House Study Bill 719 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON ECONOMIC GROWTH BILL BY CHAIRPERSON THOMAS) A BILL FOR An Act relating to economic development by providing for the 1 administration of certain withholding tax credits, the 2 allocation of funds for certain job training programs, 3 and the terms required in certain job training project 4 agreements. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 6231HC (1) 83 tw/sc

H.F. _____ DIVISION I 1 WITHHOLDING TAX CREDITS 2 Section 1. Section 15A.7, unnumbered paragraph 1, Code 3 Supplement 2009, is amended to read as follows: 4 In order to promote the creation of additional high-quality 5 new jobs within the state, an agreement under section 260E.3 6 may include a provision for a supplemental new jobs credit from 7 withholding from jobs created under the agreement. As used in 8 this section, “new jobs credit from withholding” means the same 9 as defined in section 260E.2. A provision in an agreement for 10 which a supplemental credit from withholding is included shall 11 provide for the following: 12 Sec. 2. Section 15A.9, subsection 3, paragraph a, 13 unnumbered paragraph 1, Code Supplement 2009, is amended to 14 read as follows: 15 At the request of the primary business or a supporting 16 business, an agreement authorizing a supplemental new 17 jobs credit from withholding from jobs within the zone 18 may be entered into between the department of revenue, a 19 community college, and the primary business or a supporting 20 business. As used in this subsection, “new jobs credit from 21 withholding” means the same as defined in section 260E.2. The 22 agreement shall be for program services for an additional job 23 training project, as defined in chapter 260E. The agreement 24 shall provide for the following: 25 Sec. 3. Section 15E.197, subsection 4, Code Supplement 26 2009, is amended to read as follows: 27 4. For purposes of this section, “eligible business” means 28 a business which has been approved to receive incentives and 29 assistance by the department of economic development pursuant 30 to application as provided in section 15E.195 , and “new jobs 31 credit from withholding” means the same as defined in section 32 260E.2 . 33 Sec. 4. Section 260E.2, subsection 11, Code 2009, is amended 34 to read as follows: 35 -1- LSB 6231HC (1) 83 tw/sc 1/ 15

H.F. _____ 11. “New jobs credit from withholding” means the 1 credit procedure for crediting to employers the amount of 2 withholding tax payments made by the department of revenue to 3 community colleges as provided in section 260E.5. 4 Sec. 5. Section 260E.5, subsections 2, 4, 5, and 6, Code 5 2009, are amended to read as follows: 6 2. a. The employer shall remit the total amount of 7 withholding payments due pursuant to section 422.16 to the 8 department of revenue. An amount equal to one and one-half 9 percent of the gross wages paid by the employer to each 10 employee participating in a project shall be credited from the 11 payment made by an employer pursuant to section 422.16 . If 12 the amount of the withholding by the employer is less than one 13 and one-half percent of the gross wages paid to the employees 14 covered by the agreement, then the employer shall receive a 15 credit against other withholding taxes due by the employer. 16 The employer shall remit the amount of the credit quarterly 17 in the same manner as withholding payments are reported to 18 the department of revenue, withholding tax payments to be 19 made by the department of revenue on a quarterly basis to the 20 account of each community college to be allocated to and when 21 collected paid into a special fund of the community college to 22 pay the principal of and interest on certificates issued by the 23 community college to finance or refinance, in whole or in part, 24 the project. 25 b. When the principal and interest on the certificates have 26 been paid, the employer credits department of revenue shall 27 cease and any money to credit withholding tax moneys to the 28 account of the community college. All moneys received after 29 the certificates have been paid shall be remitted to the 30 treasurer of state to be deposited in the general fund of the 31 state. 32 4. The employer shall certify to the department of revenue 33 that the new jobs credit in from withholding is in accordance 34 with an agreement and shall provide any other information the 35 -2- LSB 6231HC (1) 83 tw/sc 2/ 15

