State Senate Approves Bill Extending Manufacturing Apprenticeship Tax Credit

The State Senate has approved a bill that makes the Manufacturing Apprenticeship Tax Credit available to FTEs.

Currently, the credit is only available to businesses that are subject to corporation tax. The expansion would benefit small and medium-sized manufacturers by offsetting the cost of training new employees and apprentices, according to State Sen. Joan Hartley (D-Waterbury), co-chair of the Commerce Committee.

In its current form, the Manufacturing Apprenticeship Tax Credit can only be applied to corporation tax, which means that intermediary corporations, including S corporations and liability corporations limited, are not eligible.

Small manufacturers claim that training apprentices can reduce company productivity because it forces them to divert employees’ time. Bloomfield-based Back East Brewing LLC submitted written testimony in support of the bill on March 1, saying the benefit would help defray training costs for new employees.

“Not only does hiring an apprentice mean that I have to cover the cost and salary of the person, but I also have to take into account the lost productivity of his mentor,” the brewery’s testimony states. “In an environment where there is a huge labor shortage, taking someone out of their job to train someone is becoming less and less feasible.”

Senate Bill 98 has received support from the Connecticut Business and Industry Association, which has made addressing labor shortages a top priority.

Ashley Zane, CBIA’s government affairs associate, said it would not only help businesses, but also workers by making living wages “accessible to everyone, regardless of socio-economic status, gender, age and of the breed”. For example, a machinist in Connecticut can earn around $56,100 a year, not including overtime, benefits, and other forms of compensation, and minimal or no student debt.

The Waterbury Regional Chamber also backed the bill.

“Our state’s major defense contractors are looking to hire thousands of workers to meet production needs over the next decade or more,” said Joseph Violette, director of public policy and economic development for the state. Waterbury Regional Chamber in written testimony submitted March 1. “Unfortunately, Connecticut continues to have a shortage.

The credit would allow flow-through entities to reduce their personal income or business entity tax liability, putting them on “more even terms with large manufacturing companies that can afford to train new apprentices and possibly retain them as employees,” according to Hartley.

In Connecticut, 55% of manufacturers surveyed said they had difficulty finding workers in 2021, according to a CBIA report. The report also found that 36% of manufacturers cited a lack of necessary skills or experience among applicants as a contributing factor to hiring difficulties.

The bill will be forwarded to the House of Representatives for consideration.