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April 2009
Monday, April 27, 2009
Practically the End of a Tough Legislative Session - Some Good Competitiveness Outcomes
Posted by Richard S. Davis on 4/27/2009 6:56:00 PM
It's important to take time to recognize that in a very difficult year, the Legislature accomplished some noteworthy things, foremost among them: balancing a budget without general tax increases. Critics may point at the heavy reliance on one-time money, including the federal stimulus cash, and the likelihood of another shortfall in the next budget. While that argument has validity, it's more important to note that lawmakers bought themselves - and us - another two years to transition to a sustainable spending level, we hope in a stronger economy. Tax hikes would have further hammered struggling families and businesses, delaying the recovery. Commend lawmakers for making the right budget decisions and avoiding new taxes.
Also, at the eleventh hour (literally), lawmakers adopted a clean unemployment insurance reform bill after the House receded from problematic amendments that would have led to a certain tax hike, particularly on mid-size Main Street businesses. Along with a balanced budget that did not rely on new taxes, UI reform has been a top WashACE priority. Thanks to all who contacted their legislators in the last few weeks!
Some other good things:
We'll have more on what did and didn't happen this session in the coming weeks. Facing considerable challenges, lawmakers were able to take meaningful steps to improve our economic competitiveness. That's no small accomplishment.
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Saturday, April 25, 2009
House Passes Fee on Petroleum Products - Equivalent of 4 Cent-a-Gallon Gas Tax HIke
Posted by Richard S. Davis on 4/25/2009 6:31:00 PM
The House just voted, 51-44, to adopt HB 1614, a new fee on petroleum refined in Washington. It looks like a tax to me.
It now goes to the Senate.
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Saturday, April 25, 2009
House Passed Operating Budget, May be a While Before We Know What's In It
Posted by Richard S. Davis on 4/25/2009 1:34:00 PM
Budget work typically involves lots of behind-the-scenes scrubbing and analysis (along with some dealing and trading), followed by apparently hurried voting on a bill that few lawmakers have read. And even with that scenario in mind, this year's legislative session has ended with unusually little public discussion of the final budget.
The House-Senate compromise budget, developed by the majority party, was released early yesterday and passed by the House last night. Brad Shannon writes in the Olympian that Republicans are crying foul. First, because they weren't involved. And then...
And of course the GOP does not like the content of the budget, once members looked at it.
“I
think it looks exactly as I would have feared: Empty promises,” Rep.
Gary Alexander, R-Thurston County, said tonight. “It sets us up for a
significant deficit when we come back in 2011 of over $10 billion. …
It’s a credit card budget. They just raised their credit card limit and
promised we’ll pay it off sometime in the future. We’re just not sure
when.’’
There's little doubt that this budget fails to solve the ongoing problem of shortfalls, though that $10 billion estimate is higher than anything I've seen. As the last year and a half of quarterly revenue forecasts has shown, economists have a tough time accurately predicting the future. Easily, though, we can see a shortfall of more than $4 billion in the coming biennium.
The budget relies on $3 billion in federal stimulus aid, $4 billion in
cuts and a number of one-time moves to raid a rainy-day savings
account, delay pension payments and shift money from construction
accounts.
Turner has more on the budget here. And he points out the challenges facing the press corps - and through them, the public - in dealing with the mountain of budget detail in a very short time frame.
I generally am forced to rely on news releases and summaries handed
out by the Legislature in writing my very first stories about the
budgets -- and all three come out the same day (operating, capital,
transportation -- and I don't have a chance to read all the detail
until after the Legislature adjourns.
We can expect to learn more over the next few weeks, before the governor signs the budget. Despite earlier promises from lawmakers, this has not been a transparent process. That's perhaps understandable when you consider the difficulty in cutting $4 billion from planned spending, but it does contribute to public skepticism about the process.
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Saturday, April 25, 2009
UI Reform Back to the House
Posted by Richard S. Davis on 4/25/2009 1:18:00 PM
The proposal will return to the House with the request that representatives drop amendments that would:
- Increase the amount of benefits paid to unemployed workers, up to $20 per week.
- Solidify
a state Supreme Court decision from last summer that said some
employees who quit voluntarily can receive state benefits.
The Senate bill is a responsible measure that protects the UI trust fund, brings state policy into compliance with federal law, avoids job destroying tax hikes, and restores unambiguous policy regarding employees who voluntarily leave their jobs. It originally passed the Senate in March on a 38-11, with bipartisan support. In the House, the amended bill passed narrowly, 53-45, Representatives should now quickly accept the Senate version.
