BP BHEAD INT H

AN ACT Relating to public assistance recipient job training programs and employer business and occupation and utility tax credit incentives; adding a new chapter to Title 82 RCW; adding a new chapter to Title 74 RCW; creating new sections; providing an effective date; and providing an expiration date.

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

NEW SECTION. Sec. 1. It is the intent of the legislature that the department of social and health services, the employment security department, the work force training and education coordinating board, the department of community, trade, and economic development, and the community and technical colleges work together to market the tax incentive program established under section 6 of this act.

The goals of the tax incentive program are to give employers incentives to hire and train public assistance recipients and to increase the employability of public assistance recipients.

The legislature intends to achieve these goals through the provision of tax incentives in the form of tax credits for persons who agree, in writing, to hire and train recipients of aid to families with dependent children.

The legislature finds that incentives should be targeted by allowing smaller incentives to employers of recipients who have already achieved the higher levels of education and job experience while providing larger incentives for employers of recipients who are less job ready.

NEW SECTION. Sec. 2. (1) A person shall be allowed a credit against tax due under chapter 82.04 or 82.16 RCW of an amount equal to one hundred twenty percent of the payment made by an employer to a qualified training institution under a training plan for training a qualified employee, subject to the limitations set forth in this section. A person may not receive a credit for the same amounts under both chapters 82.04 and 82.16 RCW.

(2) A person claiming the credit shall file an affidavit form prescribed by the department, which shall include the amount of the credit claimed and additional information as the department may require.

(3)(a) The tax credit in respect to any qualified employee may not in a calendar year exceed:

(i) The lesser of eight percent of the qualified employee's gross annual wages or one thousand two hundred dollars in the case of a category 1 qualified employee;

(ii) The lesser of sixteen percent of the qualified employee's gross annual wages or two thousand four hundred dollars, in the case of a category 2 qualified employee; or

(iii) The lesser of twenty-four percent of the qualified employee's gross annual wages or three thousand six hundred dollars in the case of a category 3 qualified employee.

(b) The office of financial management shall, by December 1, 1996, for calendar year 1997, and by December 1 each year thereafter adjust the payment maximums under this subsection (3) to reflect inflation, using the previous calendar year's limit adjusted by an appropriate federal inflationary index reflecting the rate of inflation for the previous year. The department shall publish the new payment maximums.

(4) The credit in respect to any qualified employee may not be taken:

(a) For more than one year of training in the case of a category 1 qualified employee; or

(b) For more than three years of training in the case of a category 2 or category 3 qualified employee.

(5) The credit shall be taken against taxes due for the same calendar year in which the payment is made to the qualified training institution and must be claimed by the due date of the last tax return for the calendar year in which the payment is made to the qualified training institution.

(6) The department shall allow accrual of tax credits to a successor employer, if the business or firm is sold, assigned, conveyed, or otherwise transferred.

(7) Total credits allowed to all persons claiming credits may not exceed fifteen million dollars in any biennium.

(8) This section shall expire December 31, 2004.

NEW SECTION. Sec. 3. The definitions in this section apply throughout this chapter and sections 5 through 9 of this act unless the context indicates otherwise.

(1) "Gross annual wages" means salary, wages, tips, and other compensation paid to a qualified employee by an employer claiming the credit under this section during the calendar year for which the credit is claimed.

(2) "Person" has the meaning given in RCW 82.04.030.

(3) "Qualified employee" and "category 1, 2, or 3 qualified employee" means a person certified as such by the department of social and health services and hired before June 30, 2000. "Qualified employee" does not include a person hired by an employer to replace a striker or locked-out worker.

(4) "Qualified training institution" means a community or technical college, four-year college or university, public or private institution, apprenticeship program recognized by the Washington state apprenticeship and training council, or private industry council that has entered into a training plan that provides for the training of a qualified employee of a person claiming the credit under this chapter.

