Will 5th Time Around be the Charm for Washington State Voters?

We’ll soon know if lawmakers will listen to voters on taxes as the Legislature convenes Jan. 14

 

Updated Jan. 12, 2013

In terms of time management and aggravation, people in Seattle and throughout Washington dislike having to perform the same chore twice. Especially, when the chore is necessitated by politicians’ disingenuous behavior. 

But when it comes to taxes, many lawmakers in the Washington State Legislature mistakenly think it’s OK to annoy voters on the same issue over and over again.  

Five times in the past two decades, voters have passed initiatives directing the Legislature not to raise taxes without a two-thirds majority or voter approval. The initiatives require that lawmakers wait two years before voting to circumvent the will of the people.  

So, just like clockwork — as soon as the two-year period expires – guess what? The merry-go-round ride starts again, as lawmakers proceed to violate the will of the people. Repeatedly, voters complain they don’t enjoy the rides and have passed tax initiatives.  

Voters most-recently spoke on Election Day in 2012 when they easily passed I-1185. In approving the initiative, voters also told the legislators to rescind their two tax hikes passed in the 2012 session. 

On many occasions over the years, lawmakers haven’t been transparent in their behavior. Fortunately, the state’s leading think tank – the Washington Policy Center (WPC) – uses terrific investigative techniques to inform the electorate with excellent analyses about lawmakers’ chicanery. 

“Just in case a translation for these votes is really needed, lawmakers should focus their attention on balancing the 2013-15 without tax increases,” blogged Jason Mercier, WPC’s director, Center for Government Reform. His piece was entitled, “Olympia: Can you hear taxpayers now?” 

He also wrote:

“Since I-1185 was anything but new policy (most recently passed by 64% of the voters in 2010) our policy analysis advised voters to treat the decision as an opportunity to clearly frame the budget debate and send a message to Olympia that voters weren’t kidding the last four times they adopted this requirement with the hope that our elected officials will feel some obligation to their constituents to end this debate once and for all by referring the question to voters in the form of a constitutional amendment.”

Prior to the 2012 election, WPC queried 128 candidates and lawmakers:

“If Initiative 1185 is adopted, would you vote to allow the people of Washington to have the opportunity to vote on a state constitution amendment to require a supermajority vote in the legislature to raise taxes?”

Unfortunately, only 109 of them – 52 percent – responded. See their replies here. (WPC will update the survey to show which of them were elected.)

Recently, in a Tacoma News Tribune op-ed, Mr. Mercier also called for even-more legislative action:

“A constitutional amendment would provide the public and businesses with predictability about whether this tax protection will exist from year to year and whether or not the four-time (pending fifth) 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.

“With voters and lawmakers repeatedly enacting the supermajority vote for taxes requirement over the past 20 years, what could be more representative of the public will than allowing a vote of the people on a constitutional amendment to help end this debate once and for all?” he asked.

Good question.

From the Coach’s Corner, WPC has often been a great source of information for this portal – here’s a handful of articles:

• Do Survey Results Mean More Dysfunction by Washington State Politicians?
• Why Small Business Vows to Continue the Healthcare Fight
• WPC Hits Target, but Will Washington State Legislature?
• What Do Small Business Owners Need from Washington State Policymakers?

“The people are hungry: It is because those in authority eat up too much in taxes.” 

-Lao Tzu

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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.

 

Instead of Solving Budget Crisis, Wash. Politicians Threaten Integrity of Election Day

 

Updated Jan. 16, 2012

Washington state has a $1.5 billion deficit, and ample justification for implementing government and budgeting reforms.

But nearly two dozen lawmakers have something more important to do. They’re gaming the voter registration system in a disingenuous effort to win elections.

That’s right. They’re not addressing the concerns of most businesspeople and consumers – a balanced budget and government reforms.

But more on that later; for now, let’s address some background information in two examples:

Example No. 1. Perhaps you saw the May 30, 2011 headline: “Voter registration could be key to Obama in 2012.” The article indicated Barack Obama’s 2008 election hinged on his ability to capitalize on the nearly 15 million voters who were newly registered.