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Saturday, April 25, 2009
UI Reform Back to the House
Posted by Richard S. Davis on 4/25/2009 1:12:00 PM
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Friday, April 24, 2009
Seattle Times Provides Good Final Hours UI Advice to Legislature
Posted by Richard S. Davis on 4/24/2009 12:14:00 PM
In the middle of an economic crisis, it makes no sense to make it more expensive to hire a worker.
Just such a measure, Senate Bill 5963, is now in the final steps in the
Legislature. The bill would make unemployment pay more generous for
workers who qualify for less than the $541 maximum weekly benefit — an
increase that is almost certain to trigger an increase in payroll taxes.
The Times editorial board points out that Washington employers already pay among the nation's highest unemployment taxes and unemployed workers here receive among the nation's most generous benefits,
WashACE has written a lot about this in recent weeks, most recently here. The Senate must reject the costly amendments placed on the bill in the House. As amended by the House, SB 5963 will cost the state good jobs.
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Thursday, April 23, 2009
Income Tax Plan, Not Dead but Sleeping in the Senate
Posted by Richard S. Davis on 4/23/2009 4:42:00 PM
Senate Democrats held a press conference this afternoon to discuss the high earners income tax. Majority Leader Lisa Brown says it won't move this session but may come back soon. Rich Roesler has a good account of the discussion.
This really is becoming more urgent every year,” said Sen. Jeanne
Kohl-Welles, D-Seattle. “Our tax system is really not only unfair, but
it’s also out of kilter. She said she’ll introduce a bill in a day or
two for a sales tax on gum and candy, with the money going to
children’s health care... But she also said that the bill is
unlikely to go anywhere in the legislative session’s final few days.
“The point is: we can’t stop discussing
this,” said Kohl-Welles, who has repeatedly introduced bills to launch
a state income tax.
Not sure that "cant stop talking about taxes" is a theme that sells well with a lot of Washingtonians.
Brad Shannon's report on the press conference includes some insight into the thinking of House Democrats.
In the House, Majority Leader Lynn Kessler, D-Hoquiam, said a caucus
last night on four different taxes produced lukewarm interest, and she
speculated that the caucus was tired. She said there appeared to be
more enthusiasm for Rep. Hans Dunshee’s jobs proposal, which is a $3
billion bond project to upgrade energy systems and improve safety at
schools, universities and public buildings.
But Brown said she
detects little support for a bond but that the Senate Democrats would
consider a sales-tax proposal if the House can approve it.
Joe Turner writes in the Political Buzz that House leaders don't have the votes to pass the sales tax increase. And he includes a copy of the letter SEIU is distributing to legislators urging them to send the tax hike to the public. It's about what you'd expect: Bad things will happen without new revenues and, once properly educated, the public will support new taxes. Not convincing.
With just a few days left to adjournment, it's clear that Democrats can't find a tax plan that gathers majority support. It's time they quit looking for one.
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Thursday, April 23, 2009
Close on Budget Agreement, Still No Deal on Taxes
Posted by Richard S. Davis on 4/23/2009 12:33:00 PM
Democratic House and Senate budget negotiators have reached agreement on a spending plan that they'll unveil to their caucuses today. Here's how Brad Shannon of the Olympian reported it last night.
The House hopes to give it a floor vote as soon as Friday, leaving just a couple days for the Senate to hear it briefly in committee then vote to concur.
House Ways and Means Committee chair Kelli Linville, D-Bellingham, said the agreement was reached this evening on major issues, including agreement on K-12 public schools and higher education. Negotiators in the two chambers are working out provisos and language, a task that likely would go well into the wee hours of Thursday.
Rich Roesler has more in his Spokesman-Review blog, including this bit on prospects for a tax package.
The budget does not include a proposed state income tax or three-tenths of a cent sales tax hike. Lawmakers have floated both ideas — which would need voter approval — as a way to offset hundreds of millions of dollars in cuts.
The income tax proposal now seems highly unlikely, and the sales tax plan appears to be faltering.
Shannon reports that three or four tax hikes are theoretically in play, at least for a while.
None seems likely, and for good reason as a couple of good editorials make clear.
Tracey Warner weighs the arguments of tax critics and tax supporters in the Wenatchee World.
People don't die for lack of tax hikes, [tax opponents] say.
Perhaps, but some people are dying for them.
And the Columbian editorial board says, "this is the worst time and the worst place to violate the 'no tax increases' principle."
Right.
