File No. 557

House of Representatives, April 19, 2006

The Committee on Finance, Revenue and Bonding reported through REP. STAPLES of the 96th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT CONCERNING ELIGIBILITY FOR THE APPRENTICESHIP TRAINING TAX CREDIT.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsection (c) of section 12-217g of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2006):

(c) There shall be allowed a credit for any taxpayer against the tax imposed under this chapter for any income year with respect to wages paid to apprentices in the construction trades by such taxpayer in such year that the apprentice and taxpayer participate in a qualified four-year apprenticeship training program, as described in this section, which [(1) is jointly administered by labor and management trustees, (2) is administered pursuant to 29 USC Section 186(c), (3)] (1) is certified in accordance with regulations adopted by the Labor Commissioner, and [(4)] (2) is registered with the Connecticut State Apprenticeship Council established under section 31-22n. The tax credit shall be in an amount equal to two dollars per hour multiplied by the total number of hours worked during the income year by apprentices, provided the amount of credit allowed for any income year with respect to each such apprentice may not exceed one thousand dollars or fifty per cent of actual wages paid in such income year for such apprenticeship, whichever is less.

The following fiscal impact statement and bill analysis are prepared for the benefit of members of the General Assembly, solely for the purpose of information, summarization, and explanation, and do not represent the intent of the General Assembly or either House thereof for any purpose:

OFA Fiscal Note

State Impact:

Note: GF=General Fund

Municipal Impact: None

Explanation

The bill is anticipated to result in a revenue loss (less than $200,000/yr) to the corporation business tax. The estimate is based on the assumption that only a few construction companies would be eligible for the credit program because most construction companies are not incorporated in such a way that subjects them to the corporation business tax (most are likely organized as S-corporations, LLCs, or LPs)

Of the 50% (in terms of liability) of all corporations that were subject few companies list their primary business as either: (1) building construction – general contractors and operative builders, (2) heavy construction other than building construction – contractors, or (3) construction – special trade contractors.

The table below shows the number of companies and amount claimed under the Apprenticeship Credit program.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.



OLR Bill Analysis

sHB 5023

AN ACT CONCERNING ELIGIBILITY FOR THE APPRENTICESHIP TRAINING TAX CREDIT.

SUMMARY:

This bill extends to open (nonunion) shops the corporation tax credit for hiring construction trade apprentices that is now available only to businesses that sponsor a four-year apprenticeship program jointly with a union. To qualify currently for a credit, an apprenticeship program must provide between 4,000 and 8,000 hours of training and be (1) administered according to a federal labor-relations law, (2) certified by the labor commissioner, and (3) registered with the State Apprenticeship Council. The bill eliminates the reference to the federal law.

The credit is for up to $1,000 per year per apprentice or 50% of the apprentice's annual wages, whichever is less. A business's total annual credit cannot exceed its tax liability for the year.

EFFECTIVE DATE: July 1, 2006

COMMITTEE ACTION

Higher Education and Employment Advancement Committee

Joint Favorable Substitute Change of Reference

Finance, Revenue and Bonding Committee

Joint Favorable