The Effects of the Sales and Use Tax Exemption For Manufacturing Machinery

Transcription

1 The Effects of the Sales and Use Tax Exemption For Manufacturing Machinery Compiled by the staff of the Education and Taxability Section, Wyoming Department of Revenue and edited by Kim E. Lovett, Administrator Excise Tax Division Tenth Edition 2004, W.S (a)(viii)(O) and W.S (a)(viii)(D) Revenue, Department of (011) Cheyenne, Wyoming November 18, 2015 Table of Contents Overview Specific Requirements of Statute Employment Growing and Declining Industries Wages Benefits Turnover Survey Process and Costs Exemption Cost References Appendices

2 Overview Original House Bill No. 44 (Enrolled Act No. 20) was signed into law on March 3, This act relates to taxation and revenue and provides for a sales and use tax exemption for machinery and machine tools used directly and predominantly in manufacturing in the State of Wyoming. The act provides for definitions, limitations, a reporting requirement and an effective date. This law took effect on July 1, 2004, and per subsequent amendments, has a sunset of December 31, The manufacturing machinery exemption is located within the economic incentive group of sales and use tax exemptions in the Wyoming statutes [W.S (a)(viii); W.S (a)(viii)]. The law exempts from Wyoming sales and use taxes, until December 31, 2017, the sale or lease of machinery to be used in Wyoming directly and predominantly in manufacturing tangible personal property provided, The sale or lease is to a manufacturer classified by the Department of Revenue under the North American Industry Classification System (NAICS) code manufacturing section 31 33; and The sale or lease does not include noncapitalized machinery except machinery expensed in accordance with Section 179 of the Internal Revenue Code. Specific Requirements by Statute 2011 Session Laws, Chapter 83 requires the Wyoming Business Council, the Department of Workforce Services, and the Department of Revenue to report on this exemption annually to the Joint Revenue and the Joint Minerals, Business and Economic Development Interim Committees. Specifically, on or before December 1 of each year the exemption is in effect, these agencies are to report the effects of the sales and use tax exemption for manufacturing machinery. If requested by the Department of Revenue, any person utilizing the exemption shall report the amount of sales tax exempted and the number of jobs created or impacted by utilization of the exemption. Furthermore, the report is to evaluate the cumulative effects of the exemption from initiation of the exemption and shall include: (i) A history of employment in terms of the numbers of employees, full-time and part time employees, and rate of turnover classified by the 2007 edition, as amended, of the North American Industry Classification System (NAICS) code manufacturing section from information collected by the Department of Employment; (ii) A history of wages and benefits disaggregated by gender for each job category; and (iii) A comprehensive history of taxes paid to the state of Wyoming.

3 Employment In 2005, the total number of persons working in Wyoming at any point during the year stood at 333,454. Of that, employment in the Manufacturing Industry accounted for 12,535 persons, or 3.76% of the employment pool. Wyoming employment saw moderate growth in the next three years and peaked in 2008 with total employment reaching 381,775. Due to the Great Recession, Wyoming subsequently experienced a workforce reduction in 2009 and 2010 with the combined loss of 30,266 positions including 1,627 in the manufacturing industry from the peak year of Since 2010, Wyoming s economy yet again experienced overall employment growth as well as growth reported in the Manufacturing sector. Starting with recession recovery, All Industries reported employed persons per year as follows: 2010, 351,509 persons, 2011, 355,857 persons; 2012, 360,154 persons; 2013, 360,601 persons and 366,504 persons in Likewise, the Manufacturing Industry reported 11,142 for 2010, 11,655 for 2011, 11,812 for 2012, 11,949 for 2013 and 12,092 for As a result, employment for All Industries gained 14,995 positions or 4.09 % over 2010 while the Manufacturing sector gained 950 positions or 7.86% over Figure 1.1 illustrates the total number of Wyoming employees in All Industries as compared to the total number of Wyoming employees in the Manufacturing Industry from 2005 through Figure 1.1: Wyoming Employment at Anytime During the Year Manufacturing All Industries ,092 11,949 11,812 11,655 11,142 11,570 12,769 13,048 13,025 12, , , , , , , , , , ,454 1 Note: Information obtained from Earnings in Wyoming by Industry, Age & Gender, 2000 to 2014, published by the Wyoming Department of Work Force Services, Research & Planning Division. Information specific to a comparison of the number of persons in the Manufacturing Industry versus All Industries combined for years 2005 through 2014.

4 In accordance with the Work Force Services report, Earnings by Industry, Age, & Gender, , the Department of Revenue has acquired general information as it relates to the ratio of men to women in the workforce in comparison to the manufacturing industry. Of the total number of persons working at any time during the year, the relationship of male to female workers has remained relatively constant since In 2005, male workers held roughly 49% of the overall workforce while women held 42% of the overall workforce. During 2008, Wyoming s peak year for total number of persons employed, men held 48% while women held 39% of the workforce. According to the current Earnings by Industry, Age, & Gender, report, in 2013 men equaled 48% and women 39% of the total workforce, and decreased slightly in 2014 with men holding at 45% and women 38% of the total workforce. 2 Lower percentages reported for men and women in recent years is most likely attributed to a larger reported amount of unknown gender. This consistency holds true within the Manufacturing Industry; however, the percentage of male to female workers is remarkably higher. For years 2005 through 2008, men accounted for roughly 73% while women accounted for roughly 21% of the total manufacturing industry. 2 For years 2009 through 2011, men accounted for roughly 75% and women 20% of the total manufacturing industry 2. Years 2012 through 2014 experienced a small decline where men held an average of 73% and women 19% of the manufacturing industry. Figures 1.2 and 1.3 graphically illustrate the ratio of men to women across All Industries in Wyoming to that within the Manufacturing Industry. Figure 1.2: Men & Women Employed, All Industires Women, All Men, All , , , , , , , , , , , , , , , , , , , ,910 2 Note: Information obtained from Earnings by Industry, Age, & Gender, , published by the Wyoming Department of Work Force Services, Research & Planning Division, Information obtained to generally compare those in the Manufacturing Industry versus All Industries combined by gender for years of 2005 through Totals reflect +/- discrepancy for unknown gender.