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Wednesday, April 22, 2009
Not Taking Boeing for Granted
Posted by Richard S. Davis on 4/22/2009 1:14:00 PM
In Washington, Boeing faces higher unemployment insurance costs,
regulatory costs and labor strife — four strikes in recent years with
202 days of lost work.
Brunell notes that this year's Legislature has not only failed to improve our competitive position, but in several cases threatens to take us backward.
Take unemployment insurance:
... the Deloitte study recommends reducing employers' unemployment
insurance costs to be more in line with competing states. State
lawmakers reformed unemployment insurance costs in 2003 to convince
Boeing to assemble the 787 in Washington, but later reneged on many of
those key reforms. Currently, Washington's unemployment insurance costs
are among the highest in the nation. But instead of lowering them, some
key lawmakers in Olympia are pushing bills backed by union leaders to
increase unemployment benefits and allow workers who voluntarily quit
their jobs to receive full benefits.
And workers' compensation:
For the past 100 years, workers' compensation claims have been handled
in an informal administrative process that doesn't involve trial
lawyers. The employer works with an employee's doctors to manage the
injured worker's treatment and eventual return to work. But the new law
bans employers from speaking to injured workers' doctors once an appeal
is filed. As a result, employers — and often workers — will be forced
to hire attorneys for the more formal and time-consuming process of
taking depositions, and as the delays drag on, legal costs pile up ...
Read the whole column.
Jerry Cornfield in the Herald of Everett reports that the House voted last night to approve an aerospace training institute but balked at endorsing the governor's proposed aerospace training council. If we get UI, workers' compensation, and labor relations wrong, last night's legislation won't make much difference in a cost-sensitive global competition to land good aerospace jobs.
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Wednesday, April 22, 2009
No Enthusiasm for Tax Hike
Posted by Richard S. Davis on 4/22/2009 12:42:00 PM
From the editorial:
... we’re dismayed that lawmakers
seem bent on giving state workers their automatic “step” increases and
keeping their share of health insurance premiums well below what
private-sector workers pay. Meanwhile, they’re talking about kicking
thousands of low-income Washingtonians off the Basic Health Plan.
How about putting the sacred cows on the ballot, and protecting the poor in the actual budget?
If
the Legislature decides to punt and tell voters that vital social
services are theirs to save, it will be a dereliction of duty. And,
yes, people might die. But the fault won’t be lawmakers’ for not
sending a tax measure to the ballot. It will be theirs for neglecting
their job.
In my column today, I compare the final days of the session to a game show. We've just entered Double Jeopardy, where anything can happen. Let lawmakers know how you feel about new taxes.
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Monday, April 20, 2009
There Will be A Tax Package on the Ballot ... Or Maybe Not
Posted by Richard S. Davis on 4/20/2009 3:58:00 PM
Lots of stories over the weekend on the prospects of lawmakers sending a tax package to the voters. This close to the scheduled April 26 adjournment, tax and spending issues dominate. And there's a great deal of uncertainty.
I'm told the reason the tax referendum was revived from near-certain death over the weekend was that House Speaker Frank Chopp
has some members of his Democratic caucus who absolutely refuse to vote
for a budget with $4 billion in spending cuts -- unless there is a tax
proposition on the ballot, too.
We'll find out more tomorrow. That when the tax vote coalition
members say whether they are in or out. The campaign really needs two
components: It's gotta have the Service Employees International Union,
which represents homecare workers and nurses, to provide the foot
soldiers for doorbelling. And it needs the hospitals and nursing homes
to pony up the money.
The Everett Herald takes an unusually sharp tone in its Sunday editorial warning lawmakers: " Don't blackmail the voters." They take Rep. Eric Pettigrew to task for saying "people will die" if voters don't approve new taxes.
Yes, the recession has hit the state budget
hard. But before asking taxpayers for more, lawmakers need to do a
better job prioritizing existing dollars. Why not, for example, ask
state employees to share a greater portion of their health-benefit
costs? They're getting a significantly better deal than most
private-sector workers -- the very people who would be asked to pay
more in sales taxes.
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Monday, April 20, 2009
Excellent UI Editorial in The News Tribune
Posted by Richard S. Davis on 4/20/2009 12:49:00 PM
We hear that the state Senate may take up SB 5963 today. We've written a lot on the issue, urging the Senate to strip the House amendments and insist on their version of this vital legislation.
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Friday, April 17, 2009
Taxes & Fees Quietly Growing
Posted by Richard S. Davis on 4/17/2009 11:46:00 AM
Most of the proposals come from majority Democrats, who are grappling
with a $9 billion budget shortfall over the next two years. Republicans
have argued for more cost-cutting, but Democrats say that some
increases are crucial to easing devastating cuts.
