Saturday roundup

Labor, industry back changes in unemployment insurance that make re-training an option

Bill taps millions in federal funding to help those seeking work

By Dan Neal and Sarah Gorin

Unemployed Wyoming workers who want training in skills that could open doors to other jobs will get a boost if a bill to extend long-term unemployment benefits becomes law. Both industry and labor support the bill.

Rep. Cathy Connolly (D-HD13, Laramie) sponsored HB 244 – Unemployment insurance amendments.
It will change state statutes to enable Wyoming to take advantage of the extension of long-term unemployment benefits approved by Congress in December. The extension will allow currently unemployed workers to qualify for 13 more weeks of benefits through January 12, 2012. Connolly thinks up to 7,500 unemployed workers could benefit from that extension.

The bill also allows the state to tap $14.2 million in federal funding authorized under the American Recovery and Reinvestment Act. In order to qualify, the state would change its law to allow unemployed workers in approved training programs to continue to receive their unemployment insurance checks.
It also would change the base period to allow more workers to qualify for unemployment insurance benefits.

Wyoming Contractors Association Executive Director Jonathon Downing testified in favor of the bill, calling it “a hand up, not a hand-out.” The Contractors Association offers training to people to get them into other trades. Union locals also offer training.

The training is intense, however, and unemployed workers in nearly every situation would have to forgo unemployment insurance benefits because they do not have time to look for work. The system can force a worker to choose between the benefits needed to feed and clothe his or her family or the training that could open a door to another job or career.

AFL-CIO Executive Secretary Kim Floyd said the change to allow people to receive benefits while training “is an incredible option.” He noted that while Wyoming’s overall employment rate stands at more than 6.5%, unemployment in the construction trades stands at about 21%. “We’ve got a lot of people sitting on the bench.” (Quick aside: This is one of the reasons that the unions and the contractors association have joined forces to push legislation that could mean more state work for resident contractors who hire resident workers. Most state-funded highway and capital construction contracts have gone to contractors from outside the state, Floyd says.)

Joan Evans, director of the Department of Workforce Services, noted the simple extension of benefits will help people who have not been able to find work. “There are some people in desperate situations right now,” she told the committee.

Evans noted the ARRA funds offer important help to the department because they include $1 million for reprogramming to upgrade state administrative systems to handle changes in the law, such as the change in the base period of work used to calculate benefits. When she noted the state system currently uses COBOL programming, a buzz rippled around the committee room. Downing said later it has been many years since he heard of anyone using COBOL.

Addressing committee member concerns about continuing costs to the state after the ARRA funds are used, Downing said the legislature might have to repeal the changes later. Connolly asked the committee to consider the bill as a “pilot project” that will enable the state to use federal funds to evaluate the value of the changes.

The House Minerals, Business and Economic Development Committee amended the bill to delete several pages, including a section that would have allowed payment of benefits when a worker loses a job because his or her spouse’s job requires a change in location. At the urging of Rep. Dan Zwonitzer (R-HD43, Cheyenne) the committee also approved an amendment requiring the department to report on the costs and effects of the changes in by Nov. 15.

“That way we can fix our computer system and see if we want to change the law back,” Zwonitzer said.

House leadership referred the bill to be heard by the House Appropriations Committee Monday. The bill must be heard in the House Committee of the Whole by the end of the day Monday or it dies for the year. If that happens, the state loses the opportunity to tap the ARRA funds. States have until Aug. 22, 2011 to submit their applications to the U.S. Department of Labor to certify that they comply with the specific provisions of the ARRA’s incentive funding program.

“Validity” of Marriage

HB 74 – Validity of marriage was heard by the Senate Agriculture, State and Public Lands and Cultural Resources Committee. Opponents argued that the bill violates Equal Protection rights guaranteed by the U.S. Constitution, voids legal contracts, and puts in doubt the status of legally married same-sex couples and their children.

House Majority Floor Leader Tom Lubnau pooh-poohed the criticism of the bill so loudly heard while it made its way through the House. “I don’t see this as a monumental civil rights battle,” he said.

