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:
- Revisit the voluntary settlement agreement as passed by the state Senate in 2011 – $1.2 billion
- Reform the displaced worker retraining program
- 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
- Review regulations to ensure that Washington rules don’t exceed federal regulations
- Enact Tort Reform
- Do no harm in transportation policy – do not reduce road lane capacity
- 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.
_______
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?
WPC Hits Target, but Will Washington State Legislature?
Dec. 7, 2011
The clock is ticking. The state government spends $41 million each day but the Washington State Legislature has made little, if any, progress in its 30-day special session to solve a $2 billion deficit. Meantime, Office of Financial Management Director Marty Brown sent an email to lawmakers warning them action is needed – now.
No floor votes. Nada. Nothing.
At the request of Gov. Chris Gregoire, the special session started Nov. 28. The state is scheduled to spend more money than it will have for policies, programs and salaries.
Earlier, the governor proposed a half cent sales tax increase to raise about $500 million. The events prompted this Biz Coach piece: Budget Debate: Will Legislature Read Seattle News Media Headlines?
Actually, more than balancing the budget, the state needs to reform government for a healthy economic environment.
“While it’s true that state revenues are projected to grow by $2 billion over the previous budget cycle, this time there’s no federal bailout to prop up past overspending,” said a WPC press release. “Some in Olympia are talking tax increases, yet our state’s fragile economy, and especially small businesses, are struggling to survive as it is.”
The Washington Policy Center (WPC) has some ideas worth adopting – the suggestions were sent in a letter to Governor Gregoire.
WPC’s recommendations:
- Provide the governor discretionary authority to cut spending. Adopt performance-based Priorities of government budgeting to control the rate of spending growth.
- Restore the legislature’s ability to amend collective bargaining agreements.
- Direct state managers to use more competitive contracting.
- Repeal unaffordable programs instead of suspending them.
- Bring state employee health care premium contributions in line with those of the private sector.
- Ask state lawmakers to set aside a 5 percent reserve when adopting the next biennial budget.
Following its statewide conference to discuss small business issues, WPC sent the legislature these recommendations:
- Revisit the voluntary settlement agreement as passed by the state Senate in 2011 – $1.2 billion
- Reform the displaced worker retraining program
- 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
- Review regulations to ensure that Washington rules don’t exceed federal regulations
- Enact Tort Reform
- Do no harm in transportation policy – do not reduce road lane capacity
- Do not follow Seattle in enacting statewide paid sick leave
From the Coach’s Corner, see WPC’s Coverage of the special legislative session here.
Here are related columns:
Why the Sales Tax Debate Erupts in Washington State
No Lame Duck, Washington Official Enhances Economic Public Policy
“There’s no trick to being a humorist when you have the whole government working for you.”
-Will Rogers
__________
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?
No Lame Duck, Washington Official Enhances Economic Public Policy
Oct. 20, 2011
Like all inspiring great leaders, he and his staff are tenacious in delivering value for all of Washington. Who? State Auditor Brian Sonntag.
Mr. Sonntag is a favorite on this portal, a sagacious Democratic, who has consistently delivered value to state residents, and has always been available to answer questions. Admittedly, I was a bit melancholy about Mr. Sonntag’s announced retirement in 2012.
He has served constituents well, particularly, with his agency’s performance audits and initiatives in improving state-government performance.
And to the end, he continues to do what’s best for the state. He’s working to enhance entrepreneurship, which will help put the state on sound economic footing.
Another favorite entity is Washington Policy Center (WPC). The think tank also provides noteworthy analysis and timely updates.
A blog by Jason Mercier is how I learned Mr. Sonntag has been focusing on business regulations to enhance Washington’s economic environment for the creation of jobs.
Mr. Mercier cites a salient assessment of the state’s regulatory processes in the state auditor’s March 2011 report.
A few highlights:
- The complexity of Washington State’s regulatory system creates costs for governments and businesses alike. Not only are there many regulations, but many requirements change every year or two based on new legislation or state agency amendments to existing rules. The Office of the Code Reviser reports that in 2009 alone, state agencies proposed more than 14,000 pages of new or revised rules.
