or equipment is acquired, subject to the provisions of subparagraph (b) of this subdivision. MACHINERY AND EQUIPMENT ACQUIRED ON OR AFTER JULY 1, 1996, AND USED IN THE BIOTECHNOLOGY INDUSTRY, WHOSE PREDOMINANT USE IS FOR MANUFACTURING, PROCESSING OR FABRICATING; FOR RESEARCH AND DEVELOPMENT, INCLUDING EXPERIMENTAL OR LABORATORY RESEARCH AND DEVELOPMENT, DESIGN OR ENGINEERING; FOR THE SIGNIFICANT SERVICING, OVERHAULING OR REBUILDING OF MACHINERY AND EQUIPMENT; OR FOR MEASURING OR TESTING, SHALL QUALIFY FOR THE EXEMPTION UNDER THIS SUBSECTION. For the purposes of this subdivision: (A) "Machinery" and "equipment" mean tangible personal property which is (i) installed in a manufacturing facility operated by a manufacturer, either five-year property or seven-year property, as those terms are defined in Section 168(e) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and the predominant use of which is for manufacturing, processing or fabricating; for research and development, including experimental or laboratory research and development, design or engineering directly related to manufacturing; for the significant servicing, overhauling or rebuilding of machinery and equipment for industrial use or the significant overhauling or rebuilding of other products on a factory basis; for measuring or testing or for metal finishing; or (ii) used in the production of motion pictures, video and sound recordings. "Machinery" means the basic machine itself, including all of its component parts and contrivances such as belts, pulleys, shafts, moving parts, operating structures and all equipment or devices used or required to control, regulate or operate the machinery, including, without limitation, computers and data processing equipment, together with all replacement and repair parts therefor, whether purchased separately or in conjunction with a complete machine, and regardless of whether the machine or component parts thereof are assembled by the taxpayer or another party. "Equipment" means any device separate from machinery but essential to a manufacturing, processing or fabricating process. (B) "Manufacturing facility" means that portion of a plant, building or other real property improvement used for manufacturing, processing or fabricating, for research and development, including experimental or laboratory research and development, design or engineering directly related to manufacturing, for the significant servicing, overhauling or rebuilding of machinery and equipment for industrial use or the significant overhauling or rebuilding of other products on a factory basis, for measuring or testing or for metal finishing. (C) "Manufacturing" means the activity of converting or conditioning tangible personal property by changing the form, composition, quality or character of the property for ultimate sale at retail or use in the manufacturing of a product to be ultimately sold at retail. Changing the quality of property shall include any substantial overhaul of the property that results in a significantly greater service life than such property would have had in the absence of such overhaul or with significantly greater functionality within the original service life of the property, beyond merely restoring the original functionality for the balance of the original service life. (D) "Fabricating" means to make, build, create, produce or assemble components or tangible personal property work in a new or different manner. (E) "Processing" means the physical application of the materials and labor necessary to modify or change the characteristics of tangible personal property. (F) "Measuring or testing" includes both nondestructive and destructive measuring or testing, and the alignment and calibration of machinery, equipment and tools, in the furtherance of the manufacturing, processing or fabricating of tangible personal property. (G) "BIOTECHNOLOGY" MEANS THE APPLICATION OF TECHNOLOGIES, SUCH AS RECOMBINANT DNA TECHNIQUES, BIOCHEMISTRY, MOLECULAR AND CELLULAR BIOLOGY, GENETICS AND GENETIC ENGINEERING, BIOLOGICAL CELL FUSION TECHNIQUES, AND NEW BIOPROCESSES, USING LIVING ORGANISMS, OR PARTS OF ORGANISMS, TO PRODUCE OR MODIFY PRODUCTS, TO IMPROVE PLANTS OR ANIMALS, TO DEVELOPMENT MICROORGANISMS FOR SPECIFIC USES, TO IDENTIFY TARGETS FOR SMALL MOLECULE PHARMACEUTICAL DEVELOPMENT, TO TRANSFORM BIOLOGICAL SYSTEMS INTO USEFUL PROCESSES AND PRODUCTS OR TO DEVELOP MICROORGANISMS FOR SPECIFIC USES.

Sec. 7. Section 12-217j of the general statutes is repealed and the following is substituted in lieu thereof:

There shall be allowed as a credit against the tax imposed on any corporation under this chapter, (1) with respect to income years of such corporation commencing on or after January 1, 1993, and prior to January 1, 1994, an amount equal to ten per cent of the amount spent by such corporation directly on research and experimental expenditures, as defined in Section 174 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, which are conducted in this state and which exceeds the amount spent by such corporation during the preceding taxable year of such corporation for such expenditures and (2) with respect to any taxable year of such corporation commencing on or after January 1, 1994, an amount equal to twenty per cent of the amount spent by such corporation on such expenditures which exceeds the amount spent by such corporation during the preceding taxable year of such corporation for such expenditures. A CREDIT OR ANY PORTION OF A CREDIT THAT IS ALLOWED UNDER THIS SECTION BUT IS NOT USED BY A BIOTECHNOLOGY COMPANY BECAUSE THE AMOUNT OF THE CREDIT EXCEEDS THE TAX DUE AND OWING BY THE BIOTECHNOLOGY COMPANY SHALL BE CARRIED FORWARD TO EACH OF THE SUCCESSIVE INCOME YEARS UNTIL SUCH CREDIT, OR APPLICABLE PORTION OF THE CREDIT, IS FULLY TAKEN. IN NO CASE SHALL A CREDIT, OR ANY PORTION OF A CREDIT, THAT IS NOT USED BY A BIOTECHNOLOGY COMPANY BE CARRIED FORWARD FOR A PERIOD OF MORE THAN FIFTEEN YEARS. FOR THE PURPOSES OF THIS SECTION, "BIOTECHNOLOGY COMPANY" MEANS A COMPANY ENGAGED IN THE BUSINESS OF APPLYING TECHNOLOGIES, SUCH AS RECOMBINANT DNA TECHNIQUES, BIOCHEMISTRY, MOLECULAR AND CELLULAR BIOLOGY, GENETICS AND GENETIC ENGINEERING, BIOLOGICAL CELL FUSION TECHNIQUES, AND NEW BIOPROCESSES, USING LIVING ORGANISMS, OR PARTS OF ORGANISMS, TO PRODUCE OR MODIFY PRODUCTS, TO IMPROVE PLANTS OR ANIMALS, TO DEVELOP MICROORGANISMS FOR SPECIFIC USES, TO IDENTIFY TARGETS FOR SMALL MOLECULE PHARMACEUTICAL DEVELOPMENT, OR TO TRANSFORM BIOLOGICAL SYSTEMS INTO USEFUL PROCESSES AND PRODUCTS OR TO DEVELOP MICROORGANISMS FOR SPECIFIC USES.

Sec. 8. This act shall take effect July 1, 1996, and section 5 shall be applicable to sales made on or after July 1, 1996, section 6 shall be applicable to assessment years of municipalities commencing on or after October 1, 1996, and section 7 shall be applicable to income years of corporations commencing on or after January 1, 1997.

Approved June 6, 1996. Effective July 1, 1996, and applicable as provided in section 8.

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