2006 Legislation
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HOUSE BILL NO. 405 – Workforce development training tax


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Bill Status

H0405.......................................by COMMERCE AND HUMAN RESOURCES
WORKFORCE DEVELOPMENT TRAINING TAX - Amends existing law to extend the
sunset date on the Workforce Development Training Fund Training Tax for an
additional five years - from January 1, 2007, to January 1, 2012.
01/18    House intro - 1st rdg - to printing
01/19    Rpt prt - to Com/HuRes
01/25    Rpt out - rec d/p - to 2nd rdg
01/26    2nd rdg - to 3rd rdg
01/30    3rd rdg - PASSED - 66-0-4
      AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer, Bell,
      Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford, Cannon,
      Chadderdon, Clark, Collins, Crow, Denney, Ellsworth, Eskridge,
      Field(18), Field(23), Garrett, Hart, Harwood, Henbest(Bock),
      Henderson, Jaquet, Kemp, Lake, LeFavour, Loertscher, Martinez,
      Mathews, McGeachin, McKague, Miller, Mitchell, Moyle, Nielsen,
      Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo, Roberts, Rusche,
      Rydalch, Sali, Sayler, Shepherd(2), Shepherd(8), Shirley, Skippen,
      Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail, Wills,
      Wood, Mr. Speaker
      NAYS -- None
      Absent and excused -- Bedke, Deal, Edmunson, Schaefer
    Floor Sponsor - Pasley-Stuart
    Title apvd - to Senate
01/31    Senate intro - 1st rdg - to Com/HuRes
02/03    Rpt out - rec d/p - to 2nd rdg
02/06    2nd rdg - to 3rd rdg
02/10    3rd rdg - PASSED - 34-0-1
      AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
      Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
      Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough,
      Langhorst, Little, Lodge, Malepeai, Marley, McGee, Pearce,
      Richardson, Schroeder, Stegner, Stennett, Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- McKenzie
    Floor Sponsor - Goedde
    Title apvd - to House
02/13    To enrol
02/14    Rpt enrol - Sp signed
02/15    Pres signed
02/16    To Governor
02/17    Governor signed
         Session Law Chapter 13
         Effective: 07/01/06; 1/1/12 Sunset Clause

