By Brandon Moseley
Alabama Political Reporter
On Wednesday, February 10, the Alabama Senate Finance & Taxation Education Committee held a public hearing on Senate Bill 90, which is sponsored by Committee Chairman Arthur Orr (R-Decatur).
This bill would provide an income tax credit of $1,000 to an employer, for each qualified apprentice of an employer, and would also cap the cumulative tax credits allowed at $3,000,000 for the first two tax years following the passage of the bill, and $5,000,000 for each tax year thereafter. This bill would also require the Workforce Development Division of the Department of Commerce to provide an annual report to certain legislative committees, regarding the effectiveness of the program.
The State Director of the National Federation of Independent Businesses, Rosemary Elebash, spoke in favor of the bill. Director Elebash said, “I have heard from my members about the lack of a skilled workforce. Senator Arthur Orr went to South Carolina and looked at how they are using apprenticeships.”
Elebash said that it is important to getting young people in the workforce and make them productive early on. The number one job opening in Alabama is for truck drivers. This is a very good idea. It would be good for both small employers and larger employers.
Senator Trip Pittman (R-Montrose) said that this is such a good idea, that maybe we should squeeze all of those incentives to find the money for this.
Sen. Orr said, “This committee reported this out last year.”
Senator Quinton Ross (D) said, “We do a lot of these incentives and need to make sure that they are working.”
Alabama Industrial Development and Training Director Ed Castille said that US Secretary of Labor Thomas Perez is a huge proponent of apprenticeships. He said that this is a third of college without the debt.
State Senator Paul Bussman (R-Cullman) asked about what occupations are targeted for the credit.
Castille said that we are focused on manufacturing, transportation, healthcare, construction, and IT.
Sen. Bussman said, “I have some large concerns about this bill…How long does it take an apprentice to get through the program?”
Castille said, Typically 3 or 4 years.
Sen. Bussman said, “We have no idea how this is going to work and after two years we are going to automatically bump this up to $5 million. The Legislature would have to go back and try to stop it which is harder than me stopping it now.” Bussman suggested making the increase conditional.
Sen. Orr said, “I have no problem with kicking the tires before we bump up the program.”
Sen. Bussman asked who has the control of the program.
Director Castille said, “We will work directly with the Chancellors office of the two year college system. Control of the program technically lies with the company and must follow a structured set of rules which come from the US department of Commerce. The company can do the on the job training. The college does the classroom instruction.”
Sen. Bussman complained, “We have no control of the rules.” Lots of time the rules are not what was the legislative intent…The only other concern I have with this bill is that it is not outcome oriented at all. If I hire five apprentices and they fail out of the program I still get my $5000 deduction. There is no incentive for success. We needs some claw back provision. I worry about the people who rip-off the system.”
Castille said that would be one of our jobs: to manage that program.
State Senator Hank Sanders (D-Selma) asked: “With a $3 million cap: Is this first come first served? The reason that I am concerned is that the larger companies will find out about it and the smaller companies will find out about it and it will be too late for them to participate.”
Castille said that AIDT would get the word out to small businesses with help from Ms. Elebash and the NFIB.
Sen. Orr said that he will drop a bill tomorrow that raises the reporting requirements of all incentives.
Molly Cagle with Manufacture Alabama said, “We are very supportive of this…We hear from our members that if is getting harder and harder to fill those high wage jobs.”
Susan Kennedy with the AEA (Alabama Education Association) said, “I just wanted to point out that there are some tweaks that the legislature could use to replenish the education trust fund. For example, if you buy a Coca~Cola from a vending machine, there is a different sales tax rate than if you bought that drink from the store. Something like that might be a way to pay for some of these programs.”
The committee gave a favorable report to the bill. The bill will head next to the full Senate.