It's the same debate we've heard all session, with increasing intensity as the legislature heads into the final ten days. Read Roesler's story and weigh in with your lawmakers. The layering on of new taxes, particularly without a public vote, simply adds new costs on families and employers struggling to make ends meet. It's a bad idea.
... taxes extract money from the economy that provides the fundamental
support for all of us, and increasing taxes will have negative effects
It really is that simple.
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Thursday, April 16, 2009
Business Urges Senate to Insist on Good Unemployment Insurance Reform
Posted by Richard S. Davis on 4/16/2009 12:19:00 PM
I can't do better than link to this Olympia Business Watch post by Jocelyn McCabe. WashACE worked closely with AWB, the Seattle Chamber, the Washington Roundtable and Enterprise Washington to write the state Senate urging them to insist on the Senate-passed version of SB 5963 and to reject the l ousy House amendments.
Jocelyn also provides a link to this great editorial in the Yakima Herald-Republic.
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Thursday, April 16, 2009
Tax Protests, Proposals, and Perspectives
Posted by Richard S. Davis on 4/16/2009 10:55:00 AM
Yesterday, the folks who wanted a vehicle for tax hikes finally got their shot. Rep. Eric Pettigrew introduced HB 2377, a 0.3 percentage point increase in the state sales tax rate, bringing it to 6.8 percent. The tax hike requires voter approval and would be in effect from January 1, 2010 through December 31, 2012. Interestingly, one-fifth of the new revenue would be used to fund the so-called "working families' tax exemption," with the balance going to a newly-created health care trust account.
Members of the coalition are planning to review the final round of
public polling this weekend to see whether the public has sufficient
appetite to raise taxes to restore health program cuts, she said.
Language in the bill by change by Tuesday, she said.
"Each (member of the coalition) will have to decide by Tuesday
whether they are in or out," Sauer said. That's Day 100 of the current
legislative session. Lawmakers are scheduled to adjourn five days
later, on April 26.
(I should note that Rep. Maralyn Chase introduced HB 2354, a sweeping 1 percent tax on intangible property like stocks and bonds. No analysis has been done on the bill, which looks like the biggest tax hike in state history. We can only hope it's an empty gesture, but ... watch it nonetheless.)
As lawmakers pondered tax hikes, a surprisingly large crowd of protesters rallied against "out of control spending," the growing national debt, and the prospect of increasing tax burdens. Here's Brad Shannon's account in the Olympian.
The rally, which was one of many similar events throughout the state
and nation Wednesday, drew an estimated 4,000 to 5,000 people who
chanted “stop spending my money!”
Coincidentally (??) the Washington Post reported that " Americans' Tax Burden Near HIstoric Low ... for all but the wealthiest Americans." I'm not sure that will placate the folks who see rising debt, unsustainable spending, and economic insecurity threatening their standard of living and the prospects for their children's futures.
The only accurate way to compare tax burdens is by comparing both state and
local taxes among states. By that measure, Washington ranks
19th-highest per capita and 35th-highest in taxes as a percentage of
personal income, http://www.taxfoundation.org/files/sr163.pdf.
Economists generally prefer measuring as a percentage of personal
income because it takes into account economic activity and demand for
services. Rankings have become a popular staple among certain national
publications, but they can be misleading.
Well, yes, they can be. So can business climate rankings, alhtough I don't recall such zealous attention to detail when Forbes reported favorably on Washington's business climate or when the Tax Foundation and Small Business Survival Committee provided equally flawed analyis of the business tax climate in the state. The Department's right: Forbes missed the mark. I'd quibble that it makes sense to look at tax burden from both perspectives - per capita and as a share in personal income - and not pick one over the other. But interstate comparisons should always combine state and local taxes.
Ultimately, I think voters will base their decision on new taxes - should they have a decision to make - on their perceptions of their personal tax situation, their assessment of the quality of government spending, and their confidence in the legislature's fiscal management. How do you think that will come out?
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Wednesday, April 15, 2009
Revenues Down, Unemployment Rate Up ...
Posted by Richard S. Davis on 4/15/2009 1:52:00 PM
Raha has increased the value of the monthly revenue collection reports, now billed as "economic and revenue updates," and justifies his cautious optimism with charts, data and analysis. No one expects an immediate or robust bounce. As he writes of the US recession,
The free-fall phase appears to be over, but the trough of the recession is still several months away.
But for Washington,
The state economy is likely to recover at the same time as the national economy. But, the early signs of recovery seen in the national data are not yet obvious in state data - mostly due to reporting lags, but also due to the type of data reported.
