Lower your taxes

In 2000, the state of Ohio had $20 million in tax credits available for businesses that provided training to their workers.

However, only about $233,000 was used. That’s barely more than 1 percent of the tax breaks the state could have provided businesses.

“Since this has been implemented, we’ve not seen a major effort to use this incentive,” says State Sen. Bill Harris, R-Ashland.

Daryl Hennessy, manager of the Office of Tax Incentives at the Ohio Department of Development, says just six companies applied for the credit in 2000.

Harris hopes that changes this year, now that the legislature has revised the Job Training Tax Credit to allow applications from more businesses for more training. The program only permitted applications from C corporations before.

Harris, who introduced legislation that led to creation of the tax credit in 1999, says it was originally written too narrowly, so he made moves to change it through additional legislation that passed late last year. Now the credit is available to any taxpayer who is an investor in a pass-through entity, such as a partnership, S corporation, limited liability company or sole proprietorship not taxed as a corporation.

“It opens it up to a much broader base where small business and small industry has the same opportunity as a C corporation,” Harris says.

Dan Berry, vice president of the Greater Cleveland Growth Association, which serves as the chamber of commerce for the area, praised the changes, especially the elimination of a requirement that training be limited to employees who had skill deficiencies in their positions. Now, the credit includes training programs that enable employees to perform additional job duties.

“There was a feeling that, in order to really make it work, we needed to make it for upscaling our work force to compete in the marketplace,” Berry says.

Other changes, which took effect Jan. 1, have:

  • Increased the credit amount.

    Previously, the credit equaled 50 percent of the incremental increase in training costs above the company’s three-year average training costs. Now, the amount of the credit will equal 100 percent of all training costs.

  • Relaxed credit limitations.

    The limit increased from $500 per employee trained to $1,000 per employee trained. The maximum annual credit allowed, however, remains at $100,000.

  • Expanded the kinds of businesses eligible for the credit.

    Previously the credit was limited to corporations in certain standardized industry categories. Now, eligible companies can come from any industry.

In addition, last month, the Ohio Department of Job and Family Services expected to be able to accept applications electronically.

Sue Kelly, director of taxes for Moen Inc., a nearly $1 billion company with about 850 Ohio employees, knows how helpful the tax credit program can be. Moen received a $100,000 credit for its 2000 training to apply toward 2001 taxes and may apply for credit again this year.

“We are implementing what’s called an enterprise resource planning system, an integrated system to basically run our business,” she says. “It requires basically a retraining of all people in all functions.”

Harris knows the costs involved in training employees. As a former chairman of the Ashland Area Chamber of Commerce, his sons now own and operate his companies: Bill Harris Chevrolet/GEO as well as insurance, finance and car wash businesses.

“What this does is motivate the employer to invest more of their own dollars into their employees, and makes them more competitive in the marketplace,” says Harris.

“Every employer knows more training will make (employees) more attractive in the marketplace,” he says, “but training employees gives you a better product and more product so you can be more competitive.” How to reach: Sen. Bill Harris, (614) 466-8086 or [email protected]; Ohio Department of Job and Family Services, Linda O’Connor, business services representative, (614) 995-2047 or click on the tax credit information link at www.ohioworks.com

Joan Slattery Wall ([email protected]) is an associate editor and statehouse correspondent for SBN Magazine.