POSHARD SEEKS LAW FOR FEDERAL ENTERPRISE ZONE

CARTERVILLE, Ill. -- U.S. Rep. Glenn Poshard will spearhead efforts to bring enterprise zones to Illinois through legislation under consideration in Washington.

Poshard, an Illinois Democrat, said: "The measure, part of an urban aid package passed by the U.S. House, would create 50 new enterprise zones 25 in rural areas. Businesses locating in the zones would be eligible for a number of tax breaks, including wage credits, capital gains relief, deductions for new equipment and other incentives.

"We think this is an important concept for those of us in the downstate area of the state," said Poshard. "We have a strong case to make for rural enterprise zones in our area."

Poshard said the area had seen a gradual deterioration of jobs through the loss of mining, small farms and the manufacturing base.

"The federal incentives, when supplemented by state and local incentives, would be powerful inducements for industry to locate in Southern Illinois, bringing jobs to a region troubled by high unemployment," said Poshard.

To be eligible for designation as a rural enterprise zone, the area must have four of the following characteristics: Population of at least 1,000; a condition of general economic distress; unemployment at least 1.5 times that of the national rate; poverty rates of at least 20 percent in 90 percent of the area's census tracts; decline in employment of more than 5 percent over the past five years; and 10 percent or greater decline in population between 1980 and 1998.

"I have already put the wheels in motion to determine which areas in Southern and Central Illinois might qualify," said Poshard. "You can go through several of the counties in Southern Illinois, and most all rank much greater than one-and-a-half times the national unemployment average. Many have experienced loss of population and most have experienced economic problems."

Unemployment figures released recently showed at least six Southern Illinois counties recorded jobless rates double the 7.2 percent U.S. rate, including Pulaski at 17.3 and Alexander at 14.8. Several other counties recorded unemployment rates over 11 percent.

"Unemployment figures show Southern Illinois with nine of the 10 highest county unemployment rates in the state," said Poshard.

Poshard met last week with the Southern Illinois Coalition, which works to market the region nationwide, to request its cooperation in assessing the area.

"It will take regional economic development groups, planning commissions, public officials and community leaders at all levels to determine which areas might qualify," said Poshard. "But if we pull together we have a great shot of landing the zones to help the economy of downstate Illinois.

"I don't anticipate any problems with the proposal," said Poshard. "The House has passed the bill and it's moving along."

The proposal still must go through the Senate. "The president has agreed to it," said Poshard. "There may be a few changes but nothing substantial."

Poshard said Southern Illinois would have to compete for the designation with regions of similar or worse economic conditions, but "I think the area has a good chance of getting one of the rural zones."

Among benefits to businesses which locate within the proposed zones are:

A 15 percent wage tax credit for employers for each worker on the first $20,000 of income, up to a maximum of $3,000 per employee a year.

A 50 percent exclusion from capital gains tax for profits from property in the zone for five years, and deferral of all capital gains taxes as long as proceeds are reinvested in an enterprise zone business.

A first-year, $20,000 tax deduction for new equipment purchased by a zone business. The current law allows a $10,000 deduction.

A tax deduction of up to $25,000 a year for the purchase of certain stock in enterprise zone businesses.

Ordinary loss treatment rather than capital loss treatment on sales of certain property used by enterprise zone business.

Liberalized rules governing the issuance of bonds to refinance redevelopment in the zone.