ObamaCare: High Court Upholds Subsidies…What Now?



June 25, 2015 –


So the U.S. Supreme Court has ruled in King v. Burwell that it’s OK for ObamaCare to allow the federal government to subsidize health-insurance premiums.

The high court’s justification for its decision defies logic for economic, legal and moral reasons.

The so-called Affordable Care Act (ACA) unambiguously states the subsidies can only be given to people based on their income via an “Exchange established by the State.”

stockimages doctorBut only 13 states, including Washington state, have exchanges. Individual Americans are required to enroll in the federal government’s exchange. If they don’t, they face fines as high as $695 in 2016.

ObamaCare architect Jonathan Gruber has said the law’s authors wanted the subsidies to force states to participate in the program.

Good economic sense

When the majority of states, 37, used good economic sense to refrain from establishing exchanges, the Obama Administration circumvented the law by issuing an IRS regulation.

“Virtually all of the state-exchanges are experiencing financial difficulties, including Washington state,” blogs Roger Stark, MD, the health care policy analyst for the Washington Policy Center (WPC), www.washingtonpolicy.org.

Fearing exploding costs, 23 states declined to take part in the resulting Medicaid expansion. In the participating 27 states, a major injustice is occurring. Able-bodied unemployed men are receiving free care.

The uninsured 33 million people have hit a wall – the plans are too expensive even with subsidies and the coverage is too limited.

But even moms and their children, who are eligible for coverage, are being rejected as new patients by doctors. Physicians simply cannot afford the drastically low-government reimbursement rates. They’re already overwhelmed with the required complex paperwork.

Few enrollees

In addition, only about 17 million people, who were among the 50-million uninsured before the law’s passage, are enrolled in the federal and state exchanges. Many enrolled in Medicaid, which puts a bigger burden on taxpayers.

Why so few enrollees?

For seemingly countless individuals, the four ACA-mandated insurance plans are out of their reach. The uninsured 33 million people have hit a wall – the plans are too expensive even with subsidies and the coverage is too limited.

Therefore, many Americans – the working poor, self employed and middle-income folks – have opted out. For them, it’s more financially feasible to pay the federal fine, negotiate health-care provider fees and hospitals, and seek low or no-cost deals from drug companies.

Many others are struggling to pay for health insurance.

The law’s bronze plan, for example, costs a minimum of $500 and inflicting deductibles that cost as much as $13,200 for a family of four – with extremely limited provider networks. The latter means such people can’t reliably choose their doctors or hospitals.

Furthermore, small-insurance companies have been forced out, which means only a handful of companies are participating and it constitutes a monopoly of insurers. It will only get worse as Aetna is acquiring Humana.

The consolidation also means there’s been a similar constriction of hospital and doctor services.

The individual plans are mired in a quagmire. What used to be routinely covered, no longer is. When an insurer denies coverage, the patients have no recourse as the insurers are unresponsive to the complaints.

There’s more mass confusion and waste that could be mentioned. It would require additional voluminous explanations in this article, but you get the idea.

Premium increases

With the dramatic decrease in insurance options, premiums for individuals are forecast to jump as much as 20 percent in 2016.

“Health insurance premiums will continue to rise, ultimately forcing the government to put some type of price controls on the industry,” predicts Dr. Stark. “Health insurance companies will then essentially become public utilities.”

There are other onerous implications.

“Taxes will continue to rise,” adds the WPC analyst. “The federal debt will increase and future generations will have a huge financial burden. Cuts to Medicare to pay for the ACA will get worse and access to health care for our seniors will decrease.”

Had the Supreme Court ruled the subsidies to be illegal, it’s true about 6-million low-income beneficiaries of this ghastly law would have lost their subsidies.

But for millions more, the monopolies – that drive the massive premium increases and less coverage – would have ended. For the uninsured 30-million+ Americans, a free-market system would likely provide affordable premiums and wider choices.

