Olympia Business Watch

Economic Stimulus Through Public Works Spending

Carter Wood at the National Association of Manufacturer's ShopFloor blog looks at Governor Gregoire's Seattle Rotary Club speech yesterday calling for increased spending on public works as a form of economic stimulus.   

His verdict?  Deja vu.

Of Rulemaking and Sausagemaking

From this morning's P-I, on Governor Gregoire's decision whether to veto Washington's toy safety bill because of its various ambiguities and unintended consequences:

"The bill is flexible enough to allow the governor to provide the necessary guidance to the Department of Ecology to make sure those concerns are taken care of in the rule-making process -- that's the purpose of the rule-making process, it allows the department to implement the law in a way that makes sense," [the bill's main lobbyist proponent] said.

This is an interesting theory of lawmaking. 

Perhaps the response ought to be:  Flexibility -- ambiguity -- in laws creating liability for commercial conduct is no virtue, and drafting legislation so it may be, by its own terms, "implemented in a way that makes sense," is no vice.

Feast or Salmon--The Sea Lion Dilemma at Bonneville Dam

A couple of weeks ago, I wrote a column about the sea lions at Bonneville Dam.  Last Sunday, Erik Robinson, The Columbian staff writer, penned a well-documented article about the decision to shoot some of the California sea lions before they wipe out the Columbia River salmon runs---much as they did at the Ballard Locks in Seattle two decades ago.

Robinson writes:  "Sea lions have in recent years converted the dam’s forebay into their own salmon buffet line, but soon they may eat their last meal. Federal authorities last week granted a request by the states of Washington, Oregon and Idaho to shoot California sea lions believed to be taking a chunk of salmon stocks that have already dwindled nearly to the point of extinction."

“These animals are very smart, and they’re food-driven,” said Guy Norman, regional director of the Washington Department of Fish and Wildlife. In recent years, as many as 100 sea lions have been seen milling around in front of the dam, where observers with the Army Corps of Engineers documented them eating about 4,000 salmon last year — about a third of which are believed to be wild-spawning endangered salmon.

The population of California sea lions is thriving, with an estimated 238,000 creatures living along the West Coast. Federal experts say removing as many as 85 a year at Bonneville Dam won’t hurt the population. 

Since the passage of the Marine Mammal Protection Act, authored by Washington Sen. Warren Magnuson (D), California sea lions are thriving and salmon have become scarce. Their range has expanded into the Columbia.  With the decision by fisheries officials to close the salmon season along the Oregon and California Pacific coast line through the spring and much of the summer and the lower returns expected in Washington as well this year, federal officials are confronted with either reducing the number of sea lions or watching salmon disappear.

Don C. Brunell, President

AWB President Tells Mount Vernon Chamber That Costs Matter

Speaking to the Mount Vernon Chamber of Commerce yesterday, Association of Washington Business (AWB) President Don Brunell said that if Washington businesses are to compete globally, they must be cost competitive.

Brunell said the $830 million the legislature put in reserve for the 2009-11 budget is insufficient to cover the costs of government in the future and to pay for new programs the legislature authorized, but did not fund, this year. 

"We are very concerned about the fragility of our national and state economy and the new spending programs at all levels of government,"  Brunell added.  "We hope to avoid a repeat of the 1993 legislative session when lawmakers raised the B&O (gross receipts) tax just to balance the budget and added a whole new set of government mandated programs."

AWB is concerned about the impacts and costs of new health care, leave and climate change initiatives.   "The Governor and lawmakers need to look at the cumulative impact of these programs and the combined costs of them.  Too often, they tend to only look at the individual costs and don't add them all together."

Brunell said elected officials must remember that costs matter today and they must do everything they can to make Washington a "cost competitive state."

About that Climate Change Veto

Earlier we took note of The News Tribune's blog post regarding our request for a veto of a section of the climate change legislation passed last session. The editorial page blog solicited a response to our request from Bill LaBorde, a former Tacoma Public Utility board member now with Environment Washington.

Now comes a thoughtful rebuttal to LaBorde from Brian Holtzclaw, legal counsel of The McNaugton Group, a medium-sized residential contractor. Holtzclaw's response - 4th comment, by HoltB - puts the matter in sharp focus.

... the issue is not, as Mr. LaBorde argues, whether ESSB 6580 requires local jurisdictions to adopt climate change regulations today. Rather, the issue is, and AWB is concerned about, whether ESSB 6580 is leading in the future towards a “top down” mandate from CTED/DOE to comply with the “advisory climate change response methodologies” required under this legislation.

