WA Election Reminder: Business Issues to Ponder
Updated Aug. 17, 2010
Today is Washington state’s Primary Election Day. Be sure to vote.
Meantime, there are valid reasons why Washington state public officials’ pleas of poverty and and justifications for tax increases have fallen on the deaf ears of most businesspeople. The overwhelming majority of companies – large, medium and small – have had to resort to cost savings. But only recently in mid-2010 have state leaders finally admitted state government needs to be downsized by as much as 7 percent across-the-board in the wake of declining revenue and continuing forecasts of $3 billion deficits.
However, for years, many of us have warned about the state’s propensity to spend wastefully in the face of multi-billion- dollar unfunded state pensions and $3 billion deficit forecasts. Again this year, the Legislature bypassed voter protections on transparency, and raised taxes by $800 million. In the last decade, there have have numerous Biz Coach columns about court cases and shell games by public officials in violations of state spending limits. But we’ve been ignored by public servants, which infuriates the electorate concerned about economic health and job creation.
Ironically, there have been numerous published reports of fiscal waste, mismanagement and abuse. That means if efficiencies were ever implemented– including the best-practices in fiscal management recommended by the state auditor – there would be enough tax revenue.
For example, the state was overcharged $306,000 for supplies by Office Depot in 2009, according to the state auditor. But the state’s Department of General Administration denies it’s overspending. We have to wonder how badly the other agencies are misbehaving.
The contract with Office Depot is part of a $24-million deal that includes other state agencies, institutions of higher learning and local governments.
The agency is part of a list of other state agencies also in denial, especially the Department of Social and Health Services (DSHS), and the Washington State Department of Transportation (WSDOT) and the ferry system.
As a business-performance consultant who has solved the financial headaches of public and private-sector clients since 1992 – often by not even having to look at numbers – just observing people at work – I have also interviewed State Auditor Brian Sonntag.
As I’ve written before regarding public policy, I’ve witnessed tons of waste at DSHS, WSDOT and the Washington State Department of Personnel.
My sense also is that Mr. Sonntag is a stellar public servant, and I would point a finger at Office Depot for not adhering to the contract rates, as well as at the Department of General Administration for being lazy in due diligence.
This summer, we finally heard about the flawed worked of state employees that caused two freeway projects in Tacoma to be torn down and rebuilt. It resulted in $1.5 million in more waste and no accountability. That wouldn’t fly in the private sector at most companies.
Don’t forget about the KING 5 series on mega millions in waste and inefficiency in the state ferry system.
Also, I’d ignore the disingenuous arguments in the $2 million Initiative 1098 campaign to start a state income tax. An income tax would soak the rich – many of the very people who hire workers and make investments.
A state income tax has not helped two states where I spend a lot of time: Oregon and California.
An income tax here would send a negative message to prospective employers around the globe that might consider establishing a presence in Washington. Why would anyone want to harm our potential to grow the economy and create jobs?
Another thought: Should this income tax pass this year, state officials will find excuses to broaden the income tax to include middle-income taxpayers, too. Have you ever known a tax not to expand or even disappear?
Now comes the disingenuous allegation in two state reports claiming that voters should not privatize liquor sales because they would cause shortages. That’s bunk. Not only will we put a governor on the unfunded pensions of 1500 state liquor employees, the number of privatized liquor outlets will expand 10-fold. That enhances tax revenue — it doesn’t decrease it.
Please forgive me for being a tad gauche, but you’re best advised to consider all the government waste and mismanagement, as well as the candidates’ philosophies before going to the polls or returning your absentee ballot.
Courtesy of Enterprise Washington, here are two research resources:
- Reviewing candidates’ answers to the Enterprise Washington & WashACE Candidate Questionnaire, accessible through the GROW Voter Guides.
- Viewing incumbent candidates’ legislative voting records.
May Washingtonians decide on a business-friendly environment on Aug. 17 and in Nov.
From the Coach’s Corner, this Web site has more than 50 national and Washington state public-policy columns regarding the governments’ adverse impacts on the economy and business climate in this section.
Options for Hotel Owners – Seattle Ranks Among Worst 5 Cities in Travel Taxes
July 23, 2011 – updated 12:14 a.m.
