Olympia Business Watch

Six-Year-Budget Outlook Shows $2.5 B Shortfall by 2013

As we posted earlier, OFM has discontinued production of the familiar six-year budget outlook. Sen. Joe Zarelli subsequently asked the Senate Ways and Means Committee to make the forecast. The committee's projections are here and its methodology here.

By the end of the next biennium, in 2011, the outlook shows the General Fund running in the red by $937 million. Looking out to the end of the 2011-2013 biennium, the General Fund shortfall is $2.5 billion. The outlook also looks at the emergency reserve account and budget stabilization account, both of which would be drained (assuming the requirements to tap the budget stabilization account could be met).

As we've written before, a big part of the problem stems from the need to use general fund money to bail out dedicated accounts - near general fund state accounts - which typically have heavy spending requirements inadequately supported by slow growing revenues.

Of course the state won't spend into a hole that size. Adjustments will be made as necessary. Spending will be trimmed. Taxes may be increased. And the economy may outperform the estimates, although the new revenue forecast next month is likely to show that this estimate is optimistic.

It's true that, as Yogi Berra is said to have commented, that "forecasting is awful difficult, particularly about the future." And given the current economic volatility, it's especially difficult now. But there's utility in looking ahead, if only to get an idea of where current patterns would take you. Recognize that things will change, but benchmark according to plan.

And this plan reveals long term problems.

Tooting our own horn...

Last week's lobby lunch podcast was a huge sucess, with more than 400 downloads as of this morning. I would like to thank y'all for making this such a success! (If you haven't listen to it, click here)

A few things:

- Don't forget to listen to the Olympia Business Review where we look over some of the hot issues of this legislative session. To listen to our latest episode, click here.

- I am currently working on a flash player to embed with our podcasts so those of you who use web browsers that do not support windows media player (such as Firefox) or Mac users can stream the podcast too. This will be coming soon.

- We want to hear from you! What do you think of our podcasts? Is there a topic you want covered? Is there an elected official or legislators who you want to see on? Let me know by sending me  an old fashioned email at danb@awb.org.

Again, thanks for listening!

Evolving Health Care Debate and Good News for Wal-Mart Workers

Wal-Mart, often cited as an employer "black hat" in health care discussions, has come in for some deserved good press from, of all media, the New York Times. Here's the lead from the summary provided by Covertheuninsured.org, a great source of health care information.

For the first time since it was founded 46 years ago, Wal-Mart is providing health care coverage to more than half of its workers in the United States--"a milestone for a retailer long criticized as offering unaffordable benefits," reports the New York Times.

The NYT describes the Wal-Mart plan, which sounds pretty good:

After several years of intensive research and debate within Wal-Mart — including discussions with executives at companies known for generous health care like Starbucks, Pitney Bowes and Microsoft — the chain introduced last fall what was considered its most flexible and generous health plan, effective for the calendar year 2008.

The plan offered deductibles ranging from $350 to $2,000 for individuals. Employees could choose plans with health care “credits” to use for routine care and obtain 2,400 generic prescription drugs for $4 apiece.

Wal-Mart also eliminated fees like $150 monthly for covering a spouse and cut out separate deductibles, like an additional $1,000 for a hospital stay.

A family can pay as little as $250 a year in premiums if it is willing to shoulder a $4,000 deductible and be responsible for as much as $10,000 in medical bills, roughly the same plan that cost $1,500 a few years ago.

A good employer response.

Cover the Uninusred also reports on the defeat the California Senate handed Gov. Schwarzenegger.

Senator Dick Ackerman said that he and his fellow Republicans did not approve of the governor’s plan to rework the entire system, which they felt was working for the most part. In addition, they did not like provisions that would increase the cigarette tax and provide health insurance to illegal residents. Adding to the bill’s problems was a report released by the Legislative Analysts Office that found that while the program could be funded in its first year of operation in 2010-11, "by the fifth year of the program (2014-15), annual costs exceed revenues by $300 million.''

Based on the record in Massachusetts, that shortfall is probably understated.