5 Figure 1.3: Men & Women Employed, Manufacturing Women Men ,271 2, ,273 2,236 2,298 2,626 2,726 2,812 2,691 8,706 8, ,741 8,418 8,742 9,396 9,487 9,407 9,156 The number of persons employed in full-time versus part-time capacities across Wyoming has remained stable with the only decline from due to the effects of the Great Recession. In 2006, full-time employment across All Industries was positioned at 74%, and by 2009 the number of persons employed full-time had reached a high of 77%. Years 2010 and 2011 revealed the Recession s decline with totals of 74% and 75% respectfully. Beginning with 2012, numbers began to rise: 2012, 75%; 2013, 76%; and 2014 with 76%. 3 Through a special request of Workforce Services, Research and Planning Division, and new to the report this year, the Department is providing data for full-and part-time employment specifically for the manufacturing sector. For those employed in the manufacturing sector, fulltime employment is dominant with a steady 91% or above average. Starting in 2005 and continuing through 2006, full-time manufacturing employment held a 93% average, and in 2007 through 2008, the percentage slid to an average of 91% and 92% respectfully; however, in 2009 the average climbed to a 93% average. Years held the average of 92%, and in 2012, the percentage of jobs held in the manufacturing sector reached its peak at 94%. Years 2013 and 2014 would see a slight decrease from the peak with an average of 93% and 92%. Unlike parttime employment, the percentage ranged from 23% - 28% for All Industries from , part-time employment in the manufacturing sector ranged from 7% - 9%. Beginning in 2005, part-time employment held at 7%, and would increase to 9% for years 2006 through Years 2009 through 2012 the average percent would alternate from 7% to 8%. Part-time employment picked up in 2013 and 2014 with 9%. 4 Figures 1.4 and 1.5 graphically illustrate the percentage of those employed full- and part-time in All Industries and Manufacturing. 3 Note: Information obtained from Earnings by Industry, Age, & Gender, , published by the Wyoming Department of Work Force Services, Research & Planning Division, Note: Information obtained directly from the Wyoming Department of Work Force Services, Research & Planning Division, Information includes the totals and percentages of employees in Wyoming working full- and part-

6 Figure 1.4: Full & Part-Time Employment, All Industries Full-time, All Industires Part-time, All Industires 72% 75% 75% 76% 77% 76% 75% 75% 76% 76% 28% 25% 25% 24% 23% 24% 26% 25% 25% 24% Figure 1.5: Full & Part-Time Employment, Manufacturing Full-time, Manufacturing Part-time, Manufacturing 93% 93% 91% 92% 93% 92% 92% 94% 93% 92% A discussion about those employed in the manufacturing industry is not complete without a closer review of the Standard Occupational Classification (SOC) system. The SOC system is used by federal and state statistical agencies to classify workers into detailed occupational categories according to their occupational definition. Wyoming utilizes the SOC system to categorize workers within the state, and while manufacturing has its own SOC code, several other occupational groups are typically found in the manufacturing industry as well. Table 1.1 ( ) and Table 1.2 ( ) illustrate the total number of persons working in the selected SOC categories within Wyoming from year time, All Industires and Manufacturing. Data derived from Wyoming Benefit Surveys issued by the Division of Workforce Services, research and Planning. 5 Note: Information obtained from the Wyoming Department of Work Force Services publications: 2005 data Wages and Benefits in Wyoming; data obtained from Wyoming Wage Survey, Historical Surveys

7 Table 1.1: Employment per SOC Classifications typically found in the Manufacturing Industry for Years SOC Occupational Title Management 12,780 12,450 NA 12,550 12, Business & Financial 6,270 6,720 NA 7,070 7, Computer & Mathematical 1,930 2,050 NA 2,040 2, Architecture & Engineering 3,920 4,250 NA 4,650 5, Life, Physical & Social Services 4,210 4,270 NA 4,260 4, Arts, Design, Entertainment, Sports & Media 2,740 2,490 NA 2,570 2, Healthcare Practitioners & Technical 10,550 10,850 NA 11,520 12, Food Preparation & Serving Related 24,440 23,600 NA 24,140 24, Building & Grounds Cleaning & Maintenance 10,030 11,110 NA 11,370 11, Sales & Related 21,760 22,480 NA 23,390 24, Office & Administrative Support 36,160 36,530 NA 37,870 38, Construction & Extraction 27,090 29,260 NA 33,090 37, Installation, Maintenance & Repair 14,730 15,520 NA 17,380 17, Production 11,900 13,060 NA 14,320 14, Transportation & Material Moving 24,020 26,640 NA 25,570 25,810 Table 1.2: Employment per SOC Classifications typically found in the Manufacturing Industry for Years SOC Occupational Title Management 12,710 12,370 12,200 12,040 12, Business & Financial 7,350 7,270 7,850 8,130 8, Computer & Mathematical 2,200 2,210 2,620 2,750 2, Architecture & Engineering 5,040 5,090 4,910 5,130 5, Life, Physical & Social Services 4,860 4,360 4,340 4,180 4, Arts, Design, Entertainment, Sports & Media 3,130 2,920 2,970 2,810 3, Healthcare Practitioners & Technical 12,770 13,130 13,280 13,360 13, Food Preparation & Serving Related 24,430 23,070 11,110 24,710 24, Building & Grounds Cleaning & Maintenance 11,250 11,220 22,630 11,070 11, Sales & Related 23,850 22,720 37,610 23,000 23, Office & Administrative Support 38,490 37,190 33,210 36,790 36, Construction & Extraction 36,510 32,620 33,770 33,770 33, Installation, Maintenance & Repair 18,080 16,890 17,790 18,370 18, Production 14,200 13,280 12,300 13,260 12, Transportation & Material Moving 24,820 22,060 20,450 23,160 23,700 (Statewide, Regional, & MSA Data) : November 2006, No data available for 2007, annual September reports