Ironically, a free market – with lower premiums and better choices – would have fulfilled the original intent of the law. ObamaCare is the poster child for heavy-handed government dysfunction.

“The stated goal of many of the proponents of the ACA is some type of government single-payer system,” concludes Dr. Stark. “Hopefully, the American public will reject this and will instead push for a patient-oriented health care system that puts the patient, not the government, in charge.”

Agreed.

From the Coach’s Corner, you can read more insights of the Washington Policy Center here.

“The problem with socialism is that you eventually run out of other peoples’ money.”

-Margaret Thatcher


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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.




Photo courtesy of stockimages at www.freedigitalphotos.net

Why You Can’t Expect Needed Reforms in Washington State Schools



July 16, 2013-


An additional $1 billion was added to funding of Washington state schools in the 2013 legislative session for a total of $15.2 billion in the biennial budget. But Democratic lawmakers – at the urging of the Washington Education Association (WEA) – refused to allow reforms.

“Though the new budget will increase state funding by about $1,000 per student, to an all-time high of $11,300 per student, only about 59 cents of every education dollar reaches the classroom, and restrictive seniority policies prevent students from learning from the best teachers,” wrote Liv Finne, the esteemed director of the Center for Education at Washington Policy Center in a July 2013 Seattle Times Op Ed.

“A little context is first necessary,” wrote Ms. Finne. “Last year, 23,000 Washington students, or 31 percent of the total, failed to pass the state’s third grade reading test. And 26,000 students, or 34 percent, failed to pass the third grade math test.”

That’s not all.

“Fully one-third of Washington’s schools rank as only ‘Fair’ or ‘Struggling,’ the lowest two categories on the State Board of Education’s School Achievement Index,” she explained. “These and other dismal results led the state Supreme Court to rule in the McCleary decision that ‘fundamental reforms are needed for Washington to meet its constitutional obligation to its students. Pouring more money into an outmoded system will not succeed.’”

She pointed out that student achievement is largely influenced by the quality of teachers, and that best schools have terrific teachers with an assertive principal who demands “high academic standards for students.”

Reform-minded lawmakers

Ms. Finne saluted efforts by state Senators, including Majority Leader Rodney Tom (D-Bellevue), as well Senators Steve Litzow (R-Mercer Island), Bruce Dammeier (R-Puyallup) and Andy Hill (R-Redmond).

She commended their four proposed reforms:

  1.  Allowing school principals to hire the best teachers and end the practice of endlessly transferring bad teachers from one school to another in the infamously bureaucratic “dance of the lemons”
  2. Giving schools A to F letter grades so parents can easily understand how well their local school are performing
  3. Ending the social promotion of students who cannot read at grade level by third grade 
  4. Directing that future compensation adjustments for teachers, beyond an adjustment for inflation, be provided in the form of professional training in methods that actually work at teaching underachieving students how to read, write, add, subtract, multiply and divide.

She pointed out Democratic leaders blocked the reforms.

“Supported by the powerful WEA union, these lawmakers are strong defenders of the educational status quo, fearing policy changes that may threaten the position of adults in the system,” she theorized.

But wait there’s more.

“The WEA union is also working to cut education services for children,” she revealed. “Many school districts, at the request of WEA representatives, are seeking to close school house doors at noon Wednesdays or Fridays.”

Seriously? Yes.

Common sense

“While the cuts would certainly reduce classroom work hours for adults, they would deprive students of important instructional hours,” she asserted. “In addition, last week the WEA union filed a frivolous lawsuit in an attempt to deny students access to charter schools.”

Her conclusion:

“In many states, like Wisconsin, Indiana and Florida, lawmakers are improving public education by giving parents more choice in selecting the school that works best for their children,” she wrote.

“Similarly, Washington voters enacted the new charter school law to provide school choice for parents in a few districts across the state,” she added. “Given the record of the just-ended legislative session, however, it is clear reforms that give most Washington parents a greater voice in their children’s education will have to wait for another day.”

