SENATE BILL REPORT

                   SB 6321

              As Reported By Senate Committee On:

        Labor & Workforce Development, February 3, 2000

Title:  An act relating to economic development by improving the skills and productivity of Washington workers.

Brief Description:  Promoting economic development in Washington by increasing the skills and productivity of workers.

Sponsors:  Senators Prentice, Hale, Bauer, Costa, Swecker, Winsley, B. Sheldon, T. Sheldon, Gardner, Oke and Rasmussen; by request of Governor Locke.

Brief History:

Committee Activity:  Labor & Workforce Development:  1/24/2000, 2/3/2000 [DPS].

SENATE COMMITTEE ON LABOR & WORKFORCE DEVELOPMENT

Majority Report:  That Substitute Senate Bill No. 6321 be substituted therefor, and the substitute bill do pass.

  Signed by Senators Fairley, Chair; Franklin, Vice Chair; Hochstatter, Kline, Oke and Wojahn.

Staff:  Jack Brummel (786-7428)

Background:  According to a survey by the Workforce and Education Coordinating Board, 60,000 Washington employers (64 percent of all employers in the state) had difficulty finding qualified job applicants during the past year.  Seventy-four percent of these firms said it lowered their productivity, 67 percent said it reduced output or sales and 64 percent said it reduced product or service quality.

The Legislative Committee on Economic Development, in its 1999 report to the Legislature, concluded that the availability of a skilled workforce is the top-rated economic and business challenge facing the state.

Summary of Substitute Bill:  The Workforce Training and Education Coordinating Board must create a Skills Gap Program.  The program provides grants to local workforce development councils to create partnerships between business, labor and training providers to identify and meet training needs through use of skill standards, customized training and on-the-job training.  Outreach to employers with 50 or fewer employees is required.

A tax credit is allowed against the state=s business and occupation tax (B&O) of 50 percent of expenditures made to upgrade the skills of any employer=s work force.  The credit is limited annually to $5,000 per employee, $100,000 per employer, and is capped at $1 million per fiscal year.  Businesses must have entered into a training contract with a training institution to be eligible.  Priority in receiving the credit is given to those businesses participating in partnerships formed under the Skills Gap Program.

The Workforce Board is to review the impact and effectiveness of the credit against the B&O tax.  The Skills Gap Program and the training tax credit are terminated June 30, 2003.

The State Board for Community and Technical Colleges must conduct outreach to employers of current or former WorkFirst recipients about the availability of job skills grants for worker training.

Substitute Bill Compared to Original Bill:  The substitute made technical and clarifying changes to the original and has provisions requiring outreach to small businesses for the Skills Gap Program and outreach to employers of WorkFirst recipients for the job skills program.

Appropriation:  None.

Fiscal Note:  Available.

Effective Date:  The bill takes effect July 1, 2000.

Testimony For:  The skills shortage harms businesses and causes lost opportunities to upgrade skills.  The Skills Gap Program would assess training needs and develop skill standards.  The focus will be in working with groups of companies.  Companies who take part in these partnerships are eligible for a training tax credit.  This is intended to be a pilot.  This is intended to save small businesses.

Concern:  Would like a quarter of the funds to be set aside for smaller firms.

Testimony Against:  None.

Testified:  Rich Nafziger, Governor=s Executive Policy Office; Tom Ryan, Ryan Financial Services; Pam Lund, NW Food Processors Assn.; Colin Conant, Tacoma-Pierce County Workforce Development Council; Gary Smith, IBA; Dan McConnon, SBCTC.