However, the article also mentioned that Democrats are looking at a major red flag – their party has regressed in terms of voter registrations in states won by Mr. Obama. Many Independents now disfavor Mr. Obama’s re-election. The upshot being he needs to attract more black, college students, Hispanic and women voters.

He has problems in at least three states:

• Florida – 2.6 million voters haven’t declared their party affiliation
• Pennsylvania – 500,000 unaffiliated voters
• Iowa – at least 762,000 nonpartisan voters

The article indicated several cities are in play:

• Philadelphia
• Denver (site of the 2008 Democratic convention)
• Charlotte, North Carolina (site of the 2012 Democratic convention)

And the newspaper report quoted Mr. Obama’s adviser, David Axelrod, who said voter registrations are a big priority for the 2012 election.

Example No. 2. Democrats are also worried about the Washington’s gubernatorial race. First the time in recent memory, Washington state Republicans have a solid chance to elect a governor.

Since last September, State Attorney General Rob McKenna has a six point lead in four polls pitting him against U.S. Rep. Jay Inslee. The polls include two by SurveyUSA, The Washington Poll, and Strategies 360 (D).

As of this writing, Mr. McKenna has netted $3.67 million in donations – $560,000 or 18 percent more than Mr. Inslee.

Disingenuous lawmakers

Fear by Democrats in a spirited competition to win elections is one thing, but it’s another to behave against the best interests of the electorate. A new development has failed to be adequately covered by the news media.

Twenty-three Washington House Democrats have introduced HB 2204, which would require the state’s 60 counties to accept voter registrations on Election Day after the polling is well underway – until 5 p.m. to be exact.

“What?!” you’re probably stunned. “Don’t voters have to register eight days before an election – not on Election Day?!”

Yes, you’re right.

Such a new law would have several ramifications.

It means the right to vote is no longer sacred. It games the voter registration system. It opens the door for voter fraud. It leaves no time to check the registration of new voters’ eligibility. It overburdens county election workers when they’re already straining to count votes.

Indeed, citing such concerns, the County Auditors Association and the Secretary of State oppose the bill.

Further, there’s a recent precedent to consider: Election Day registrations had 33.7 percent error rate in the April 5, 2011 election held in Milwaukee County, Wisconsin.

It isn’t too much to ask legislators to earn their pay. Stop trying to game the voter registration system.  Fix the budget and institute permanent safeguards for good government and balanced budgets.

Then, it will be possible for Washington to have a healthy climate for economic development and the creation of jobs.

From the Coach’s Corner, in case you’re not aware, state lawmakers have long failed to do their jobs.

The most recent example is featured in this column: Washington: A Balanced Budget Is No Longer Enough.

“You may fool all the people some of the time, you can even fool some of the people all of the time, but you cannot fool all of the people all the time.”

-Abraham Lincoln

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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 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

www.awb.org

www.enterprisewashington.org

“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?

 

AWB: ESB 5566 Will Minimize Sting in Workers-Comp Rates

 

April 14, 2011

A bill – generally supported by employers and opposed by labor – will alleviate workers compensation rates in Washington state. At issue are reforms, especially allowing workers to receive voluntary lump-sum payments instead of pensions.

At this writing, ESB 5566 is stalled in a Washington State Legislature committee – the House Labor and Workforce Development Committee, which is chaired by Mike Sells, D-Everett.

That’s despite support from the Association of Washington Business (AWB) and former Washington and Oregon Labor & Industries Director Gary Weeks. Mr. Weeks has been quoted as saying voluntary settlements work in 44 other states and they save money – $1.2 billion by Washington L&I estimates.

“We have two weeks to go and while the prospects for passage maybe dim, it is never over until it’s over, as Yogi Berra would say,” says AWB President Don Brunell. “Keep contacting the Governor and House members.  If they say no, don’t give up because the answer is always no until it is yes.”

Mr. Brunell asserts the bill’s passage will alleviate the pain on business.

“Because without reforms such as incorporated in ESB 5566, we are likely to look at double-digit workers compensation rage increases in 2012,” he says.

