Will State Lawmakers Heed New SBA Data, Small Business Concerns?

Jan. 26, 2012

There’s more evidence that small business plays a pivotal role in creating jobs in Washington and other states, according to the Office of Advocacy in the Small Business Administration (SBA). The Office of Advocacy released small business data for each of the 50 states.

SBA believes the new data is “an invaluable resource for small businesses, legislators, academics, government officials, and policymakers in each state.”

Why?

“Small businesses are the foundation of economic growth in Washington and in our nation” said Dr. Winslow Sargeant, Chief Counsel for Advocacy. “By supporting policies that promote innovation and entrepreneurship, we help small businesses tackle these challenging economic times. These statistics are a resource for a path to economic growth.”

As for Washington state, the report explains “small business employment; business starts and closings; bank lending; business ownership by minorities, women, and veterans; and firm and employment change by major industry and firm size.”

Salient data about small business:

  • There were 532,162 small businesses in Washington in 2009. Of these, 142,854 were employers and they accounted for 53.3 percent of private sector jobs in the state. Small firms made up 98.1 percent of the state’s employers.
  • Throughout 2010, the number of opening establishments was lower than closing establishments and the net employment change from this turnover was negative.
  • Washington’s real gross state product increased 0.7 percent and private-sector employment decreased 1.8 percent in 2010. By comparison, real GDP in the United States decreased 1.3 percent and private sector employment declined by 0.8 percent.
  • Self-employment in Washington surged over the last decade. Female self-employment fared the best compared with other demographic groups during the decade.

To promote entrepreneurship, this week the Washington Policy Center sent state lawmakers in the 2012 legislative session these recommendations:

  1. Revisit the voluntary settlement agreement as passed by the state Senate in 2011 – $1.2 billion
  2. Reform the displaced worker retraining program
  3. Simplify sales taxes by using an ‘origin based’ tax (as opposed to a ‘destination based’ tax) and creating a flat rate for out-of-state businesses
  4. Review regulations to ensure that Washington rules don’t exceed federal regulations
  5. Enact Tort Reform
  6. Do no harm in transportation policy – do not reduce road lane capacity
  7. Do not follow Seattle in enacting statewide paid sick leave

In addition, Gov. Gregoire suggested her strategies to aid small business — business and occupation tax relief.

How has the Legislature responded? Lawmakers have ignored their $1.5 budget-deficit crisis.

Instead, lawmakers are considering other matters – mandating paid sick leave and safe leave, banning plastic bags, abolishing the death penalty and gay marriage.

When will Washington’s Legislature demonstrate wisdom?

From the Coach’s Corner, also read:

WPC Hits Target, but Will Washington State Legislature?

Washington: A Balanced Budget Is No Longer Enough

Does the Federal Reserve Understand Small Business?

Knowledge is knowing a tomato is a fruit.  Wisdom is not putting it in a fruit salad. 

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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 complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

Washington: A Balanced Budget Is No Longer Enough

Updated Jan. 11, 2012

A Seattle Times headline is perplexing. True, the headline –“Lawmakers open session, try to close $1B gap” – is a fairly accurate assessment of Washington state’s budget. Not to be laboriously repetitive, but the headline is worrisome. Once again the Legislature faces a budget crisis.

“The economy is the focal point of this year’s legislature as state lawmakers attempt to close a $1.5 billion shortfall in a $34 billion budget at the state capitol in Olympia,” blogged Don Brunell, president of the Association of Washington Business (AWB).

Mr. Brunell is known for his pragmatic reasoning.

“As they deliberate, they must be mindful that Washington is in the midst of an anemic economic recovery which is very fragile,” the AWB president added. “New costs to employers, especially those along Main Street, have a dampening effect on our ability to increase consumer confidence and bring people back to work.”

That’s my sense, too. But the Legislature routinely fails to prioritize first things first. The short-term priority is to balance the 2011-2013 budget. But as a priority, it’s secondary to a bigger quandary – government and budgeting reform, which are needed immediately, as well.

