EDV-49-15-00002-EP Employee Training Incentive Program
12/9/15 N.Y. St. Reg. EDV-49-15-00002-EP
NEW YORK STATE REGISTER
VOLUME XXXVII, ISSUE 49
December 09, 2015
RULE MAKING ACTIVITIES
DEPARTMENT OF ECONOMIC DEVELOPMENT
EMERGENCY/PROPOSED RULE MAKING
NO HEARING(S) SCHEDULED
I.D No. EDV-49-15-00002-EP
Filing No. 1003
Filing Date. Nov. 17, 2015
Effective Date. Nov. 17, 2015
Employee Training Incentive Program
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Proposed Action:
Addition of Part 250 to Title 5 NYCRR.
Statutory authority:
L. 2015, ch. 59
Finding of necessity for emergency rule:
Preservation of general welfare.
Specific reasons underlying the finding of necessity:
The Employee Training Incentive Program (“ETIP”) offers qualifying business applicants tax incentives to procure eligible training for their employees, and also to provide internship opportunities for current students, recent graduates, and recent members of the armed forces. These incentives are designed to encourage employers in strategic industries to address shortages of qualified employees through qualified training activities rather than relocating their operations outside of New York State to attract human capital.
Regulatory action is required to implement ETIP. The legislation creating ETIP delegated to the Department of Economic Development (the “Department”) the establishment of procedures for the implementation and execution of the program. Without regulatory action by the Department, procedures will not be in place to accept applications from business desiring to engage in qualified training.
Adoption of this rule will enable the Department to begin accepting applications from businesses to participate in ETIP, and promote the objectives of ETIP to support the growth and retention of businesses in New York State through the development of employee skills.
Subject:
Employee Training Incentive Program.
Purpose:
Establish procedures for the implementation of the Employee Training Incentive Program.
Substance of emergency/proposed rule (Full text is posted at the following State website:esd.ny.gov):
The Employee Training Incentive Program (“ETIP”) provides tax credits to business entities in strategic industries that procure eligible training for their employees in conjunction with creating at least ten (10) net new jobs or making a significant capital investment, as well as to business entities that provide internships in advanced technology to current students, recent graduates, and/or recent members of the armed forces through an eligible internship program.
1) The rule defines numerous important terms, including, but not limited to, “approved provider of eligible training,” “capital investment,” “eligible internship program,” and “strategic industry.”
2) The rule describes the eligibility criteria for business entities applying to ETIP based upon procuring eligible training. Such applicants must operate in the state predominantly in a strategic industry, procure eligible training from an approved provider, create at least ten (10) net new jobs or make a significant capital investment in conjunction with the training, be in compliance with all worker protection and environmental laws and regulations, and not owe past due state taxes or local property taxes.
3) The rule describes eligibility criteria for business entities applying to ETIP based upon providing eligible internship training. Such applicants must demonstrate that they will provide an eligible internship program of no more than twelve (12) months in duration in the state, be in compliance with all worker protection and environmental laws and regulations, not owe past due state taxes or local property taxes, certify that the eligible internship program will not displace employees of the applicant, and employ fewer than one hundred employees.
4) The rule states that initial applications are to be submitted by applicants to the Commissioner of Economic Development, and that such applications shall be submitted prior to procuring eligible training or retaining interns.
5) The total value of tax credits issued by the Commissioner for any taxable year shall not exceed five million dollars, of which at least two hundred fifty thousand dollars and no more than one million dollars shall be reserved for applicants providing eligible internship programs.
6) The rule describes the contents of an initial application by an applicant applying to procure eligible training for its employees. Such an application shall, among other things, identify the approved provider from which the applicant proposes to procure eligible training, include a curriculum or other evidence that the training to be procured is eligible training, estimate the total cost of the training, and establish the applicant’s efforts to secure competitive bids from approved providers to provide the eligible training.
7) The rule describes the contents of an initial application by an applicant applying to provide an eligible internship program. Such an application shall, among other things, include a curriculum or other evidence that the internship program will be an eligible internship program providing training in advanced technology, identify the approved provider that will provide the eligible internship program and the employees of such entity who will be responsible for managing and training interns retained by the business entity, and estimate the total costs of stipends to be provided to interns participating in the eligible internship program.
8) The rule describes the contents of a final application by an applicant, including proof that such applicant has completed eligible training and created ten (10) net new jobs or made a significant capital investment, or that such applicant has completed an eligible internship program.
9) The rule indicates that participants in ETIP shall maintain all relevant records for the duration of its program participation plus three (3) years, and make such records available to the Department and its agents upon seven (7) days’ notice.
This notice is intended:
to serve as both a notice of emergency adoption and a notice of proposed rule making. The emergency rule will expire February 14, 2016.
Text of rule and any required statements and analyses may be obtained from:
Phillip Harmonick, New York State Department of Economic Development, 625 Broadway, 8th Floor, Albany, NY 12245, (518) 292-5112, email: Phillip.Harmonick@esd.ny.gov
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
45 days after publication of this notice.
Regulatory Impact Statement
STATUTORY AUTHORITY:
Chapter 59 of the Laws of 2015 requires the Commissioner of the Department of Economic Development (the “Department”) to promulgate regulations establishing the application process for the Employee Training Incentive Program (“ETIP”). These procedures include the process for applying for tax credits under ETIP, standards for the assessment of applications, and other provisions deemed necessary and appropriate. This regulatory impact statement is submitted in conjunction with the submission of a permanent regulation.