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   Second Regular Session - 2006
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 405
  1                                        AN ACT
  4        FIVE YEARS.
  5    Be It Enacted by the Legislature of the State of Idaho:
  6        SECTION 1.  That Section 72-1347B, Idaho Code, be, and the same is  hereby
  7    amended to read as follows:
  8        72-1347B.  WORKFORCE  DEVELOPMENT  TRAINING FUND. (1) There is established
  9    in the state treasury a special trust fund, separate and apart from all  other
 10    public  funds of this state, to be known as the workforce development training
 11    fund, hereinafter "training fund."  Except as provided  herein,  all  proceeds
 12    from  the training tax defined in subsection (4) of this section shall be paid
 13    into the training fund. The state treasurer shall  be  the  custodian  of  the
 14    training  fund and shall invest said moneys in accordance with law. Any inter-
 15    est earned on the moneys in the training fund shall be deposited in the train-
 16    ing fund. Moneys in the training fund shall be disbursed  in  accordance  with
 17    the  directions of the director. In any month when the unencumbered balance in
 18    the training fund exceeds six million dollars ($6,000,000), the excess  amount
 19    over  six  million dollars ($6,000,000) shall be transferred to the employment
 20    security reserve fund, section 72-1347A, Idaho Code. For the purposes of  this
 21    subsection  (1),  the unencumbered balance in the training fund is the balance
 22    in such fund reduced by the sum of:
 23        (a)  The amounts that  have  been  obligated  pursuant  to  fully-executed
 24        workforce development training fund contracts;
 25        (b)  The  amounts  that  have been obligated pursuant to letters of intent
 26        for proposed job training projects; and
 27        (c)  Any administrative costs related to the training fund  that  are  due
 28        and payable.
 29        (2)  All  moneys  in the training fund are perpetually appropriated to the
 30    director for expenditure in accordance with the provisions  of  this  section.
 31    The purpose of the training fund is to provide or expand training and retrain-
 32    ing  opportunities in an expeditious manner that would not otherwise exist for
 33    Idaho's workforce. The training fund is intended to  supplement,  but  not  to
 34    supplant  or compete with, money available through existing training programs.
 35    The moneys in the training fund shall be used for the following purposes:
 36        (a)  To provide training for skills necessary for specific economic oppor-
 37        tunities and industrial expansion initiatives;
 38        (b)  To provide training to upgrade the skills of currently employed work-
 39        ers at risk of being permanently laid off;
 40        (c)  For refunds of training taxes erroneously collected and deposited  in
 41        the workforce training fund;
 42        (d)  For all administrative expenses incurred by the department associated
 43        with  the  collection  of  the  training  tax and any other administrative
  1        expenses associated with the training fund.
  2        (3)  Expenditures from the training fund for purposes authorized in  para-
  3    graphs  (a) and (b) of subsection (2) of this section shall be approved by the
  4    director in consultation with  the office of the  governor,  based  on  proce-
  5    dures,  criteria and performance measures established by the council appointed
  6    pursuant to section 72-1336, Idaho Code. The activities funded  by the  train-
  7    ing fund will be coordinated with similar activities funded by the state divi-
  8    sion  of professional-technical education. Expenditures from the training fund
  9    for purposes authorized in paragraphs (c) and (d) of subsection  (2)  of  this
 10    section shall be approved by the director. The director shall pay all approved
 11    expenditures  as long as the training fund has a positive balance. The council
 12    shall report annually to the governor  and  the  joint  finance-appropriations
 13    committee  the commitments and expenditures made from the training fund in the
 14    preceding fiscal year and the results of the activities funded by the training
 15    fund.
 16        (4)  A training tax is hereby imposed on all covered employers required to
 17    pay contributions pursuant to section 72-1350, Idaho Code, with the  exception
 18    of  deficit  employers  who  have  been assigned a taxable wage rate from rate
 19    class six pursuant to section 72-1350, Idaho Code. The training tax rate shall
 20    be equal to three percent (3%) of the taxable wage rate  then  in  effect  for
 21    each  eligible, standard-rated and deficit employer. The training tax shall be
 22    due and payable at the same time and in the same manner as contributions. This
 23    subsection is repealed effective January 1,  200712,  unless,  prior  to  that
 24    date,  the  Idaho  legislature approves the continuation of this subsection by
 25    repeal of this sunset clause.
 26        (5)  The provisions of this chapter which apply to the payment and collec-
 27    tion of contributions also apply to the payment and collection of the training
 28    tax, including the same calculations, assessments, method of  payment,  penal-
 29    ties,  interest,  costs,  liens,  injunctive relief, collection procedures and
 30    refund procedures. In the administration of the provisions  of  this  section,
 31    the  director is granted all rights, authority, and prerogatives granted under
 32    the provisions of this chapter. Moneys collected from an  employer  delinquent
 33    in  paying  contributions, reserve taxes  and  the training tax shall first be
 34    applied to any penalty and interest imposed pursuant to the provisions of this
 35    chapter and shall then be applied pro rata to delinquent contributions to  the
 36    employment  security  fund,  section  72-1346,  Idaho Code, delinquent reserve
 37    taxes to the reserve fund, section 72-1347A, Idaho Code, and delinquent train-
 38    ing taxes to the training fund. Any interest and penalties collected  pursuant
 39    to  this  subsection shall be paid into the state employment security adminis-
 40    trative and reimbursement fund, section 72-1348, Idaho Code, and any  interest
 41    or  penalties  refunded  under  this subsection shall be paid out of that same
 42    fund. Training taxes paid pursuant to this section shall not  be  credited  to
 43    the  employer's  experience  rating  account  and  may  not be deducted by any
 44    employer from the wages of individuals in its employ. All training taxes shall
 45    be deposited in the clearing account of the employment security fund,  section
 46    72-1346,  Idaho  Code,  for  clearance  only and shall not become part of such
 47    fund. After clearance, the moneys shall be  deposited  in  the  training  fund
 48    established in subsection (1) of this section.
 49        (6)  Administrative  costs related to the training fund shall be paid from
 50    the training fund in accordance with subsection (3) of this section.

Statement of Purpose / Fiscal Impact

                      STATEMENT OF PURPOSE
                            RS 15455
     This legislation will extend the sunset clause on the
Workforce Development Training Fund (WDTF) tax an additional five
years to January 1, 2012.  Without this amendment, the WDTF tax
will be repealed effective January 1, 2007. The WDTF was created
in 1996 and was reauthorized in 2001 as a recruiting tool to
attract new businesses to Idaho and to help Idaho businesses
expand. The Fund is used to finance training of employee skills
necessary for specific economic opportunities and industrial
expansion initiatives and for upgrading skills of employed
workers at risk of being permanently laid off.  The Fund is
administered by the Department of Commerce and Labor. The revenue
for the Fund is generated by decreasing the amount of
unemployment insurance taxes experience-rated employers must pay
by 3% and imposing a 3% training tax.

                          FISCAL NOTE

     There is no negative impact on the State General Fund.  If
the WDTF tax is not renewed, Idaho will lose a major economic
development tool for creating new jobs. Since its inception, the
WDTF has helped create almost 17,000 new jobs by providing grants
to train employees for these new positions. The income taxes and
unemployment insurance taxes paid on the salaries of these new
workers have contributed significantly to the State's General
Fund and to the Unemployment Insurance Trust Fund. Over time, the
3% reduction in unemployment insurance taxes could result in an
increase in overall unemployment insurance tax rates. However,
some revenue models show that the increase in unemployment
insurance tax receipts from the increased economic development
activity more than compensate for the negative impact of the 3%
unemployment insurance tax offset.

Name:     Bob Fick
Agency:   Commerce and Labor, Dept. of
Phone:    409-9818

STATEMENT OF PURPOSE/FISCAL NOTE                          H 405