Kiefer Partridge, a UW student and member of the WyWatch Political Action Committee, supported the bill, saying that state law should be biblically sound. According to Partridge, the concept of separation of church and state was meant to protect churches from the state, not to exclude churches from advocating for religiously-derived policy.

That’s a long stretch from the idea that separation of church and state prevents the adherents of one church or religion from using the state to impose their credo on the faithful of another belief or on people who follow no religion.

Tax on Wind Power Whirling Around
HB 191 – Wind power taxation narrowly passed Committee of the Whole, 28-24. Opponents said it takes too long – 20 years – to phase-in the $3 per megawatt hour (MWH) tax on power generated by wind farms already constructed in the state. They also claimed the bill is not ready, since sponsors said they would have to bring major amendments in subsequent readings.

The ESPC supports the existing wind tax structure, which imposes both sales tax and a MWH tax (although the MWH tax could be higher!). HB 191 “finances” sales tax via a higher MWH tax, which places some risk on the state if anticipated wind power development does not actually happen. Moreover, the sloooowwww phase-in of the MWH tax on existing projects is unjustified, as these projects never paid sales tax due to an exemption that expired at the end of 2010.

Data Not Needed

The bill extending an existing sales and use tax exemption for purchases of manufacturing equipment, HB 143 - Manufacturing tax exemption, passed the Senate Revenue Committee 4-1 last Thursday.

As in the House, economic development organizations and manufacturers lined up to say how much they like the tax exemption, and asserted that new taxes generated by development make up for the loss in sales and use tax collections: $53 million and growing since the exemption was enacted six years ago.

The ESPC, which opposed the tax exemption from the beginning and advocated successfully for the first follow-up reporting on a tax exemption, went through this year’s report on the exemption. It shows that the percentage of manufacturing jobs in Wyoming has gone down slightly since the tax exemption began, and that the absolute number of manufacturing jobs went up only slightly, but went down with the recession.

The report also shows while manufacturing wages are higher than in other economic sectors, part-time employees in manufacturing receive fewer benefits than part-time employees in other sectors.

Finally, the report notes that most of the benefit of the tax exemption has gone to a handful of manufacturers, principally the state’s two major refineries, Frontier Refining in Cheyenne and the Sinclair refinery. The ESPC collected data from the Laramie and Carbon county assessors to show that property tax data did not support the assertion that the sales tax exemption was made up for by increases in other tax revenues.

Senator Case asked most of the proponents why manufacturing should get a sales and use tax exemption but not other types of businesses. This question was raised in the ESPC’s testimony as well, a particularly pertinent one given the complete absence of any concrete documentation of the exemption’s benefits.

Chairman John Hines (R-S23, Gillette) and Senators Paul Barnard (R-S15, Evanston), Fred Emerich (R-S5, Cheyenne) and Drew Perkins (S-29, Casper) voted for the bill; Senator Cale Case (R-S25, Lander) cast the dissenting vote.

Participate
Citizens can register their opinions on specific legislation by using the “Online Hotline” or the telephone Hotline – 1-866-966-8683 or, in Cheyenne, 777-8683.

Second week ends on low note

What part of “Equality State” don’t legislators understand?

The Senate Judiciary Committee today approved SJ 5 - Defense of marriage – constitutional amendment. The proposal would amend the Wyoming Constitution as follows: “A marriage between a man and a woman shall be the only legal union that shall be valid or recognized in this state.”

Testimony on the bill, which opened Wednesday and was continued this morning, was similar to that presented just days ago in the House Education Committee on HB 74 - Validity of Marriages.

HB 74 specifically provides that marriages between more than two parties are void (e.g., polygamy). This topic also came up in today’s discussion of SJ 5, when three senators, Bruce Burns (R-SD21, Sheridan), Larry Hicks (R-SD11, Baggs) and Chairman Drew Perkins (R-SD29, Casper) wondered aloud why opponents of the proposed amendment talked only about same-sex marriages and not polygamy.