H.F. _____ department may require. 1 5. A In order to receive the moneys credited to a community 2 college’s account, the community college shall certify to 3 the department of revenue the amount of new jobs credit 4 from withholding an employer has remitted to be allocated 5 and paid to the special fund and shall provide any other 6 information the department may require. Upon reviewing the 7 required information and verifying that the certified amount 8 is correct, the department of revenue shall pay the certified 9 amount into the special fund of the community college. 10 6. An employee participating in a project will must receive 11 full credit for the amount withheld as provided in section 12 422.16. 13 Sec. 6. Section 260G.2, subsection 13, Code 2009, is amended 14 to read as follows: 15 13. “Program job credit” means the credit procedure for 16 crediting to employers the amount of withholding tax payments 17 made by the department of revenue to community colleges as 18 provided in section 260G.4A. 19 Sec. 7. Section 260G.4A, subsections 2 through 5, Code 2009, 20 are amended to read as follows: 21 2. a. Eligibility for program job credits shall be 22 based on certification of program job positions and program 23 job wages by the employer at the time established in the 24 agreement. An employer shall remit the total amount of 25 withholding payments due pursuant to section 422.16 to the 26 department of revenue. An amount up to ten percent of the 27 gross program job wage as certified by the employer in the 28 agreement shall be credited from the total payment made by 29 an employer pursuant to section 422.16 . The employer shall 30 receive a credit against all withholding taxes due by the 31 employer regardless of whether or not the withholding from the 32 employer of current program job wages is less than ten percent. 33 The employer shall remit the amount of the credit quarterly in 34 the same manner as withholding payments are reported to the 35 -3- LSB 6231HC (1) 83 tw/sc 3/ 15

H.F. _____ department of revenue, withholding tax payments to be made by 1 the department of revenue on a quarterly basis to the account 2 of each community college to be allocated to and when collected 3 paid into a special fund of the community college to pay, in 4 part, the program costs. 5 b. When the program costs have been paid, the employer 6 credits department of revenue shall cease and any to credit 7 withholding tax moneys to the account of the community college. 8 All moneys received after the program costs have been paid 9 shall be remitted to the treasurer of state to be deposited in 10 the general fund of the state. 11 3. The employer shall certify to the department of revenue 12 that the program job credit is in accordance with the agreement 13 and shall provide any other information the department may 14 require. 15 4. A In order to receive the moneys credited to a community 16 college’s account, the community college shall certify to 17 the department of revenue that the amount of the program job 18 credit to be allocated and paid to the special fund is correct 19 and in accordance with an agreement and shall provide any other 20 information the department may require. Upon reviewing the 21 required information and verifying that the certified amount 22 is correct, the department of revenue shall pay the certified 23 amount into the special fund of the community college. 24 5. Employees from of an employer participating in an 25 agreement shall must receive full credit for the amount 26 withheld as provided in section 422.16. 27 Sec. 8. Section 403.19A, subsection 1, Code Supplement 28 2009, is amended by adding the following new paragraph: 29 NEW PARAGRAPH . Og. “Targeted jobs withholding credit” 30 means the procedure for crediting to employers the amount of 31 withholding tax payments made by the department of revenue to a 32 pilot project city as provided in subsection 3. 33 Sec. 9. Section 403.19A, subsection 3, paragraphs a, b, 34 e, f, g, and h, Code Supplement 2009, are amended to read as 35 -4- LSB 6231HC (1) 83 tw/sc 4/ 15

H.F. _____ follows: 1 a. A pilot project city may provide by ordinance for 2 the deposit into a designated account in the special fund 3 described in section 403.19, subsection 2 , of the targeted 4 jobs withholding credit described in this section and an 5 employer may enter into a withholding agreement pursuant to 6 this subsection. Such an agreement may include a provision 7 for a targeted jobs withholding credit . The targeted jobs 8 withholding credit shall be based upon the wages paid to 9 employees pursuant to a withholding agreement. 10 b. The employer shall remit the total amount of withholding 11 payments due pursuant to section 422.16 to the department 12 of revenue. An amount equal to three percent of the gross 13 wages paid by an employer to each employee under a withholding 14 agreement shall be credited from the payment made by the 15 employer pursuant to section 422.16 . If the amount of the 16 withholding by the employer is less than three percent of the 17 gross wages paid to the employees covered by the withholding 18 agreement, the employer shall receive a credit against other 19 withholding taxes due by the employer or may carry the credit 20 forward for up to ten years or until depleted, whichever is the 21 earlier. The employer shall remit the amount of the credit 22 quarterly, in the same manner as withholding payments are 23 reported to the department of revenue, withholding tax payments 24 to be made by the department of revenue on a quarterly basis to 25 the account of each pilot project city to be allocated to and 26 when collected paid into a designated account in the special 27 fund for the urban renewal area in which the targeted jobs are 28 located. All amounts so deposited shall be used or pledged by 29 the pilot project city for an urban renewal project related to 30 the employer pursuant to the withholding agreement. 31 e. (1) The employer shall certify to the department 32 of revenue that the targeted jobs withholding credit is in 33 accordance with the withholding agreement and shall provide 34 any other information the department may require. Notice of 35 -5- LSB 6231HC (1) 83 tw/sc 5/ 15