Ugh. Why is it too much to ask lawmakers to do the right thing for Washington’s kids, not their political allies and donors?

Little wonder Washington’s employers complain about the lack of quality applicants, and the state’s technology companies are strong advocates for Congress to increase the number of H1-B visas to alleviate the shortage of skilled workers (see: Seattle Tech Recruiter Provides Career Advice, Makes Prediction).

Remember this debacle the next time you vote.

The authoritative think tank’s Web address: www.washingtonpolicycenter.org.

From the Coach’s Corner, see the Keys to Economic Development: Managing Ignorance.

“The philosophy of the school room in one generation will be the philosophy of government in the next.”

-Abraham Lincoln


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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.




Do Entrepreneurs Really Feel it’s National Small Business Week?



May 12, 2014 –


In its 51st year, the annual charade is underway. The week traditionally highlights government events for entrepreneurs.

President Barack Obama proclaimed May 12 to 16 as National Small Business Week 2014 in saying the right things about small business: “the lifeblood of our economy, employing half of our country’s workforce and creating nearly two out of every three new American jobs.”

But governments’ lip service to small business is underwhelming.

"Do Not Track" legislation bad for business?

Not to be a spoil sport, but it doesn’t feel as though the federal government has given us sufficient reasons for a celebration. That’s why it’s been ignored on this portal until a blog was published June 17, 2013 at Washington Policy Center (WPC), www.washingtonpolicy.org

It was written by Erin Shannon, the director of the Center for Small Business at WPC.

In her piece, “It’s Nice to Acknowledge Small Business Week – but Actions Speak Louder than Words,” she asserts:

“The Competitive Enterprise Institute reports the Obama Administration is ‘in a class by itself’ when it comes to ‘economically significant’ rules, which are defined by the feds as those estimated to cost the private sector at least $100 million each.

In the first three years of Obama’s Administration (2009-2011), 106 ‘economically significant’ regulations were put in place, with a cost to the private sector of $46 billion annually.  The Administration finished 57 ‘economically significant’ regulations in 2012, and another 167 are in the works.

So far this year, 26 of these ‘economically significant’ regulations affect small business.

It isn’t just the economically significant regulations that are proliferating and costing businesses and consumers more money.  According to the CEI report, the Code of Federal Regulations hit an all-time high of 174,545 pages in 2012, an increase of more than 21% over the past decade.  The number of pages in the Federal Register, which includes new rules as well as proposed rules and supporting documents, has also grown.  Obama set the all-time record of 81,045 pages in 2010, and his Administration has the dubious honor of posting three of the four largest paperwork years on record.”

Washington state government

But she doesn’t stop at the federal level. Washington state is equally unproductive.

“Over the course of two years (2011-2012), during which there was a moratorium on “non-critical” agency rulemaking, state agencies imposed a total of 805 new, permanent rules and 909 temporary, emergency rules that together fill 15,754 pages and change 10,047 sections of the Washington Administrative Code.

The Washington Economic Development Commission (WEDC), which is comprised of stakeholders representing business and labor, agency directors and lawmakers from both parties, says the key to job growth is to reform our state’s regulatory policies.  In a strongly worded condemnation of our state’s regulatory climate, the WEDC says, ‘Washington’s overly burdensome regulatory system must be addressed as a top economic development priority.’”

She pointed out Washington state Governor Jay Inslee hadn’t joined in the recognition of small business.

She also reminds us of WPC’s astute “long-standing policy recommendations to improve our state’s business climate.” Indeed, they’re certainly worth reviewing and enacting.

Seattle

And how is the city of Seattle helping small business?

The city engineered two threats to small business:

— The Seattle City Council passed its “Job Assistance Bill.” Effective November 1, 2013, this means employers cannot ask job applicants about their criminal history until after the initial screening process. That is, unless employers can show they have a “legitimate business reason,” a dubious exception.

— And then there’s the new minimum wage: $15.

