A2507

ASSEMBLY, No. 2507

STATE OF NEW JERSEY

INTRODUCED NOVEMBER 14, 1996

By Assemblyman GREENWALD and Assemblywoman ALLEN

An Act concerning the Workforce Development Partnership Program and tax credits for certain employers for customized training services, amending P.L.1992, c.43, and supplementing P.L.1945, c.162 (C.54:10A-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 4 of P.L.1992, c.43 (C.34:15D-4) is amended to read as follows:

4. a. The Workforce Development Partnership Program is hereby established in the Department of Labor and shall be administered by the Commissioner of Labor. The purpose of the program is to provide qualified displaced, disadvantaged and employed workers with the employment and training services most likely to provide the greatest opportunity for long-range career advancement with high levels of productivity and earning power. To implement that purpose, the program shall provide those services by means of training grants or customized training services, to the extent that funding for the services is not available from federal or other sources. The commissioner is authorized to expend moneys from the Workforce Development Partnership Fund to provide the training grants or customized training services and provide for each of the following:

(1) The cost of counseling required pursuant to section 7 of P.L.1992, c.43 (C.34:15D-7), to the extent that adequate funding for counseling is not available from federal or other sources;

(2) Reasonable administrative costs not to exceed 10% of the revenues collected pursuant to section 2 of P.L.1992, c.44 (C.34:15D-13) during any one fiscal year, except for additional start-up administrative costs approved by the Director of the Office of Management and Budget during the first year of the program's operation;

(3) Reasonable costs, not exceeding 0.5% of the revenues collected pursuant to section 2 of P.L.1992, c.44 (C.34:15D-13) during any one fiscal year, as required by the State Employment and Training Commission to design criteria and conduct an annual evaluation of the program; and

(4) The cost of reimbursement to individuals for excess contributions pursuant to section 6 of P.L.1992, c.44 (C.34:15D-17).

b. Not more than 10% of the moneys received by any service provider pursuant to this act shall be expended on anything other than direct costs to the provider of providing the employment and training services, which direct costs shall not include any administrative or overhead expense of the provider.

c. Training and employment services shall be provided to a worker who receives counseling pursuant to section 7 of P.L.1992, c.43 (C.34:15D-7) only if the counselor who evaluates the worker pursuant to that section determines that the worker can reasonably be expected to successfully complete the training and education identified in the Employability Development Plan developed pursuant to that section for the worker.

d. All vocational training provided under this act:

(1) Shall be training which is likely to substantially enhance the individual's marketable skills and earning power; and

(2) Shall be training for a labor demand occupation, except for:

(a) Customized training provided to the present employees of a business which the commissioner deems to be in need of the training to prevent job loss caused by obsolete skills, technological change or national or global competition; or

(b) Customized training provided to employees at a facility which is being relocated from another state into New Jersey; or

(c) Entrepreneurial training and technical assistance supported by training grants provided pursuant to subsection b. of section 6 of P.L.1992, c.43 (C.34:15D-6).

e. (1) During any fiscal year ending prior to July 1, 1997:

(a) Not less than 25% of the total revenues dedicated to the program during any one fiscal year shall be reserved to provide employment and training services for qualified displaced workers[.];

(b) Not less than [six percent] 6% of the total revenues dedicated to the program during any one fiscal year shall be reserved to provide employment and training services for qualified disadvantaged workers[.];

(c) Not less than 45% of the total revenues dedicated to the program during any one fiscal year shall be reserved for and appropriated to the Office of Customized Training[.];

(d) Not less than 3% of the total revenues dedicated to the program during any one fiscal year shall be reserved for occupational safety and health training[. Beginning July 1, 1994,]; and

(e) 5% of the total revenues dedicated to the program during any one fiscal year shall be reserved for and appropriated to the Youth Transitions to Work Partnership created pursuant to P.L.1993, c.268 (C.34:15E-1 et seq.).