(5) "Training plan" means a written agreement, signed by a qualified employee, a union or other employee bargaining representative if the position is covered by a collective bargaining agreement, a qualified training institution, the department of social and health services or a designee of the department, and an employer claiming the credit under this section, which specifies the amount that the employer will pay the qualified training institution for the payment costs for the qualified employee, the learning objectives that will be achieved by the training, and a statement of progressively increasing scale of wages to be paid to the employee during the training plan period, using a wage scale that exceeds federal poverty levels for a family of three.

NEW SECTION. Sec. 4. Chapter 82.32 RCW applies to the administration of this chapter.

NEW SECTION. Sec. 5. The definitions in section 3 of this act apply throughout this chapter unless the context clearly requires otherwise.

NEW SECTION. Sec. 6. (1) The tax incentive program is hereby established. The department may enter into training plans. The department shall by rule adopt guidelines for the tax incentive program. The guidelines must include, but are not limited to:

(a) Designation of three categories of eligible aid to families with dependent children recipients. The department shall by rule establish criteria for assigning recipients into categories 1, 2, and 3. In establishing the criteria, the department shall consider the degree of work experience, training, wage and employment history, and education, category 1 representing recipients with the highest degree of job readiness;

(b) Selection criteria that includes establishment of a pool of prospective public assistance participants;

(c) A restriction on the total number of employees that an employer may have in the program, except that no more than twenty percent of the employers' employees may participate in the program;

(d) A requirement that the employer participate in the earned income tax credit program; and

(e) Standards regarding length of training plans, requiring the training institution to design the plan length so that it meets accepted training standards for that industry or profession. Training plans may not exceed three years.

(2) Qualified training institutions are deemed accredited for the purposes of this chapter if they meet national standards, standards of the state board for community and technical colleges, or standards of the work force training and education coordinating board.

(3) The department may contract with a public or private entity to carry out the department's duties under this chapter. The department reserves the right to withdraw designation of authority to this entity without showing cause.

(4) The department shall manage the program so that the total amount of credits by all persons claiming tax credits under chapter 82.-- RCW (sections 1 through 4 of this act) does not exceed fifteen million dollars in any biennium. The department shall enter into contracts with employers on a first-come, first-served basis. The department shall not enter into contracts if the potential amount of credits by all persons potentially claiming credits will exceed fifteen million dollars in any biennium.

NEW SECTION. Sec. 7. The department may institute an experimental and control group study under this program. The department, in carrying out this study, may select particular recipients or categories of recipients, and is not subject to claims of discrimination from recipients who are not participating in the experimental group, if the selection process is in the furtherance of a valid public purpose.

NEW SECTION. Sec. 8. The department of social and health services, the employment security department, the department of community, trade, and economic development, and the community and technical colleges shall cooperate and coordinate among the existing state and federal assistance and training programs to focus the efforts of enrollees and programs to most effectively achieve results from the various programs.

NEW SECTION. Sec. 9. (1) Training plans may not be entered into after June 30, 2001. Contracts in effect on June 30, 2001, shall continue in effect according to the terms of the contract.

(2) If the program under chapter . . ., Laws of 1996 (this act) is terminated before June 30, 2001, persons eligible for tax credits at the time of program termination under chapter 82.-- RCW (sections 1 through 4 of this act) shall receive the credits, subject to the limitations in section 2(7) of this act.

NEW SECTION. Sec. 10. (1) Sections 1 through 4 of this act shall constitute a new chapter in Title 82 RCW.

(2) Sections 5 through 9 of this act shall constitute a new chapter in Title 74 RCW.

NEW SECTION. Sec. 11. The department of revenue and the department of social and health services shall perform an assessment of the results of the tax incentive program created by this act and deliver a report on the assessment to the governor and the legislature by December 1, 2000. The assessment shall measure the effect of the tax incentive program on increasing self-sufficiency of public assistance recipients, and other factors the department of revenue and the department of social and health services may select.

NEW SECTION. Sec. 12. If any part of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state, the conflicting part of this act is inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding does not affect the operation of the remainder of this act in its application to the agencies concerned. The rules under this act shall meet federal requirements that are a necessary condition to the receipt of federal funds by the state.

NEW SECTION. Sec. 13. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 14. This act shall take effect July 1, 1996.