We expect the state economy to continue to lose jobs through the end of 2009, but at a diminishing rate.
It's difficult to preduct a turnaround, one of those things best identified in the rear-view mirror, after the fact. Given the uncertainty and fragility of the economy, legislators should resist calls for tax hikes. There's no excuse for adding to the burdens of struggling families and employers.
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Tuesday, April 14, 2009
What if Boeing Left Washington?
Posted by Richard S. Davis on 4/14/2009 1:54:00 PM
Since each Boeing job supports nearly three additional jobs in the state, the company’s departure would mean a permanent reduction of 285,000 jobs.
Without the draw of aerospace employment, housing priceswould fall by as much as 6.5 percent by 2030.
Statewide personal income would decline by nearly 9 percent.
The analysis, conducted independently for us by the Washington Research Council, complements last week's release of Deloitte Consulting's assessment of Washington's aerospace competitiveness.
Read them both. And remind lawmakers that enhancing and maintaining Washington's economic competitiveness is the key to recovery.
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Saturday, April 11, 2009
Slightly More Clarity on Legislative Tax Options, But Not Much
Posted by on 4/11/2009 5:15:00 PM
Sen. Joe Zarelli looks at the final weeks of legislative activy and reviews 10 recommendations for structural reform (Budget Brief #4). The Columbian has more on four of his ideas.
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Saturday, April 11, 2009
Aerospace Study: Washington Not Competitive
Posted by Richard S. Davis on 4/11/2009 4:42:00 PM
April 9, somewhat ahead of schedule as Jerry Cornfield reports, Gov. Gregoire released the results of a study of Washington aerospace competitiveness conducted for the administration by Deloitte Consulting. Rich Roesler of the Spokesman-Review had an earlier link to the leak.
It's a good report, echoing earlier work by Deloitte Consulting. After establishing the importance of aerospace to the state economy, the analysts examine Washington's strengths and weaknesses compared to competitor states, including the Carolinas, Kansas, and Texas. Here's a key finding:
While Washington offers many advantages to aerospace companies, its disadvantages outweigh the advantages in attracting and retaining aerospace companies relative to other states."
Recommendations were clustered into five groups and scored in terms of "ease of implementation" and "importance to aerospace." At the risk of oversimplifying (download the report and make your own judgment), I think our problem is that the stuff that's easy to do (training/education, research and development, create an "office of aerospace and defense) tends to be of relatively lower importance to aerospace. The important stuff (reducing high UI taxes and workers' compensation, improving labor management) is more difficult to implement.
The larger problem, as evidenced by yesterday's House vote increasing UI costs, is that too many Washington legislators are unwilling to take even modest steps to improve our cost competitiveness. And the state labor council openly mocks the Deloitte report, which is, I suppose, easier than refuting it.
We'll look at the report in more detail and offer additional thoughts in the coming weeks. Right now, though, we encourage legislators to take seriously recommendations to bring the cost of doing business here more in line with those of competiting states.
Excellent TNT editorial here.
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Saturday, April 11, 2009
House Passes Lousy Unemployment Insurance Bill
Posted by Richard S. Davis on 4/11/2009 12:47:00 PM
Yesterday, the House passed an unacceptable version of unemployment insurance reform. Business groups, including members of WashACE, had urged lawmakers to pass Senate Bill 5963 as it came from the Senate. The House Commerce and Labor Committee had taken that good legislation and tacked on amendments that increased UI benefits, assuring future tax increases for employers, and weakened language clarifying when workers who voluntarily quite their jobs could qualify for UI benefits. The legislation passed yesterday, after a flurry of amendments and heated floor speeches, reflects the committee's work.
"The irony is that the day after the governor rolls out
her plan to make Washington more competitive and improve the state's
business climate, her allies in the House decide to raise business taxes
and she's nowhere to be found," said Condotta.
The bill now goes back to the Senate, where Senators should insist on their original bill.
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Thursday, April 09, 2009
The Home Stretch: All Taxes, All the Time
Posted by Richard S. Davis on 4/9/2009 1:26:00 PM
The mass ascension is the highlight of hot air balloon festivals. Lots of balloons. Lots of color. Lots of, well, hot air on sunny, calm days. A lot of fun.
The tax balloons being floated in Olympia lack color, calm and fun. Totally taxing.
If they're looking to voters to identify the consensus pick, they should be picking up a clear signal: Don't raise taxes. A new Moore Information survey shows voters overwhelmingly rejecting a two-year increase in the state sales tax (from 6.5 percent to 7.5 percent) for education and other important state programs. Down it goes: 56 -39.