8 Again this year, the Department included data specific from the Wyoming Department of Work Force Services report, Wyoming Long-Term Occupational Projections, 2012 to 2022, which provided insight to the expected growth of all industries and those SOC classifications typically found in the Manufacturing Industry. Table 1.3, details the number of projected positions within the SOC classifications typically found in manufacturing. Projected employment trends begin with the base period of 2012 and move forward to Please note: This year s data has not altered from last year s report. Table 1.3: Projected Employment per SOC Classifications typically found in the Manufacturing Industry, SOC Occupational Title Base Projected Numeric % Change Change Management 16,942 18,841 1, Business & Financial 7,978 9,003 1, Computer & Mathematical 2,806 3, Architecture & Engineering 4,968 5, Life, Physical & Social Services 3,803 4, Arts, Design, Entertainment, Sports & Media 3,919 4, Healthcare Practitioners & Technical 14,395 17,062 2, Food Preparation & Serving Related 26,189 29, Building & Grounds Cleaning & Maintenance 14,009 15,724 1, Sales & Related 25,298 27,865 2, Office & Administrative Support 37,362 40,931 3, Construction & Extraction 37,077 42,301 5, Installation, Maintenance & Repair 19,056 21,575 2, Production 13,568 14,863 1, Transportation & Material Moving 22,343 24,910 2, Specific to manufacturing, the Department again utilized two reports published by the Wyoming Department of Workforce Services: Wyoming Short-Term Industry Projections, and Wyoming Long-Term Industry Projections, These reports utilize the North American Industrial Classification System (NAICS) which is used by federal and state statistical agencies. While SOC codes categorize workers into detailed occupational categories according to their occupational definition, NAICS codes group establishments into industries based on the goods or services they produce. According to Wyoming Workforce Service s report, Wyoming Short-Term Industry Projections, , 7 the employment forecast for Wyoming s Manufacturing Industry in general will grow by 2.5% with approximately 241 new jobs added from 2014 through Subsections to note are Fabricated Metal Product Manufacturing which reflects a gain of 157 new jobs, an increase of 10.1%, Chemical Manufacturing with a projected gain of 81 jobs and an increase of 4.5%, as well as Petroleum and Coal Products Manufacturing with 53 new jobs at 3.9% increase. Machinery, Computer and Electronic Product, and Printing and Related Support Activities 6 Data obtained from Wyoming Department of Workforce Services, Wyoming Long-Term Occupational Projections, Note: Information obtained from Wyoming Short-Term Industry Projections, Wyoming Occupational term Projections, 2012 to 2022.

9 Manufacturing are projected to lose the most jobs with 24, 20, and 15 jobs lost respectively. Table 1.4 illustrates short-term manufacturing projections from Table 1.4: Short-Term Manufacturing Projections, SOC Manufacturing Subsection Base Projection Change % in Jobs Change Manufacturing, as a whole 9,637 9, % Food Manufacturing % Beverage and Tobacco Product Manufacturing % Textile Mills ND ND ND ND Textile Product Mills % Leather and Allied Product Manufacturing % Wood Product Manufacturing % Printing and Related Support Activities % Petroleum and Coal Products Manufacturing 1,354 1, % Chemical Manufacturing 1,799 1, % Plastics and Rubber Products Manufacturing % Nonmetallic Mineral Product Manufacturing % Primary Metal Manufacturing ND ND ND ND Fabricated Metal Product Manufacturing 1,559 1, % Machinery Manufacturing % Computer and Electronic Product Manufacturing % Electrical Equipment, Appliance, and Component % Transportation Equipment Manufacturing % Furniture and Related Product Manufacturing % Miscellaneous Manufacturing % With last year s report, the Department introduced Wyoming Long-Term Industry Projections, , which is still relevant data this year. While the data reported is the same as last year, (the manufacturing sector will grow 9.9% with an additional 927 new jobs from 2012 through ), there are some notable differences between the short- and long-term projections. The short-term percentage change projection for manufacturing as a whole (2.5% increase) is significantly less that the long-term projection (9.9% increase). Furthermore, the short-term projection of Beverage and Tobacco Product Manufacturing rests at a 1.8% increase, the longterm projection is an increase of 19.7%. Conversely, the short-term projection of Chemical Manufacturing reveals an increase of 4.5% while the long-term projection is almost twice that amount at 10.9%. What both projections (short - and long -term) do reveal is that Fabricated Metal Product Manufacturing has the largest increase of jobs (L- 194, S- 157) as well as percentage (L-12.3%, S-10.1%). Table 1.5 illustrates long-term manufacturing projections from Note: Information obtained from Wyoming Long-Term Industry Projections, Wyoming Occupational Projections, 2012 to 2022 comparing employment figures for the base of 2012 to 2022 projections for SOC categories typically found within the Manufacturing Industry.