Yes, hotel owners are panic-stricken – hospitality profits are down in Seattle and everywhere else.
But for the second consecutive year, Seattle ranks among the most-expensive for travelers, and hotel owners want to hike room taxes for a tactic that will not work. Not to criticize, they have better options, which I’ll explain later.
Seattle imposes the third-highest car rental, hotel and meal taxes among the 50 largest markets in the nation, according to a 2011 business study by the Global Business Travel Association Foundation.
Taxes include: A general sales tax, and taxes on car rentals, hotels and meals.
Ironically, the Seattle Hotel Association wants to tack on another $2 tax for each room per night for travelers. That’s in addition to the 15.6 percent in sales and room taxes already levied on hotel guests.
Unfortunately, they think the excess funds should be used in an advertising campaign to boost tourism. The Seattle City Council will vote on the issue.
The five highest-taxing cities: 1. Chicago. 2. New York City. 3. Seattle. 4. Boston. 5. Kansas City.
Ironically, Seattle ranks among the three most-expensive but is only the 15th-largest city in America.
The foundation’s director of research, Joe Bates, says there’s a huge difference among the 50 cities – as much as 80 percent. It’s not surprising that such taxes affect the travel plans of business people.
“If you are a travel manager planning a meeting, this is important information to take into consideration,” says Mr. Bates. “And if you are a retail business attempting to lure travelers, this tax rate differential is a competitive advantage or disadvantage.”
Better Options for Seattle Hotel Owners
In my experience as a confidential business-performance consultant, who has also produced hundreds of radio-television commercials, my sense is that an increase in Seattle hotel taxes to fund an advertising campaign is ill-advised. There are good reasons why stay-cations have been prevalent.
Sometimes you can’t buy the market, especially in the tourism sector for a rainy region in a downturn. In addition, Seattle hotel owners have already committed missteps — three of the 14 reasons for the failure of a marketing campaign (How to Win Your Major Marketing Campaign).
Don’t get me wrong, I love Seattle, but hotel owners would be better served using other less-costly strategies for a positive return on investment.
Short-term, in times like these, it’s much better to be creative in strategy with an effective public-relations campaign and strategic partnerships with contests as the anchor element in a promotion.
Consider a Seattle asset: Alaska Airlines. Why do you think Alaska Airlines is loaded with Seattle passengers in February for flights to warm-weathered Mexico and Hawaii? Conversely, Alaska Airlines would love to strategize as a partner in savvy promotions to bring tourists to Seattle in the wintertime.
Long-term, strategies should include sharing the cost with other groups in underwriting image-building initiatives. For example, Washington Filmworks (www.washingtonfilmworks.org) and the Seattle Film Office (www.seattle.gov/filmoffice) to promote filmmaking.
It was a win-win with these two organizations until legislators killed a great tax-incentive program and opportunities for growth (How Washington Fails in Filmmaking for Economic Development). Maybe it happened but I don’t recall the Seattle Hotel Association lobbying the Legislature last session.
Films create emotions, which fill hotel rooms in rainy weather by helping to overcome resistance by winter travelers who’d prefer to visit sun-soaked locales.
So, a two-pronged strategy — a strategic public-relations program and partnering for image-building films — are the solution.
Oh, by the way, filmmaking also creates jobs while enhancing both the city’s and state’s economic image. In terms of public policy – for a region that’s thirsting for jobs and tax revenue – hotel tax increases and eliminating tax incentives are deterrents to economic development.
Consumers, out-of-state corporations and small businesses have budgets, too.
From the Coach’s Corner, are you surprised Washington state also doesn’t even rank among the top 10 pro-business states? That’s according to a 2010 study by Pollina Corporate Real Estate.
Pollina’s 2010 top 10 pro business states:
- Virginia
- Utah
- Wyoming
- South Carolina
- North Carolina
- Nebraska
- Kansas
- South Dakota
- Alabama
- Missouri
Here’s more information.
Over-taxing business travelers and maintaining anti-employer public policies hurt Washington state’s business competitiveness. Job creation and economic health will not be enhanced. The prescription: A heavy dose of economic patriotism.
“The economy is bad. It’s so bad, third graders in China are being forced to take second jobs.”
-Jay Leno
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complementary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
