February 2008

Tax Reduction Saving Manufacturers Money – and You Can Still Apply

Are you taking advantage of the sales tax reduction for energy used in industry and manufacturing?

If your answer is “yes,” we’re happy that Act 185 is working for you and your company. Passed in the 2007 legislative session, this legislation was a major priority – and a major victory – for the State Chamber/AIA.

It established a sales tax reduction on electricity and natural gas used by manufacturers in the manufacturing process. The state sales tax rate on this energy usage was reduced from 6 percent to 4.5 percent effective July 1, 2007. The tax rate will be reduced an additional half of a percentage point to 4 percent effective July 1, 2008.

However, if your answer is “no,” you can still reap the benefits.

The Arkansas Department of Finance and Administration (DFA) recently issued Final Rule 2007-5: Reduced Tax Rate for Natural Gas and Electricity Used in Manufacturing. Click here to access it. Registration and certification are covered in Section C, which includes guidelines outlining the required registration with DFA to secure the reduced rates.

The State Chamber/AIA assumed the leadership role on this issue in the 2007 legislative session. Our leadership and lobbying efforts paid off and now are saving manufacturers thousands of dollars. We also worked closely with DFA on implementation of the reduction and the resulting Final Rule. We will continue to work in future sessions to further expand the exemption’s amount and application.

Congressional Dinner Will Highlight Annual Washington Fly-In

Participants on the State Chamber/AIA’s 49th Annual Washington Fly-In and Congressional Dinner can plan on a busy night on Monday, April 28, at the Crystal Gateway Marriott Hotel in Arlington, Va.

The evening begins with a 6 p.m. reception and continues into the dinner hour at 7 p.m., with both events featuring ample chances for productive contact with members of our congressional delegation and their staffs. The fun and tradition – along with excellent networking opportunities – continue after dinner in the Hospitality Suite, once again hosted by the Arkansas Chamber of Commerce Executives.

We will also meet and greet our senators and representatives and their staffs at their offices and at district dinners, luncheons and breakfasts April 27-29.

The Crystal Gateway is serving as our headquarters, and for your convenience the State Chamber/AIA has booked rooms at the hotel April 26-29. Click here for our Web site calendar and to access hotel and contact information for the event. The registration form is also on our Web site.

Pending Bill Would Overhaul Consumer Product Safety Commission

The Wall Street Journal reported earlier this month that the Senate may vote on a bill soon that would give the Consumer Product Safety Commission (CPSC) “greater resources to remove unsafe products from the marketplace,” but the measure will need to be reconciled with a House bill passed in December.

Although industry groups have raised objections, the agreement “appears to put CPSC-overhaul legislation back on track to clear Congress, especially in an election year when a crackdown on unsafe children's products has broad consumer appeal,” the newspaper reported. “The bill would boost fines for safety violations to $20 million from the current $1.8 million, restore the commission to five members from three and require the safety agency to set up a database containing reports of injuries, illnesses or deaths from consumer products submitted by the public. The bill also would extend the temporary two-person quorum for nine months so that the CPSC can continue to conduct official business, such as mandatory recalls and moving ahead with new regulations.”

On the front of its February 16 Business section, the Washington Post added that the agreement on the Senate bill “clears the way for the first major overhaul of the nation's consumer product safety system in a generation.” Although there was “broad agreement on many parts of the legislation,” lawmakers, industry lobbyists and consumer advocates “differed over how to ease restrictions on the CPSC's ability to alert the public about dangerous products and how much authority to give state attorneys general to help enforce federal product safety laws.” Rep. Diana DeGette (D-Colo.), vice chairman of the House Energy and Commerce Committee, said the differences between the House and Senate bills were “minor,” adding that the Senate deal “improves prospects for final passage.”

Figures Show Productivity Slowed Sharply in Fourth Quarter

The U.S. Labor Department reported earlier this month that worker productivity, the key factor in rising living standards, slowed sharply in the final three months of the year while wage pressures increased.

Productivity, the amount of output per hour of work, increased at an annual rate of 1.8 percent in the October-December quarter, down from a 6 percent performance in the July-September period. The slowdown reflected the fact that overall economic activity weakened considerably in the final three months of last year, according to the Associated Press (AP). Labor costs rose by 2.1 percent in the final three months of the year, after having fallen by 1.9 percent in the third quarter and 1.1 percent in the second quarter.

AP reported that Ian Shepherdson, chief U.S. economist at High Frequency Economics, said he looked for productivity to slow further in 2008, reflecting an extremely weak economy in the first half of the year. For the year, productivity rose by 1.6 percent, a slight rebound from a 1 percent gain in 2006 but both years were well below the average annual increases of 3.2 percent turned in from 2000 through 2004.

Productivity determines whether living standards can rise because it allows businesses to pay their workers more because of their increased output without having to raise the cost of their products, which increases inflation.

Labor Department to Propose Changes to FMLA

The U.S. Labor Department is considering changes to the Family Medical Leave Act (FMLA) that may cause workers to “be required to tell their bosses in advance when they take non-emergency leave.”

Currently, "employees can wait as long as two days after their shift begins to notify employers they are claiming time." Other changes the Labor Department is proposing include allowing "employers to require 'fitness-for-duty' evaluations for workers who took intermittent FMLA time and are returning to jobs that could endanger themselves or others," and redefining "having a 'serious health condition' require at least two visits to a healthcare provider within a month of being incapacitated," among others.

While industry groups had "not yet seen the proposed changes," Jason Straczewski, the National Association of Manufacturers' director of labor and workforce, said, "Right now, from what I've heard about it, it sounds like there are going to be some good commonsense reforms in this proposal."

Rise in OSHA Inspections Leads to Rise in Violations

Industry Week reports that the Occupational Safety and Health Administration (OSHA) said that overall workplace safety violations increased in the United States by 6 percent in 2007 over 2006.

OSHA said the rise was due to an increase in enforcement efforts. The department "conducted 39,324 inspections in 2007, a 4.3 percent increase over its 2007 goal of 37,700 inspections. At the same time, total violations increased 6 percent over 2006, with serious infractions rising 9 percent and repeat offenses increasing 6.4 percent." Total violations rose from 83,913 in 2006 to 88,846 in 2007.