10 Table 1.5: Long-Term Manufacturing Projections, SOC Manufacturing Subsection Base Projection Change % in Jobs Change Manufacturing as a whole 9,358 10, % Food Manufacturing % Beverage and Tobacco Product Manufacturing % Textile Mills ND ND ND ND Textile Product Mills % Apparel Manufacturing ND ND ND ND Leather and Allied Product Manufacturing % Wood Product Manufacturing % Paper Manufacturing ND ND ND ND Printing and Related Support Activities % Petroleum and Coal Products Manufacturing 1,106 1, % Chemical Manufacturing 1,759 1, % Plastics and Rubber Products Manufacturing % Nonmetallic Mineral Product Manufacturing % Primary Metal Manufacturing ND ND ND ND Fabricated Metal Product Manufacturing 1,582 1, % Machinery Manufacturing % Computer and Electronic Product Manufacturing % Electrical Equipment, Appliance, and Component % Transportation Equipment Manufacturing % Furniture and Related Product Manufacturing % Miscellaneous Manufacturing %

11 Growing and Declining Industries The Department utilized the Department of Workforce Service s Growing and Declining Industries reports, which provides data of those industries which are growing and declining. Presented by annual quarters, these reports compare the number of jobs per subsection of the North American Industrial Classification System (NAICS) calculating the average change which is the employment-weighted average percentage change of the current and prior quarters. Highlighting the top growing industries in Wyoming for 2014, Transportation and warehousing, which made the list with double digit increases each quarter, ISP, search portals, & data processing, Computer & electronic product manufacturing, and Heavy civil engineering construction all made the top five of growing industries with double digits for three quarters of Figure 2.1 reflects those subsections for All Industries which grew in Wyoming during Figure 2.1: 2014 Top Five Growing Industries, All Transportation warehousing & storage ISP, search portals, & data processing Computer & electronic product manf. Manufacturing miscellaneous Construction Wood product manufaturing Petroleum & coal products Heavy civil engineering consturction Furniture & Related 4Q 29% 15% 10% 85% 20% 19% 3Q 30% 74% 29% 13% 18% 2Q 31% 25% 62% 22% 14% 1Q 18% 22% 15% 12% 20% The top five declining industries included two industries which made the list all four quarters of 2014: Transportation equipment manufacturing and Air transportation. Nonstore retailers made the list with a decline in three quarters ranging from 27% - 29%. Repair & maintenance declined the first two quarters of 2014, and Machine manufacturing declined the last two quarters of Figure 2.2 illustrates those subsections for all industries which declined during the year. 9 Note: Information obtained from the Wyoming Department of Work Force Services Growing and Declining Industries comparing growing industries, 1 st - 4 th quarters of Note: Information obtained from the Wyoming Department of Work Force Services Growing and Declining Industries comparing growing industries, 1 st - 4 th quarters of 2014.

12 Figure 2.2: 2014 Top Five Declinging Industries 4Q 5% 12% 19% 29% 7% Transportation equipment manufacturing Nonmetalic mineral manufacturing 3Q 9% 9% 24% 27% 7% Machine manufacturing 2Q 13% 24% 8% 27% Air transportation 1Q 13% 7% 16% 8% 0% 20% 40% 60% 80% 100% Repair & maintenance Nonstore retailers Specific to manufacturing subsections which grew in 2014, Petroleum & coal products made the list all four quarters with an average of 12%, Computer & electronic product manufacturing placed the last three quarters with an impressive average of 74%, while Furniture & related manufacturing place the first three quarters with an average of 12% growth, and Fabricated metal products manufacturing appeared in the last two quarters for a 11% average increase. Also notable was Wood product manufacturing and Textile product mills which grew 22% and 8% respectively in the first quarter. 11 Figure 2.3 illustrates manufacturing subsections which grew during Figure 2.3: 2014 Growing Manufacturing Subsections Wood product manufaturing Computer & electronic products Textile product mills Fabricated metal product Petroleum & coal products Miscellaneous Furniture & related 4Q 10% 85% 13% 3Q 12% 74% 13% 9% 2Q 13% 62% 13% 14% 1Q 22% 12% 20% 8% 9% 11 Note: Information obtained from the Wyoming Department of Work Force Services Growing and Declining Industries comparing Decling industries, 1 st - 4 th quarters of 2014.

13 While the Manufacturing Industry gained as a whole in 2014 and is projected to do so through 2022, several subsectors in the manufacturing sector declined in Transportation equipment manufacturing declined on average of 12% all four quarters, Machinery manufacturing declined the last two quarters of 2014 by an 11% average, and Nonmetalic mineral manufacturing declined 7% the first quarter while Plastics and rubber manufacturing declined 7% in the last quarter. 12 Figure 2.4 illustrates manufacturing subsections which declined during Figure 2.4: 2014 Declining Manufacturing Subsections 4Q 12% 12% 7% 3Q 9% 9% Transportation equipment Nonmetalic mineral 2Q 12% Machinery Platics and rubber 1Q 16% 7% 0% 20% 40% 60% 80% 100% 12 Note: Information obtained from the Wyoming Department of Work Force Services Growing and Declining Industries comparing Decling industries, 1 st - 4 th quarters of 2014.

