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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY BROWNE, EARLL, WAUGH, FOLMER, FERLO, D. WHITE, ORIE, ERICKSON, VANCE, RAFFERTY, BOSCOLA, TOMLINSON AND PIPPY, MARCH 17, 2010 |
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| REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT, MARCH 17, 2010 |
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| AN ACT |
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1 | Requiring the Department of Community and Economic Development |
2 | to submit a unified economic development budget; providing |
3 | for unified reporting of property tax reductions and |
4 | abatements, for application for economic development |
5 | subsidies, for reports, for subsidy limit and job quality |
6 | standards and for recapture; establishing a private |
7 | enforcement action; and providing for public record |
8 | disclosure. |
9 | The General Assembly finds and declares as follows: |
10 | (1) Although the Commonwealth and its local government |
11 | units have granted numerous economic development subsidies in |
12 | the last 25 years, the real wage levels and health care |
13 | coverage of working families have stagnated or declined. |
14 | (2) When workers receive low wages and poor benefits, |
15 | such jobs often impose hidden taxpayer costs on citizens, in |
16 | the form of Medicaid, food stamps, earned income tax credits |
17 | and other forms of public assistance to the working poor and |
18 | their families. |
19 | (3) Citizen participation in economic development has |
20 | been impeded by a lack of readily accessible information |
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1 | regarding expenditures and outcomes. |
2 | (4) That subsidies may result in the relocation of |
3 | companies and the displacement of their former employees. |
4 | (5) Therefore, in order to improve the effectiveness of |
5 | expenditures for economic development and to ensure that they |
6 | achieve the goal of raising living standards for working |
7 | families, it is necessary to collect, analyze and make |
8 | publicly available information regarding those expenditures |
9 | and to enact certain safeguards for their use. |
10 | The General Assembly of the Commonwealth of Pennsylvania |
11 | hereby enacts as follows: |
12 | Section 1. Short title. |
13 | This act shall be known and may be cited as the Economic |
14 | Development and Fiscal Accountability Act. |
15 | Section 2. Definitions. |
16 | The following words and phrases when used in this act shall |
17 | have the meanings given to them in this section unless the |
18 | context clearly indicates otherwise: |
19 | "Applicant." Any person, association, corporation, joint |
20 | venture, partnership, public authority, public benefit |
21 | corporation, local government unit or other entity that applies |
22 | for a development subsidy. |
23 | "Brownfield." A distressed, blighted, underutilized or |
24 | abandoned property that has been previously developed for |
25 | industrial, commercial or related uses and that meets the |
26 | requirements set forth in the act of October 18, 1988 (P.L.756, |
27 | No.108), known as the Hazardous Sites Cleanup Act. |
28 | "Corporate parent." A person, association, corporation, |
29 | joint venture, partnership or other entity that owns or controls |
30 | 50% or more of a recipient corporation. |
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1 | "Date of subsidy." Any of the following: |
2 | (1) Except as otherwise provided in paragraph (2) or |
3 | (3), the date that a granting body provides the initial |
4 | monetary value of a development subsidy to a recipient |
5 | corporation. |
6 | (2) Where a development subsidy is for the installation |
7 | of new equipment, the date a recipient corporation puts the |
8 | equipment into service. |
9 | (3) Where a development subsidy is for improvements to |
10 | property, the date the improvements are finished or the date |
11 | the business occupies the property, whichever is earlier. |
12 | "Department." The Department of Community and Economic |
13 | Development of the Commonwealth. |
14 | "Development subsidy." An expenditure of public funds with a |
15 | value of at least $25,000 for the purpose of stimulating |
16 | economic development within this Commonwealth, including, but |
17 | not limited to a bond, grant, loan, loan guarantee, enterprise |
18 | zone, empowerment zone, tax increment financing, fee waiver, |
19 | infrastructure improvements, land price subsidy, matching fund, |
20 | tax abatement, tax exemption and tax credits. |
21 | "Development tax subsidy." A tax credit, abatement, |
22 | exemption or reduction of any kind, including, but not limited |
23 | to, those provided as a part of a Keystone Opportunity Zone, |