- Many regulatory costs to business are fixed, with larger firms able to spread those costs over a greater number of employees, meaning that small businesses bear a disproportionate part of the regulatory burden. A 2007 Department of Revenue study on the business survival rate in Washington found that ‘taxes and costs of complying with government regulations are factors that contribute to business failure because most small businesses are not profitable in the early years.’ (BSSUG, 2007)
This is a noteworthy conclusion:
- Improving the effectiveness of Washington’s regulatory regime through streamlining, clear rule writing, reducing the administrative burden, and other innovations will benefit businesses, state government and taxpayers in general. Clear, fair and efficient regulations will keep Washington competitive in the global economy.”
In his blog, Mr. Mercier indicates we can look forward to five Sonntag performance audits:
- Agency efforts to streamline their administrative rules
- Agency permit process time
- State regulations in excess of federal regulations and the value added for the extra regulation
- Agency inspection process and coordination amongst agency inspections
- Effectiveness and opportunities for improvement for the state’s one-stop portal for business regulations.
As a result of WPC’s September 2011, the Legislature is getting feedback from small business (What Do Small Business Owners Need from Washington State Policymakers?).
The state’s small businesses want the following:
- Review environmental regulations to ensure that Washington rules don’t exceed federal regulations
- Legislature should not grant general rule making authority to agencies, but rather be specific about rules to be put in place
- Legislature should listen to and follow up on State Auditor Office reports on regulatory reform (tie)
- Sunset provisions for regulations (tie)
So a Biz Coach tip of the hat to Mr. Sonntag and his team, as well as to WPC. It’s past time to evolve from an adversarial state government-business relationship to one of effective public policy for economic development.
From the Coach’s Corner, the Legislature should reconsider at least one other economic issue: How Washington Fails in Filmmaking for Economic Development. State government wants tax revenue but consistently has failed to be astute in seeing the problems and solutions.
Frustration is trying to find your glasses without your glasses.
__________
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?
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:
- Require 72-hour public notification before any bill could receive a public hearing
- Prohibit title only bills (no public hearing or vote should occur on a “ghost bill”)
- 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?
I-1082 Will Stabilize Worker’s Compensation in Washington
Washington state will benefit three ways if Initiative 1082 passes, according to the highly respected Washington Policy Center (WPC).
WPC released a study that shows I-1082 will “help keep premium increases in check, encourage innovation in rehabilitating injured workers, and most importantly, provide safer workplaces.” That means employers and workers will benefit.
The WPC points out the four goals of I-1082:
- Maintain existing benefit levels for injured workers while improving their opportunity to return to work.
- Eliminate the requirement that workers pay one-half of their medical coverage for on-the-job injuries.
- Open up the current state-run industrial insurance system to competition from private industrial insurance providers, with a July 1, 2012 start date for an open market.
- Maintain a “best practices” approach to worker safety as developed by both private and public sectors
The WPC study (Citizens Guide to Initiative 1082: To Reform Workers’ Compensation in Washington) concludes that Washington state is a “high benefit, high cost state system.”
It explains how the current government system “is on a shaky financial footing.”
The study also asserts “punishes a business community that has produced safer workplaces over the last two decades, and has been rewarded with steadily increasing insurance rates.”
The study’s most salient points:
- Research shows that more competition in industrial insurance would help keep premiums in check, encourage innovation in rehabilitating injured workers and provide safer workplaces.
- States that have recently introduced a competitive industrial insurance market have seen costs decline and customer satisfaction increase.
- As written, I-1082 relieves employees from paying for industrial insurance premiums. As in the other 49 states, businesses would pay 100% of the cost.
- I-1082 would not address every detail of the transition to a “hybrid” industrial insurance market, but would set mechanisms in place to do so.
- As written, I-1082 does not alter the benefit levels of injured workers in any way.
Proponents argue that Washington state is only one of four state-government monopolies in the nation. They lament Washington’s worker’s comp increases while Oregon has had the same rates for the last two decades. They point to the state’s second-highest cost per worker, and “the third most generous benefit package in the nation.”
