How to Alleviate Business Uncertainty in Washington State

 

July 25, 2010

Washington state is comparatively healthy. But don’t tell that to most employers. They won’t buy it. Washington state has lost more jobs, 16,000, in the past year than 41 other states.

Unemployment rates are a huge drag holding back economic development. There are many reasons why job creation is sputtering.

Actually, it’s symptomatic and related to many economic problems. The overall common denominator is uncertainty – from declining sales revenue, threats of a double-dip recession, tax increases, and unproductive public policies.

Yes, Washington faces another $3 billion shortfall.

A July Op Ed piece in the Seattle Times by State Auditor Brian Sonntag made an excellent case for decreasing the size of state government and improving its inefficient budgeting process.

“We need to resize government’s footprint to reflect what it can and should do, balanced with what it can afford to do,” Mr. Sonntag wrote. “We will not get there unless we stop, now, the petty partisan bickering that erodes citizens’ trust in government and inhibits meaningful solutions to our greatest challenges.”

A frequent complaint on this site is the mega unfunded public pensions. Mr. Sonntag points out Washington state public pensions are skyrocketing and $8 billion is unfunded.

“Our work at the Office of State Auditor uniquely positions us to understand the state’s broad financial condition,” Mr. Sonntag explained. “For example, we know even in good economic times as well as bad, the state has not systematically funded all its long-term financial obligations.”

It’s not just the unfunded aspects of pensions, which I contend are too generous vis-à-vis the retirement plans available in the private sector.

Mr. Sonntag cited a related example: “A $4 billion liability in the health-and life-insurance benefits paid to retired public employees without any accumulation of revenue to pay for it.”

Political “courage” and “leadership” is needed, he wrote.

“It is time to end the current era of political polarization and extreme partisanship. We must transform government together,” he asserted. “We must put aside the premise of ‘I’m right, you’re wrong.’ We must do what is right instead of doing what makes the other side look bad.”

His points are astute and accurate. The tendency, as it is at the national level, is to focus on personalities and not principles. It’s time to stop shooting the messenger instead of the message, and to be honest in campaigns.

For example, it took legal action by the Association of Washington to clean up the ballot title for Referendum 52. To win passage of $505 million in bonds for energy-saving school construction projects, the wording would have tricked voters into extending the new tax on bottled water. A Thurston County judge ruled that the phrase, “job creation,” was disingenuous and removed it from the ballot title.

Alleviating uncertainty

Voters have an opportunity to start implementing solutions this fall. The most salient is transparency and voter protection against disingenuous taxation. In essence, Initiative 1053 will again require a two-thirds majority on any legislative tax increase, and approval by voters.

I-1053 must be passed. Plus, voters have to make it clear to lawmakers that they will not put up with any more games.

Three times voters have passed this protection, and each time the Legislature has circumvented it.

Initiative 1082 deserves voter approval. It would pave the way for private insurers in Washington state workers’ compensation.

Liquor sale privatization is important, too, in I-1100. It would end the state’s monopoly on liquor sales and put it in the hands of the private sector. That includes the 1,500 state-liquor employees.

The class warfare implications of I-1098 are troubling. That’s the income tax on the affluent. A similar 2010 measure in Oregon has failed to help that state’s economy.

Another opportunity to alleviate uncertainty is to comment at two remaining events: The Governor’s Committee on transforming Washington’s Budget. So far, only the special interests advocating the status quo are showing up to comment.

The final two hearings:

• July 27, 7-9 p.m. in Vancouver – Washington State University-Vancouver, Administration Building Room 110, 14204 NE Salmon Creek Avenue.
• July 29, 7-9 p.m. in Spokane  – Spokane City Hall, City Council Chambers, 808 W. Spokane Falls Boulevard.

Will you participate.

Meantime, productive public policy will do a lot to alleviate concerns about business uncertainty, and will make it easier for businesspeople to solve their declining sales revenue.

From the Coach’s Corner, admittedly, I haven’t budgeted the time to review the dozens of initiatives on the November ballot, but have read a few others.

For some levity, here are two extreme initiatives:

• I-1079 – “This measure states that it is an act to require state and governmental agencies, publicly owned companies, and non profit groups to pay all mandatory overtime at the rate of three times the employees’ hourly rate.”
• I-1069 – “This measure would require the Seal of the State of Washington to be changed to depict a vignette of a tapeworm dressed in a three piece suit attached to the lower intestine of a taxpayer shown as the central figure. The seal would be required to be encircled with the following words: ‘Committed to sucking the life blood out of each and every tax payer.’ The illustration would be selected from submissions submitted by taxpayers.”

And to see more than 50 other public-policy columns, visit this section.

How Enterprise Washington Helps State’s Businesses

Feb. 28, 2010

In trying to solve a $2.8 billion budget shortfall, Washington state lawmakers have been debating the wrong issues. Instead of debating whether to increase the sales tax or to eliminate tax exemptions for industries, lawmakers would better serve voters if they dealt with the core issue.

The core issue: Developing a healthy economic climate with public policies that help – not hinder creation of private-sector jobs.

Most businesses have had to significantly cut payroll – 175,000 jobs were lost in two years. However, instead of being good stewards of taxpayer assets, many public officials are frantically looking to spend money and generate more tax revenue. The only jobs the state helps to create are government jobs that exacerbate the economic climate.

Worse, state pensions are 74 percent higher per person compared to the private sector. And the Legislature has failed to fund at least $7.9 billion in healthcare and pension liabilities – a financial time bomb set to explode.

Thirty percent or more of your business headaches are caused by onerous government regulations and taxes.