24 | Keystone Innovative Zone or tax increment financing, provided |
25 | for the purpose of stimulating economic development within this |
26 | Commonwealth. |
27 | "Employee." An employee other than a manager or supervisor. |
28 | "Full-time job." A job in which an individual is employed by |
29 | a recipient corporation for at least 35 hours per week. |
30 | "Granting body." An agency, board, office, public benefit |
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1 | corporation or authority of the Commonwealth or a local |
2 | government unit that provides a developmental subsidy. |
3 | "Greenfield." Land that has not been previously developed. |
4 | "Infrastructure improvements." The term shall have the same |
5 | meaning as given to it in section 2 of the act of July 11, 1996 |
6 | (P.L.677, No.116), known as the Infrastructure Development Act. |
7 | "Multiproject site." An industrial park or an area that |
8 | includes more than one industrial, commercial or retail business |
9 | and that benefits from a development subsidy. |
10 | "NAICS sector." Any of the 20 sectors defined at the two- |
11 | digit level under the North American Industry Classifications |
12 | System. |
13 | "New employee." A full-time employee who represents a net |
14 | increase in the number of individuals employed by the recipient |
15 | corporation in this Commonwealth. The term does not include an |
16 | employee who performs a job that was previously performed by |
17 | another employee of the recipient corporation if that job |
18 | existed for at least six months before hiring the employee. |
19 | "Part-time job." A job in which an individual is employed by |
20 | a business for fewer than 35 hours per week. |
21 | "Project site." The site of a project for which a |
22 | development subsidy is provided or, in the case of |
23 | infrastructure improvements that directly benefit a particular |
24 | business, the location of the benefited business. |
25 | "Recipient." A person, association, corporation, joint |
26 | venture, partnership, public authority, public benefit |
27 | corporation, local government unit or other entity that receives |
28 | a development subsidy. |
29 | "Recipient corporation." Any recipient that is a |
30 | corporation. |
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1 | "Small business." A corporation or other business entity |
2 | that employed fewer than 20 full-time employees, excluding the |
3 | principals, or had total gross receipts of less than $2,500,000 |
4 | during the calendar year. For the purposes of determining full- |
5 | time employees and total gross receipts, if a business is a |
6 | corporation, the full-time employees and gross receipts of the |
7 | corporate parent and all subsidiaries thereof shall be included. |
8 | "State agency." An agency, board, commission, office, public |
9 | corporation or public authority of the Commonwealth. |
10 | "Subsidy value." The face value of any and all development |
11 | subsidies provided to a recipient corporation. |
12 | "Temporary job." A job in which an individual is hired for a |
13 | season or for a limited period of time. |
14 | Section 3. Unified economic development budget report. |
15 | The department shall submit an annual unified economic |
16 | development budget report to the General Assembly no later than |
17 | five months after the end of the Commonwealth's fiscal year. The |
18 | report shall present all types of expenditures for economic |
19 | development during the prior fiscal year, including, but not |
20 | limited to: |
21 | (1) The amount of uncollected State and local government |
22 | tax revenues resulting from every tax credit, abatement and |
23 | exemption provided by the State government or a local |
24 | governmental unit, including, but not limited to, gross |
25 | receipts, income, sales, use, raw materials, excise, |
26 | property, utility, privilege and inventory taxes. |
27 | (2) The name of each taxpayer which claimed any tax |
28 | credit, abatement, exemption or reduction under paragraph (1) |
29 | of any value equal to or greater than $5,000, together with |
30 | the dollar amount received by each such taxpayer. |
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1 | (3) Any tax credit, abatement, exemption or reduction |
2 | received by a business entity of less than $5,000 each shall |
3 | not be itemized. The Department of Revenue shall report an |
4 | aggregate dollar amount of such expenditures and the number |
5 | of business entities so aggregated for each tax expenditure. |
6 | (4) All State-related expenditures for economic |
7 | development, including line-item budgets for every State- |
8 | funded entity concerned with economic development, including, |
9 | but not limited to, the Department of Community and Economic |