14 Wages Average annual wages rose from 2005 to 2008; however, the effects of the Great Recession ( ) would keep wages from again rising until In 2005, the average wage for men in All Industries was $32,218, and by 2014 the average wage rose to $47,154 annually which represents an increase of $14,936 or roughly 46% over Equally, female workers experienced consistent increases, initially earning an annual average wage of $18,721 in 2005 and $27,464 in 2014, an annual increase of $8,743 or roughly 47%. 13 Figure 3.1 illustrates the average Wyoming wage for All Industries categorized by gender between 2005 and Figure 3.1: Average Wages, All Industries $50,000 $40,000 $30,000 $20,000 $10,000 $ Men, All Women, All Men and women employed in the Manufacturing sector enjoy higher wagers than their counterparts in All Industries, and have also seen annual wage increases over the last nine years. In 2005, men employed in Manufacturing earned an average annual wage of $38,463 and women earned $19,795. In 2014, the average wage for men and women rose to $58,751 and $31,580 respectively. 14 Figure 3.2 portrays the average Wyoming wage for manufacturing categorized by gender between years 2005 and $80,000 $60,000 $40,000 $20,000 Figure 3.2: Average Wages, Manufacturing $ Men, Manufacturing Women, Manufacturing 13 Note: Information obtained from Average Earnings by Age, & Gender, All Industry , published by the Wyoming Department of Work Force Services, Information specific to average wages for all industries and manufacturing reported per gender between years Ibid.

15 Figures 3.3, 3.4, and 3.5 compare average wages within the Manufacturing Industry to All Industries. $40,000 $30,000 $20,000 $10,000 $0 Figure 3.4: Wages, Women $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Figure 3.3: Wages, Men Women, All Women, Manufacturing Men, All Men, Manufacturing $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- Figure 3.5: Wages, Manufacturing V. All Industries Men, All Men, Manufacturing Women, All Women, Manufacturing Skilled laborers, such as professional, technical, and healthcare positions pay a higher median wage than unskilled labor, i.e., sales, food service, and maintenance, and repair services. Skilled labor shows a median wage increase from while unskilled labor increases remain relatively flat. Although not gender specific, Tables 3.1 ( ) and 3.2 ( ) detail the hourly median wage earned by workers within the SOC occupation typically found in the Manufacturing Industry Note: Information obtained from the Wyoming Statewide Wages Tables as excepted from the following publications: 2005 data Wages and Benefits in Wyoming, Pubished September 2006, ; data from Wyoming Wage Survey, Historical Surveys, Statewide, Regional, & MSA Data tables Wyoming Occupational Employment and Wages, Published November 2006, all others published September of corresponding year.

16 Table 3.1: Hourly Median Wage ( ) SOC Occupational Title Management Occupations NA Business & Financial NA Computer & Mathical NA Architecture & Engineering NA Life, Physical & Social Services NA Arts, Design, Entertainment, Sports, etc NA Healthcare Practitioners & Technical NA Food Preparation & Serving Related NA Building & Grounds Clearing & Maint NA Sales & Related NA Office & Administration Support NA Construction & Extraction NA Installation, Maintenance & Repair NA Production NA Transportation & Material Moving NA Table 3.2: Hourly Median Wage ( ) SOC Occupational Title Management Occupations Business & Financial Computer & Mathematical Architecture & Engineering Life, Physical & Social Services Arts, Design, Entertainment, Sports, etc Healthcare Practitioners & Technical Food Preparation & Serving Related Building & Grounds Clearing & Maint Sales & Related Office & Administration Support Construction & Extraction Installation, Maintenance & Repair Production Transportation & Material Moving

17 Benefits In accordance with the specific statutory requirements, the Department of Revenue included benefit data collected by the Wyoming Department of Work Force Services. Employers are surveyed on a quarterly basis and the compiled results are published annually as part of Workforce Service s Wyoming Benefits Survey publications. 16 Currently, Workforce Services tracks twenty benefits that may or may not be offered to employees; however, for simplicity sake, the Department of Revenue had opted to follow seven of the most familiar benefits offered by employers during years 2005 through Benefits, in addition to earned wages, are typically offered as an incentive by the employer, and benefits offered varies per employer. For example, some employers offer a retirement plan, such as a 401(K), while others offer a long-term disability benefit. The cost associated with such benefits also varies in degree where the employer may be the sole sponsor or the employee may share in the cost. For instance, an employer may offer and absorb the cost of a prescribed number of sick days; whereas, another employer may match contributions in a 401(K) retirement plan up to a designated percent. Still yet, medical insurance follows a shared contribution model in accordance with the Affordable Care Act which was signed into Federal law in 2010 and enacted in From those surveyed, benefits offered (aside from medical and dental insurance) to full-time employees in All Industries increased at a steady pace from 2005 until year Benefits offered dropped during 2007 and 2008, most likely a direct result of the Great Recession, but began to slowly increase during 2009 and The year 2011 was mixed with an increase of some benefits offered while others declined. Benefits offered would rebound starting with year 2012 in which a few benefits held flat while others increased by a few percentage points. Year 2013 held stable with a few increases until 2014 with the exception of medical insurance, the majority of benefits offered by employers increased. The drop in medical insurance offered by employers could be a result of the Affordable Care Act s open exchange. Benefits offered by employers to full-time employees in the manufacturing sector also saw a drop in 2007 from benefits offered in In 2008, benefits offered would again rise until 2011 in which the year proved to be mixed where some benefits offered increased while others declined. In 2012 & 2013, employee benefits increased, while in 2014, a majority of employee benefits offered had declined. In spite of the Great Recession, benefits offered to full-time employees in the Manufacturing Industry enjoyed greater access to sampled benefits over benefits offered to those employees in All Industries. 16 Note: Infomration obtained from Wyoming Department of Work Force Services, Research & Planning. Data for 2005& 2006 obtained from publication, Wages and Benefits in Wyoming 2008; 2007 & 2008 data Wyoming Benefits Survey; 2008, published December 2009 and Wyoming Wage Survey, Occupational Employment Statistics March 2009; 2009 data Wyoming Benefits Survey, Published February 2011; Wage Survey, Occupational Employment Statistics 2010; 2010 and 2011 data Wyoming Benefits Survey 2012, published February 2012 ; Q3 2 data provided by Wyoming Department of Work Force Services later to be published in Wyoming Benefits Survey 2013, February 2015, data for 4thQ obtained by request to Workforce Services, unpublished.