MORE The State Policy Network adds New Mexico to the list of would-be reform states, with a plan touted by Gov. Bill Richardson.

Olympia Business Review - Episode Four: Vesting and Court Decisions

In Episode Four of the Olympia Business Review we discuss the pending vesting bill with Abbie Birmingham, Pat Schnieder, and George Kresovich. These three testified on this bill on Monday (January 28, 2008) and will explain the issue and why business should take notice. Also we will be looking some court cases with AWB General Counsel Kris Tefft and how these cases could affect you business.

Issues covered: vesting, permitting, land use, legal affairs, Brink's decision, supreme court decisions, Judicial scorecard

For more information about this, check out our website at www.awb.org.

Direct download: Click Here

WPC on Paid Family Leave

Carl Gipson at the Washington Policy Center has this op-ed running in the PI today, evaluating the financial foibles of the paid family leave program.

Gipson sums the issue up nicely:

We have a new and expensive state entitlement program but no way to pay for the administration or benefits past the first four years, no opt-out for small businesses, no political will to implement a new payroll tax, and no one knows yet just how the paid family leave program will affect other complex government programs such as unemployment insurance that rate businesses on their past employment history.

All true.  The implementation bills in the House and Senate, HB 3305 and SB 6820, are on the move, scheduled to come out of committee this week.  There are some ideas floating back and forth for fixing this nit or adjusting that trifling, but these major employment and fiscal policy issues do not appear headed for quick or easy resolution.

Belated Recognition of Budget Problems

But late is better than never.

The morning PI reports, "reality will bit state budget." That's gotta hurt.

Gov. Chris Gregoire and leading Democrats in the House and Senate have reached one early agreement in this year's budget negotiations: It's time for a reality check.

Anticipating a bleak revenue forecast, they've agreed to start looking for places to trim the $33 billion budget they passed last year. They say they want to have their priorities in order in case the slowing economy forces them to find efficiencies or even cut programs altogether.

Set priorities. Find efficiencies. Cut programs. Sounds familiar. And budget director Victor Moore is quoted as saying the governor used the Priorities of Government in developing her supplemental budget.

PI reporter Chris McGann goes to Sen. Joe Zarelli for the Republican take.

Republicans have been calling for spending reductions for at least three years.

"Better late than never," said Sen. Joe Zarelli, R-Ridgefield. "Over the last four years, we've increased spending by a full third, 33 percent, several billion dollars. It was way too much too quick."

The sustainability concerns raised in 2007 may get a quick vindication.

California Senate Terminates Schwarzenegger Health Care Plan

Anyone surprised at this?

Olympia Business Review - Episode Three: Crazy Bills and Serious Issues

Richard Davis and Gary Chandler, AWB vice presidents, discuss some fast moving issues of the first two weeks of the legislature. We look at some of the more... ahhh... interesting bills that have been brought forth. Plus we examine several emerging issue that will define this legislature.

Issues covered: number of bills, initiatives, impeachment, building contractors, vesting, health care, association health plans, WASL, transportation

For more information about this, check out our website at www.awb.org.

Direct download: Click Here

Olympia Business Review - Episode Two: Health Care and WASL

It might be only the second week of session, but already health care bills are flying everywhere. We are joined today by Donna Steward, governmental affairs director for the Association of Washington Business, who discusses several pieces of on-going legislation concerning health care.

As Steward also handles education issues for AWB, we briefly discuss proposed changes to the WASL.

For more information about this, check out our website at www.awb.org.

Direct Download: Click Here

Good Advice on the WASL

Seattle Times editorial writer Bruce Ramsey used his column yesterday to take a look at legislative proposals to weaken the WASL. I like this:

This is a new thing, to insist on a standard — new for the state and new for them. Since childhood, these students have been swathed in egalitarian softness. They have been praised on the playfield when they didn't win. They have been promoted to the next grade without question. Now, at 18, they face this new hurdle. It is important for them to get over it. Trying is not enough. They have to do it.

The legislators who mandated this 15 years ago knew it would be painful, so they postponed it past the millennium. Now the question is: Do we mean it?

We should.