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Manufacturers laud passage of industry-friendly legislation

Even though the 2005 regular legislative session officially ends on Sunday, April 3, and several industry-related legislative bills are snaking through the system, Mississippi manufacturers celebrated the passage of legislation that reduces the unemployment tax rate and earmarks a portion of savings for workforce training.

Senate Bill 2480, which was signed by Gov. Haley Barbour March 23, provides an unemployment tax reduction for Mississippi employers totaling $35 million for 2005 (retroactive January 1), dedicates $20 million to fund workforce training and protects the security of the unemployment trust fund.

“We worked closely with the Mississippi Department of Employment Security and others to craft this important bill,” said Jay Moon, president and CEO of Mississippi Manufacturers Association. “It’s a tremendous bill, and we’re very happy with it. It gives us a huge recruiting tool.”

The state unemployment tax formula had not been reviewed for several years, and the unemployment trust fund had amassed more than $680 million, explained Moon.

“The federal government recommends that any given state have in their trust fund the equivalent of two times the worst year of payout,” he said. “In our case, that amounted to about $190 million. We had over three times what was needed.”

Manufacturers were also seeking a funding source for workforce training outside the general fund, said Moon.

“Every year, the Legislature allocates $12 to $15 million for workforce training, primarily for manufacturers,” he said. “Then the Legislative Budget Office recommends $2 or $3 million, and they spend the whole session trying to get it back up. We needed to get off this yo-yo and secure stabilized funding from another source. The federal government allows the use of unemployment insurance funds collected for unemployment claims and workforce training, so we thought we found a win-win situation because the trust fund was so high. We thought we could lower the rate for all employers in the state, including manufacturers, and spin off roughly $20 million from collected money and dedicate it to workforce training.”

The bill dovetails with legislation passed last year that increased the tax credit allowed for private sector employers that provide their own workforce training, said Moon. Manufacturers are hopeful that legislators will breathe new life into the Momentum Mississippi Incentive Bill, which died on the calendar in the House. Among other things, it would provide incentives for existing manufacturers to invest in technology to keep out-of-date plants operating in the state.

“The Momentum program updates the old Advantage program and adds significant new industrial sectors that weren’t covered before,” explained Moon. “It adds two new program categories for existing manufacturers: a low-interest loan program and a tax credit for investment in new capital expenditures. They’re very important because we are in a competitive environment with other states, many of which have very innovative programs coming online specifically supportive of existing industry.

“I hope the legislators will revisit it and realize it’s important to have those kinds of tools at MDA’s disposal to keep us competitive. Those new efforts for existing business are so critical right now because the economy is getting better, but we’re not out of the woods yet. We need to make sure we keep strengthening the economy to move forward.”

Bond bills were passed that provided installment funding of multi-year commitments by the state for manufacturers including Northrup Grumman, Baxter Healthcare, Viking Range and Eurocopter.

“Those are major contributory manufacturers within the state that employ a lot of people and make capital investments and will be making a lot more,” said Moon. “These manufacturers are indicating they’re staying in the state and will continue to grow in the state. They needed this support to stay viable and competitive in the global marketplace.”

State lawmakers also supported a $110-million incentive package of bonds to lure SteelCorr, an $800-million steel plant, to Columbus.

“By itself, it’s the kind of project you’d want to attract to any state,” said Moon. “My guess is that it will probably be the largest capital investment of any project in the U.S. this year. It will also bring additional suppliers, providing a multiple benefit to the state. It continues our ability to build the kind of infrastructure we need to solidify our growing auto industry in Mississippi.”

For the second straight year, legislation failed that would have exempted manufacturers from ad valorem taxes on pollution control equipment mandated by federal or state law. Senate Bill 2449 failed when House Ways and Means chairman Percy Watson (D-Hattiesburg) did not allow the committee to vote on it.

“Forty-one states offer some kind of exemption, if not an outright exemption, for taxes on mandated pollution control equipment,” said Moon. “The legislation would have not only been a great incentive in luring businesses to Mississippi, but it would have leveled the playing field for existing industry in the state.”

However, Moon called the passage of brownfields incentive legislation “a real coup.”

“We’d been looking at it for some years now — creating a tax credit for the owner or purchaser of a brownfields site to put it back into some type of productive use — and were finally able to get some consideration,” said Moon.

Contact MBJ contributing writer Lynne W. Jeter at lwjeter@yahoo.com.

About Lynne W. Jeter

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