H.F. _____ any withholding agreement shall be provided promptly to the 1 department of revenue following execution of the agreement by 2 the pilot project city and the employer. 3 (2) Following termination of the withholding agreement, 4 the employer credits department of revenue shall cease and any 5 money to credit withholding tax moneys to the account of the 6 pilot project city. All moneys received by the pilot project 7 city after termination shall be remitted to the treasurer of 8 state to be deposited into the general fund of the state. 9 Notice shall be provided promptly to the department of revenue 10 following termination. 11 f. If the employer ceases to meet the requirements of the 12 withholding agreement, the agreement shall be terminated and 13 any targeted jobs withholding tax credits for the benefit 14 of payments credited to the employer employer’s obligations 15 under the agreement shall cease. However, in regard to the 16 number of new jobs that are to be created, if the employer 17 has met the number of new jobs to be created pursuant to 18 the withholding agreement and subsequently the number of new 19 jobs falls below the required level, the employer shall not 20 be considered as not meeting the new job requirement until 21 eighteen months after the date of the decrease in the number of 22 new jobs created. 23 g. A In order to receive the moneys credited to a pilot 24 project city’s account, the pilot project city shall certify 25 to the department of revenue the amount of the targeted jobs 26 withholding credit an employer has remitted to the city to 27 be allocated and paid to the special fund as provided for 28 under the agreement and shall provide any other information 29 the department may require. Upon reviewing the required 30 information and verifying that the certified amount is correct, 31 the department of revenue shall pay the certified amount into 32 the designated account of the special fund of the urban renewal 33 area in which the targeted jobs are located. 34 h. An employee whose wages are subject to a withholding 35 -6- LSB 6231HC (1) 83 tw/sc 6/ 15

H.F. _____ agreement shall must receive full credit for the amount 1 withheld as provided in section 422.16. 2 Sec. 10. Section 403.19A, subsection 3, paragraph j, 3 subparagraph (1), Code Supplement 2009, is amended to read as 4 follows: 5 (1) A pilot project city entering into a withholding 6 agreement shall arrange for matching local financial support 7 for the project. The local match required under this paragraph 8 “j” shall be in an amount equal to one dollar for every dollar 9 of targeted jobs withholding credit tax payments received by 10 the pilot project city from the department of revenue . 11 Sec. 11. Section 422.16A, Code 2009, is amended to read as 12 follows: 13 422.16A Job training withholding —— certification and 14 transfer. 15 Upon the completion by a business of its repayment 16 obligation of the payment of program costs for a training 17 project funded under chapter 260E, including a job training 18 project funded under section 15A.8 or repaid in whole or in 19 part by the supplemental new jobs credit from withholding 20 under section 15A.7 or section 15E.197, the sponsoring 21 community college shall report to the department of economic 22 development the amount of withholding paid by the business tax 23 payments credited by the department of revenue to the account 24 of the community college during the final twelve months of 25 withholding payments. The department of economic development 26 shall notify the department of revenue of that the amount 27 reported by the community college . The department of 28 revenue shall credit to the workforce development fund account 29 established in section 15.342A twenty-five percent of that 30 amount each quarter for a period of ten years. If the amount 31 of withholding from the business or employer credited by 32 the department of revenue is insufficient, the department 33 of revenue shall prorate the quarterly amount credited to 34 the workforce development fund account. The maximum amount 35 -7- LSB 6231HC (1) 83 tw/sc 7/ 15