Businesspeople and human resources folks will have fun. Neither threats will help small business. They’ll lead to higher prices, drive entrepreneurs elsewhere, and will decrease opportunities for low-skill workers.

From the Coach’s Corner, you can read more about government/public policy issues here.

Rather than just pointing out the flaws in government policy, here are related small business tips:

Don’t let Minimum Wage Mandates Ruin Your Business — Your cash flow, credit access, pricing and profit margins are all directly or indirectly at-risk with the proposed mandates to increase the minimum wage. Workers should be paid well, if they’re good performers.

Minimizing Liability and Managing an OSHA Inspection — Government is making it harder and harder to run a business. Many business owners dread onerous government regulations, including from OSHA.

Small Business – Easy Ways to Boost Your Employees’ Morale — Employee morale affects performance. Study after study shows a significant percentage of worker morale is mediocre, at best. That’s often the case even for companies that are able to pay competitive wages and benefits.

Searching for Profits? Escape the Wilderness of Uncertainty — The quest for profits is challenging if you’re lost in the wilderness of uncertainty. But success is possible. Hard work isn’t a cure-all for success in business. True, passion and enthusiasm help to a degree, as well. But success requires more than just these qualities.

“Good judgment comes from experience, and a lot of that comes from bad judgment.”
-Will Rogers

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

Washington Taxpayers Lose Economic Freedoms under Ruling Class, Inslee



May 28, 2013 –


Washington state’s ruling class was at it again in March 2013. After less than four months in office, Gov. Jay Inslee has already violated a major campaign promise he made on taxes to get elected in 2012.

“After a year of pledging that higher taxes won’t be needed to fix Washington’s budget woes, Governor Inslee has broken his campaign promise with his budget that would raise $1.2 billion in new revenue to pay for increased government spending,” wrote Erin Shannon, director of the Center for Small Business at the Washington Policy Center (www.washingtonpolicy.org).

Moreover, she wrote “Inslee’s budget proposes the  largest increase in government spending” in several years. That’s an 11 percent increase – the largest since 2005 when Gov. Gregoire’s proposed an 18 percent hike just after she was elected.

Governor’s disingenuous claim

At the least, Gov. Inslee is disingenuous. He claims extending the tax hikes are not tax increases.

“Part of Inslee’s budget would roll back a series of tax breaks for businesses and individuals, and would make permanent tax increases that were supposed to be temporary and set to expire this year,” wrote Ms. Shannon.

“Those temporary taxes were part of SB 6143, an $890 million tax package passed by the Legislature in 2010,” she explained. “Included in the bill were increased Business & Occupation taxes and an increased tax on beer, among other tax increases (increased taxes on soda and bottled water were subsequently repealed by voters via I-1107).”

Legislators’ broken promises

Voters were told the tax increases wouldn’t be forever. Lawmakers claimed the taxes would end June 30, 2013.

“When debated, lawmakers promised the controversial tax increases would be temporary increases in revenue. Then Senate Majority Leader Lisa Brown gave rousing floor speeches on March 7, 2010 and April 12, 2010 promising the taxes would be temporary,” Ms. Shannon remembers.” Senator James Hargrove is also on record reassuring opponents the tax hikes would not be permanent.”

Are you amused? There’s more.

“By extending these taxes, Governor Inslee would impose an additional $661 million tax increase on Washingtonians in 2013-2015,” observes Ms. Shannon.

“When Inslee first indicated he might extend the tax increases (his second day in office) he explained that allowing those temporary tax increases to continue is not breaking his no-tax campaign promise because it is not an actual tax increase…”

Sure. And the reasons for the tax increases have nothing to do with over-spending.

My question is: How long will it take for voters to realize they’re responsible for continuing to elect a ruling class.

From the Coach’s Corner, as it is, in a ranking of economic and personal freedoms, Washington residents languish 29th in the nation, according to an academic study.

The study’s data range from fiscal policy and regulatory policy to personal freedom in the Freedom in the 50 States 2013 study by the Mercatus Center at George Mason University.