OK. Now they're talking about a smaller increase: 0.3 percent. Don't count on it doing much better. Roesler has more on the poll and on a national survey showing some support for taxing the rich. Even if you buy the national data, remember that most states already have an income tax, so support for skewing it to take more from the rich will be an easier sell. Income taxers here have a higher threshold to cross.
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Tuesday, April 07, 2009
Plenty of Tax Talk
Posted by Richard S. Davis on 4/7/2009 3:09:00 PM
Although the economy remains the top issue for voters, a Rasmussen Reports survey finds taxes moving up the list. Nationally,
... 64% of voters see taxation as very important; it’s highest level in nearly two years.
They have a lot of company in Olympia, where at least 64 percent of the legislature also see taxation as very important. In the final three weeks of the session, taxes and talk of taxes dominate the agenda.
The income tax continues to get talked about. Sen. Jeanne Kohl-Welles, who has sponsored a 1 percent income tax for the wealthy, thinks her plan is constitutional, according to an email she sent the Seattle PI.
I believe that the court would apply modern concepts of income tax, and
conclude that this legislation is constitutional, especially with the
support of the voters.
I think "the support of the voters" is supposed to be irrelevant when it comes to determining the constitutionality of a measure. Remember I-695?
One idea is to raise the sales tax by a third of a penny to fund
long-term care, adult family care, mental health and basic health care
services, and mitigate the effects of the cuts to public health care in
the House and Senate budgets. This would include a rebate for working
families, in order to offset the disproportionate burden that low and
middle income families pay under our current tax structure.
The new fashion is to take advantage of hard times to target a class of
people that few politicians are willing to defend -- and then expand
that class.
Our state makes a cameo appearance.
In the state of Washington, which has no income tax, Democratic state
Sen. Lisa Brown raised the idea in her blog. "The New York Legislature
is considering what I think is a fair and stable way of addressing
their revenue challenges. Should we do something similar in
Washington?" she asked. Not long after, one of her Democratic
colleagues introduced a bill proposing a millionaires' tax that would
kick in at $500,000.
Peter Callaghan reminds us in his TNT column that income tax proposals always surface here during a recession.
And in the scheme of things, income-tax talk is just that – a verbal
distraction until lawmakers come up with the actual solutions.
AWB believes it is the private sector--Main Street
businesses providing jobs and tax revenues which will drive us back to
prosperity.
To bring us to that day, lawmakers should abandon talks of present and future tax increases and concentrate on creating a sustainable budget.
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Tuesday, April 07, 2009
$3 Billion Bond Issue Off to Rocky Start
Posted by Richard S. Davis on 4/7/2009 1:08:00 PM
Rep. Hans Dunshee announced plans for a $3 billion bond issue to public building construction and renovation projects. State Treasurer Jim McIntire, a former House colleague of Dunshee, offered compelling early skepticism. Here's Rich Roesler's story from yesterday's Spokesman-Review, with a quote from the treasurer's press release.
“The $3 billion of added debt called for in HB 2334 is too
much,” McIntire said in a press release a few minutes ago. “It would
threaten our credit rating and would affect the rest of our investments
in transportation and public infrastructure.”
House Majority Leader Lynn Kessler, D-Hoquiam, said she had concerns
about the legislation and noted that it got mixed reviews in the House
Democratic caucus last week.
State Sen. Ed Murray, chairman of the Senate Democratic Caucus, said
he had not seen the proposal and that the caucus has not discussed the
issue. However, he said, "the challenge for us is why are you building
schools when you're firing teachers?"
The big problem seems to be that Dunshee is more clear on what he wants to do than he is on how he wants to pay for it.
"I'm proposing this package of $3 billion to fix schools and other
public facilities and create energy savings and put people to work.
Possibly 90,000 people," Dunshee said earlier today.
Garber links to a one-page outline of the Washington Works Act that shows where some of the money goes but provides no info on the revenues backing the bonds.
Dunshee said the bond package would cost about $210 million annually to
finance, but he expects to recoup some of that through increased energy
efficiencies at public buildings. He said no decision has been made
whether to propose paying for the debt with existing state revenue or
through a tax increase.
Looks like a long shot right now, despite the governor's endorsement of the concept.
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Monday, April 06, 2009
Legislators Consider Tax HIkes
Posted by Richard S. Davis on 4/6/2009 4:28:00 PM
There's not much time left in the legislative session. In the final three weeks, legislators remain divided on the shape of the tax package, if any, they'll send to voters. Although Senate Majority Leader Lisa Brown and House Speaker Frank Chopp are weighing an income tax, there's no way that a state income tax will be of much help in solving this year's budget crunch.