(2) During fiscal year 1998:

(a) 29% of the total revenues dedicated to the program during the fiscal year shall be reserved to provide employment and training services for qualified displaced workers;

(b) 16% of the total revenues dedicated to the program during the fiscal year shall be reserved to provide employment and training services for qualified disadvantaged workers;

(c) 35% of the total revenues dedicated to the program during the fiscal year shall be reserved for and appropriated to the Office of Customized Training;

(d) 3.5% of the total revenues dedicated to the program during the fiscal year shall be reserved for occupational safety and health training; and

(e) 6% of the total revenues dedicated to the program during the fiscal year shall be reserved for and appropriated to the Youth Transitions to Work Partnership created pursuant to P.L.1993, c.268 (C.34:15E-1 et seq.).

(3) During fiscal year 1999:

(a) 33.5% of the total revenues dedicated to the program during the fiscal year shall be reserved to provide employment and training services for qualified displaced workers;

(b) 20% of the total revenues dedicated to the program during the fiscal year shall be reserved to provide employment and training services for qualified disadvantaged workers;

(c) 25% of the total revenues dedicated to the program during the fiscal year shall be reserved for and appropriated to the Office of Customized Training;

(d) 4% of the total revenues dedicated to the program during the fiscal year shall be reserved for occupational safety and health training; and

(e) 7% of the total revenues dedicated to the program during the fiscal year shall be reserved for and appropriated to the Youth Transitions to Work Partnership created pursuant to P.L.1993, c.268 (C.34:15E-1 et seq.).

(4) During fiscal year 2000 and each subsequent fiscal year:

(a) 37% of the total revenues dedicated to the program during the fiscal year shall be reserved to provide employment and training services for qualified displaced workers;

(b) 25% of the total revenues dedicated to the program during the fiscal year shall be reserved to provide employment and training services for qualified disadvantaged workers;

(c) 15% of the total revenues dedicated to the program during the fiscal year shall be reserved for and appropriated to the Office of Customized Training;

(d) 4.5% of the total revenues dedicated to the program during the fiscal year shall be reserved for occupational safety and health training; and

(e) 8% of the total revenues dedicated to the program during the fiscal year shall be reserved for and appropriated to the Youth Transitions to Work Partnership created pursuant to P.L.1993, c.268 (C.34:15E-1 et seq.).

f. Funds available under the program and tax credits authorized pursuant to section 5 of P.L.1992, c.43 (C.34:15D-5) shall not be used for activities which induce, encourage or assist: any displacement of currently employed workers by trainees, including partial displacement by means such as reduced hours of currently employed workers; any replacement of laid off workers by trainees; or any relocation of operations resulting in a loss of employment at a previous workplace located in the State.

g. On-the-job training shall not be funded by the program or tax credits authorized pursuant to section 5 of P.L.1992, c.43 (C.34:15D-5) for any employment found by the commissioner to be of a level of skill and complexity too low to merit training. The duration of on-the-job training funded by the program for any worker shall not exceed the duration indicated by the Specific Vocational Preparation Code developed by the United States Department of Labor for the occupation for which the training is provided and shall in no case exceed 26 weeks. The department shall set the duration of on-the-job training for a worker for less than the indicated maximum, when training for the maximum duration is not warranted because of the level of the individual's previous training, education or work experience. On-the-job training shall not be funded by the program unless it is accompanied, concurrently or otherwise, by whatever amount of classroom-based vocational training, remedial education or both, is deemed appropriate for the worker by the commissioner.

h. Employment and training services funded by the program and tax credits authorized pursuant to section 5 of P.L.1992, c.43 (C.34:15D-5) shall not replace, supplant, compete with or duplicate in any way approved apprenticeship programs.

i. No activities funded by the program or tax credits authorized pursuant to section 5 of P.L.1992, c.43 (C.34:15D-5) shall impair existing contracts for services or collective bargaining agreements, except that activities which would be inconsistent with the terms of a collective bargaining agreement may be undertaken with the written concurrence of the collective bargaining unit and employer who are parties to the agreement.