To bring Washington in line with national norms, researchers recommend several policy improvements:

  • The state should stop over-spending (spending is too high in proportion to tax revenue).
  • Reduce government employment.
  • Reduce spending on unemployment and workers’ compensation.
  • Protect the property rights of landowners by with eminent-domain reforms and either “repealing or amending the Growth Management Act and the Shoreline Management Act.”
  • Stop relying on sin taxes.

THE RULING CLASS…now even the deviancy of the old nobility is becoming more commonplace…as once they were given land by the sovereign, upon which to live well…now they are given government pensions and benefits.

-Frequent Biz Coach Reader


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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.




‘Ruling Class’ Beats Voters – Thanks to Washington Supreme Court



Feb. 28, 2013

“The Ruling Class — now, even the deviancy of the old nobility is becoming more commonplace…as once they were given land by the sovereign, upon which to live well…now they are given government pensions and benefits.”

-frequent Biz Coach reader


Washington state businesspeople and consumers, alike, have been dealt a blow by the state Supreme Court. In a 6-3 ruling, the court threw out the voter-approved mandate requiring a two-thirds legislative vote in order for lawmakers to raise taxes.

The court dubiously ruled such voter-approved initiatives are unconstitutional. The ruling followed a lawsuit by left-leaning Democrats and groups opposing the will of the taxpayers. So, the “ruling class” won.

Washington’s “ruling class” — including many lawmakers, bureaucrats and public employee unions — marches forward with deficit spending and lucrative pensions for state workers. Washington state’s unfunded pension liability is $52 billion, according to Retirement Benefit Solutions.

The two-thirds requirement was passed by voters to require the Legislature to honor voters’ wishes in five elections:

  • 1993
  • 1998
  • 2007
  • 2010
  • 2012

But each time the Legislature circumvented the voter-approved wishes. Under state law – if legislators wait two years – they can violate the will of the people by changing the initiatives with only a majority vote.

“Our holding today is not a judgment on the wisdom of requiring a supermajority for the passage of tax legislation,” the majority opinion said.

“Such judgment is left to the legislative branch of our government. Should the people and the legislature still wish to require a supermajority vote for tax legislation, they must do so through constitutional amendment, not through legislation,” added the majority opinion.

The bad news: So once again, tax increases can be imposed by a single vote of the Legislature’s two bodies, the House and Senate, and a signature by the governor.

Some good news

A silver lining: The state Senate is controlled by Republicans. They’re on record – vowing to oppose tax increases.

The GOP took charge of the Senate, thanks to two Democrats: Tom, D-Medina, and Tim Sheldon, D-Potlatch. This year, they began caucusing with the Republicans.

Generally, Democrats are looking forward to raising taxes according to published reports. As a result of too-much spending, Washington perennially has a budget deficit. This year, the deficit is $1 billion.

Think tank’s permanent solution

“For the past 20 years the voters have consistently made clear they want their lawmakers to reach a broad consensus on the need to raise taxes or include the voters directly on the decision,” said Jason Mercier of the Washington Policy Center (WPC), www.washingtonpolicy.org.

“Today, the Supreme Court invalidated this taxpayer protection but did not negate the fact that on five separate occasions the voters have demanded this requirement most recently with statewide passage of I-1185 with a 64 percent vote and approval in 44 of the state’s 49 legislative districts,” he added.

“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 such as SJR 8205 to help resolve this debate once and for all?” he asked.

“There is nothing for lawmakers to fear by sending SJR 8205 to the voters but the will of the people,” he asserted.

Sen. Don Benton, R-Vancouver and Sen. Pam Roach, R-Auburn, in joint resolutions, are calling for the state’s constitution to be amended – to stop the chicanery and violation of voter wishes. The amendment would not allow legislators to shelve the law in order to impose tax increases.

Conclusion

The WPC’s advocacy for a constitutional amendment makes sense.

In addition, here’s a common-sense question: How long will voters allow the “ruling class” lawmakers to stay in power?