Brad Shannon says the clock is ticking on tax proposals. He reports that the brief time left in the session has some members worried.
"I'm concerned when you've been asleep for 78 days, it's hard to wake
up in the last 27," Democratic Rep. Brendan Williams of Olympia said
Friday, referring to fellow Democrats' need to scramble into action
after finally releasing budget plans this week.
The AP's Curt Woodward also notes that time is running out. Read his story for a rundown on the, as yet, not-very-specific ideas.
Majority Democrats, finally in the last phases of plugging a $9 billion
budget shortfall, are suddenly flush with ideas for raising taxes,
selling IOUs, and soaking the rich to raise money.
Here's the problem.
Whether recession-hammered voters will agree to bail out the budget by
raising their own taxes has been the nervous question running beneath
the entire 2009 session.
Sin taxes don't get you there. And every other option poses a problem. Going to be a busy three weeks.
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Monday, April 06, 2009
Economists Against Tax Increases
Posted by Richard S. Davis on 4/6/2009 3:54:00 PM
Today the Washington Policy Center released a letter from 31 economists warning that tax increases would damage the state economy.
Increasing taxes at this time will shift necessary capital from the
private sector to the public sector, thereby depriving private
enterprise of the source of true economic growth and making Washington
state even less competitive for new businesses and jobs.
In February, remember, the Washington Budget and Policy Center put out a letter from a group of economists and others that argued for "keeping all options" open, by which they meant a tax increase might make sense.
I'll take the folks who signed in today - a first round knockout.
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Friday, April 03, 2009
Reject $100 MM in New Costs on Restaurant Industry
Posted by Richard S. Davis on 4/3/2009 2:16:00 PM
The Senate's proposed budget includes nearly $100 million in higher costs for the state's struggling restaurant industry. Here's how Bruce Beckett, the Washington Restaurant Association's government affairs director, describes the measures in a letter to state senators:
1. Tax on Spirit Sales to Liquor Licensees (SB 6119)
The proposed Senate budget includes revenue resulting from the elimination of the 15 percent discount on liquor purchases by liquor licensees. This effectively imposes a $72 million tax ($36 million state general fund revenue and $36 million revenue to cities and counties) on the restaurant industry. This liquor tax increase will undoubtedly lead to additional job losses in our industry, and for those restaurants on the brink of closing, may very likely push them over the edge to closure .
This discount has been in effect since 1949. It recognizes the efficiency in providing quantity discounts to volume purchasing
customers like restaurants. It also recognizes the lower costs to the state in serving wholesale restaurant customers, as opposed to the higher cost associated with retail sales to the general public.
2. Transfer of $25 million from the Liquor Revolving Account to the General Fund.
The proposed budget transfers $25 million to the general fund and states that this amount could be made up from a "liquor price increase or implementing efficiency measures."
Restaurants have been particularly hard hit during this recession, as consumers clamp down on discretionary spending. The repeal of the longstanding discount should be viewed as the repeal of a tax exemption, requiring a two-thirds legislative vote to pass. Even better, it should quickly fall off the table as the House and Senate reconcile budgets in the coming weeks. It's just a bad idea. For more information on this, check out the restaurant association web site.
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Friday, April 03, 2009
As the Week Ends, the Income Tax Talk Revs Up
Posted by Richard S. Davis on 4/3/2009 10:22:00 AM
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Friday, April 03, 2009
Two New Competitiveness Reports
Posted by Richard S. Davis on 4/3/2009 9:26:00 AM
A couple of national studies of state business climates came out recently.
Chief Executive magazine's 2009 " Best and Worst States" for job growth and business survey that Texas, North Carolina and Florida are the top places. Bringing up the rear are California, New York and Michigan.
"Our survey, year-over-year proves
that those states with the worst records continue to practice the same
policies that alienate businesses," said JP Donlon, Editor-in-Chief of Chief Executive
magazine. "As the nation’s economic problems continue to snowball and
an increasing number of states experience budgetary problems, state
governments ought to take a hard look at their taxation and
unionization policies if they want to turn the page and attract new
businesses and capital to their provinces."
Washington ranked 40th; North Carolina was No. 1. The state ranking table is here.
The other study comes out of Ball State University and focuses on manufacturing and logistics. It grades the states on 7 factors: It does not calculate a GPA for the states and neighter did I. (If you choose to, let me know.)