10 | Development, the Department of Labor and Industry, the |
11 | Department of Education, the Department of Environmental |
12 | Protection, the Commonwealth Finance Agency, vocational |
13 | education programs, State university research programs, |
14 | industrial resource centers, Pennsylvania Infrastructure |
15 | Investment Authority, work force investment boards, economic |
16 | development commissions, industrial development authorities, |
17 | regional development authorities, finance authorities and |
18 | economic stimulus programs. |
19 | Section 4. Unified reporting of property tax reductions and |
20 | abatements and other local subsidiaries. |
21 | (a) Property report.--Each political subdivision shall |
22 | annually submit a report to the department regarding any real |
23 | property in the political subdivision's jurisdiction that has |
24 | received a property tax abatement, reduction, exemption or |
25 | subsidy during the last report of the fiscal year before the |
26 | effective date of this section. The report shall contain |
27 | information including: |
28 | (1) the name of the property owner; |
29 | (2) the address of the property; |
30 | (3) the start and end dates of the property tax |
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1 | abatement, reduction or exemption; |
2 | (4) the schedule of the tax reduction; |
3 | (5) each tax abatement, reduction or exemption for the |
4 | property; and |
5 | (6) the amount of property tax revenue not paid to the |
6 | political subdivision as a result of the abatement, |
7 | reduction, exemption or subsidy. |
8 | (b) Unpaid tax revenue report.--Each political subdivision |
9 | shall submit a report to the department setting forth the total |
10 | property tax revenue not paid to the political subdivision |
11 | during its fiscal year as a result of all property tax |
12 | abatements, reductions, exemptions and subsidies in the |
13 | political subdivision's jurisdiction. |
14 | (c) Time period for filing.--The reports required under |
15 | subsections (a) and (b) shall be prepared on two forms prepared |
16 | by the department and shall be submitted to the department by |
17 | the political subdivision no later than three months after the |
18 | end of the fiscal year. |
19 | (d) Publication.--Within 30 days of filing the report |
20 | required under section 3, the department shall annually compile |
21 | and publish all of the data contained in the reports required |
22 | under subsections (a) and (b) in both written and electronic |
23 | form, including the department's Internet website. One of the |
24 | electronic forms in which the data shall be available shall be a |
25 | spread sheet suitable for analysis. |
26 | (e) Penalty for failure to report.--If the political |
27 | subdivision fails to submit its reports to the department within |
28 | the prescribed time, the department shall notify the State |
29 | Treasurer, whereupon the State Treasurer shall withhold further |
30 | payments of any development subsidy to the delinquent political |
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1 | subdivision until the political subdivision files all reports |
2 | with the department. |
3 | Section 5. Application for economic development subsidies. |
4 | (a) Contents of application.--Each granting body, together |
5 | with the applicant for a development subsidy, shall complete an |
6 | application for the subsidy on a form prepared by the |
7 | department. The information required on the application shall |
8 | include the following: |
9 | (1) An application tracking number for the granting |
10 | agency and the project. |
11 | (2) The name, street and mailing address and telephone |
12 | number of the chief officer of the granting body. |
13 | (3) The name, street and mailing addresses and telephone |
14 | number of the chief officer of the applicant's corporate |
15 | parent, if any. |
16 | (4) The name, street and mailing address and telephone |
17 | number of the chief officer of the applicant. |
18 | (5) The name, street and mailing address and telephone |
19 | number of the chief officer of the corporate parent of each |
20 | business operating on the project site, if different from the |
21 | applicant's corporate parent. |
22 | (6) The name, street and mailing address and telephone |
23 | number of the chief officer of each business operating on the |
24 | project site, if different from the applicant. |
25 | (7) The street address of the project site. |
26 | (8) The land-use classification of the project site, |
27 | including indication of whether it is greenfield or |
28 | brownfield, based on a uniform code to be established by the |
29 | Department of Community and Economic Development. |
30 | (9) The three-digit North American Industry |
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1 | Classification System number of the project site. |