18 Tables 4.1 and 4.2 represent a compilation of excerpts from the Wages and Benefits Surveys, and chronicle the selected benefits offered to full-and part-time employees across All Industries and isolated specifically to those offered in the Manufacturing Industry. 17 Table 4.1: Percentage of Full-Time Employees Offered Selected Benefits, Manufacturing v. All Industries Benefit Type Medical Ins., Manufacturing 80.5% 85.5% 75.5% 88.1% 84.7% 89.7% 85.5% 85.3% 87.9% 82.1% Medical Ins., All Industries 78.0% 79.2% 76.3% 80.1% 80.2% 80.0% 77.7% 80.4% 81.9% 78.6% Dental Plan, Manufacturing 67.2% 73.2% 52.2% 77.9% 70.9% 82.0% 74.2% 79.3% 86.1% 83.0% Dental Plan, All Industries 67.8% 69.7% 65.3% 67.7% 71.7% 67.7% 70.5% 71.3% 73.5% 73.6% Life Insurance, Manufacturing 71.2% 76.5% 62.5% 80.7% 77.2% 77.1% 80.6% 81.8% 85.4% 85.1% Life Insurance, All Industries 66.8% 69.7% 67.3% 71.1% 71.6% 69.8% 68.8% 71.1% 73.3% 72.2% Paid Vacation, Manufacturing 81.4% 85.9% 90.1% 85.4% 82.7% 77.9% 89.9% 87.3% 84.6% 78.5% Paid Vacation, All Industries 74.8% 76.0% 71.8% 71.8% 75.3% 79.4% 73.0% 72.9% 72.8% 74.3% Retirement, Manufacturing 76.4% 81.4% 80.8% 84.2% 78.4% 76.4% 86.2% 85.2% 84.2% 82.8% Retirement, All Industries 75.2% 77.8% 75.8% 79.0% 78.3% 76.5% 73.5% 75.4% 77.2% 74.8% Paid Sick, Manufacturing 53.0% 41.1% 20.6% 48.7% 50.1% 40.2% 52.6% 44.0% 35.3% 34.9% Paid Sick, All Industries 51.7% 47.0% 39.1% 42.7% 50.8% 47.8% 50.9% 50.0% 49.1% 54.3% LT Disability, Manufacturing 46.9% 56.3% 33.8% 45.0% 42.6% 57.5% 64.8% 69.3% 73.8% 61.0% LT Disability, All Industries 45.1% 44.1% 40.7% 42.7% 50.9% 40.5% 46.9% 50.4% 53.8% 53.1% 17 Note: Infomration obtained from Wyoming Department of Work Force Services, Research & Planning. Data for 2005& 2006 obtained from publication, Wages and Benefits in Wyoming 2008; 2007 & 2008 data Wyoming Benefits Survey; 2008, published December 2009 and Wyoming Wage Survey, Occupational Employment Statistics March 2009; 2009 data Wyoming Benefits Survey, Published February 2011; Wage Survey, Occupational Employment Statistics 2010; 2010 and 2011 data Wyoming Benefits Survey 2012, published February 2012 ; Q3 2 data provided by Wyoming Department of Work Force Services later to be published in Wyoming Benefits Survey 2013, February 2015, data for 4thQ obtained by request to Workforce Services, unpublished.