Here's Washington's report card:
Manufacturing: C+
Logistics: D+
Human Capital: A
Benefit Costs: D-
Global Position: C
Productivity and Innovation: B-
Tax Climate: C
Have fun with it.
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Wednesday, April 01, 2009
Income Taxes? Really?
Posted by Richard S. Davis on 4/1/2009 3:36:00 PM
Senate Majority Leader Lisa Brown gets candor points for talking about a state income tax. I wrote about this Monday at The News Tribune's editorial page blog. Both Brown and Sen. Adam Kline, D-Seattle, have suggested that this might be a good time to push the issue.
Last week, Kline brought up the notion of a "high incomes" tax on his Senate blog.
Some recent polls show that a slim majority of folks would support an
income tax for folks who earn over $250,000 per year. My preference
would be institute an income tax for individuals who make over $100,000
per year or for couples (either married or in a domestic partnership
arrangement) whose combined income is over $200,000 per year.
He noted that voters passed an income tax in 1932, during the Great Depression (what exactly was so great about it?), only to have the Supreme Court toss it out as unconstitutional in 1933.
In spite over overwhelming public support, a Supreme Court ruling kept that income tax from being implemented.
...Would an income tax be found unconstitutional today?
Prominent constitutional attorney and law professor Hugh Spitzer has an interesting analysis that suggests today might see a different outcome.
There’s been a lot of talk in Olympia recently about a sales tax
increase, but we need a revenue proposal that makes things better and
fairer for regular families in our state -- not worse.
Brown links to a New York Times story describing a push in New York for a tax increase on high earners, calling it a "fair and stable way" of tackling the problem. Here's how the NYT describes that plan:
The new plan, which would expire after three years, would represent
the largest state income tax increase in recent history, significantly
larger than the surcharges imposed from 2003 to 2005, when the state
last faced a major recession.
The plan would raise $4 billion a
year by creating two new tax brackets, the highest one affecting those
who earn $500,000 or more. If approved by rank-and-file lawmakers in
the Assembly and State Senate, the tax increases would be a major
victory for unions and liberal advocacy groups and a signal of the new
balance of power in Albany, where Democrats won control of both houses
of the Legislature and the governor’s office in last year’s election.
Somehow, that doesn't sound like a winner to me.
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Wednesday, April 01, 2009
Yesterday's Release of the House Democrats' Budget
Posted by Richard S. Davis on 4/1/2009 10:35:00 AM
It's going to take some time to unravel the House and Senate budgets, particularly to determine how they backfill state budget cuts with federal dollars. Right now, appropriately, there's a lot of focus on the cuts in state funding.
What's less clear is how much those cuts may be offset by federal stimulus money, either money flowing through the state or directly to, for example, school districts. An unusually sharp - and apt - editorial from the Yakima Herald-Republic gets to the critical issue.
What the two proposed budgets for 2009-11 don't accomplish is a
structured spending plan that will return this state to fiscal
responsibility. The proposed cuts of nearly $4 billion fail to produce
a significant and lasting reduction in labor costs. Instead, they rely
too heavily on $3 billion in one-time federal stimulus funds and on
questionable revenue raised through closing several tax loopholes.
Missing in this process is a profound change in the way the state
operates. Without that, we could find ourselves in 2011 in the same
spot we are today -- staring at a budget that's upside down.
Unsustainable spending contributed to our current problem. Even absent the recession, this year's budget writers faced a multi-billion dollar shortfall. Using $4-5 billion in one-time money to fund ongoing programs sets us up for another "upside down" budget in two years.
... these budgets are balanced only with the stimulus money and massive
raids on construction funds and other separate accounts. The
one-time-only fixes exceed $4 billion. That’s a huge bet – necessary in
this crisis – that the economy will be recovering by the next biennium.
The chief hedge against further calamity is a relatively healthy $850
million reserve fund. Wisely, lawmakers made no assumptions that
Washingtonians would approve new taxes in November.
As Joe Turner reported yesterday, budget writers considered the federal stimulus money a "godsend." Even so, House budget chair Kellii Linville says it's "very likely" that they'll put up a tax package for voter approval.
Watch for more analysis in the next few days. For now, it's hard to see how these budgets accomplish the essential goal of resetting spending to a sustainable. level. A tax package would be another step backward.
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Wednesday, April 01, 2009
NFIB on Card Check and the Employer Gag Rule
Posted by Richard S. Davis on 4/1/2009 10:34:00 AM
I'm a bit late with this, but wanted to share a good op-ed by NFIB's Troy Nichols that ran last week in the Columbia Basin Herald.
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