H.F. _____ from all employers of withholding tax credit which shall be 1 transferred to the workforce development fund account in any 2 year is four million dollars. 3 Sec. 12. APPLICABILITY. 4 1. This division of this Act applies to all agreements 5 concerning withholding tax credit payments entered into 6 pursuant to the provisions of chapters 260E and 260G and 7 section 403.19A before, on, or after the effective date of this 8 division of this Act. 9 2. An agreement entered into prior to the effective date of 10 this division of this Act shall be administered in compliance 11 with the provisions of this division of this Act, and the 12 parties to such agreements shall amend the agreements as 13 necessary. 14 DIVISION II 15 JOB TRAINING FUNDS 16 Sec. 13. Section 15.343, subsection 3, Code 2009, is amended 17 by striking the subsection and inserting in lieu thereof the 18 following: 19 3. At least three million dollars of the moneys in the 20 workforce development fund shall be allocated for purposes of 21 the job training fund pursuant to section 260F.6. 22 Sec. 14. Section 260C.44, Code 2009, is amended to read as 23 follows: 24 260C.44 Apprenticeship programs. 25 1. Each community college is authorized to establish or 26 contract for the establishment of apprenticeship programs 27 for apprenticeable occupations. Any apprenticeship program 28 established under this section shall comply with requirements 29 established by the United States department of labor, 30 bureau of apprenticeship and training. Participation in an 31 apprenticeship program or apprenticeship agreement by an 32 apprenticeship sponsor shall be on a voluntary basis. 33 2. For purposes of this section, the following terms have 34 the following meanings: 35 -8- LSB 6231HC (1) 83 tw/sc 8/ 15

H.F. _____ a. “apprenticeship “Apprenticeship program” means a plan, 1 registered with the United States bureau of apprenticeship 2 and training which contains the terms and conditions for the 3 qualification, recruitment, selection, employment, and training 4 of apprentices, including the requirement for a written 5 apprenticeship agreement. 6 b. For purposes of this section , “apprenticeship 7 “Apprenticeship sponsor” means a person operating an 8 apprenticeship program or in whose name an apprenticeship 9 program is being operated, registered, or approved. 10 c. For purposes of this section , “apprenticeable 11 “Apprenticeable occupation” means an occupation approved for 12 apprenticeship by the United States department of labor, bureau 13 of apprenticeship and training. 14 d. For purposes of this section , 15 “apprentice” “Apprentice” means a person who is at least sixteen 16 years of age, except where a higher minimum age is required by 17 law, who is employed in an apprenticeable occupation, and is 18 registered with the United States department of labor, bureau 19 of apprenticeship and training. 20 Sec. 15. Section 260F.2, subsection 11, Code 2009, is 21 amended to read as follows: 22 11. “Project” means a training arrangement which is the 23 subject of an agreement entered into between the community 24 college and a business to provide program services. “Project” 25 also means a department-sponsored training arrangement 26 which is sponsored by the department and administered under 27 sections section 260F.6A and 260F.6B . 28 Sec. 16. Section 260F.6, Code 2009, is amended by adding the 29 following new subsection: 30 NEW SUBSECTION . 4. Of the moneys in the job training fund, 31 at least thirty percent shall be used for purposes of funding 32 new or statewide apprenticeship programs. For purposes of 33 this section, “apprenticeship program” has the same meaning as 34 defined in section 260C.44. 35 -9- LSB 6231HC (1) 83 tw/sc 9/ 15