Linda Burt, executive director and lobbyist for the Wyoming Chapter of the American Civil Liberties Union (an ESPC member group), explained that the proposed amendment violates the U.S. Constitution’s Equal Protection clause. She said the proposed law restricts the right of two people of the same gender to marry; however, state law does not burden the rights of two people entering marriages involving a man and a woman.

The prohibition against polygamy applies to everyone, regardless of whether a plural marriage is composed of men and women, only women, or only men. Since it is applied evenly, the prohibition against polygamy does not violate the Equal Protection clause, Burt said.

The committee adopted an amendment proposed by Sen. Leland Christensen (R-S17, Alta) who said he hoped to give some latitude when it comes to property owned by a gay or lesbian person.

The bill originally said:

"A marriage between a man and a woman shall be the only legal union that shall be valid or recognized in this state."

The Christensen amendment substitutes the following language:

"Only a marriage between a man and a woman is valid or recognized in Wyoming. Any other relationship shall not be valid or recognized as a marriage or the substantial equivalent thereof by the state or any of its political subdivisions."

The ESPC intends to check with several attorneys to see if the language does provide the latitude Sen. Christensen intended. One attorney consulted in the Capitol said he did not see how, since the language explicitly prohibits any political subdivision, which would include the courts, from acknowledging a homosexual couple's relationship as a legal civil union or other legal construct.

Senate Judiciary Committee Chairman Perkins, Sen. Hicks, and Sen. Christensen voted for SJ 5. Sen. Burns and Floyd Esquibel (D-S8, Cheyenne) voted against it.


More Equality next Monday …

The House Minerals, Business and Economic Development Committee will take up HB 94 - Illegal immigration, at 7:30 am. The bill mirrors Arizona’s controversial measure.


Tax exemption, anyone? No data required …

The House Revenue Committee today took up HB 143 - Manufacturing tax exemption. The bill continues a sales and use tax exemption for purchases of manufacturing equipment that was originally enacted in 2004 over opposition from the ESPC.

The exemption was set to sunset at the end of 2010, but was extended for a year by the 2010 Legislature in order to study how the exemption might be changed to better accomplish its original purpose of encouraging the creation of manufacturing jobs.

Although the ESPC was not successful in blocking passage of the exemption in 2004, we successfully advocated for the first annual reporting on the costs of a tax exemption. The 2010 report shows:

• manufacturing jobs as a percent of total Wyoming employment has declined since passage of the exemption;
• the absolute number of jobs ticked up only slightly and then contracted significantly with the recession;
• the benefits offered to full-time employees in the manufacturing sector are comparable to those in other sectors of the Wyoming economy, but the benefits offered to part-time employees are less than in other sectors; and
• the exemption primarily has benefited the state’s refineries, which upgraded equipment and claimed the exemption. In 2010, for example, a refiner claimed $128 million in exempt purchases, and $138 million the previous year.
  

The total lost tax revenue from this exemption is approximately $53 million, or about $10 million a year since it was enacted.

The Wyoming Business Council, Cheyenne LEADS/Wyoming Economic Development Association, and several manufacturers spoke in favor of retaining the tax exemption. None of them provided any concrete data about jobs created or sustained for this $53 million investment.

Proponents repeatedly stated that the tax exemption is needed as a recruiting tool for economic development, although why Wyoming, without personal or corporate income taxes, also needs a manufacturing tax exemption to compete with other states remains a mystery.

In addition to going over the report, the ESPC questioned the fairness of a tax policy that provides a sales and use tax exemption for one sector but not another, especially in the absence of any additional revenues from economic development the exemption was supposed to generate.

Rep. Mike Madden (R-H40, Buffalo) successfully amended the bill to apply only to purchases of equipment to manufacture a new product line or expand capacity. A further amendment by Rep. Dave Miller (R-H55, Riverton) included equipment to “lower emissions.” Pollution control equipment already is exempt from property tax so, if ultimately passed, this provision will mean that pollution control equipment – an ordinary part of doing business in this day and age – will not be taxed at all.

