BILL REQ. #:  H-1697.1 

Read first time 02/15/2005.   Referred to Committee on Finance.

     AN ACT Relating to economic development tax credits for employee training; adding a new section to chapter 82.04 RCW; adding a new section to chapter 82.16 RCW; providing an effective date; and declaring an emergency.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.04 RCW to read as follows:
     (1) A person whose application has been approved by the department under this section may take a credit against tax imposed by this chapter, subject to the limitations in this section. The credit under this program is only available to persons with five hundred or fewer employees in the state.
     (2)(a) The credit under this section is equal to sixty percent of the amount of qualifying costs made in rural counties, as defined in RCW 82.14.370, or forty percent of the amount of qualifying costs made in nonrural counties. A person shall not receive credit for more than five thousand dollars for qualifying costs per employee per calendar year. A person shall not receive total credits over two hundred fifty thousand dollars per calendar year. A person may only receive credit for amounts expended on job classes covered by the minimum wage provisions of the federal fair labor standards act.
     (b) As preconditions to approval by the department under subsection (4) of this section, the person must:
     (i) Have entered into a training contract with a qualified training institution; and
     (ii) Show that the training costs during the year for which a credit is requested exceed the person's average annual training expenditures over the past three years on the job classes covered by the minimum wage provisions of the federal fair labor standards act.
     (3) Training contracts must be for the training of at least five employees. If an employer does not have five employees to train, the person may coordinate with other employers who have identical training needs to create groups to meet the five person threshold.
     (4) Application for credits under this section shall be made to the department in a form and manner as required by the department. The application shall include a statement affirming the person's compliance with this section. The department shall approve or deny application for credits using the criteria under this section. The department shall require the person receiving approval to keep records necessary for the department to verify eligibility under this section. A person shall apply for the credit after making an expenditure. Tax credit applications shall not be approved for expenditures that occurred before the effective date of this act.
     (5) Tax credits are available on a first-come basis, with priority based on the date and time the application is received by the department. The total of credits granted under this section and section 2 of this act shall be no more than ten million dollars per biennium. The department shall keep a running total of all credits approved. If the amount submitted for a credit will cause the cap to be exceeded, the department shall give a partial approval of the application, equal to the amount of remaining credit available for the fiscal year.
     (6) No person is eligible for tax credits under this section in excess of the amount of tax that would otherwise be due under this chapter. Approved credit may not be carried over to subsequent calendar years. The credit must be claimed by the due date of the last tax return for the calendar year in which the payment is made. Any unused credit expires. Refunds shall not be given in place of credits.
     (7) If a person has used a credit granted under this section against tax due under chapter 82.16 RCW the person may not use the same credit for tax due under this chapter.
     (8) A person who takes credits under RCW 82.04.4333 may not take a credit under this section for the same training.
     (9) For the purposes of this section, the following definitions apply:
     (a) "Employer" means the same as "person";
     (b) "Qualifying costs" means those employee training expenditures which exceed the employer's average annual employee training expenditures over the previous three calendar years and are direct payments made under a contract with a qualified training institution for formal technical or skill training, including work force and basic skill training. The term includes amounts in the contract for costs of instruction, materials, equipment, rental of class space, and overhead. "Qualifying costs" do not include employee tuition reimbursements unless the tuition reimbursement is specifically included in a contract under subsection (2)(b) of this section;
     (c) "Employee" means a person working in a job class covered by the minimum wage provisions of the federal fair labor standards act;
     (d) "Qualified training institution" means a public community or technical college, or a private vocational school licensed by either the work force training and education coordinating board or the higher education coordinating board.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.16 RCW to read as follows:
     The tax credit program under section 1 of this act is available to persons for tax due under this chapter. If a person has used a credit granted under this section against tax due under chapter 82.04 RCW, the person may not use the same credit for tax due under this chapter. A person who takes credits under RCW 82.04.4333 may not take a credit under this section for the same training.

NEW SECTION.  Sec. 3   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 2005.