19 Table 4.2: Percentage of Part-Time Employees Offered Selected Benefits, Manufacturing v. All Industries Benefit Type Medical Ins., Manufacturing 12.7% 5.7% 0.0% 11.6% 2.0% 3.7% 7.4% 8.1% 8.7% 9.0% Medical Ins., All Industries 11.3% 12.1% 13.4% 9.8% 19.8% 11.4% 9.7% 18.3% 19.8% 12.1% Dental Plan, Manufacturing 12.1% 5.2% 0.0% 13.4% 1.0% 4.5% 7.4% 11.5% 12.3% 10.0% Dental Plan, All Industries 9.4% 11.2% 11.9% 9.2% 18.3% 11.4% 9.9% 17.6% 18.3% 11.9% Life Insurance, Manufacturing 60.0% 1.2% 2.0% 5.6% 1.0% 0.6% 7.4% 5.8% 4.8% 3.3% Life Insurance, All Industries 8.1% 8.9% 10.0% 9.4% 13.9% 11.7% 9.3% 14.3% 15.3% 10.1% Paid Vacation, Manufacturing 5.4% 7.1% 17.3% 8.6% 3.2% 10.5% 10.9% 7.3% 3.1% 5.4% Paid Vacation, All Industries 21.3% 21.8% 28.5% 17.4% 18.5% 21.8% 14.6% 18.1% 20.8% 19.1% Retirement, Manufacturing 21.0% 18.7% 23.9% 21.4% 2.6% 12.5% 19.6% 19.7% 15.6% 14.2% Retirement, All Industries. 28.3% 30.8% 33.1% 33.1% 32.4% 27.9% 25.0% 32.0% 27.3% 21.9% Paid Sick, Manufacturing 0.0% 0.7% 3.4% 4.8% 4.2% 2.7% 1.6% 3.8% 4.5% 1.8% Paid Sick, All Industries 19.7% 17.5% 15.1% 11.1% 18.2% 13.7% 14.7% 14.3% 14.7% 13.4% LT Disability, Manufacturing 0.0% 0.0% 0.0% 6.3% 0.3% 0.0% 0.0% 0.9% 1.5% 0.4% LT Disability, All Industries 5.7% 6.0% 6.2% 6.0% 9.3% 6.1% 4.9% 5.7% 7.6% 8.3%

20 Turnover Turnover is the rate at which an employer gains or loses employees and includes open position new hires, new hires and exits, as well as attrition exits over a specific period of time. An unusually high turnover rate is symptomatic of challenges related to a possible host of factors both externally and internally, such as benefits offered, pay, recognition, schedules, or even industry health. In whole from 2005 through 2014, the Manufacturing Industry experienced considerably lower turnover rates than All Industries. From 2005 to 2008, the Manufacturing Industry experienced an average of 8% lower turnover rate than those employers in All Industries statewide. Similarly, from 2009 through 2011, the Manufacturing Industry maintained a lower turnover rate from All Industries by 8%. Feeling the effects of the Great Recession, 2009 s turnover rate revealed the greatest comparison between manufacturing at 18.6% to that of All Industries at 28.6%. From 2010 to 2013, turnover rates stabilized and remained constant with All industries averaging 29.3% and Manufacturing averaging 21.5%. In 2014, All Industries reported a turnover of 31.4% while manufacturing reported 22%. Figure 5.1 illustrates Wyoming s annual turnover rates for the Manufacturing Industry as compared to All Industries for years % Figure 5.1: Employment Turnover Rates 35% 30% 25% 20% 15% 10% 5% 0% All Industires Manufacturing 18 Note: Information obtained from Department of Workforce Services, Wyoming Industry Turnover by Year and Quarter, 1992Q1 to 2014 Q4, totals derived from Q1 Q4 yearly average.

21 Survey Process and Costs This is the ninth report in a series of annual reports on the effects of the sales and use tax exemption for manufacturing machinery. This report is based on 1,109 surveys (Manufacturing Machinery Exemption Survey Form 108) mailed June 9, 2015 by the Department of Revenue to manufacturers as identified in its system and from merged databases used previously. This is an increase from the number of surveys sent last year. A cover letter attached to the survey informed those contacted that the survey could be completed by respondents either in paper format and then returned to the Department or the survey could be completed online. 19 Costs to prepare the survey, attached cover letter, and postage are estimated at $ However, the primary expense associated with this report is not quantifiable, and is the result of hours spent preparing the address database identifying recipients; printing the cover letters and surveys themselves; answering and returning calls to respondents with questions and concerns; data entering responses received in paper format; reviewing and analyzing data received from the respondents as well as obtaining data from the Wyoming Department of Work Force Services. The due date set forth in the mailed survey was August 15, Total survey responses received as of September 21, 2015 totaled 511 responses, or or 46.1% of those surveyed. The survey has been revised and simplified throughout the years which has led to truer responses from those surveyed, and thus, more accurate data. In addition, the Department has continued to scrutinize and verify response data for accuracy, i.e., duplicate responses, exempt purchase amount entered compared to the respondent s selection of a corresponding dollar range, contacting respondents with incomplete surveys, etc. The Department of Revenue made numerous efforts to educate those in the manufacturing industry of their reporting requirements. On the Department s website, a related bulletin is always available and links to the electronic survey as well as a printable copy were made available for those who preferred traditional reporting. In 2015, the number of survey responses remains stable with the last two years: 2014 had 517 responses from 1,040 surveys mailed, 2013 had 508 responses from 964 surveys mailed. Years had roughly half the mailed surveys, yet higher percentage of responses. New to the report this year, Table 6.1 provides data from pertaining to surveys mailed and those who responded. Table 6.1: Manufacturing Exemption Survey Data Survey Response % Nº Mailed 1,073 1,036 1,321 1,633 1, ,040 1,109 Nº Responsed Note: Survey components and results, see Appendix A-B for year Note: Survey components and results, see Appendix A-B for year Data for data obtained from prior published manufacturing reports Amended Manufacturing Report - November 6, 2009 and Revised Manufacturing Report - November 24, 2008.