Instead, all budget discussions are about the short-term and relatively insignificant issues grab a disproportionate amount of attention.

Gov. Gregoire wants to focus on a new $3.6 billion transportation package, gay marriage, shorten the school year, abolish social services, release some prisoners before the sentences expire, and increase the state’s sales tax. House Speaker Frank Chopp, D-Seattle, also says same-sex marriage is a top priority.

A significant number of citizens wants to legalize marijuana. Some lawmakers want a statewide ban on plastic grocery bags.

Most of us in business agree education is a priority. But increasing taxes even for education isn’t productive as long as government/budgeting reform is ignored as a priority.

In addition to Mr. Brunell, another thoughtful pragmatist is Jason Mercier. Mr. Mercier is director of the Center for Government Reform of the Washington Policy Center.

Worth consideration is Mr. Mercier’s list of recommended reforms:

  • Enact a constitutional tax and spending limit (with two-thirds requirement to raise taxes) modeled after the original 1993 I-601 formula.
  • Remove as many of the restrictions on lawmakers’ ability to set spending priorities as possible (collective bargaining restrictions on compensation, federal mandates, assumption of auto-pilot budgeting on programs).
  • Reform competitive contracting. Allow agencies to make performance-based contracting more proactive (create a Competitive Contracting Council).
  • Provide the governor discretionary authority to cut spending.
  • Repeal unaffordable programs instead of suspending them.
  • Require at least a 5 percent reserve when adopting the next biennial budget.
  • Require updated four-year budget outlooks to be published after each state revenue forecast or budget adoption.
  • Require completed fiscal notes before bills can be acted on.
  • Phase in a defined-contribution retirement plan that gives state workers benefits that can never be taken away.

Amen. Yes, the Legislature should soberly balance the budget. However, unless the Legislature concomitantly reforms government and the budgeting process, uncertainty will never be alleviated for the state’s businesses and consumers.

From the Coach’s Corner, you might want to consider other public policy columns.

“There is an important sense in which government is distinctive from administration. One is perpetual, the other is temporary and changeable. A man may be loyal to his government and yet oppose the particular principles and methods of administration.”

-Abraham Lincoln

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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 complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

Budget Debate: Will Legislature Read Seattle News Media Headlines?

Nov. 28, 2011

The headline on the Seattle PI Web site was startling. It read: “FACT CHECK: Has Wash. cut budget by $10.5B? Hardly.”

The headline and accompanying story questioned what appear to be misrepresentations by Gov. Chris Gregoire when she claimed Washington has slashed $10.8 billion from the state budget in the last three years. The cuts were her justification for proposing a sales tax increase to balance the budget.

My hope in the budget debate is that the Legislature will read such Seattle media headlines, as they meet in a special session this week to debate the budget deficit.

(Actually, the story appeared in the Seattle PI an hour after it first appeared in the Seattle Times. But, inexplicably, the Seattle Times deleted the story less than an hour after the PI story appeared.)

Reporter Mike Baker documented how the hundreds of so-called cuts are really spending increases that haven’t been implemented.

For example, the alleged cuts include:

  • $682 million in cost-of- living increases for education employees
  • $344 million in cost-of-living hikes for pensions
  • $1 billion in education cuts, but it hasn’t really been slashed because of student tuition increases
  • $128 million for an education apportionment payment, but the payment has actually been doled out
  • $69 million for state parks, but in reality the state took in that amount from user fees

Mr. Baker also reminded us that the state is ready to spend around $30 billion from the general fund budget. That’s more money than was spent in the more-recent budget cycle.

Because it was an Associate Press story, it soon appeared on 54 media sites.

The sales tax proposal is controversial for good reason, and why the sales tax debate erupted in Washington state.

Public officials have long violated good government standards on transparency and in spending. On multiple occasions, this column has called for reform and wondered why not transparency for good, open government in Washington state?