From the Coach’s Corner, if you want to track the state Legislature’s bills, visit: washingtonvotes.org.

“The problem with political jokes is they get elected.”

-Henry Cate VII


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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.




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

Jan. 26, 2012

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

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

Why?

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

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

Salient data about small business:

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

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

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

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

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

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

When will Washington’s Legislature demonstrate wisdom?

From the Coach’s Corner, also read:

WPC Hits Target, but Will Washington State Legislature?

Washington: A Balanced Budget Is No Longer Enough

Does the Federal Reserve Understand Small Business?

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

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

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:

  1. Provide the governor discretionary authority to cut spending. Adopt performance-based Priorities of government budgeting to control the rate of spending growth.
  2. Restore the legislature’s ability to amend collective bargaining agreements.
  3. Direct state managers to use more competitive contracting.
  4. Repeal unaffordable programs instead of suspending them.
  5. Bring state employee health care premium contributions in line with those of the private sector.
  6. 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:

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

From the Coach’s Corner, see WPC’s Coverage of the special legislative session here.

Here are related columns:

“There’s no trick to being a humorist when you have the whole government working for you.”

Will Rogers

 

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

Former Washington Auditor Who Championed Good Government, Wins National Honor

April 13, 2013 

The man had a vision and now he’s being recognized for it.

Former Washington State Auditor Brian Sonntag, who is in retirement this year after superb performances in five terms, has won a prestigious national honor. That would be induction into the Heroes of the 50 States: The State Open Government Hall of Fame.

Mr. Sonntag stood out as the epitome of state-government transparency. Yes, as an elected official, he had an unparalleled vision.

Count me as a fan – not only as a citizen and business consultant, but as a columnist who interviewed him on multiple occasions as the “Biz Coach” on KING5.com and two other Washington media Web sites; as well as the host of “Washington Business Weekly,” the Association of Washington Business radio program.

It can’t be over-stated. He was a conscientious public servant dedicated to doing the right thing for taxpayers.

WPC weighs in

His award drew praise from a state public-policy think tank, Washington Policy Center (WPC).

“Sonntag has also been a strong advocate for Washington Policy Center’s proposed legislative transparency reforms,”said Jason Mercier, director, for WPCs Center for Government Reform. “NFOIC’s acknowledgment of Sonntag’s long-time support for open government is well deserved.”

His selection was announced by the National Freedom of Information Coalition (NFOIC) and the Society of Professional Journalists (SPJ).

The State Open Government Hall of Fame is a joint venture by SPJ and NFOIC. It was developed by leaders in both organizations as a way to recognize long-term contributions of individuals to open government in their states.

Induction into the State Open Government Hall of Fame recognizes “long and steady effort to preserve and protect the free flow of information about state and local government that is vital to the public in a democracy.” The award is intended to honor individuals – living or dead – whose lifetime commitment to citizen access, open government and freedom of information has left a significant legacy at the state and local level.

When Mr. Sonntag announced his intention to retire, it was a sad day for the state.

To review history and a record of his achievements, here’s what I wrote here on this portal:

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.

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:

  1. Agency efforts to streamline their administrative rules
  2. Agency permit process time
  3. State regulations in excess of federal regulations and the value added for the extra regulation
  4. Agency inspection process and coordination amongst agency inspections
  5. 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:

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

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.

Frustration is trying to find your glasses without your glasses. 

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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. 

Common Sense Needed for Washington State Pension Reform

Updated March 19, 2012

It’s no secret that Washington state has a nightmarish budget deficit. Lawmakers have consistently failed to solve the red ink, which is exacerbated by lavish public-employee pensions.

My two salient concerns:

1.  Public-sector pensions are on average about 74 percent higher than the private sector.

2.  The Legislature has been delinquent in funding them in the billions of dollars.

But lawmakers aren’t exactly shy about high spending and taxes.

