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?
How Economic, Political Freedom Got Boost from Two Reproaches
Updated – Feb. 1, 2012
The healthcare debacle is going to the U.S. Supreme Court, in part, thanks to ruling by an Atlanta federal appeals court and the Standard and Poor’s downgrade of the U.S. credit rating last August. In reality, they were positive developments. The two evens represent reproaches to the federal government’s behavior and performance.
While sustaining the bulk of the so-called reforms, thankfully, the 11th Circuit Court of Appeals ruled that Congress unconstitutionally required Americans to buy health insurance or pay a stiff fine. Most businesspeople feel differently about the law (How Healthcare Law Would Affect Small Business, and Healthcare Reform Increases Costs to Workers, Study).
Despite disingenuous claims by the Obama Administration, S&P’s downgrade was justified. In pandering to political cronies nearly all in Congress from both parties, has spent an obscene amount of money on unwarranted hometown pork and earmarks. Politicians must now stare at a huge red flag.
Another reason why the court’s health-law ruling is encouraging:
One of the opinions was written by Judge Frank M. Hull. He was appointed by a Democrat – President Bill Clinton in 1994. He was joined by Chief Judge Joel F. Dubina, who was appointed by Republican President H.W. Bush.
Until Judge Hull’s decision, lower court rulings were rendered along party lines. Republican appointees invalidated the health-law, and judicial appointees by Democrats upheld it.
“This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives,” wrote Judges Hull and Dubina.
“We have not found any generally applicable, judicially enforceable limiting principle that would permit us to uphold the mandate without obliterating the boundaries inherent in the system of enumerated congressional powers,” they also wrote.
Yes, there more legal challenges in the courts, including Virginia and the District of Columbia.
But this ruling was the most salient. The opponents’ case was pursued by attorneys general and governors from more than half of the states – 26. Other plaintiffs included the National Federation of Independent Business and two individuals.
Again, the U.S. Supreme Court will rule on the case.
Possible Ramifications
The Atlanta court’s dramatic ruling might influence the pricing of insurance policies. The Obamacare requirement guaranteed funding via the consistency in the mega pool of policyholders. Now, insurance companies started to hike premiums — just as predicted here at The Biz Coach.
Politically, there’s also a different landscape. Perhaps the Supreme Court might agree with the Atlanta court. But any legislative attempts by Congress to sidestep such a ruling would be unwise. That’s because the Democrats no longer enjoy being the majority in both houses of Congress. Republicans are unified against the law.
States governments are carrying out the law’s reforms. There has been a lot of angst about the costs in implementing the law. Many of the states’ politicians complain their rights have been trampled.
Even though the remaining portions of Obamacare were untouched by the Atlanta court, the ruling also appears to torch them. Why? The mandate to buy insurance is a source of the law’s funding, which has now been disrupted.
Only one source remains as a funding source – a decrease in Medicare benefits. Democrats have been disingenuous. They conveniently omit the devastation to recipients of Medicare.
Let’s hope the entire baggage in Obamacare is at-risk. It was clearly unconscionable for Congress to require Americans to buy private products.
The Great Recession may have technically ended but not for most businesspeople and consumers. That’s why the S&P downgrade and court ruling are beneficial. The reproaches help to end the expansion of the over-extended Federal government.
The reproaches also hold the promise of enhancing the economy by alleviating economic uncertainty for 14 million unemployed Americans and employers. Companies have been reluctant to hire, in part, because of the expense of Obamacare.
Here’s a better strategic plan: Balance the budget without increasing taxes on everyone. Make it feasible for startups and other businesses to hire and expand.
Economic and political freedom are two of America’s sacred liberties.
From the Coach’s Corner, here are related public policy columns:
Only Fiscal Sobriety Will Prevent Further Fiscal Chaos
Do We Really Honor the Declaration of Independence?
Manufacturing Jobs Might Return to U.S. as China’s Labor Costs Rise
Economic Climate for Small Business – Has Obama Misread the 3 Ms?
Government Spending Causes Companies to Cut Back, Harvard Study
“Giving money and power to government is like giving whiskey and car keys to teenage boys.”
-P.J. O’Rourke
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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?
Update: Washington State House Speaker Frank Chopp Obstructs Workers’ Comp Reform
Updated May 19, 2011
Reform is drastically needed for workers’ compensation in Washington state. Workers’ comp costs threaten to kill the state budget and business, as companies face the prospect of double-digit workers’ comp increases.
That’s been the judgment of this Seattle business-news portal, the Association of Washington Business (AWB), and other business leaders. It might surprise you to learn that most state lawmakers want workers’ comp reform, too.
But debate is being stymied in the Legislature. Bills would continue protections for injured workers without further decimating the state’s operating budget. Plus, reform would give the workers an option to take a lump-sum payment.
Yes, it would be voluntary. The idea is patterned after successful workers’ comp systems in our neighboring state, Oregon, and 43 other states. But reform is stalled. Yes, Washington remains in the Neanderthal Age while the reform ideas are continuing to work in 44 other states.
Why doesn’t common sense prevail?
“It is House Speaker Frank Chopp (D-Seattle) and a group of union and trial attorney supported Democrats in the House who are blocking a vote on voluntary settlements,” writes AWB President Don Brunell.
“Remember, the bill passed the Senate with a bipartisan 35-14 vote,” adds Mr. Brunell. “Gov. Gregoire, in her press conference yesterday, again called for the legislature to address workers comp and said it is imperative to prevent another round of double-digit rate increases in 2012.”
Not only has Speaker Chopp and the Legislature failed to act in the best interests of the state in workers’ comp reform, state residents face the prospect of a suspension of most state-government services in the near future.
“There are only a few days left in this special session and there is no budget,” warns the AWB president. “What appears to be happening is a stalling tactic by the Speaker until the July 1 deadline approaches and then only leave time to address the budget. The budget must be adopted by July 1 or state government shuts down.”
The issue has drawn the attention of the state’s largest newspaper – a brilliant Seattle Times editorial entitled, “Speaker Chopp: Who is running your House? | Kate Riley.”
Ms. Riley’s editorial astutely disparages the stonewalling by Speaker Chopp:
“Washington state’s Speaker of the House Frank Chopp is outvoted on much-needed workers’ compensation reform.
“You wouldn’t know it though, because he won’t allow a floor vote on the bill.”
Despite overwhelming support in the Legislature for workers’ comp reform, the newspaper sheds further light on the disingenuous behavior in the Legislature, specifically regarding a reform bill in the House:
“So, House leadership referred HB 2109 to the black hole of the House Labor and Workforce Development Committee. On this issue, it’s a ‘black hole’ because the Democratic majority on the committee is stacked with union-friendly members, including some who are labor officials in their own right.
“According to his bio, Chairman Mike Sells has been the elected secretary-treasurer of the Snohomish County Labor Council since 1976 — the position became full-time in 1998. Of the seven Democrats serving last year, five have 10-for-10 voting records on the Washington Labor Council’s 2010 Legislative Voting Record. One each scored nine and eight.”
So, organized labor is the culprit behind the scenes. The unions would rather see a hike in workers’ comp rates.
That’s unacceptable. What we need is Speaker Chopp’s empathy for Washington state’s overall welfare to accelerate economic recovery. Washington needs a healthy economic environment for the creation of jobs. Let’s join Ms. Riley is demanding a solution. Speaker Chopp: Who is running your House?
From the Coach’s Corner, here are workers’ comp resource links:
AWB: ESB 5566 Will Minimize Sting in Workers-Comp Rates
“Now there sits a man with an open mind. You can feel the draft from here.”
– Groucho Marx
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Terry Corbell is 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?