We need better public policy – here are a couple of examples:

  • Proposing to cut $160 million from state colleges and universities is unconscionable.
  • Special interests such as the Washington Federation of State Employees should be reasonable and agree to renegotiate labor contracts.

It’s easy to conclude from the Associated Press story that Washington state has a spending problem, not a revenue problem. For example, the State Auditor revealed state government spends $1.8 million for nearly 6,700 unused cell phones is only one example. We need more public officials to create a favorable economic environment.

Given the economy and continuous budget crises, Washington legislators should finally start compromising, stop the longtime practice of shell games and launch legitimate reform. Only then, will thoughtful businesspeople and voters trust Washington state government and consider a sales tax increase.

So, in the budget debate: Will the Legislature read the Seattle news media headlines? It’s time for good government.

From the Coach’s Corner, furthermore, the state can create more tax revenue if it encourages entrepreneurship to create jobs. Here’s What Small Business Owners Need from Washington State Policymakers.

Here’s another no-brainer: How Washington Fails in Filmmaking for Economic Development.

“Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.

-George Washington

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Columnist Terry Corbell is a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

Why the Sales Tax Debate Erupts in Washington State

Nov. 22, 2011

The buzz in Seattle and other Washington locales is over another attempt to raise taxes.  Yes, Gov. Chris Gregoire wants to raise $500 million via a temporary half-cent increase in the state portion of the sales tax to offset continued budget deficits to prevent more state government cuts in spending.

Either the Legislature could pass the increase providing it passes with a two-thirds majority in an upcoming special session. If it can’t, the Legislature can pass a referendum bill by the end of this year for voter approval.

Gov. Gregoire’s request also threatens to risk relations with Oregon and neighbors by repealing their sales tax exemption when traveling and shopping in Washington state.

Washington’s sales tax debate request follows four developments:

  1. Failure by public officials to practice good stewardship of existing revenue.
  2. Lack of jobs – nearly a double-digit unemployment rate.
  3. Businesses are struggling.
  4. Washington’s two-thirds vote requirement for tax increases – demanded by voters in four referendums.

No. 1 – the sales tax increase request is not a surprise to watchdogs in the wake of years of overspending. For years, analysts have been warning about public policies, including in this space as long as two-and-a-half years ago when this portal was launched (Analysis: Steps for Economic Success in Washington State).

Part of the problem stems from furtive policymakers and the failure to answer the right questions: Why Not Transparency for Good, Open Government in Washington State?

No. 2 – 314,700 people are unemployed in Washington state out of the 3.5 million-person workforce. In October, 4,600 jobs were created in government, education, health services, manufacturing and wholesale trade.

No. 3 – With many of the new jobs in government and education, it underscores the point about the state’s business climate. The tech sector in Seattle is doing well. But ask any business owner or manager if their companies are better off now than they were in 2006 before the recession.

No. 4 – It seems unlikely the Legislature will be able to pass such an increase, but will authorized a vote of the people thanks to I-1053, which was passed last year after the Legislature circumvented the three previous voter-approved referendums (I-1053: Critical to Washington State Businesses and Workers).

The Secretary of State’s timeline for the sales tax debate:

  • Dec. 30 – Last day for Legislature to pass tax referendum bill for March 13 election
  • February 10 – Military and overseas ballots mailed for March election
  • February 21 – Mailing of voters’ pamphlets begins for March 13 election
  • February 24 – Regular ballots mailed for March 13 election
  • March 13 – Election Day

“There will be plenty of time to debate the merits of the Governor’s tax proposal but one thing isn’t open for debate, I-1053 is working exactly the way voters intended by providing them the opportunity to ultimately decide this important question,” writes Jason Mercier of the Washington Policy Center.

He offers this proviso:

“To help ensure this opportunity continues in the future, if lawmakers are going to send voters a proposed tax referendum they should also put a constitutional amendment enforcing the four-time voter approved two-thirds vote requirement for tax increases on the ballot,” he writes.