Fortunately, I’m not alone in sounding the alarm. Concerned analysts also include Jason Mercier of the Washington Policy Center, www.washingtonpolicy.orgin a 2010 Op Ed in The Seattle Times.

“According to the state actuary, two of Washington’s nine pension plans are already in the red with unfunded liabilities totaling nearly $7 billion,” he reminded readers. “This does not include an additional $8 billion in unfunded post-retirement benefit liability, primarily for retiree health care. Unlike pensions, however, these other retirement benefits are not a contractual right, meaning the Legislature has the ability to make changes as necessary.”

He, too, understood the adverse pension impact on the state’s budget.

“Already our state is facing nearly a $6 billion projected budget shortfall for 2011-13. Included in these projections is the need for additional pension contributions” Mr. Mercier wrote. “The state’s Office of Financial Management projects that an additional $700 million in pension payments above the base will be required in the 2011-13 biennium.”

The forecasts proved to be accurate.

He further stated that pension costs will continue to grow – to $1.2 billion during the 2013 to 2015 budgeting cycle.

“To help avoid kicking the pension liability can further down the road while putting the state’s credit rating in jeopardy, it may be time to pass a constitutional amendment that forces state officials to make the required pension payments and creates a higher threshold to provide enhanced benefits,” he observed. “While funding these past pension promises may crowd out other spending, the alternative puts taxpayers in a worse position.”

He offered another vital solution:

“Meanwhile, legislators must stop enhancing retiree benefits until all the state’s pension plans return to healthy status,” Mr. Mercier explained. “Exacerbating taxpayer exposure while billions in unfunded liabilities exist is the height of irresponsibility. It may also be time for additional reforms to help minimize future pension liabilities.”

It’s also worth noting that constitutional pension reforms were advocated by State Treasurer Jim McIntire.

Amen.

From the Coach’s Corner, here’s another piece on pension reform: Washington Labor Leader Is Right – It Is ‘Class Warfare’.

“Pension reform can be hard to talk about. In the long run, reform now means fewer demands for layoffs and less draconian measures in the future. It’s in the best interest of all Californians to fix this system now.” 

-Jerry Brown

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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?

I-1098’s Impact on Economic Development in Washington?

 

Sep. 22, 2010

You’ve heard the rhetoric. Initiative 1098 , the controversial income-tax proposal, has become one of the most divisive issues in Washington state.

It would impose a 5 percent tax rate of $200,000 on individuals and $400,000 on couples with a 9 percent tax rate on $500,000 for one person and $1 million on families. The state’s share of the property tax would be lowered by 20 percent and the business and occupational tax would exempt 118,000 more companies.

Bill Gates, the c0-founder of Microsoft, joined his father Bill Gates Sr. in advocating passage of I-1098. Notable opponents include Microsoft CEO Steve Ballmer and Amazon.com founder Jeff Bezos.  

Ironically, as an economic development tool, the state’s Department of Commerce has a Web site (www.chooseWashington.com) that states Washington has a “Favorable Business Environment.” One of the advantages: “No income tax in Washington.”

So what’s the impact of I-1098?

 The Citizens’ Guide to Initiative 1098 is a policy brief by written by Paul Guppy. He’s the vice president for research at the highly respected think tank, Washington Policy Center. It’s voluminous and thought-provoking with heavy documentation.

To summarize, here are Mr. Guppy’s 10 salient conclusions:

1. Initiative 1098 Creates a New Way to Tax. Essentially he believes it does nothing to fix the inequities of the state sales tax, which is regressive for businesses and low-income families.

2. The Income Tax would Likely be Extended to More People. Is this a surprise? No.

“Unlike past efforts, Initiative 1098 is drafted as an ordinary law, not as an amendment to the state constitution, Mr. Guppy writes. “This makes it easier for the income tax to be extended to more people in the future. The legislature could change Initiative 1098 in the short-term with a two-thirds vote, and after two years could change it by a simple majority vote, just like any other part of the legal code.”