The bill passed the committee on a 6-2 vote. Chairman Pat Childers (R-H50, Cody) and Representatives Greg Blikre (R-H53, Gillette), Rita Campbell (R-H34, Shoshoni), Miller, Owen Petersen (R-H19, Mountain View), and Clarence Vranish (R-H49, Evanston) voted yes. Representatives Madden and Mark Semlek (R-H1, Moorcroft) voted no. Rep. Pat Goggles (D-H33, Ethete) was excused.

Wyo's Manufacturing Tax Exemption and Gender Wage Disparity

Reports on tax break finds pay gap

This is Part III of an ESPC analysis of state tax policies and policy proposals and their potential effect on the Wyoming economy


By Sarah Gorin
ESPC researcher

Wyoming ranks consistently at or near the top in “gender wage gap,” the difference in wages paid to men and women. A study commissioned by the Wyoming Legislature in 2003 examined factors contributing to Wyoming’s gender wage gap, including:

1. A concentration of women in part-time work, either by choice or due to lack of necessary support services such as adequate child care;
2. Relatively low wage levels in female-dominated occupations, such as teaching and nursing;
3. High wages in male-dominated occupations such as mining and construction, which are major players in Wyoming’s economy.

In 2004, the Wyoming Legislature enacted a sales and use tax exemption for purchases of manufacturing equipment. Wyoming’s manufacturing sector is relatively small, and economic development proponents argued that a tax exemption similar to ones offered in other states would give Wyoming “another tool in the toolbox” to attract manufacturers to our state.

The Equality State Policy Center opposed the tax exemption, arguing in turn that tax exemptions do not drive location decisions, and that other states’ tax structures enable them to potentially recoup revenues lost from a sales tax exemption.

For example, in a state with personal and corporate income taxes, there is the possibility of replacing the revenues lost from a sales tax exemption on manufacturing equipment – if indeed the exemption attracts a manufacturer – because the company and employees will then pay income taxes.

Wyoming could recoup lost revenues only from property and sales taxes paid by the manufacturing company and its employees, which might or might not make up the difference.

In addition, some other states have enacted “clawbacks,” where state tax exemptions or other incentives are stopped and even recovered from businesses which fail to produce promised jobs and tax revenues.

Although the ESPC was not successful in stopping the exemption for purchases of manufacturing equipment, we successfully advocated for an amendment requiring reporting on the results of the tax exemption. And because gender wage gap was very much on everyone’s minds at the time, the reporting requirements included reporting wages paid to men and to women.

The reporting proved problematic as a first-time effort, since there were no baseline data to compare to, and there was no structure in place to identify manufacturers who might avail themselves of the tax exemption. However, the Department of Revenue worked diligently and began producing reports that showed wages paid to men and women (full- and part-time), and benefits offered to employees in the manufacturing sector.

The ESPC recently compiled all the reports and the results were rather interesting (see spreadsheet here of the last two years, which have comparable data).

The shaded boxes show where there are significant wage gaps between men and women in the same broad job category within the manufacturing sector.

Caveat: these data are compiled from employer surveys, and the employers chose individually how to list their data in the six categories offered by the Department of Revenue. The data are not tied to national manufacturing codes and unfortunately cannot be compared to regional or national data on manufacturing wages.

Nevertheless, the data do raise red flags that beg further investigation. For example, when 423 full-time female employees in the administrative/clerical category in FY 2008 earn, on average, nearly $7/hour less than 157 male employees in the same category, it stretches the imagination to believe that all 423 of those females are that much less qualified than the 157 males to justify making 70% of the males’ wages.

Approximately $32 million in revenues have been lost due to the tax exemption for purchases of manufacturing equipment (through FY 2008). The tax exemption is set to expire at the end of 2010, and several business organizations are lobbying to extend it. We at the ESPC think some questions need to be answered first.

Next:
Part IV, The Jobs Budget