“This would provide the public and businesses with predictability about whether this tax protection will exist from year to year and clarify whether or not the four-time approval of the voters for this policy was a fluke or actually reflects their consistent and ongoing desire for lawmakers to build a strong public consensus on the need for any proposed tax increase,” he explains.

Agreed – tax increases would be unnecessary if the public officials worked to improve the business climate and performed to voter expectations. Tax increases are never temporary in Washington and the economic environment isn’t improving.

From the Coach’s Corner, Washington state has budget woes and high unemployment because legislators don’t ask the right questions, such as What Do Small Business Owners Need from Washington State Policymakers?

“Be thankful we’re not getting all the government we’re paying for.”

-Will Rogers

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

What Do Small Business Owners Need from Washington State Policymakers?



Updated Feb. 1, 2012


Washington state legislators are getting an earful from small-business owners. But will lawmakers listen in the 2012 legislative session?

Washington state’s small-business owners have voiced their concerns over six major public-policy issues, as a result of a Seattle-area conference held by respected think-tank Washington Policy Center (WPC). Their economic-related issues range from workers’ compensation to mandatory paid sick leave.

A detailed analysis was presented in a report to the Legislature.

“Nearly half of Washington’s work force is employed by small businesses,” said WPC President Daniel Mead Smith.

“These are the businesses struggling for survival right now, and they came to us with practical recommendations for how policymakers can make it easier for them to not only survive but grow and create jobs,” added Mr. Smith.

The conference held breakout sessions at Bellevue College.

“The result is a list of priority solutions, selected by small business owners, for solving the major problems with the state’s business climate and moving towards economic recovery,” wrote WPC Communication Director John Barnes.

Here’s the list of small-business owners’ issues:

Workers’ Compensation

  1. Revisit voluntary settlement agreement, as passed in the state Senate in 2011
  2. Do not raise rates for 2012 since L&I funds are in the black
  3. Increase the fraud prevention and investigation efforts

Unemployment Insurance

  1. Reform the displaced worker retraining program
  2. Implement a web-based portal to allow employers to access current claims data, including current contact information for unemployed workers (similar to the system used by the Department of Labor and Industries)
  3. Educate small business owners about the “shared work program”

Regulatory Reform                                          

  1. Review environmental regulations to ensure that Washington rules don’t exceed federal regulations
  2. Legislature should not grant general rule making authority to agencies, but rather be specific about rules to be put in place
  3. Legislature should listen to and follow up on State Auditor Office reports on regulatory reform (tie)
  4. Sunset provisions for regulations (tie)

Health Care

  1. Tort reform
  2. Limit the number of state-required health mandates
  3. Repeal federal health care law

Transportation

  1. Do no harm — don’t reduce lane capacity
  2. Protect highway tolls and taxes for highway purposes
  3. Make congestion relief a policy goal (tie)
  4. Performance-based spending on transportation (tie)

Mandatory Paid Sick Leave

  1. Legislature should not follow Seattle and should not enact statewide paid sick leave
  2. State should pre-empt local government regulations on labor laws
  3. Business impact statements on laws like mandatory paid sick leave should be required

“The conference was co-sponsored by Verizon, Regence, Wells Fargo, Walmart, the Puget Sound Business Journal, Berntson Porter and Co., Columbia Bank, the Washington Health Foundation, NCM, Associated Builders and Contractors of Western Washington, Baldwin Resource Group, and Noteworld Servicing Center,” Mr. Barnes indicated.

”More than 30 chambers of commerce and trade associations from around the state co-presented the conference,” he added.

This was WPC’s fifth conference hosted since 2003. Rarely has the majority of the legislators listened to small business. Let’s hope they start now for economic development and the creation of jobs.

From the Coach’s Corner, in the past I’ve written about the results of the WPC conferences. I’ve also voiced similar concerns in this portal’s Public Policy section.

“People try to live within their income so they can afford to pay taxes to a government that can’t live within its income.”

-Robert Half

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Seattle business consultant Terry Corbell provides high-performance management services and strategies.