3. Income Tax Revenue May Not Go to Promised Purposes. He cites Washington Secretary of State’s data that indicates the Legislature has over-ridden 30 voter-approved initiatives.

“Lawmakers often divert tax revenues from their intended purposes,” he explains. “This year the legislature transferred tax revenue totaling more than $1 billion from 33 dedicated trust accounts, some created by voter initiative, and spent those funds on general programs.” 

4. More Money Will Not Help Public Schools. He points out school children will not learn more.

“Taxpayers contribute over $10 billion per year toward the education of slightly less than one million public school students in Washington,” he writes. “Public school districts currently spend an average of $10,100 per student per year, the highest level in state history. 

“The largest budget item, comprising 83 percent of spending, is devoted to salaries and benefits. The statewide average for teacher pay with benefits is $79,200,” he asserts. “Average pay with benefits for school administrators is $117,000.”

He adds Seattle’s school spending of $12,746 per student annually has increased more than a third since 2005.

“In Seattle average teacher pay with benefits is $92,100. Average administrator pay with benefits is $106,900,” he adds.

5. Initiative 1098 and the State Economy. He lists numerous examples how the initiative would hinder the state’s economic climate.

“By enacting an income tax, Washington would be giving up a significant competitive advantage in relation to other states,” he advises. “Washington has a high sales tax. Adding an income tax means Washington would join the states that impose all the major forms of tax on their citizens.”

6. Some Residents would Leave Washington to Avoid the Income Tax. He points out a new income tax would be the fourth-highest in the U.S.

“High-earners targeted by the tax would suddenly have a strong financial incentive to move out of state,” he writes. “A change in residence would include pulling investments out of the state as well, since Initiative 1098 would tax non-residents who derive income from Washington businesses. In a survey of business owners and their views of Initiative 1098, 1.8 percent of respondents said they planned to leave Washington if the income tax measure passes, even though this was not one of the survey questions.”

He cites New Jersey and Minnesota as examples where high-income residents felt compelled to leave for greener pastures.

7. Initiative 1098 would Reduce Charitable Giving. Because the controversial proposal would be higher than the federal tax and would be applied to adjusted gross income, he writes the affluent would fewer funds for charity.

“Adjusted gross income includes wages, salaries, tips, interest income, rental income, capital gains, income from pensions and retirement accounts, and alimony payments received by divorced spouses,” he suggests. “Adjusted gross income is calculated before the taxpayer is allowed to lower his reported income by claiming deductions such as the federal standard deduction, the child tax credit, the dependent care credit, local property taxes, motor vehicle taxes, mortgage interest payments, contributions to retirement accounts and donations to charity.”

That means that $2.2 billion next year and $11.1 billion over the next five years would not be available for nonprofit giving.

8. Initiative 1098 and Tax Fairness. He writes, contrary to proponents’ claims, the proposal is unfair – 98 percent of the state’s population would escape an income tax.

“Initiative 1098 is not unbiased or impartial in its treatment of Washington citizens,” he explains. “It specifically targets a minority, as defined in economic terms, to shoulder the full cost of a new tax, while using state power to redistribute the benefits to others.”

9. State Income Taxes Do Not Lead to Fiscal Stability. He points out Oregon, New Jersey and California all have major budget woes despite an income tax.

“Oregon’s personal income taxes – based on 2009 returns due on April 15, 2010, were down by $472.3 million, or 16.4 percent less than the previous year,” he writes.

“During the strong economy lawmakers increased state spending by over 33 percent in a single four-year period,” he reminds us. “Access to a new revenue stream would likely encourage Washington lawmakers to return to enacting large, permanent spending increases in each budget cycle. When economic activity slows or declines in recessionary years, personal incomes fall accordingly, and leave income tax states like Oregon and California with far less revenue than officials expected to receive.”

10. Initiative 1098 is Unconstitutional under Current Case Law. Opponents argue passage of I-1098 would be thrown out by the courts.

From the Coach’s Corner, you can visit the Defeat 1098 campaign here.

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