BP BHEAD INT H

AN ACT Relating to providing a business and occupation tax credit to firms that maintain a work-based basic skills program to improve the skills of their existing work force; adding new sections to chapter 82.04 RCW; adding a new section to chapter 28B.50 RCW; adding a new section to chapter 28C.18 RCW; adding new sections to chapter 43.131 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that:

(1) The well-being of the state economy depends on a literate, skilled, and adaptable work force. Structural changes in work methods, evolving technologies, corporate restructuring, and intensifying global competition have demanded that employers seek ever-greater contributions from their work force. Commensurate with this demand is the need for the work force to obtain skills upgrading to keep pace with technological change;

(2) Washington employers cite the lack of basic skills as a major impediment to improving productivity, providing high-quality customer service, and sustaining work force skills upgrading programs. The investment in human capital study in 1990 reported that nearly one-third of Washington's employers are generally dissatisfied with their employees' basic skills;

(3) The 1993 Washington state adult literacy survey indicates that five hundred seventy thousand adult workers in Washington scored in the lowest two, out of five, levels of basic skills on a standardized performance literacy assessment;

(4) A 1991 nation-wide manufacturing employer survey conducted by the national association of manufacturers found nearly forty percent of their members are having serious problems upgrading technology or increasing productivity due to major employee skills deficiencies in basic math, reading, and problem solving in their work force; and

(5) A recent report from the American society for training and development declares that, "the association between skills and opportunity for individual Americans is powerful and growing . . . Individuals with poor skills do not have much to bargain with; they are condemned to low earnings and limited choices." The data from the 1993 Washington State Adult Literacy Survey supports this view.

Therefore, the legislature finds it necessary and in the public interest to create a work-based basic skills tax credit in order to promote and assist employer efforts to develop and maintain a quality work force. The legislature further declares that this program serves the vital public purpose of improving an individual's job performance, economic security, citizenship, and family life.

NEW SECTION. Sec. 2. A new section is added to chapter 82.04 RCW to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout sections 2 through 4 of this act.

(1) "Approved basic skills education program" means a basic skills education program that has received written approval from the office of adult literacy of the state board for community and technical colleges, is offered by a private vocational school, labor organization, or provider licensed by the work force training and education coordinating board, or by one of the higher education institutions that conduct education programs under RCW 28B.50.020.

(2) "Basic skills training" means an employer-sponsored training by a qualified basic skills provider that enhances basic computer literacy, English as a second language, reading, writing, or math skills, up to the twelfth grade level, of employees who need to develop skills in these areas in order to function as effectively as needed on the job or be able to adapt to new technologies.

(3) "Employee" means an individual resident of Washington who is employed for at least twenty hours per week by the employer seeking the tax credit and who has been continuously employed for at least sixteen weeks.

(4) "Employer" means an individual or corporate business that is subject to the business and occupation tax as determined under this chapter.

(5) "Employer-sponsored" means a contractual arrangement with a school, college, community-based organization, adult basic skills education program, or other approved provider or an internal program provided by a firm that offers an approved basic skills education program that is paid for by the employer.

(6) "Qualified costs of education" means direct instructional expenses incurred for or relating to curriculum development, instructors, materials, or equipment used in the qualifying program, or for tuition, supplies, textbooks, or salaries, including compensation paid to employees while participating in an approved basic skills education program.

NEW SECTION. Sec. 3. A new section is added to chapter 82.04 RCW to read as follows:

(1) In computing the tax imposed under this chapter, a two-tiered tax credit is available to employers:

(a) A credit equal to seventy-five percent of an employer's qualified costs of education for an approved basic skills education program shall be granted for an employer-sponsored basic skills training under this chapter, up to fifty thousand dollars per year; and

(b) A credit equal to fifty percent of an employer's qualified costs exceeding fifty thousand dollars shall be granted for any employer-sponsored basic skills training under this chapter, up to a maximum allowable credit of one hundred fifty thousand dollars for each taxable year.

(2) Only the actual employer qualifying for the credits may use the credits allowed under this section. The credits allowed under this section are limited to the amount of the employer's business and occupation tax liability for the taxable year without regard to this chapter and limited to the amount of tax imposed by this chapter. Unused excess credit in a reporting period may be carried forward to future reporting periods for a maximum of one year.

(3) The department shall keep a running total of credits granted under this section during each calendar year. The department shall not allow the aggregate amount of credits taken under this section to exceed ten million dollars during each calendar year. The department shall adjust this aggregate allowable amount annually thereafter by the rate of inflation as indicated by the consumer price index (CPI-W) published by the bureau of labor statistics, United States department of labor for the Seattle, Washington area, based on the prior year's increase.

NEW SECTION. Sec. 4. A new section is added to chapter 82.04 RCW to read as follows:

A tax credit may not be granted under section 3 of this act to an employer of an employee participating in a basic skills education program if the employer receives or requires reimbursement or any form of remuneration for a cost of the education. However, a reimbursement or remuneration that disqualifies an employer under this section does not preclude the employer from including those amounts in calculating program costs for federal corporate income tax purposes.

NEW SECTION. Sec. 5. A new section is added to chapter 28B.50 RCW to read as follows:

The state office of adult literacy in conjunction with the work force training and education coordinating board shall make a report to the legislature by January 30th of every even-numbered year, beginning in 1996, summarizing the progress of the tax incentive program under sections 2 through 4 of this act and listing the number of participants, the providers of training, and the type of training offered. The report must also include, but not be limited to, an evaluation assessment that provides feedback from program participants, feedback from nonparticipants in the workplace, for example line supervisors, regarding program impact and results, and evaluation results from premeasure and postmeasure assessments.

NEW SECTION. Sec. 6. A new section is added to chapter 28C.18 RCW to read as follows:

The work force training and education coordinating board shall adopt rules for limited and uncomplicated procedures and standards it deems necessary for carrying out the curriculum review and evaluation purposes of sections 2 through 5 of this act.

NEW SECTION. Sec. 7. A new section is added to chapter 43.131 RCW to read as follows:

The program providing a business and occupation tax credit to firms that maintain a work-based skills program to improve the skills of their existing work force under sections 2 through 6 of this act shall be terminated on June 30, 2000, as provided in section 8 of this act.

NEW SECTION. Sec. 8. A new section is added to chapter 43.131 RCW to read as follows:

The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, 2001:

(1) Section 2 of this act;

(2) Section 3 of this act;

(3) Section 4 of this act;

(4) Section 5 of this act; and

(5) Section 6 of this act.