Wyoming Manufacturers seek tax relief

The Wyoming Manufacturers’ Association will lobby for a legislative bill that proposes to institute a sales tax exemption on manufacturing equipment, WMA officials said.

The Casper Star Tribune

In preparation, WMA members sought some tips from longtime soda ash lobbyist Joe Jelaca during a roundtable meeting here Wednesday.

Jelaca’s advice: Form a coalition, get the facts right and make sure lawmakers know exactly why the legislation will help the state’s manufacturers.

"Sales tax exemptions are always a problem because many legislators don’t like to give exemptions and some are just plain adamantly opposed to any kind of tax exemption," said Jelaca, a safety engineer and 14-year lobbyist for General Chemical, Inc.’s trona mine and soda ash plant in Sweetwater County.

"If this bill is going to pass, you better be able to explain to (lawmakers) why this exemption is going to help you, the manufacturers," he said.

"You have to be able to clearly explain this exemption to them … and now that you’ve got a committee bill, that’s good," Jelaca said. "But you still have to work hard, you still have to make sure you really lobby that bill."

WMA President George Rex said the association will be ready for the re-introduction of tax abatement legislation in the 2004 budget session, which begins in February.

He said the association heard about last year’s bill just three days before it was voted on and did not have time to fully act on the proposal.

Rex said WMA officials believe they can convince lawmakers this time around the sales tax exemption would enhance current manufacturing efforts in the state.

"What this bill would do is enhance, not recruit, but enhance manufacturing in the state," Rex said.

"We’re not asking for handouts, we’re not asking for subsidies, we’re just asking for the tools to diversify the economy … and this would be a great tool," he said.

In the last session, House Bill 88 — which would have exempted sales tax on equipment purchases for manufacturing — was approved by the House Minerals Committee, but failed the full House by a vote of 41-19.

The measure was defeated, in part, because advocates of the bill could not easily show the economic benefits from the tax exemption to the state, WMA Vice President Bill Britz said.

"It was a key stumbling block … the idea that the Revenue Department could not accurately quantify what the direct revenue impact to the state would be," he said.

Business incentives

The debate on the merits of a sales tax exemption for manufacturing equipment intensified after Owens-Illinois, Inc. decided to build a $30 million glass container plant in Windsor, Colo., instead of Cheyenne.

Colorado and 45 other states offer sales tax exemptions on manufacturing equipment, partly as an incentive to lure new business. Wyoming, California, Alabama and South Dakota do not.

The Legislature’s Joint Revenue Committee voted last week to take over sponsorship of the re-introduced bill from its author, Rep. Pete Illoway, R-Cheyenne. The lawmakers amended the bill to require companies benefiting from the tax exemption to file annual reports so the benefits can be calculated.

The bill, as written, would apply to the sale or lease of machinery for manufacturing "tangible personal property." Manufacturing is defined as producing a new product, article, substance or commodity of a distinctive nature.

Casper Area Economic Development Alliance President and CEO Chris Manegold urged WMA members to lobby their legislators to get the bill passed.

"Make an issue like this the litmus test (for lawmakers) … tell them if they’re serious about economic development, then this is it," he said.

"Tell them if economic development is an issue and diversifying the economy … away from the last 150 years is an issue, then this is the way to do it," Manegold said. "We must have the policies in place to make it happen."

Dwight Hicks of the Cheyenne-based Hicks Consulting Co. said it might behoove the association to gather information for lawmakers about manufacturing tax exemptions from neighboring states.

"Let’s get some success stories from those other 46 states to present to legislators," he said. "Tell them this is what has happened in other states like Utah and Colorado … and why can’t we do it here."

Eliminating or reducing the sales tax on manufacturing equipment lowers capital costs and boosts investments in productive capacity through expansion or the building of new manufacturing facilities, according to the Milken Institute, an economic think tank.

The ultimate loss in tax revenues is usually offset by additional revenue from the higher economic activity, institute data shows.

But there’s some skepticism about whether the bill would provide a real economic boost for Wyoming. Revenue Committee members told the Associated Press that attracting new businesses to Wyoming can be counterproductive if they do not bring higher-paying, sustainable jobs.

The 160-member WMA was formed in 1992 to unite individual manufacturing companies and give them a stronger voice and the opportunity to network with others who face similar challenges, according to Rex.

Each quarter the WMA hosts a manufacturers roundtable where speakers address specific problems faced by the state’s manufacturers. The discussions are cosponsored by the Wyoming Business Council and the Mid-American Manufacturing Technology Center.

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