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S.F. No. 240 - Tax Credit for Jobs Training (First Engrossment)
 
Author: Senator David J. Tomassoni
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: April 7, 2013



 

Section 1, [Definitions] Provides definitions for the following terms:

Subd. 2. “Agreement” is the agreement between an employer and the Commissioner of Employment and Economic Development for a project.

Subd. 3. “Commissioner” means the Commissioner of Employment and Economic Development.

Subd. 4. “Employee” means the individual employed in a new job.

Subd. 5. “Employer” means the individual, corporation, or other business organization providing new jobs and entering into an agreement.

Subd. 6. “New job” means a job provided by a new or expanding business at a location outside of the metropolitan area providing at least 32 hours of work per week for a minimum of nine months of the year; is permanent with no planned termination date; and is certified by the commissioner as qualifying under the program before the first employee is hired to fill the job.  An employee must not have been formerly employed by the employer in the state for the job and the employee must not be replacement worker.

Subd. 7. “Jobs credit” or “credit” means the credit authorized under section 3. 

Subd. 8. “Program” means the project or projects established under the provisions of this bill.

Subd. 9. “Program costs” are the costs of providing program services, not including the cost of purchasing equipment to be owned or used by the training or educational institution or service.

Subd. 10. “Program services" are the training and education specifically directed to new jobs, as determined by the commissioner, including in-house training; services provided by institutions of higher education, federal, state, or local agencies; or private training or educational services, including administrative, assessment, and testing costs. 

Subd. 11. “Project” means a training arrangement that is the subject of an agreement between the commissioner and an employer to provide program services.           

Section 2.  [Commissioner’s duties and powers; agreements]  Subdivision 1 requires the DEED Commissioner to coordinate or provide program services to employers eligible for grants authorized in the bill. 

Subd. 2.  Authorizes DEED to enter into agreements with employers to establish jobs programs.  Agreements must identify program costs to be paid from program sources; provide for employer guarantee of payment for program costs and that any deferral of program cost payments not exceed ten years; provide that on-the-job training costs not exceed 50 percent of annual wages of the new jobs in the first full year after execution of the agreement; provide that employees must be paid at least $13 per hour plus benefits by the end of the first year of project employment and through the period of funding for the program; and provide that job training for a specified length of time will be provided for each job category.  The agreement may provide that program costs be directly reimbursed with a grant from DEED, rather than a tax credit, but if an employer elects to receive a grant, the grant amount is limited to 90 percent of the amount of the tax credit.  Requires the DEED Commissioner to determine that sufficient funding for the job project is available and to review the suitability of the program for the needs of the employer. 

Subd. 3. [Agreement required; notification]  Provides that the Commissioner of DEED may not execute an agreement unless funding is available and the commissioner has awarded a project grant.  Requires the Commissioner of DEED to notify the Commissioner of Revenue of the agreement and the identity of the employer, if the agreement provides for a tax credit.   

Subd. 4. [Allocation of limit]  Requires the Commissioner of DEED to allocate funding authority for tax credits or grants for projects on a first-come first-served basis. 

Subd. 5. [Application fee]   Provides that the Commissioner of DEED may charge an application fee of not more than $500 per applicant, to be deposited in the jobs tax credit account in the special revenue fund.  Amounts are appropriated from the fund for administration costs of the program. 

Section 3.  [Jobs tax credit]  Authorizes a tax credit for employers based on wages paid to a new employee and employer payroll taxes on wages paid to the new employee.  Requires the Commissioner of Management and Budget (MMB) to establish accounts necessary to administer the credit.  Requires that a new employee must receive full credit for the amount of employer payroll taxes withheld.  Provides that employer credits cease when the grant amount has been repaid, but shall not be later than ten years after the execution of the project agreement.  

Section 4.  [Program funding; appropriation]  Requires that funding for the program must be through grants as provided in the bill.  Appropriates $10 million per fiscal year to the Commissioner of MMB for grants and credits. 

Section 5.  [Funding limit; report; expiration]  Prohibits the Commissioner of DEED from entering into agreements if reimbursements exceed the $10 million appropriated in section 4.  Requires DEED to submit a report to the Governor and Legislature by February 1, 2016, including the amount of grants issued, the number of individuals receiving training under the program, the number of new hires attributable to the program; an analysis of the effectiveness of the program in encouraging employment, and other information as the commissioner determines.  The commissioner may not enter into agreements authorizing new training after June 30, 2018.

NBP:dv 

 

 

 
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