H.F. _____ Sec. 17. REPEAL. Section 260F.6B, Code 2009, is repealed. 1 DIVISION III 2 JOB TRAINING PROJECT AGREEMENTS 3 Sec. 18. Section 260C.66, Code 2009, is amended to read as 4 follows: 5 260C.66 Reports to general assembly. 6 1. The board of directors of each community college shall 7 determine, in consultation with the legislative services 8 agency, the financial information to be included in line item 9 budget information for projects funded by the issuance of 10 bonds or notes under this chapter and shall submit the line 11 item budget information to the general assembly as requested. 12 The board of directors of each community college shall submit 13 quarterly reports to the general assembly concerning the 14 projects funded by the issuance of bonds or notes under this 15 chapter as follows: 16 1. a. Identification of both undercharges and overcharges 17 for line items of projects. 18 2. b. Identification of contracts in which any line item 19 for a project exceeds the adopted budget for that line item by 20 ten percent or more. 21 3. c. Identification of complaints received by an 22 institution regarding the construction of a project. 23 d. Identification of all job training projects, including 24 an assessment of the status of each project. The assessment 25 shall specify whether a project is in compliance with the terms 26 of the project agreement and shall list the projects that are 27 terminating. For purposes of this section, “project” means 28 a training arrangement which is the subject of an agreement 29 entered into between a community college and a business or an 30 employer to provide program services and includes projects 31 specified in agreements entered into pursuant to chapters 260E, 32 260F, and 260G. 33 2. If the board of directors of a community college 34 approves a change in the amount of the line item of a 35 -10- LSB 6231HC (1) 83 tw/sc 10/ 15

H.F. _____ budget for a project, the change shall be transmitted to the 1 appropriations committees of the house of representatives 2 and senate, while the general assembly is in session, and to 3 the legislative council, when the general assembly is not in 4 session, for review. 5 Sec. 19. Section 260E.3, Code 2009, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 6. a. An agreement shall last for a 8 period of five years, unless an earlier date of termination is 9 mutually agreed upon, shall specify the number of employees to 10 be trained within three years of the signing of the agreement, 11 and shall require that a certain number of the employees who 12 will have been trained be maintained throughout the duration 13 of the agreement. 14 b. An agreement shall require an employer to report annually 15 to the community college the total number of employees trained 16 and the number of trained employees still employed as of 17 the end of the third, fourth, and fifth years of the period 18 specified in the agreement. 19 c. An agreement shall provide for a date of termination 20 not to exceed five years from the date of the agreement, and a 21 project shall not be extended beyond the date of termination 22 specified in the agreement. 23 Sec. 20. Section 260F.3, Code 2009, is amended to read as 24 follows: 25 260F.3 Agreement. 26 1. A community college may enter into an agreement to 27 establish a project. 28 2. An agreement shall provide for , but is not limited 29 to , the following: 30 1. a. Date of agreement. 31 2. b. Anticipated number of employees to be trained within 32 three years of the signing of the agreement . 33 3. c. Estimated cost of training. 34 4. d. Anticipated dates of commencement and termination of 35 -11- LSB 6231HC (1) 83 tw/sc 11/ 15

H.F. _____ training. 1 5. e. Other criteria established by the department. 2 3. An agreement shall last for a period of five years, 3 unless an earlier date of termination is mutually agreed upon, 4 and shall require that a certain number of the employees 5 who will have been trained during the three-year period be 6 maintained throughout the duration of the agreement. 7 4. An agreement shall require an employer to report annually 8 to the community college the total number of employees trained 9 and the number of trained employees still employed as of 10 the end of the third, fourth, and fifth years of the period 11 specified in the agreement. 12 5. An agreement shall provide for a date of termination 13 not to exceed five years from the date of the agreement, and a 14 project shall not be extended beyond the date of termination 15 specified in the agreement. 16 Sec. 21. Section 260F.9, Code 2009, is amended to read as 17 follows: 18 260F.9 Job retention program. 19 1. The department of economic development shall administer 20 the job retention program. The department shall adopt rules 21 pursuant to chapter 17A necessary for the administration of 22 this section. By January 15 of each year, the department 23 shall submit a written report to the general assembly and the 24 governor regarding the activities of the job retention program 25 during the previous calendar year. 26 2. A community college and the department may enter into an 27 agreement to establish a job retention project. 28 3. A job retention project agreement shall include , but not 29 be limited to , the following: 30 a. The date of the agreement. 31 b. The anticipated number of employees to be trained within 32 three years of the signing of the agreement . 33 c. The estimated cost of training. 34 d. A statement regarding the number of employees employed 35 -12- LSB 6231HC (1) 83 tw/sc 12/ 15