“Some are saying 20 percent or higher,” he adds. “So while I know that killing voluntary settlements makes absolutely no sense, this all about politics.”

That’s my sense, too. Candidly, I’ve worked with Mr. Brunell and his fine staff in whom I have the utmost confidence.

From the Coach’s Corner, here are AWB’s tips on what you can do.

“I cannot say that I do not disagree with you.”

– Groucho Marx

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

Thankfully, WA State Officials Listen to WPC – Ask Lawmakers for Transparency

Jan. 12, 2011

 

Washington state legislators have been formally asked to become transparent – to practice accountability for good, open government. The request was in the form of a letter from State Auditor Brian Sonntag, a Democrat, and Attorney General Rob McKenna, a Republican.

In fact, Messrs. Sonntag and McKenna have asked lawmakers for a constitutional amendment to improve legislative transparency – actually, it’s an idea from the Washington Policy Center (WPC – www.washingtonpolicy.org).

The Sonntag-McKenna letter states:

“In the spirit of open and accountable government, we support a proposed constitutional amendment to create greater legislative transparency. The attached proposal, recommended by the Washington Policy Center, would prohibit blank bills from being introduced or voted on by the legislature. While the use of ‘title only bills’ is a rare procedure, the public concern substantially justifies eliminating their use entirely. The proposal would also require a minimum time for public notice of bills before a legislative hearing or action on the bill. 

These basic reforms will build the public trust and ensure that government is open and accountable to the public.  Please give your support to this proposed constitutional amendment.”

Accountability and transparency have long been issues in Washington.

“During the 2010 Session lawmakers routinely waived legislative rules requiring five-day notice before holding a bill hearing; provided inadequate notice of the time, location and topic of public hearings; held hearings on bills with no text; and voted on bills the same day details were made publicly available,” wrote Jason Mercier, director for the Center for Government Reform at WPC.

“The rush to vote on the budget and tax bills without allowing meaningful public comment or adequate review time by lawmakers led to mistakes in the bills,” he added.

Actually, the 2010 legislative session was one of only many in which lawmakers ignored the principle of good, open government. That’s why the state has a severe budget crisis. I’ve been warning about these issues for many years.

Appropriately, Mr. Mercier said the WPC makes these specific recommendations:

1. Require 72-hour public notification before any bill could receive a public hearing
2. Prohibit title only bills (no public hearing or vote should occur on a “ghost bill”)
3. Prohibit votes on final passage until the final version of the bill to be approved has been publicly available for at least 24 hours.

Yes, reform is critical. The lack of transparency and good, open government have adversely impacted state businesses, their workers and customers for years. The WPC, and Messrs. Sonntag and McKenna have admirably worked to protect Washingtonians.

Memo to state officials: Please do the right thing.

From the Coach’s Corner, the state’s government needs a fundamental cultural and structural change in the way it conducts its business in order to perform the will of the voters. This Biz Coach business-news portal was designed primarily to provide business-coaching – proven solutions for maximum profits. But a disproportionate number of columns have been necessarily devoted to stop the chicanery of the state’s Legislature and agencies.

As a review, a sample from 2010 includes:

Washington Needs Soul-Searching in Public Policy, Budgeting – and Action

WA Election Reminder: Business Issues to Ponder

How to Alleviate Business Uncertainty in Washington State

Tax Increases Will Cost Washington Businesses, Consumers $6.7 Billion Next 10 Years

Why Not Transparency for Good, Open Government in Washington State?

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.

Budget: Is Washington State Asking the Right Questions?

Updated June 28, 2010 1:30 p.m.

Bravo to Gov. Chris Gregoire for taking action. She’s putting together a group of 32 Washington business, labor, political, and think-tank folks to help her and the Office of Financial Management stage four public hearings to discuss the state budget.

That’s because the budget will again be mired in red ink in the next biennium – another $3 billion shortfall. In fact, the state admits to red ink for at least the next five years, which many of us analysts have been warning about for years.

It’s worth noting the state is reportedly behind in funding the state worker pension system by $4 billion. No one should logically argue that hardworking state employees are not entitled to pensions. But as I’ve reported before, public pensions are on average 74 percent higher than what is available in the private sector.