From the Coach’s Corner, for more information, here are three I-1082 resource links:
Small Business Success Is Key for Washington’s Sustainability
April 6, 2010
Washington state’s small business owners are getting a first-hand look at ways to improve their economic environment, thanks to the Washington Policy Center (WPC). The think tank is taking 24 ideas on the road and sharing them in 24 locales around the state.
“Small businesses are the backbone of Washington’s economy,” wrote Carl Gipson, director of WPC’s Center for Small Business. “We are committed to helping improve the small business climate in our state, and going on a tour of Washington is a great way to get the conversation started.”
The topics in the WPC tour range from unemployment insurance to state taxes. They’re included in the WPC report, Lead the Way: Small Business and the Road to Recovery. The ideas were provided by small business owners throughout the state in late 2009.
Mr. Gipson provides this ominous reminder: “Recent data shows Washington’s small business failure rate is the second-highest in the nation.”
To be candid, this Biz Coach site has long voiced concerns about government behavior – the theft of economic freedom and political freedom — so I really appreciate Mr. Gipson’s observation:
“The proper function of taxation is to raise money for core functions of government, not to direct the behavior of its citizens,” he wrote.
“This is true whether government is big or small, and this is true for lawmakers at all levels of government,” he added. “Many lawmakers think of the tax code as a way to penalize ‘bad’ behaviors and reward ‘good’ ones. They have sought incessantly to guide, micromanage and steer the economy by manipulating the tax laws.”
Then, there’s this reminder: “The State Auditor has conducted 23 audits as of December, 2009, ‘identifying billions of dollars in unnecessary spending, potential cost savings and economic benefits and recommending numerous ways to improve state and local government operations’,” he wrote.
“Too often, policymakers act without considering or measuring the impact of their decisions on the owners of mom-and-pop businesses, even though those are the very businesses that are disproportionately hampered by the regulations and taxes they impose,” wrote Mr. Gipson.
And he shares some history about the impact of small business.
“During the 2003-2004 recovery period from the recession from the early 2000s, businesses with fewer than 500 employees hired almost 1.9 million workers, while businesses with more than 500 employees laid off over 200,000 workers,” he wrote. “In Washington, using both the state government’s and Washington Policy Center’s definition of small business (fewer than 50 employees), small businesses make up 96 percent of all registered businesses while employees of small businesses account for 41 percent of the state’s workforce.”
Here is the WPC tour schedule: www.washingtonpolicy.org/leadtheway
WPC’s Web site: www.washingtonpolicy.org
From the Coach’s Corner, a reminder if you need business counseling at no charge, consider the Small Business Development Center nearest you (SBDC).
Why Not Transparency for Good, Open Government in Washington State?
March 24, 2010
Even after concluding its regular 2010 legislative session and after nearly two weeks of a special session, there is no balanced budget. There are no efficiencies. Worse, there is little transparency about taxpayer assets. The Legislature hasn’t learned to stop chasing ill health.
By extension, it’s clear that Senate Majority Leader Lisa Brown is not passing the transparency test of good, open government. She has failed to spearhead passage of a balanced budget and has largely ignored efficiencies, such as the Opportunities for Washington, recommended by a prominent member of her own party – State Auditor Brian Sonntag.
Instead of focusing on successfully ending the special session, The Seattle Times reports she sent a letter to Washington State Attorney General Rob McKenna demanding that he stop his health-care efforts and accused him of being “far outside the mainstream interests” of the state. But my straw poll of businesses and consumers shows a majority in favor of his position.
Meantime, here’s a news flash: There is furtive, dubious activity under her leadership – everything from secretly raising taxes; gutting The Taxpayer Protection Act, Initiative 960; and passing ghost tax bills. There are no efforts to create a good economic environment and private sector jobs.
Actively highlighting the disingenuous behavior has been Jason Mercier, director of the Center for Government Reform at the Washington Policy Center (WPC), the nonpartisan think tank.