H.F. _____ by the participating business on the date of the agreement 1 which must equal at least the lesser of one thousand employees 2 or four percent or more of the county’s resident labor force 3 based on the most recent annual labor force statistics from the 4 department of workforce development. 5 e. A commitment that the participating business shall invest 6 at least fifteen million dollars to retool the workplace and 7 upgrade the facilities of the participating business. 8 f. A commitment that the participating business shall not 9 move the business operation out of this state or close the 10 business operation for at least ten years following the date 11 of the agreement. 12 g. Other criteria established by the department of economic 13 development. 14 4. A job retention project agreement shall last for a 15 period of five years, unless an earlier date of termination 16 is mutually agreed upon, and shall require that a certain 17 number of the employees who will have been trained during the 18 three-year period be maintained throughout the duration of the 19 agreement. 20 5. An agreement shall require an employer to report annually 21 to the community college the total number of employees trained 22 and the number of trained employees still employed as of 23 the end of the third, fourth, and fifth years of the period 24 specified in the agreement. 25 6. An agreement shall provide for a date of termination 26 not to exceed five years from the date of the agreement, and a 27 project shall not be extended beyond the date of termination 28 specified in the agreement. 29 3. 7. A job retention project agreement entered into 30 pursuant to this section must be approved by the board of 31 trustees of the applicable community college, the department of 32 economic development, and the participating business. 33 Sec. 22. Section 260G.3, subsection 5, Code 2009, is amended 34 by striking the subsection and inserting in lieu thereof the 35 -13- LSB 6231HC (1) 83 tw/sc 13/ 15

H.F. _____ following: 1 5. a. An agreement shall last for a period of five years, 2 unless an earlier date of termination is mutually agreed upon, 3 shall specify the number of employees to be trained within 4 three years of the signing of the agreement, and shall require 5 that a certain number of the employees who will have been 6 trained be maintained throughout the duration of the agreement. 7 b. An agreement shall require an employer to report annually 8 to the community college the total number of employees trained 9 and the number of trained employees still employed as of 10 the end of the third, fourth, and fifth years of the period 11 specified in the agreement. 12 c. An agreement shall provide for a date of termination 13 not to exceed five years from the date of the agreement, and a 14 project shall not be extended beyond the date of termination 15 specified in the agreement. 16 EXPLANATION 17 This bill amends certain withholding tax credit programs, 18 changes the allocation of funds for certain job training 19 programs, and provides for additional requirements in certain 20 job training project agreements. 21 Division I of the bill amends certain withholding tax credit 22 programs related to jobs training and economic development. 23 Currently, the industrial new jobs training program, the 24 accelerated career education program, and the targeted jobs 25 withholding program all allow a certain percentage of the 26 withholding taxes due from businesses to the state to be 27 remitted directly to either community colleges or pilot 28 project cities. Division I amends the programs to require that 29 businesses pay their withholding taxes to the department of 30 revenue and that community colleges and pilot project cities 31 certify to the department the amount of the credit due them 32 under the programs. The department is required to verify those 33 amounts before remitting the credit amounts. 34 Division I applies to existing and future agreements, 35 -14- LSB 6231HC (1) 83 tw/sc 14/ 15

H.F. _____ requiring amendments to existing agreements in conformance with 1 the division. 2 Division II of the bill eliminates the high technology 3 apprenticeship program provided for in section 260F.6B, 4 requires that at least 30 percent of the moneys in the job 5 training fund be used for purposes of funding new or statewide 6 apprenticeship programs, and makes conforming amendments. 7 Division III of the bill requires the boards of directors 8 of the community colleges, in their quarterly reports to 9 the general assembly, to identify all job training projects 10 and assess the status of each project by specifying whether 11 each project is in compliance with the terms of its project 12 agreement. 13 Division III also requires that job training project 14 agreements entered into under the provisions of chapters 260E, 15 260F, and 260G specify the following: (1) that the agreement 16 will last for a period of no more than five years; (2) the 17 number of employees to be trained within three years of the 18 signing of the agreement; (3) that a certain number of the 19 employees who will have been trained in those three years be 20 maintained throughout the five-year agreement period; (4) that 21 an employer must report annually to the community college the 22 total number of employees trained and the number of trained 23 employees still employed as of the end of the third, fourth, 24 and fifth years of the agreement period; and (5) that a project 25 shall not be extended beyond the date of termination specified 26 in the agreement. 27 -15- LSB 6231HC (1) 83 tw/sc 15/ 15