The governor is also looking for a new accountability system for state programs and input on whether state services should be privatized. So, she has a list of eight questions she wants answered about state government.

They include:

1. Is the activity an essential service?
2. Does state government have to perform the activity, or can it be provided by others?
3. Can the activity be eliminated or delayed in recessionary times?
4. Does the activity need to be paid for with state general funds? Should users pay a portion of the costs?
5. Are there federal funds or other fund sources available to support this activity?
6. Are there more cost-effective, efficient ways to do the activity? 
7. Can the activity be the subject of a performance contract? 
8. Can the activity be the subject of a performance incentive?

Upon the conclusion of this process, Governor Gregoire’s 2011-2013 budget will go to the Legislature in mid-December, 2010.

These are great questions. But are they the right questions to ask? Yes and no. Correctly stated, Washington state’s budget problem is not a revenue challenge. The state’s budget woes are the result of alleged government fraud, mismanagement, waste, and a lack of common sense.

Four examples:

• Countless viewers have been appalled by the multi-million dollar alleged corruption in the state ferry system thanks to excellent investigative reporting by KING 5. Astonishingly, Gov. Gregoire publicly supported the ferry system leadership. (Specific headline links for these reports are available at the end of this column.)
• The Seattle Times reported on what many believe is the scandalous behavior of administrators at Washington State University, the Washington State Patrol, and Green River Community College. Hundreds of managers have retired, but were then rehired. Recruitment advertisements were not posted, and this has boosted their pay by as much as 60 percent. They include Greg Royer who makes $304,000 salary as the vice president for business and finance at WSU, and who has also drawn about $700,000 in pension benefits; and Rich Rutkowski, the president at Green River Community College, who retired for a month at the age of 58 and was rehired with the approval of the college’s trustees. He gets a $64,000 retirement check in addition to his $179,000 pay. (The Seattle Times link is published at the end of this column.)
•  Professionally, as a management consultant, I’ve witnessed waste and mismanagement at three state agencies – the Department of Social and Health Services (DSHS), Washington State Department of Transportation (WSDOT) and Washington State Department of Personnel. DSHS managers refused to create benchmarks in a strategic planning session – even though it was a requirement by then-Gov. Gary Locke. WSDOT managers were impotent in managing unproductive employees.  The HR agency did not honor training contracts with my firm.
• The Legislature has a long history of disingenuous behavior preventing transparency in budget issues. Instead of focusing entirely on business-coaching columns, I’ve found it imperative to write about public policy when it adversely impacts the economic climate and businesses. That includes violation of transparency standards during every legislative session for the last 10 years. (Links to several examples for this year alone also follow this column.)

It’s admirable to reform the state government budgeting process. But other public-policy questions regarding this disingenuous entitlement-culture are sorely needed.

What’s going to be done about the cronyism? What about the legality of rehiring managers without advertising the jobs? When will the fraudulent double-dipping stop? What will be done with the state administrators who do not show any contrition? What about legislative transparency? What about putting the public pension system in line with the private sector?

Washington state government is damaging the financial and political freedoms of businesspeople and all other citizens. There is enough revenue to support core government services. But there’s not enough money for this disingenuous entitlement-culture.

Public policy in Washington state has been a longstanding issue. In July, 2009, I proposed these solutions: “Analysis: Steps for Economic Success in Washington State.” They were relevant then and are relevant now – until implemented.

From the Coach’s Corner, here are the resource links for this topic:

KING 5  –

• Investigators: Governor backs state ferry system leadership  
• Investigators: $10 million spent on extras for group of state employees
• Investigators: KING 5 investigation leads to freeze on ferry fare increases
• Investigators: Ferry system fails to hold cheating employee accountable  
• Investigators: Autopsy reveals overdose caused cosmetic surgery death  
• Investigators: Governor and DOT Chief call for reform of ferry system  
• Investigators: Captains’ union votes ‘no confidence’ in ferry management
• Investigators: Warnings of paycheck padding ignored by state ferries  
• Investigators: Audit finds state overpaid truckers to ship booze  
• Investigators: Broke ferry system paying huge salaries to fortunate few 
• Investigators: State missed opportunity to save thousands on perks for ferry workers  
• KING 5 investigation prompts end to multi-million dollar state expense  
• Investigators: ‘Special projects’ bring lucrative perks for ferry workers  
• Investigators: State overpays to ship booze  
• Investigators: Ferry workers boost pay by driving to work  