2 | (10) The total number of individuals employed at the |
3 | project site by each employer on the date of the application, |
4 | itemized by full-time, part-time and temporary positions. |
5 | (11) The total number of individuals employed in this |
6 | Commonwealth by the applicant's corporate parent of each |
7 | business operating on the project site, if any, and all |
8 | subsidiaries thereof as of December 31 of the prior fiscal |
9 | year, itemized by full-time, part-time and temporary |
10 | positions for each employer. |
11 | (12) The development subsidy being applied for with the |
12 | granting body and the value of such subsidy. |
13 | (13) The infrastructure improvements to be provided at |
14 | the project site. |
15 | (14) The number of new jobs to be created by the |
16 | applicant and by each business at the project site, itemized |
17 | by full-time, part-time and temporary positions for each |
18 | employer. |
19 | (15) The average hourly wage to be paid to all current |
20 | and new employees at the project site, itemized by job |
21 | classification, the full-time, part-time and temporary |
22 | positions, and further itemized by wage groups as follows: $6 |
23 | or less per hour, $6.01 to $7 per hour, $7.01 to $8 per hour, |
24 | $8.01 to $9 per hour, $9.01 to $10 per hour, $10.01 to $11 |
25 | per hour, $11.01 to $12 per hour, $12.01 to $13 per hour, |
26 | $13.01 to $14 per hour, $14.01 to $15 per hour and $15.01 or |
27 | more per hour. |
28 | (16) The type or amount of health care coverage to be |
29 | provided by the applicant and each business operating at the |
30 | project site within 90 days of commencement of employment at |
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1 | the project site, including any costs to be borne by the |
2 | employees. |
3 | (17) A list of all development subsidies that the |
4 | applicant is requesting and the name of any other granting |
5 | body from which subsidies are sought. |
6 | (18) A statement as to whether the development subsidy |
7 | may reduce employment at any other site controlled by the |
8 | applicant or its corporate parent, if any, within or without |
9 | this Commonwealth, resulting from automation, merger, |
10 | acquisition, corporate restructuring or other business |
11 | activity. |
12 | (19) A certification by the chief officer of the |
13 | applicant as to the accuracy of the application. |
14 | (b) Copy of approved application to the department.--If the |
15 | granting body approves the application, it shall send a copy to |
16 | the department within 15 days of such approval. If the |
17 | application is not approved, the granting body shall retain the |
18 | application in its records. |
19 | Section 6. Reports. |
20 | (a) Annual reports.--Each granting body shall file a |
21 | progress report with the department for each project for which a |
22 | development subsidy has been granted no later than February 1 of |
23 | each year. The report shall include the following information: |
24 | (1) The application tracking number. |
25 | (2) The name, street and mailing address, telephone |
26 | number and chief officer of the granting body. |
27 | (3) The name, street and mailing addresses, telephone |
28 | number and the chief officer of the recipient and all |
29 | businesses operating at the project site. |
30 | (4) A summary of the number of jobs required or expected |
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1 | to be created by the recipient and all businesses at the |
2 | project site, itemized by full-time, part-time and temporary |
3 | positions and by wage groups. |
4 | (5) The wages by job classification required or expected |
5 | to be paid by the recipient to new employees and by other |
6 | businesses at the project site and the amount of wages |
7 | actually paid. |
8 | (6) The type and amount of health care coverage provided |
9 | to the employees at the project site, including any costs |
10 | borne by the employees. |
11 | (7) A comparison of the total employment in this |
12 | Commonwealth by the recipient, each business operating on the |
13 | project site and the recipient's corporate parent, if any, on |
14 | the date of the application and the date of the report, |
15 | itemized by full-time, part-time and temporary positions. |
16 | (8) A statement as to whether the use of the development |
17 | subsidy during the previous fiscal year has reduced |
18 | employment at any other site controlled by the recipient |
19 | corporation or other business or its corporate parent, if |
20 | any, within or without this Commonwealth, the extent of the |
21 | reduction and the name and address of the business facility |
22 | where the reduction took place. |
23 | (9) The extent and value of the infrastructure |