22 Figures 6.1 and 6.2 illustrate the number of surveys mailed, survey responses, and percentage responded from Figure 6.1: Manufacturing Exemption Survey Data Hundreds Mailed Surveys Number of Responses Figure 6.2: Percent of Manufacturing Exemption Survey Responders

23 Exemption Cost Based on survey responses in 2015, for purchases between the periods of July 1st, 2014 through June 30th, 2015, exempt manufacturing machinery purchases by Wyoming manufacturers equaled $342,064, As a result of this exemption and applying the statewide sales and use tax rate average of 5.40%, unrealized sales and use tax revenue for the State of Wyoming totaled $18,471, Since the inception of the manufacturing machinery exemption, this year reported the highest dollar amount in exempt purchases. Of the 511 responses received, 147 companies reported exempt machinery purchases. Figure 6.3 graphically represents the total reported manufacturing machinery purchases by those surveyed for years 2006 through Millions $400 $300 $200 $100 $- Figure 6.3: Reported Exempt Dollar Purchases $280 $283 $342 $256 $148 $177 $114 $71 $37 $60 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Purchases New this year, Figure 6.4 shows unrealized sales/use tax revenue from years for exempt manufacturing purchases Figure 6.4: Unrealized Sales/Use Tax Revenue $14.7 $15.0 $13.6 $18.5 Millions $9.4 $6.0 $3.7 $3.2 $2.1 $2.0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Unrealized Revenue 20 Note: Survey aggregate for 2015, see Appendix C, Survey aggregartes for data from prior Manufaturing Reports Published, data for 2006 retrieved from Department of Revenue data: Survey Monkey dollar amounts, November 21, 2006 and total number if malings of 1079.

24 This year, the purchasers per dollar range were spread out more evenly among the dollar ranges. The six dollar ranges used by survey responders included: $0 - $999; $1,000 - $9,999; $10,000 - $49,999; $50,000 - $99,999; $100,000 $999,999, $1,000,000 - $9,999,999; and over $10,000,000. Twenty-four respondents reported purchases $999 and under for a total of $9,745; thirty-one respondents reported purchases of $130,669 in the $ $9,999 dollar range, and thirty-three respondents reported a total of $761,624 in purchases in the $10,000 - $49,999 dollar range. Dollar range $50,000 - $99,999 had eleven respondents with $809,082 in purchases; dollar range $100,000 $999,999 reported $10,860,728 in purchases with thirty-three respondents, and $1,000,000 $9,999,999 dollar range reported $21,722,737 with ten respondents. The final range of over $10,000,000 had only five respondents, yet purchased $307,769,588, or 89% of all purchases. One company stood out as the largest purchaser with $150,895,557 in exempt manufacturing machinery purchases. Figure 6.3 graphically represents the number of purchasers per dollar range, and Figure 6.4 illustrates the dollar amount purchased per dollar range. Figure 6.5: Number of Purchasers Per Dollar Range ,000-9,999 10,000-49,999 50,000-99, , ,999 1,000,000-9,999,999 > 10,000,000 Figure 6.6: Amount of Purchases Per Dollar Range ,000-9,999 10,000-49,999 50,000-99, , ,999 1,000,000-9,999,999 > 10,000,000 $307,769,588 $9,745 $130,669 $761,624, $809,082 $10,860,728 $21,722,737

25 References Wyoming Department of Workforce Services, Research & Planning (2015). Online: Occupational Employment Statistics, Wyoming Wage Survey, Wage & Benefit publications. Wages and Benefits in Wyoming. Published September Cheyenne, WY: Retrieved from assessed 09/25/15. Wyoming Department of Workforce Services, Research & Planning (2015). Online: Occupational Employment Statistics, Wyoming Wage Survey, Historical Surveys, Wyoming Wage Survey, Historical Surveys, Wyoming Benefits Survey Cheyenne, WY: Retrieved from Assessed 09/25/15. Wyoming Department of Workforce Services, Research & Planning (2015). Wyoming Occupational Projections, 2012 to Long-Term and Short-Term Projections. Cheyenne, WY: Retrieved from doe.state.wy.us/lmi/projections/2014/longtermoccupational htm accessed 09/29/15. Wyoming Department of Workforce Services, Research & Planning (2015). Wyoming Short- Term Industry Projections, 2014 to Cheyenne, WY: Retrieved from accessed 09/25/15. Wyoming Department of Workforce Services, Research & Planning (2015). Wyoming Short- Term Occupational Projections, 2014 to Cheyenne, WY: Retrieved from accessed 09/25/15 Wyoming Department of Workforce Services, Research & Planning (2015). Wyoming Long- Term Occupational Projections, 2012 to Cheyenne, WY: Retrieved from doe.state.wy.us/lmi/projections/2014/longterm-occupational htm accessed 09/25/15. Wyoming Department of Workforce Services, Research & Planning (2015). Wyoming Long- Term Industry Projections, 2012 to Cheyenne, WY: Retrieved from accessed 09/25/15. Wyoming Department of Workforce Services. Research & Planning. (2015). Growing and Declining Industries, First Fourth Quarter Cheyenne, WY: Retrieved from accessed 09/29/15 Wyoming Department of Workforce Services, Research & Planning (2015). Earnings in Wyoming by Industry, Age & Gender, Retrieved from accessed 09/22/15

26 Wyoming Department of Employment, Research & Planning (2013). Wyoming Turnover Statistics, Total, All Counties and Manufacturing. Retrieved from accessed 10/01/15 Wyoming Department of Employment, Research & Planning (2013). Wyoming Wage Survey, Occupational Employment and Wages March All Industries and Manufacturing. Cheyenne, WY: Retrieved from accessed 10/07/14

27 Appendices Appendix A: Manufacturing Machinery Survey Form 108 Cover Letter Appendix B: Manufacturing Machinery Survey Form 108 Appendix C: Aggregate results of purchases made by respondents

28 Appendix A: Manufacturing Machinery Survey Form 108 Cover Letter

29 Appendix B: Manufacturing Machinery Survey Form 108