Seattle Times –

Retired, then rehired: How college workers use loophole to boost pay

Biz Coach public policy columns –                                                                                                                   

• I-1053: Critical to Washington State Businesses and Workers
• More Voters Say Washington State is Headed the Wrong Way
• EU, California’s Fiscal Demise: Red Flag for Washington
• Why Washington Wage Study Creates Brouhaha
• Why Proposed Washington Income Tax Will Kill Jobs
• Small Business Success Is Key for Washington’s Sustainability
• How Much of a Hit Will Business Take from WA Legislature?
• Why Not Transparency for Good, Open Government in Washington State?
• Transparency and Why WA Unemployment Rate Jumps to 9.5 Percent
• Idaho Governor Recruits Washington and Oregon Companies – Thanks to Legislatures
• Washington State Spending, Taxes – ‘Katy Bar the Door’
• How Enterprise Washington Helps State’s Businesses
• Washington State’s Last Chance for Good Government
• Washington Think Tank Says Reliance on Sin Taxes Won’t Work
• Government’s Reliance on Huge Tax Increases Reaches Absurdity
• Study: Tax Increases Threaten More Job Losses in Washington
• Washington State Senators Claim Income Tax Is ‘Fiscal Reform’
• Do Washington’s Budget Woes Warrant Government Reform?

Why Proposed Washington Income Tax Will Kill Jobs

 

Updated April 26, 2010 9:12 a.m.

When Bill Gates Sr. last proposed a Washington state income tax in 2002, he was chair of the Washington State Tax Structure Committee that was created by the Legislature. Comprised of academics and legislators, the committee studied how the tax system could be altered in the 21st century.

The committee was charged with studying “fairness, stability, adequacy and the effect of the tax system on Washington’s economic vitality.” However, the idea failed to get any traction. It was not perceived as fair, stable, and adequate. And it would have hindered the state’s economy as it emerged from the economic hangover from 9/11 and the dot-com bust.

Mr. Gates’ new income-tax proposal, Initiative 1077, won’t work either. On the surface, it sounds feasible. But the state’s unemployment rate is 9.5 percent. An income tax would discourage investment in the creation of jobs, and it emboldens more bad behavior by spend-and-tax legislators.

Already, Washington ranks among the worst states in sales and business taxes. Consider states like California and New York with their high sales and business taxes. They also have an income tax, and they’re nearly bankrupt.

Moreover, there are many reasons why an income tax is not to be trusted in Washington state.

After waiting out the two-year time limit to for overturning initiatives in 2010, Washington lawmakers jumped at their chance to suspend the transparency provisions of the Taxpayer Protection Act, Initiative 960.

Never were there serious discussions about reducing the footprint of government or even prioritizing the core services of government in the $2.8 billion shortfall. We are still saddled with unnecessary, expensive services including state retail liquor stores, the state printer, and the associated employee payroll costs and unfunded state-worker pensions.

Instead, with unlimited chicanery, the legislators violated the will of voters in a variety of ways:

• They passed a ghost tax bill with just a title and literally no text – a blank bill.
• Lawmakers refused to remove their disingenuous exemption from the state’s public records law.
• Public hearings were scheduled without 24 hours notice.

Then, the legislators passed more than $808 million in new taxes in their unsustainable budget. They relied heavily on federal government funds to balance the budget, and it’s already well-known that the next biennium budget also faces billions in red ink. What will they do then?

Was the Legislature’s dysfunction a surprise? No. For years, the Legislature has circumvented the will of the people.

State’s pattern of ignoring voters

In 2006, state officials were proven guilty in Superior Court – their secretive, incriminating government e-mails were part of a shell game that circumvented spending limits. They included state officials and employees – including members of the Legislature, Office of Financial Management, Expenditure Limit Committee, the governor, and even the attorney general appeared to oppose the will of voters on state spending.