24 | improvements that have been provided for the project site. |
25 | (10) A signed certification by the chief officer of the |
26 | recipient as to the accuracy of the progress report. |
27 | (11) On all subsequent annual progress reports which |
28 | shall be filed for the duration of the subsidy or five years, |
29 | whichever is greater, the granting body shall indicate |
30 | whether the recipient is still in compliance with its job |
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1 | creation, wage and benefit goals and whether the corporate |
2 | parent, if any, is still in compliance with its Commonwealth |
3 | employment requirement. |
4 | (b) Biennial report.-- |
5 | (1) No later than 15 days after the second anniversary |
6 | of the date of subsidy, the granting body shall file with the |
7 | department a two-year progress report including the same |
8 | information as required under subsection (a). The recipient |
9 | shall attest by signature as to the accuracy of the report. |
10 | (2) The granting body shall state in the two-year report |
11 | whether the recipient and each business operating at the |
12 | project site has achieved its job creation, wage and benefit |
13 | goals and whether each corporate parent, if any, has |
14 | maintained its level of employment in this Commonwealth at no |
15 | less than 90% of its level of employment in this Commonwealth |
16 | on the date of the subsidy. |
17 | (c) Annual report for industrial parks and multiproject |
18 | sites.--The recipient that has received a development subsidy |
19 | for an industrial park or any other site that houses more than |
20 | one business shall file a separate progress report with the |
21 | department, no later than February 1 of each year. The |
22 | department shall provide a form for the report that shall |
23 | require the following information from all new businesses that |
24 | have located within the multiproject site during the previous |
25 | calendar year: |
26 | (1) The name, street and mailing address and telephone |
27 | number of the chief officer. |
28 | (2) The number of employees at the site, itemized by |
29 | full-time, part-time and temporary positions. |
30 | (3) A statement as to whether the relocation into the |
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1 | multiproject site has reduced the work force of the new |
2 | tenant within or without this Commonwealth, the extent of the |
3 | reduction in employment and the address of each business |
4 | facility where such a reduction took place. |
5 | (4) A signed certification by the chief officer of each |
6 | new tenant as to the accuracy of the information filed. |
7 | (d) Compilation and publication of data.--Within 30 days of |
8 | filing the report required under section 3, the department shall |
9 | compile and publish all data from the reports in this section in |
10 | both written and electronic form, including the department's |
11 | Internet website. One of the electronic forms in which the data |
12 | shall be available shall be a spread sheet suitable for |
13 | analysis. |
14 | (e) Access to project site and records.--The granting body |
15 | and the Department of Community and Economic Development shall |
16 | have access at all reasonable times to the project site and the |
17 | records of the recipient corporation or other business entity in |
18 | order to monitor the project and to prepare progress reports. |
19 | (f) Effect of noncompliance.--A recipient or business that |
20 | fails to provide the granting body with the information or |
21 | access required under this section shall be subject to a fine of |
22 | not less than $500 per day to commence within ten working days |
23 | after the February 1 deadline and of not less than $1,000 per |
24 | day to commence 20 days after such deadline. |
25 | Section 7. Subsidy limit and job quality standards. |
26 | A granting body may not award: |
27 | (1) Development subsidies if the cost per job is greater |
28 | than $35,000. The cost shall be determined by dividing the |
29 | total amount of State subsidies awarded by the number of |
30 | full-time jobs required under the application approved by the |
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1 | granting body. |
2 | (2) A subsidy to an applicant unless the average of the |
3 | wages paid to employees at the project site are equal to or |
4 | exceed 80% of the average hourly wage paid to nonmanagerial |
5 | employees in the NAICS sector in the community, except that |
6 | for small businesses, the average wage must equal or exceed |
7 | 70% of the wages established under this paragraph. The |
8 | computation of wages under this paragraph shall only apply to |
9 | a recipient that provides the health care coverage as |
10 | approved in its application by the granting body. |
