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SPONSOR: |
|
DATE
TYPED: |
|
HB |
460 |
||
SHORT
TITLE: |
Career Preparation Education Tax Credit |
SB |
|
||||
|
ANALYST: |
Neel |
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REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
FY03 |
FY04 |
|
|
|
|
($450.0) |
($450.0) |
Recurring |
General
Fund |
|
|
|
|
|
(Parenthesis
( ) Indicate Revenue Decreases)
Responses
Received From:
State Department of Education (SDE)
SUMMARY
Synopsis of Bill
House Bill 460 amends the Income Tax Act to
provide income and corporate income tax credits for the employment of youth
participating in career preparation education programs. The business claiming the credit can claim up
to 50 percent of the gross wages paid to qualified students during any one-tax
year. The business is limited to a
maximum of ten students employed for up to 320 hours per year for three years
per students. The credit has a ceiling
of $12.0 in any one-tax year.
TRD is required to issue job mentorship tax
credit certificates upon request by any accredited
Significant
Issues
Under
the proposed program, unused credits may be carried forward for three years.
They may be claimed by “
The
Taxation and Revenue Department is to allocate certificates annually to the
state School-to-Work Director. The School-to-Work Director is to distribute the
certificates to administrators of certified school-to-career programs. The
certificates are to serve as evidence of eligibility for the job-mentorship tax
credit. The number of certificates issued to a single school-to-career program
administrator is to equal the number of qualified school-to-career participants
in the particular program on May 1 of each calendar year.
FISCAL
IMPLICATION
According
to TRD notes the following assumptions:
·
The cost to a business of hiring a student
for 320 hours - eight 40-hour weeks at, for example $8 per hour would be
reduced from $2,560 to $1,280 after taxes under the proposed measure and
generate $1280 in tax credits.
·
The fiscal impact assumes 350 students
participate in the program and generate an average 320 hours in credits.
Although credits against personal income tax obligations from the job mentorship
program totaled only about $40,000 annually, statistics on the number of
credits taken against the corporate income tax were probably much higher than
amounts taken against personal income tax liability.
TECHNICAL
ISSUES
·
According to the New Mexico Department of Education
(SDE), the School-to-Work Act on which the original job mentorship credit
program was based is no longer in effect. SDE therefore recommends modifying
language in the proposal pertaining to the school to work certificates that is
similar to language in HB-460 and HB-572 stating “The Department shall issue
job mentorship tax credit certificates upon request to any accredited
·
The
apparent intent of the proposal is to allow program administrators to
distribute the certificates to individuals and businesses that wish to claim
the credits. Adding language to the proposal that clarifies this issue might be
appropriate.
OTHER SUBSTANTIVE ISSUES
The Job Mentorship Tax Credit was signed
into law in the spring of 1999 as a three-year pilot project, beginning in the
summer 2000, to encourage New Mexico employers to partner with educators to
provide high-quality work-based learning experiences through summer employment
for youth participating in certified school-to-careers programs. Implementation highlights included:
The proposed legislation carries forward
these elements except for the limit on the number of annual participants.
The bill limits
participation to students attending secondary schools. Businesses participating in work-based
learning opportunities that employ students who attend the state’s
postsecondary institutions would not be eligible for this credit.
SS/ls/njw