LEGISLATIVE OBJECTIVES:
The proposed rule gives effect to the intention of the legislature in adopting ETIP to encourage employers in strategic industries, characterized by technological disruption and a shortage of potential employees within New York State, to develop talent in New York State through eligible training and internship programs rather than relocating to other regions to secure skilled employees.
NEEDS AND BENEFITS:
The rulemaking is necessary in order to implement Article 22 of the Economic Development Law, which establishes ETIP. The statute directs the Commissioner to establish procedures for the implementation and execution of ETIP.
New York suffers from a skills gap in its workforce, resulting in thousands of job vacancies that employers are unable to fill due to a shortage of qualified workers. Without action on the part of the state, employers in industries subject to such shortages of skilled workers may be required to relocate outside of New York in order to retain adequate numbers of skilled employees. This problem is made more acute by the action of other states in the region to create programs to cultivate pools of skilled labor, creating an incentive for employers in New York to relocate jobs outside of the state. To address this problem, ETIP provides tax credit incentives to business entities that procure eligible training or provide eligible internship programs in advanced technology.
Business applicants to the program must first establish that they are engaged in a strategic industry, as evidenced by factors such as shortages of skilled employees and technological disruption in the industry. Furthermore, such applicants must demonstrate, among other things, that they will be procuring eligible training from an approved provider or providing an eligible internship program in advanced technology. In order to begin to receive applications from business entities, the Department must establish application criteria describing the contents of applications, defining key terms such as “approved provider of eligible training” and “strategic industry,” and establishing procedures for the processing of applications.
The proposed rule establishes the necessary application procedures for the Department to receive applications by business entities to ETIP. These rules allow for the prompt and efficient commencement of ETIP, clarify which business entities will be eligible to participate in ETIP, and promote the cultivation of the skilled New York workforce necessary to support economic development.
COSTS:
I. Costs to private regulated parties (the business applicants): None. The proposed rule will not impose any additional costs to eligible business applicants.
II. Costs to the regulating agency for the implementation and continued administration of the rule: None.
III. Costs to the State government: None.
IV. Costs to local governments: None. The proposed rule will not impose any costs on local governments.
LOCAL GOVERNMENT MANDATES:
None. There are no local government mandates associated with ETIP.
PAPERWORK:
The rule establishes qualification rules and application procedures for ETIP. The rule entails certain paperwork burdens including materials to be submitted as part of applications for tax credits, additional documents the Commissioner may request from applicants as part of his evaluation of applications, and certain records that must be maintained by program participants for auditing purposes.
DUPLICATION:
The proposed rule will create a new section of the existing regulations of the Commissioner of the Department of Economic Development, Part 250 of 5 NYCRR. Accordingly, there is no risk of duplication in the adoption of the proposed rule.
ALTERNATIVES:
No alternatives were considered with regard to creating a new rule in response to the statutory requirement. The rule establishes the procedures for business entities to apply to ETIP. This action is necessary in order to clarify how qualifying businesses in strategic industries may receive program benefits, and is required by the legislation establishing ETIP.
FEDERAL STANDARDS:
There are no federal standards applicable to ETIP; it is purely a state program that offers tax benefits to business entities in strategic industries incurring qualifying costs for eligible training or an eligible internship program in advanced technology. Therefore, the proposed rule does not exceed any federal standard.
COMPLIANCE SCHEDULE:
The affected agency (Department of Economic Development) and any applicants to ETIP will be able to achieve compliance with the regulation as soon as it is implemented.
Regulatory Flexibility Analysis
Participation in the Employee Training Incentive Program (“ETIP”) is entirely at the discretion of qualifying business entities. Neither statute nor the proposed rule impose any obligation on any local government or business entity to participate in the program. The proposed rule does not impose any adverse economic impact or compliance requirements on small businesses or local governments. In fact, the proposed rule may have a positive economic impact on small businesses. Only small businesses, those with one hundred (100) employees or fewer, are eligible to apply to ETIP for benefits associated with providing an eligible internship program.
Because it is evident from the nature of the proposed rule that it will have either no impact or a positive impact on small businesses and local government, no further affirmative steps were needed to ascertain that fact and none were taken. Accordingly, a regulatory flexibility analysis for small businesses and local governments is not required and one has not been prepared.
Rural Area Flexibility Analysis
The Employee Training Incentive Program (“ETIP”) provides tax benefits to participating business entities engaged in strategic industries, and does not distinguish between entities located in rural and urban areas of New York. Furthermore, the rule does not impose reporting, recordkeeping or other compliance requirements on public or private entities in rural areas, except for any rural business entities voluntarily applying to participate in ETIP. Therefore, the rule will not have a substantial adverse economic impact on rural areas. Accordingly, a rural flexibility analysis is not required and one has not been prepared.
Job Impact Statement
The proposed rule establishes application procedures for business entities to apply to the Employee Training Incentive Program (“ETIP”) for tax credit benefits associated with providing eligible training to their employees, or an eligible internship program in advanced technology. The program aims to induce employers to provide training in order to cultivate a pool of skilled workers who can meet the requirements for unfilled positions in strategic industries. The rule will not have a substantial adverse impact on jobs and employment opportunities; rather, the program is intended to increase employment opportunities. Because it is evident from the nature of the rulemaking that it will have either no impact or a positive impact on job and employment opportunities, no further affirmative steps were needed to ascertain that fact and none were taken. Accordingly, a job impact statement is not required and one has not been prepared.