After seeing this TVW video posted on the Washington Policy Blog in which Speaker Brown denies knowing why Mr. Mercier has repeatedly raised concerns about legislative transparency, how could she be so disconnected?
Most state newspapers have commented to no avail, such as The Seattle Times in Gov. Gregoire: Use veto to keep transparency and in The Washington State Senate and the age of hubris.
When Gov. Gregoire failed to honor the request, the newspaper ran this editorial, Governor, Legislature should have kept two-thirds rule on taxes.
Even The Olympian commented in A bad example of legislative ‘transparency’.
There are plenty of other indications about the absence of transparency. How could she not have noticed any of WPC’s analysis? See for yourself at www.washingtonpolicy.org.
Plus, I’ve written numerous Biz Coach columns on the issue.
I cited $65 million in waste in this column, “Will Government Policies Ever Promote Economic And Political Liberty?” State employees are allowed to carry forward and cash out their unused sick leave.
You see, the state paid $65.3 million in unused sick leave from 2007 to 2009. And state workers have received millions of dollars in this budget cycle. This is a perk you will rarely, if ever, see for taxpayers in the private sector.
The largest employer in Washington, 17.6 percent of the workforce, is government. The retail sector is second with 10.8 percent. In the state’s 2009 comprehensive annual financial report, government expenses outgrew revenue.
Another eye-opener in the report: “Governmental activities resulted in a decrease in the state of Washington’s net assets of $2.2 billion.”
Because of the extravagant spending, the gap in unfunded Washington’s retiree health benefits is $7.9 billon.
Meantime, ranking member of the Senate Ways and Means Committee, Sen. Joe Zarelli, has unsuccessfully argued in favor of transparency with Committee Chair, Sen. Margarita Prentice. This TVW video illustrates violations of legislative transparency standards.
All of this employee pork, unnecessary spending, and violations of transparency standards are why WPC is advocating a constitutional amendment for transparency:
BE IT RESOLVED, BY THE SENATE AND HOUSE OF REPRESENTATIVES OF THE STATE OF WASHINGTON, IN LEGISLATIVE SESSION ASSEMBLED:
THAT, Transparency and public disclosure in the legislative process is vital to a representative democracy. THAT, At the next general election to be held in this state the secretary of state shall submit to the qualified voters of the state for their approval and ratification, or rejection, a new section amending Article 2, an amendment to Article 2, section 19, and an amendment to Article 2, section 22 of the Constitution of the state of Washington to read as follows:
Article II, new section. No bill shall be eligible for a public hearing until 72 hours after introduction. No bill shall be eligible for legislative action of any kind unless it has first been subject to a public hearing in the same session of consideration. No bill shall be eligible for legislative action on the floor of either house until 72 hours after it has been placed on the floor calendar. This section may be suspended with two-thirds of the members elected to the house in which it is pending suspend this requirement, and every individual consideration of a bill or action suspending the requirement shall be recorded in the journal of the respective house.
Article II, section 19. No bill shall embrace more than one subject, and that shall be expressed in the title. No bill shall be eligible for public hearing or legislative consideration of any kind unless the bill shall lay forth in full the changes to any act or sections of law. Title only bills shall be prohibited.
Article II, section 22. No bill shall be eligible for final passage in either house unless copies of the bill in the form to be passed shall have been made available to the members of that house and the public for at least twenty-four hours, unless two-thirds of the members elected to the house in which it is pending suspend this requirement, and every individual consideration of a bill or action suspending the requirement shall be recorded in the journal of the respective house. No bill shall become a law unless on its final passage the vote be taken by yeas and nays, the names of the members voting for and against the same be entered on the journal of each house, and a majority of the members elected to each house be recorded thereon as voting in its favor.
BE IT FURTHER RESOLVED, That the secretary of state shall cause notice of this constitutional amendment to be published at least four times during the four weeks next preceding the election in every legal newspaper in the state.
Let’s have a discussion about WPC’s suggestion. Implementing transparency is the right thing to do and will promote good, open government in Washington state. Stop chasing ill health.
From the Coach’s Corner, courtesy of Enterprise Washington, click here to find your legislators’ phone number and email address.