A coalition of business and consumer watchdog groups took them to court for violating the state spending limits of Initiative 601. The coalition included: The Washington Farm Bureau, the National Federation of Independent Business, the Washington State Grange, the Building Industry Association of Washington, the Washington Association of Realtors, and the Evergreen Freedom Foundation.

Snohomish County Superior Court Judge James Allendoerfer ruled the state’s collection of certain taxes was illegal and that the Legislature improperly increased the state’s spending limit in 2005 by $250 million.

The incriminating e-mails showed budget writers knowingly violated the law and shifted funds around to artificially increase the spending limit. Other e-mails also revealed a furtive dialogue involving Office of Financial Management strategies that manipulated funds for new spending in the 2006 supplemental budget.

The losing side sarcastically poked fun at a coalition’s complaint that the spending increase was approved after just 25 minutes of consideration by the state’s Expenditure Limit Committee, which has authority to increase the state’s spending limit.

The committee was comprised of Victor Moore, director of the Office of Financial Management; Maureen Hart, the Attorney General’s representative; Sen. Margarita Prentice, chair of the Senate Ways and Means Committee; and Rep. Helen Sommers, chair of the House Appropriations Committee.

Minutes from the committee’s meeting on November 25, 2005 illustrate why the coalition was concerned. The meeting ran short because all the substantive discussions took place earlier, which the incriminating e-mails demonstrated. With Hart recusing herself, the brief meeting concluded with a unanimous vote to increase the state’s spending limit in I-601.

Why did voters pass I-601? Times were tough in 1993. Figuratively, Washington voters erected a big red stop sign at the state capitol and passed I-601 to halt skyrocketing tax increases. Voters were concerned about public-sector indifference.

Even the Washington State Association of County Assessors took note of voter attitudes. In late 1994, the group invited me to advise them on strategy to persuade the Legislature to reduce property taxes. As I sat down following my pro bono seminar, I’ll never forget my disappointment when I heard Scott Noble, who was the then-interim King County Assessor, sitting across the table, refuse to participate in the effort.

“It will never work,” he said. But most assessors were receptive to lowering property taxes and they successfully persuaded state lawmakers to reduce property taxes in the ensuing 1995 session. And we know what happened to Mr. Noble, who was forced to resign in disgrace following his drunk-driving accident that resulted in injury to others.

Income tax – another $1 billion burden

The new income-tax proposal, in this uncertain economy, would dump another $1 billion in tax burdens on many of the very businesspeople who are capable of creating thousands of badly needed jobs.

It would be an additional 9-percent tax on income of $500,000 or more and a 5-percent tax on income of more than $200,000. They are already paying exorbitant fees for unemployment insurance and workers’ compensation.

In economic development and job creation, the great equalizer has been the lack of an income tax.

Proponents of I-1077, perhaps unknowingly, are instigating class warfare in claiming they want to lower taxes on most people while taxing the rich. But I-1077 would not eliminate the sales tax, which indelibly hurts the livelihoods of low-income people.

It would lower the state’s portion of the property tax by 20 percent. But that would only slightly reduce a property owner’s taxes – 96 percent of the property tax would remain. The slight reduction, of course, would be negated by the ever-increasing property assessments. So it’s a disingenuous argument.

Micro businesses, the self-employed, would not be liable for the business and occupation (B&O) tax. Larger businesses would receive a $4,400 tax credit. However, as any entrepreneur knows, $4,400 is a negligible amount as a business cost in the hiring an employee in salary and benefits.

Incidentally, an income tax was thrown out in 1933. Voters have since refused income-tax proposals five times. Seemingly, voters have known an income tax would be increasingly burdensome.  Taxes never go away. Government incessantly grows bigger.

The B&O tax was introduced as a temporary measure in the 1930s, but you guessed it. Businesses have been saddled with it ever since. The B&O tax is grossly unfair. It does not tax profits. It taxes revenue. Even if a business loses money, it’s subject to the tax.