(cf: P.L.1995, c.422, s.2)

2. Section 5 of P.L.1992, c.43 (C.34:15D-5) is amended to read as follows:

5. a. There is hereby established, as part of the Workforce Development Partnership Program, the Office of Customized Training. [Moneys] Tax credits authorized by the commissioner pursuant to this section and moneys allocated to the office from the fund shall be used to provide employment and training services to eligible applicants approved by the commissioner.

b. An applicant shall be eligible for customized training services if it is one of the following:

(1) An individual employer that seeks the customized training services to create, upgrade or retain jobs in a labor demand occupation;

(2) An individual employer that seeks customized training services to upgrade or retain jobs in an occupation which is not a labor demand occupation, if the commissioner determines that the services are necessary to prevent the likely loss of the jobs or that the services are being provided to employees at a facility which is being relocated from another state into New Jersey;

(3) An employer organization, labor organization or community-based organization seeking the customized training services to provide training in labor demand occupations in a particular industry; or

(4) A consortium made up of one or more educational institutions and one or more eligible individual employers or labor, employer or community-based organizations that seeks the customized training services to provide training in labor demand occupations in a particular industry.

c. Each applicant seeking a grant or tax credit for customized training services shall submit an application to the commissioner in a form and manner prescribed in regulations adopted by the commissioner. The application shall be accompanied by a business plan of each employer which will receive customized training services if the application is approved. The business plan shall be an agreement between the employer and the State upon the receipt of the grant or tax credit by the employer and shall include:

(1) A justification of the need for the services and funding from the office or a tax credit, including information sufficient to demonstrate to the satisfaction of the commissioner that the applicant will provide significantly less of the services if the requested funding or tax credit is not provided by the office;

(2) A comprehensive long-term human resource development plan which:

(a) Extends significantly beyond the period of time in which the services are funded by the office or by tax credits authorized by the commissioner pursuant to this section; [and]

(b) Significantly enhances the productivity and competitiveness of the employer operations located in the State and the employment security of workers employed by the employer in the State; and

(3) Evidence, if the training sought is for an occupation which is not a labor demand occupation, that the customized training services are needed to prevent job loss caused by obsolete skills, technological change or national or global competition or that the services are being provided to employees at a facility which is being relocated from another state into New Jersey;

(4) Information demonstrating that most of the individuals receiving the services will be trained primarily for work in the direct production of goods or services; [and]

(5) A commitment to provide the information needed by the commissioner to evaluate the success of the grant or tax credit and the plan in creating and retaining jobs, to assure compliance with the provisions of P.L.1992, 43 (C.34:15D-1 et seq.), and, in the case of a tax credit, to certify the training costs of the employer; and

(6) Any other information or commitments which the commissioner deems appropriate to assure compliance with the provisions of P.L.1992, 43 (C.34:15D-1 et seq.).

The commissioner may provide whatever assistance he deems appropriate in the preparation of the application and business plan, which may include labor market information, projections of occupational demand and information and advice on alternative training and education strategies.

d. Each employer that receives a grant for customized training services shall contribute a minimum of 40% of the total cost of the customized training services, except that the commissioner shall set a higher or lower minimum contribution by an employer, if warranted by the size and economic resources of the employer or other factors deemed appropriate by the commissioner.

e. Each employer receiving a grant or tax credit for customized training services shall hire or retain in permanent employment each worker who successfully completes the training and education provided under the customized training. The employer shall be entitled to select the qualified employed, disadvantaged or displaced workers who will participate in the customized training, except that if any collective bargaining unit represents a qualified employed worker, the selection shall be conducted in a manner acceptable to both the employer and the collective bargaining unit. The commissioner shall provide for the withholding, for a time period he deems appropriate, of whatever portion he deems appropriate of program funding as a final payment for customized training services, contingent upon the hiring and retention of a program completer as required pursuant to this section. If the commissioner determines that an employer who received a grant or tax credit for customized training services pursuant to this section has relocated out of the State, or otherwise eliminated, the jobs for which the training was provided within three years following the ending date of the customized training or has failed to provide the agreed-upon employment and training services to the employees, the commissioner shall provide written notification to the employer of the commissioner’s determination and an opportunity for the employer to request, within 15 days after the notification, a hearing before the commissioner to contest the determination, which shall be held not more than 15 days after the request is made. If no hearing is requested or if, upon a hearing, the commissioner reaffirms his determination:

(1) In the case of a grant, the employer shall return the amount of the grant not later than 90 days after the notification to the employer of the commissioner’s determination, and that amount shall be deposited in the Workforce Development Partnership Fund; or

(2) In the case of a tax credit, the commissioner shall retroactively disallow the tax credit and notify the Director of the Division of Taxation that the tax credit has been retroactively disallowed not later than 30 days after the notification to the employer of the commissioner’s determination.

f. The customized training services provided to an approved applicant may include any combination of employment and training services or any single employment and training service approved by the commissioner, including remedial education provided to upgrade workplace literacy. Each service may be provided by a separate approved service provider.

g. Customized training services shall include any remedial education determined necessary pursuant to section 7 of this act. Applications for customized training services shall include estimates of the total need for remedial education determined in a manner deemed appropriate by the commissioner.

h. Any business seeking customized training services shall, in the manner prescribed by the commissioner, participate in the development of a plan to provide the services. Any business seeking customized training services for workers represented by a collective bargaining unit shall notify the collective bargaining unit and permit it to participate in developing the plan. No customized training services shall be provided to a business employing workers represented by a collective bargaining unit without the written consent of both the business and the collective bargaining unit.

i. Any business receiving customized training services shall be responsible for providing workers' compensation coverage for any worker participating in the customized training.

j. After all moneys allocated during fiscal year 1998 or any subsequent fiscal year from the Workforce Development Partnership Fund for customized training have been granted to approved applicants, the commissioner shall, during the remainder of that fiscal year, authorize, on a first come, first served basis, tax credits for customized training services to employers who are approved applicants but did not receive grants. The total amount of tax credits authorized pursuant to this subsection shall be not more than $10 million during fiscal year 1998, not more than $20 million during fiscal year 1999 and not more than $30 million during fiscal year 2000 and each subsequent fiscal year. Any customized training services funded by tax credits pursuant to this subsection shall be subject to all of the provisions of section 4 of P.L.1992, c.43 (C.34:15D-4) and this section which apply to customized training services funded by grants pursuant to this section, except that the provisions of subsection d. of this section shall not apply to training services funded by the tax credits. The commissioner shall certify, for the purposes of the tax credit, the customized training costs of each approved applicant and submit a copy of the certification to the employer and the Director of the Division of Taxation. In approving grants, the commissioner shall give priority to those eligible applicants who are least likely to benefit from tax credits because of low levels of taxable income or other reasons, including applicants who are new or small employers, educational institutions or labor, employer or community-based organizations.

(cf: P.L.1992, c.43, s.5)

3. (New section) a. A taxpayer shall be allowed a credit, subject to the provisions of subsection b. of this section, against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to 50% of training costs authorized and certified by the Commissioner of Labor pursuant to subsection j. of section 5 of P.L.1992, c.43 (C.34:15D-5), incurred for the fiscal or calendar accounting year, except that the total amount of the credit shall not be more than $500,000 and shall not be more than $1,500 for each of the taxpayer's employees being trained. The taxpayer shall include a copy of the commissioner's certification of the costs when filing a tax return that includes a claim for a credit pursuant to this subsection.

b. No credit shall be allowed under section 42 of P.L.1987, c.102 (C.54:10A-5.3), under the "Manufacturing Equipment and Employment Investment Tax Credit Act," P.L.1993, c.171 (C.54:10A-5.16 et seq.), under the "New Jobs Investment Tax Credit Act," P.L.1993, c.170 (C.54:10A-5.4 et seq.), or under section 1 of P.L.1993, c.175 (C.54:10A-5.24) for property or expenditures for which a credit is allowed, or which are includable in the calculation of a credit allowed, under this section.