11 | (3) A subsidy to an applicant unless the average of |
12 | wages paid to employees at the project site are at least 90% |
13 | of the average hourly wage paid to nonmanagerial employees in |
14 | the NAICS sector in the community, except that for small |
15 | businesses the average wage must be at least 80% of the wages |
16 | established under this paragraph. The computation of wages |
17 | under this paragraph shall apply to a recipient that does not |
18 | provide the health care coverage as approved in its |
19 | application by the granting body. |
20 | Section 8. Recapture. |
21 | (a) General rule.--Each business at the site shall fulfill |
22 | its job creation and wage requirements for the project site |
23 | within two years of the date of subsidy. The recipient shall |
24 | maintain its wage and benefit goals as long as the subsidy is in |
25 | effect or for five years, whichever is longer. |
26 | (b) Corporate parent duties.--The corporate parent of a |
27 | recipient corporation must maintain at least 90% of its |
28 | employment in this Commonwealth as long as the development |
29 | subsidy is in effect or for not less than five years, whichever |
30 | is longer. |
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1 | (c) Procedure.--If the requirements under subsection (a) or |
2 | (b) are not fulfilled, the granting body shall recapture the |
3 | development subsidy from the recipient corporation as follows: |
4 | (1) Upon a failure by the recipient corporation or other |
5 | business at the site benefiting from the subsidy to create |
6 | the required number of jobs or to pay the required wages or |
7 | benefits, the amount recaptured shall be based on the pro |
8 | rata amount by which the unfilled jobs, wages or benefits |
9 | bear to the total amount of the development subsidy. |
10 | (2) Upon the failure of the corporate parent to maintain |
11 | at least 90% of its employment in this Commonwealth, the rate |
12 | of recapture shall equal twice the percentage by which the |
13 | employment is less than 90%. |
14 | (d) Notice of intent to recapture.--The granting body shall |
15 | provide notice to the recipient corporation or business at the |
16 | site of its intent to recapture the development subsidy and |
17 | state the reasons and amount to be recaptured. The recipient |
18 | corporation or business at the site shall remit to the governing |
19 | body such amount within 60 calendar days of the date of the |
20 | notice. |
21 | (e) Declaration of subsidy as null and void.--If a recipient |
22 | corporation or business has had a development subsidy recaptured |
23 | under subsection (c)(1) or (2) in three consecutive calendar |
24 | years, the granting body shall declare the subsidy null and |
25 | void, and shall so notify the department and the recipient |
26 | corporation or business. The recipient corporation shall pay |
27 | back to the granting body all remaining value of the development |
28 | subsidy it has not previously repaid within 180 calendar days of |
29 | the date of the notice. |
30 | Section 9. Private enforcement action. |
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1 | If a granting body fails to enforce any provision of this |
2 | act, any individual who paid personal income taxes to the |
3 | Commonwealth in the calendar year in dispute, or any |
4 | organization representing such taxpayers, shall be entitled to |
5 | bring a civil action in an appropriate court to compel |
6 | enforcement under this act. The court shall award reasonable |
7 | attorney fees and costs to such prevailing taxpayer or |
8 | organization. |
9 | Section 10. Public record disclosure. |
10 | All records required to be prepared or maintained under this |
11 | act, including, but not limited to, applications, progress |
12 | reports, recapture notices and any other records or proceedings |
13 | relating thereto, shall be subject to disclosure under the act |
14 | of February 14, 2008 (P.L.6, No.3), known as the Right-to-Know |
15 | Law. |
16 | Section 11. Preemption. |
17 | Nothing in this chapter shall require or authorize any |
18 | recipient corporation to reduce wages or benefits established |
19 | under any collective bargaining agreement or Federal or State |
20 | prevailing wage laws. |
21 | Section 12. Severability. |
22 | The provisions of this act are severable. If any provision of |
23 | this act or its application to any person or circumstance is |
24 | held invalid, the invalidity shall not affect other provisions |
25 | or applications of this act which can be given effect without |
26 | the invalid provision or application. |
27 | Section 40. Effective date. |
28 | This act shall take effect on the first day of the first |
29 | fiscal year occurring after December 31, 2009. |
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