Tax Credits, Workforce Lead Manufacturing Legislative Agenda
Manufacturing remains front and center on the Connecticut General Assembly’s 2022 agenda as the committee process comes to a close.
Lawmakers are considering a numerous bills this year, ranging from tax credits to workforce development measures, that will impact the sector.
Most notably, both the Commerce Committee and Finance, Revenue, and Bonding Committee unanimously passed SB 98, which allows pass-through entities to claim the manufacturing apprenticeship tax credit.
Under the current tax code, this credit can only be applied to the corporation tax, leaving thousands of small to midsize manufacturers across the state ineligible.
This bill is one of CBIA’s 2022 Rebuilding Connecticut policy priorities and is seen as one piece of the puzzle to help smaller manufacturers address the worker shortage crisis.
R&D Tax Credit
The Commerce Committee also approved SB 351, which requires the Commissioner of the Department of Economic and Community Development to study extending extend the research and development tax credits to small businesses.
DECD would report to the Commerce Committee no later than Jan. 1, 2023.
Unfortunately, the Finance Committee failed to act on HB 5488, which opens R&D tax credits to pass-through entities beginning Jan. 1, 2023.
COVID Improvements Credit
The Commerce Committee passed HB 5438, allowing corporate and pass-through entities to claim a tax credit from Jan. 1, 2020 to Jan. 1, 2023 for improvements made to nonresidential buildings due to COVID-19.
Eligible improvements include bipolar ionization and ultraviolet lighting to disinfect indoor air and surfaces, infrared thermometers for screening visitors in common areas, transparent sneeze guards or shields, touchless entryways and security devices, ventilation improvements, and other materials, and supplies and equipment necessary to create a safe environment for employers and employees to return to work spaces.
The credit equals 75% of the taxpayer’s expenditures for a work location of less than 30,000 sq ft with the credit capped at $100,000 per location.
For entities over 30,000 sq ft, the credit equals 50% of the expenditure for a work location provided the credit does not exceed $250,000 per location. The bill allows for a seven-year carry forward.
The Commerce Committee passed HB 5266, requiring the Commissioner of Education to evaluate school districts’ student work-release policies and develop a model policy by Jan. 1, 2023.
The State Department of Education will provide guidance to local and regional boards of education and require each local or regional board of education to adopt a student work release policy based on guidance by July 1, 2024.
The bill allows districts to use their current work release program upon approval by the department.
With the labor shortage crisis continuing to impact the recovery, SB 407 requires DECD, in consultation with OWS and regional workforce development boards, to develop and implement a Post COVID-19 Women’s Return to Work Economic Development Plan.
This include establishing partnerships with institutions of higher education, nonprofit organizations, professional business associations, and childcare and transit providers to develop and promote return to work initiatives, paid internships in high-growth industries, job and career fairs, professional mentorships, experiential learning opportunities, and educational and employment coaching services for women.
DECD would also be also tasked with providing business incentives to increase apprenticeship and internship opportunities for women.
Career Pathways, Student Loans
The Appropriations Committee unanimously approved SB 228, which moves administration of the Pipeline for Connecticut’s Future Program from a local or regional school board of education to the state education and labor departments.
These offices will assist local and regional boards to enhance existing partnerships and establish new partnerships for pathway programs.
The goal of the program is to help students obtain occupational licenses, apprenticeships, immediate job skills, industry specific class time, and cooperative work placements.
The bill also strengthens language requiring school counselors to provide information regarding the board’s jurisdiction of the availability of vocational, technical, technological, and postsecondary education and training at technical education/career schools as well as agricultural science and technology education at regional agricultural science and technology education centers.
The Higher Education and Employment Advancement Committee passed SB 103, which expands allowable uses of Connecticut Higher Education Supplemental Loan Authority loans.
Under current law, these loans can only be taken out for collegiate purposes. The bill expands the eligibility criteria to “post secondary” purposes, including higher education-like certificate programs that are crucial components to the manufacturing workforce pipeline.
HB 5038, which cleared the Appropriations Committee on an unanimous vote, continues the process of separating the Connecticut Technical and Career System from the education department.
The bill makes a series of conforming changes and creates the process for hiring a superintendent for the CTECS in section 17.
The bill also allows the governor to remove a member of the board for inefficiency, neglect of duty, or misconduct, and a board member may not be an employee of the system.
CBIA strongly supports separating the CTEC system from the education department and will continue advocating for a successful independent system to enhance this workforce pipeline.
Shifting the focus to educators themselves, the Education Committee and Appropriations Committee passed SB 273, which requires the education department to review statutes and regulations relating to teacher certification and identify provisions that are obsolete, evaluate existing requirements for effectiveness, and whether they are creating a barrier to entry or undue hardship for the recruitment/retention of teaching candidates.
The bill also includes reciprocity agreements with other states. Connecticut’s teacher certification process is lined with red tape and barriers that can be overwhelming, especially for individuals with decades of industry experience who can pass that knowledge to the next generation.
Encouraging these professionals to enter into teaching as their second act elevates the student’s education and create well rounded students.
Permit Fees, Release-Based Regulations
CBIA and the Environment Committee worked together to remove section 12 of SB 238, which established an annual fee for a general permit issued on or after Oct. 1, 2022, for any person or municipality authorized to engage in a regulated activity.
In addition to the registration fees, these annual fees could have ranged up to $1,000 per year per permit, with an estimated cost of $3.3 million to industry.
CBIA applauds committee leadership for recognizing the harmful effects this policy would have on the manufacturing sector.
The Commerce Committee passed SB 102, requiring the Department of Energy and Environmental Protection to provide the Release-Based Working Group a copy of the regulations prior to posting notice on the eRegulations portal.
This group is charged with promulgating the regulations that would switch Connecticut over to a release-based system from the old Transfer Act system.
This is critical for economic and environmental development and will align the state with 48 other states across the country.
The Environment Committee passed SB 236, requiring that from July 1, 2022, any diesel reciprocating engines contemporaneously installed for peak shaving purposes at a single facility and totaling more than five megawatts of generating capacity shall be designed and operated so that emissions of air pollutants while operating at steady state do not exceed certain thresholds.
The bill prohibits the use of these reciprocating engines from being used for peak shaving, testing, or maintenance purposes on any day for which the DEEP commissioner forecasts that ozone levels will be “moderate to unhealthy for sensitive groups,” “unhealthy for sensitive groups,” “unhealthy,” or “very unhealthy.”
The bill also limits the number of hours the reciprocating engines can be used for peak shaving to not more than 300 hours annually and not more than 500 cumulative hours annually for peak shaving, maintenance, and testing.
The exhaust exiting from a stack must be greater than 34 feet from ground elevation to meet air modeling guidelines.
The DEEP commissioner may adopt more stringent requirements for diesel reciprocating engines, as authorized under applicable federal air permitting regulations.
The legislative committee process wraps up for the Big Three committees—Appropriations, Judiciary, and Finance—by April 8. The legislative session ends at midnight May 4.
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