The tax imposed for a fiscal or calendar accounting year pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall first be reduced by the amount of any credit allowed pursuant to section 19 of P.L.1983, c.303 (C.52:27H-78), then by any credit allowed pursuant to section 12 of P.L.1985, c.227 (C.55:19-13), then by any credit allowed pursuant to section 42 of P.L.1987, c.102 (C.54:10A-5.3), then by any credit allowed under section 3 of P.L.1993, c.170 (C.54:10A-5.6), and then by any credit allowed under section 3 or 4 of P.L.1993, c.171 (C.54:10A-5.18 or C.54:10A-5.19), and then by any credit allowed under section 1 of P.L.1993, c.175 (C.54:10A-5.24) prior to applying any credits allowable pursuant to this section. Credits allowable pursuant to this section shall be applied in the order of the credits' tax years. The amount of the credits applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for an accounting year shall not exceed 50% of the tax liability otherwise due and shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5). The amount of tax year credit otherwise allowable under this section which cannot be applied for the tax year due to the limitations of this subsection may be carried over, if necessary, to the seven fiscal or calendar accounting years following a credit's tax year.

c. The director shall recalculate the tax liability of a taxpayer when the director has received notice of the retroactive disallowance of a tax credit pursuant to subsection e. of section 5 of P.L.1992, c.43 (C.34:15D-5), and assess a deficiency for the amount of any reduction in tax liability resulting from the application of the tax credit disallowed. Notwithstanding the provisions of R.S.54:49-3 and R.S.54:49-4 to the contrary, no interest or penalty shall be assessed against the taxpayer if the amount of deficient liability is paid within 60 days of the disallowance pursuant to subsection e. of section 5 of P.L.1992, c.43 (C.34:15D-5). A taxpayer that does not pay the deficient liability on or before the 60th day following the disallowance shall pay, in addition to the amount of the deficiency, interest on the deficiency at the rate of three percentage points above the prime rate assessed for each month or fraction thereof, compounded annually at the end of each year, from the date the credit was disallowed until the date of actual payment. Any amount of deficiency unpaid after the 60th day following the disallowance is an underpayment for the purposes of R.S.54:49-4.

4. This act shall take effect immediately and apply to fiscal or calendar accounting years beginning after its enactment.

STATEMENT

This bill provides corporation business tax credits for employers who provide job-training for their employees and modifies the allocation of moneys from the Workforce Development Partnership (WDP) fund.

The bill provides a total of $10 million for tax credits during fiscal year 1998, $20 million during fiscal year 1999 and $30 million during fiscal year 2000 and each subsequent fiscal year. An eligible employer may receive a credit against corporate income taxes equal to 50% of the employer's training costs, except that the total amount of the credit is limited to $500,000 for the employer and $1,500 for each employee trained. The Commissioner of Labor is given the responsibility of authorizing and certifying the training services to be funded by the tax credits. After all moneys allocated during any fiscal year from the WDP fund for customized training have been granted to approved applicants, the commissioner is required to authorize, on a first come, first served basis, tax credits for customized training services to employers who are approved applicants but did not receive grants. In approving grants, the commissioner shall give priority to those eligible applicants who are least likely to benefit from tax credits because of low levels of taxable income or other reasons, including applicants who are new or small employers, educational institutions or labor, employer or community-based organizations. All training services funded by tax credits pursuant to the bill are subject to all of the provisions of law that pertain to customized training grants, except for the provisions regarding matching amounts.

The bill provides that, during fiscal year 1998, fiscal year 1999 and fiscal year 2000, increases are made in the percentage of moneys from the WDP fund which are allocated to displaced worker training, the training of welfare recipients, the Youth Transitions to Work Program and occupational safety and health training. Although the share of moneys from the WDP fund allocated to customized training is reduced during those years, the total amount available to employers for customized training from the WDP fund and the tax credits will increase by approximately 50%.

The bill requires an employer to return all amounts provided either as grants or tax credits by the State for training, if the employer relocates out of the State, or otherwise eliminates, the jobs for which the training was provided within three years following the ending date of the training or fails to provide the agreed-upon training services to the employees.

Concerns Workforce Development Partnership Program and employer tax credits for customized training.