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Skilled to Work: Tax credit helps expand apprenticeships in Alabama

From 2017 to 2018, there was a 72.4 percent increase in the number of apprenticeships backed by the Alabama Apprenticeship Tax Credit.

Posted: Jan 17, 2019 8:47 AM
Updated: Jan 18, 2019 9:13 AM

It’s not often you get to help build a new version of your old high school, but that’s exactly what Clint White is doing.

He’s part of the Marathon Electrical Contractors crew installing the security system for the new Athens High School set to open later this month.

Companies that received the Alabama Apprenticeship Tax Credit:

2018: 46 companies received the tax credit for 131 apprenticeships

Region 1: 45 Tax Credits -- 17 companies

  • Colbert (2): 1 company
  • Cullman (1): 1 company
  • DeKalb (4): 2 companies
  • Lauderdale (9): 4 companies
  • Madison (20): 5 companies
  • Marshall (5): 1 company
  • Morgan (9): 3 companies

 

Region 2: 8 Tax Credits -- 4 companies

  • Calhoun (6): 3 companies
  • Etowah (2): 1 company

 

Region 3: 5 Tax Credits -- 2 companies

  • Sumter (5): 1 company
  • Tuscaloosa (3): 1 company

 

Region 4: 34 Tax Credits -- 11 companies

  • Jefferson (30): 9 companies
  • Shelby (4): 2 companies

 

Region 5: 21 Tax Credits -- 8 companies

  • Autauga (2): 1 company
  • Dallas (5): 1 company
  • Lee (10): 4 companies
  • Montgomery (4): 2 companies

 

Region 6: N/A

 

Region 7: 8 Tax Credits -- 4 companies

  • Baldwin (1): 1 company
  • Mobile (9): 3 companies

 


 

2017: 25 companies received the tax credit for 76 apprenticeships

Region 1: 35 Tax Credits -- 13 companies

  • Colbert (4): 2 companies
  • Cullman (4): 1 company
  • DeKalb (4): 2 companies
  • Lauderdale (4): 3 companies
  • Madison (10): 2 companies
  • Marshall (5): 2 companies
  • Morgan (4) 1 company

 

Region 2: 1 Tax Credit -- 1 company

  • Calhoun (1): 1 company

 

Region 3: 10 Tax Credits -- 2 companies

  • Tuscaloosa (10): 2 companies

 

Region 4: 10 Tax Credits -- 4 companies

  • Jefferson (9): 3 companies
  • Shelby (1): 1 company

 

Region 5: 10 Tax Credits -- 2 companies

  • Dallas (5): 1 company
  • Lee (5): 1 company

 

Region 6: N/A

 

Region 7: 10 Tax Credits -- 3 companies

  • Baldwin (1): 1 company
  • Mobile (9): 2 companies
The Alabama Apprenticeship Tax Credit was passed in 2016 and drew inspiration from a similar tax credit in South Carolina, according to State Senator Arthur Orr. The Alabama Apprenticeship Tax Credit was passed in 2016 and drew inspiration from a similar tax credit in South Carolina, according to State Senator Arthur Orr.

Companies that received the Alabama Apprenticeship Tax Credit in 2018

Companies that received the Alabama Apprenticeship Tax Credit in 2017

But before he was helping assemble classrooms, he taught in one.

“When I was in high school, the push was always: if you make good grades, you can try and make it at a four-year university. And I did that and went into education,” said White.

But when the job opportunities weren’t what he hoped for, White turned to electrical work instead and became an apprentice.

“It gives me a different perspective on construction and trade work...this is where the job opportunities are, this is where the money is,” said White.

One of the ways companies can bring on apprentices is through the relatively new Alabama Apprenticeship Tax Credit.

State Senator Arthur Orr was inspired by similar legislation in South Carolina and pushed for its passing here in 2016.

“We saw that we needed to get those young people in with employers and give the employers some incentive to take ownership of the program through a tax credit,” said Orr.

Here’s how the program works: each business can receive $1,000 for a qualified apprentice for up to four years and can have five such apprentices at a time.

Orr told WAAY 31 that the legislature needs to start looking at lifting at least one of these restrictions.

“We capped it at five because we were fearful of the large company coming in and taking a hundred slots and then sending the state a very big tax credit bill and so we started off small,” said Orr. “But now it’s time to look at expanding it and trying to ramp it up to increase better and more employer participation in this program.”

In 2017, 25 companies in 13 counties claimed the tax credit and used it to create 76 apprenticeships. Last year, 46 companies in 19 counties claimed the tax credit for 131 apprentices.

According to the Department of Commerce, in 2018, 27 companies submitted an apprenticeship tax credit intent form, but didn’t qualify either because they did not provided the needed documentation, they chose not to apply, or they did not meet the eligibility requirements for this year.

In order for an apprentice to be qualified for the tax credit, she or he must have been with the company for at least seven months and that apprenticeship needed to be created after the tax program start date.

Frank Chestnut, the manager of Apprenticeship Alabama, traveled to Huntsville last week to promote the tax credit as the filing season begins.

“We’re just elated that companies are listening, they’re hearing the process of how we can make our training better and they’re able to partner with the Department of Labor and Apprenticeship Alabama and just get people to work,” said Chestnut.

However, the tax credit right now isn’t permanent; it’s due to sunset in 2021 unless something changes.

The law allows for up to $3 million to be used for this tax credit. Chestnut and Orr both believe that letting companies claim more apprentices will help prove the program’s success and keep it on the books.

“If we can remove that, I think that will help us get closer to that $3 million cap and then I think we should fairly be evaluated to make sure that the return on investment is there for taxpayers,” said Chestnut.

According to the U.S. Department of Labor, there’s an almost 50 percent return on every dollar employers spend on apprenticeships.

Meanwhile, back at Athens High School, White said making the switch from education to electrical through an apprenticeship was one of the best decisions he’s made.

“You’re not coming out any money as you would if you were going to university or community college. Your company’s taking care of that. They want you to succeed. You just have to do your part,” said White.

Click here to learn more about the Alabama Apprenticeship Tax Credit.

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