These and countless other issues hurt the economy.

However, there is hope. At the grass roots level, Enterprise Washington (EW) is an organization effectively clearing the air. They know a strong economy will create jobs in a way that helps the environment.

In essence, the EW folks understand the core issue, and they are recruiting and helping business-friendly candidates get elected to office. I recently met with the group’s principles at their Issaquah office and walked away with favorable impressions. And what’s really neat is that they understand it’s important to be open-minded. They recruit both Democrats and Republicans.

It was refreshing to hear the insights of EW President Erin McCallum.

My sense is that you’ll want to know more about EW. Here are Ms. McCallum’s answers to my questions:

Q: What is your success rate?

A: Since EW’s formation in 2007, there are seven more business-friendly lawmakers in Olympia.  

Five GOP include: Sen. Randi Becker, Reps. Kevin Parker, Jan Angel, Bruce Dammeier and Terry Nealey.

Two Democrats: Reps. Reuven Carlyle and Scott White.

EW was instrumental in five of the seven victories (Becker, Parker, Angel, Nealey and Carlyle).  

In each of these races, EW either identified and recruited the business person or ran a significant independent expenditure campaign that helped educate voters about the candidate who was the stronger champion of the economy and the health and sustainability of Washington’s private sector.

Q: How would you describe your mission?

A: Recruiting, training and electing business-minded state lawmakers. 

Q: You have different organizations under your wing?  

A: Yes we do. EW, the mission is described above and EW’s Jobs PAC which is a 527 political action committee.   There is also a legally separate 501 (C)(3), charitable organization called Business Institute of Washington. It is an educational resource for our communities that helps Washingtonians gain a stronger understanding of the significant role our lawmakers play in establishing laws that govern our state. 

Q: Please describe how they’re structured cohesively.

A: EW is legally organized to influence the outcome of elections in key districts (C-6, membership organization, and a 527 political action committee). EW has established these separate entities to accommodate the different reporting requirements for various political expenditures.

As a result of the economic downturn and what a majority of the public sees as government spending run amok, the current political climate is favorable for pro-business/anti-tax candidates.  Business has an opportunity to capitalize on this shifting political climate during the 2010 election cycle.

Q: Briefly, what is the history of your organization?

A: EW grew out of an old business political action committee, United for Washington. We developed our business model using best practices from business communities in other states, and taking examples from currently successful players in Washington state politics. 

Our research has unveiled that successful special interest groups in Washington state have not been friendly to private sector business for some time.

Q: How would you describe the state of politics in Washington?

A: The political stage was set many years ago for what’s happening in Olympia and state government today. For decades, special interest groups outside of the business community have worked tirelessly in recruiting candidates who will champion their issues and helped get them elected.  Our state’s current political climate augurs opportunity for pro-business candidates – Democrat and Republican, alike. And with the new top two primary, business-friendly Democrats are viable again.

Here are some examples of how other special interest groups operate in our state, and how the private sector community has assisted in bringing them to power:  

Organized labor has done an incredible job in helping to elect candidates to champion their issues in Olympia. Organized labor, with SEIU largely driving the effort, has been effective in politics by winning one race at a time. Their efforts have paid dividends for them on shaping public policy.

Other special interest groups such as the Trial Lawyer Bar, WEA, Firefighters, etc., make sure contributions get funneled to close races, usually to Democrat candidates. When business contributes to both parties (often to gain political access) a significant portion of contributions made to Democrat leaders are transferred to competitive races and used against pro-business candidates. Organized labor has been able to rely on a pro-union majority in both the House and Senate to protect its interests.

Q: How many members or supporters does your organization have?

A: EW currently has about 250 members representing businesses from all across the state in a broad range of industries. This year, we are currently in a drive to double our membership.  Any of you who are business owners and who care about the future of our state, please join us by visiting www.enterprisewashington.org and become a member.

Q: A lot of voters think of business-oriented people as Republicans-only, but you have the vision to be nonpartisan.  Please describe how and why you decided on the nonpartisan approach.

A: Business issues do not necessarily cut clearly across political party lines. Also, given our state’s demographics and increase in population, we recognize that voters in this state are fiscally conservative, socially progressive. With Washington state’s two political parties tending to lean more to the extreme we look for balance and middle ground.

Q: What’s your criterion for a political candidate? 

A: Our state is quite diverse, so the ideal candidate can vary quite a lot depending on the location of the district. Having said that we are looking for business people, both employers and more likely employees, who have strong experience in the private sector and can bring their expertise to the state lawmaking process.

Q: What’s on tap for your association?

A: We are in the midst of a $1.6 million campaign for Washington’s private sector and invite everyone in business in this state to get engaged through EW membership. Unlike public employee unions that can collect political contributions through the monthly dues process, EW must appeal to the greater business community, those who have the most at stake, to make our programs succeed.

Please go to www.enterprisewashington.org and become a member today! Through membership, you can help elect more business minded state lawmakers who will understand and support public policy that supports private sector jobs.

Q: What else would you like to add?  

A: The business community has a choice to make: either get involved and help elect more business friendly lawmakers or face steeply higher taxes. EW is the only organization in Washington state that is tackling the political landscape with the goal of making significant positive changes to the makeup of our state legislature.  Democracy is not a spectator sport so join EW today! Having strong elected lawmakers who understand that it’s the private sector that creates jobs and turn builds healthy and happy communities.

From the Coach’s Corner, here’s more on upcoming state-government developments:

To identify state efficiencies and savings, Washington State Auditor Brian Sonntag has announced his performance audit work plan.