It’s especially regressive on new businesses. Imposing B&O taxes on a startup makes it harder for it to succeed. And it’s a major factor why Washington is a leader in startup failures. We don’t need failures. We need entrepreneurs to be successful to create jobs.

In essence, Washington state government has a documented propensity to trample on the economic freedom and political freedom of businesspeople and voters. There is not a voter-approved agreement regarding the state’s core services.

Until there is agreement, state government shrinks significantly and voter wishes are upheld, here’s a resounding no to an income tax. An income tax would threaten more danger for the state because it chases ill-economic health. The proposed income tax won’t work – because it won’t put Washingtonians to work.

From the Coach’s Corner, do you need more evidence why the Washington State Legislature cannot be trusted?

See this blog from Jason Mercier of the Washington Policy Center regarding transparency.

Washington Legislature Should Smell Some Strong Starbucks

Updated Feb. 10, 2010 3:15 p.m.

With December, 2009 tax-collection revenue up 3.6 percent, the Washington State Legislature is getting some good news as it debates solutions to the anticipated nearly $2.7 billion budget shortfall. But lawmakers are flunking the transparency test during this legislative session.

As the adage goes, they need to wake up and smell the coffee. They need a good, strong venti-size cup of Starbucks. Make it two.

In a recent column, “Government’s Reliance on Huge Tax Increases Reaches Absurdity,” I wrote that a proposed state of Washington sin tax – a 500 percent tax increase – was best described as punitive, full of hypocrisy and discriminatory. That’s because the state operates venues in both gambling and liquor.

But state lawmakers are not done. With seemingly unlimited chicanery, the Legislature is violating the will of voters in a variety of ways in the current session.

Literally, a ghost tax bill, SB 6853, was introduced. It had zero text. Yes, it was blank. It appears it will violate the state principle that requires five days notice of transparency – public notification – before passage.

“This title only bill…subject to a public hearing and received executive action even though there are no details in the bill,” says Jason Mercier who is director of the Center for Government Reform at the Washington Policy Center.

“This means anything related to the bill title can be added on the Senate floor without ever receiving public scrutiny or comment,” he explains. 

Mr. Mercier sheds more light on the disturbing, ongoing chicanery.

“…the Legislature is considering repeal of the state’s Sunshine Committee while failing to act on the committee’s recommendation that the Legislature’s double standard exempting lawmakers from the state’s public records law be repealed,” he says.

You might recall a batch of incriminating legislative/executive branch e-mails as part of a shell game to circumvent spending limits led to a Washington Supreme Court case just a few years ago.

Well now, lawmakers have killed a transparency bill: HB 2872: Establishing a period of public and legislative review of appropriations legislation. “This bipartisan bill would have created a 72-hour public review period before budget bills could be voted on,” says Mr. Mercier. “The bill received a public hearing and was originally scheduled for executive action but was never voted on in committee. The bill is now dead.”

Lawmakers also want to suspend Initiative 960. That’s the voter-passed initiative, the Taxpayer Protection Act. SB 6843: Preserving essential public services by temporarily suspending the two-thirds vote requirement for tax increases.

These unsavory legislative actions undermine the intent of the majority of Washington voters. Further, it’s another violation of the economic freedom and political freedom of Washingtonians.

See the videos of lawmakers in action for yourself.  

Meantime, lawmakers are ignoring all kinds productive ways to streamline. It’s clear they don’t have a revenue problem. They have spending and transparency problems.

Frankly, it will be interesting to see how voters react. In 1993, the Legislature pulled similar stunts and the following year saw a high volume of voter angst at the polls. It was a nationwide trend, too, in the 1994 landslide defeats for countless officeholders.

Following widespread protests over massive business-tax increases in 1993, the Washington State Association of County Assessors decided to take action. I was invited by a client – the-then Kitsap County Assessor and a self-described conservative Democrat – in late 1994 to advise the 60 assessors on media strategies.  As a result, the assessors persuaded state lawmakers to reduce property taxes by 4.7 percent in the ensuing 1995 session.

Perhaps they consumed enough coffee that year.

From the Coach’s Corner, if you agree, voice your opinion to legislators.