...Section 5(a)(1) does NOT preclude appeals arising under Section 2 of the bill. 
The basis for AWB’s veto request is the concern that Mr. LaBorde and/or his constituents in the environmental community apparently want to file Growth Board appeals in the future arguing that local jurisdictions are required to follow whatever climate change methodologies are adopted by CTED under Section 2 of the bill, even though such methodologies are intended to be only “advisory.” The simple solution to address AWB’s concern would have been for the Legislature to have provided in Section 5 that no appeals to the Growth Boards are allowed under either Section 2 or 3. If the methodologies adopted under Section 2 are truly intended to be “advisory” as the legislation provides, then there should have been no opposition or disagreement that Section 5 should preclude any Growth Board appeals arising under BOTH Sections 2 and 3 of the bill. It is my understanding the environmental community fought hard to limit Section 5 to only appeals arising under Section 3 of the bill. The fact the environmental community fought hard to ensure that Section 5 of ESSB 6580 precluded appeals arising only under Section 3, and not Section 2, seems to validate AWB’s concern.

Holtzclaw was among those working with AWB on this and other important land use legislation during the session. His assessment of the environmental lobby's aggressive fight to preserve the appeal option is correct.

Wall Street Journal Looks at Our Toys

Yesterday's Wall Street Journal featured Washington's toy safety legislation, which sets the toughest standards in the nation. The bill sailed through the Legislature, with overwhelming majorities in both chambers. But on closer inspection, flaws in the bill have emerged that justify a gubernatorial veto.

From the WSJ:

Some small toy makers say they are planning to stop selling in the state if, as they expect, Democratic Gov. Chris Gregoire signs the bill in coming days. The cost of certifying their products as safe under the law, they say, would be prohibitive. The state accounts for about 2% of total U.S. toy sales, which last year equaled $23.5 billion in annual revenues.

Obviously, no one wants unsafe toys in the hands of children. The legitimate questions have to do with the standards imposed. Following the recall of dangerous toys imported from China last year, toy safety has captured the attention of lawmakers responding to public concern. A common national standard makes sense. Lacking that, manufacturers face a plethora of competing, inconsistent regulations.

As the WSJ reports,

Of the laws under consideration at the state level, 24 regulate lead, 18 cover phthalates, 10 set limits on mercury, and 17 address a variety of other potential toxins. With more state laws possible, makers of toys and other children's products are afraid that regulatory compliance will turn into a manufacturing nightmare.

"Having different standards for different states is just going to create complete chaos," says Carter Keithley, the TIA's president.

For Seattle residents, an iconic retailer is at risk.

Congress Moving Forward on Hydro Incentives Legislation, What About Washington?

Even though I-937, the so-called renewable portfolio initiative passed by the voters in 2006, discourages hydroelectric power generation by basically excluding it as a renewable energy source, Congress is moving ahead with legislation to ENCOURAGE hydro expansion and new technologies. Under the initiative, utilities (public and investor-owned) with 25,000 customers must buy 15 percent of their electricity from non-hydro renewable sources by 2020.

The legislation is sponsored by Rep. Charles Rangel (D-NY), chairman of the powerful House Ways and Means Committee, and passed the U.S. House last month by a 236-182 vote with Washington members Jay Inslee, Rick Larsen, Brian Baird, Norm Dicks, Jim McDermott, Dave Reichert and Adam Smith supporting it and Cathy McMorris-Rodgers and Doc Hastings opposing.  (Republicans)

According to the National Hydropower Association, Rangel's bill is not just about dams.  It encourages the development of ocean, tidal and hydrokinetic in-stream technologies through tax incentives.  NHA estimates there is at least 95,000 megawatts of hydropower which can be developed---energy which does NOT emit greenhouse gases. 

Unfortunately, unless I-937 is changed by the legislature in 2009, Washington may not be positioned to take advantage of the hydro generation because the initiative, again, doe NOT include nearly all of new hydro capacity in the calculation of the 15% of renewable energy which our power companies are required to buy by 2020.

Don C. Brunell, President

Veto on Climate Change Discussed in TNT

In response to AWB's request for a partial veto of the climate change legislation, The News Tribune's David Seago asked for comments from Bill LaBorde, a former Tacoma Utility Board member now working for Environment Washington. Seago posts excerpts from our letter and LaBorde's response, on The News Tribune's editorial page blog.

LaBorde's key contention:

I think a simple reading of the bill shows that there are no regulations -de facto or explicit- in Sec. 2 of the bill, or any other section of the bill. Sec. 2 simply says that CTED will create a series of tools to make it easier for local governments that want to voluntarily incorporate climate considerations into their next comp plan updates.

In our letter, Don Brunell acknowledges

... the extent to which this bill has been scaled back from its original regulatory/prescriptive form ...

Nonetheless, we conclude

that [it] will create de-factor rules and regulations that will create another "Best Available Science" debacle, where issues have to be endlessly litigated at the local level...

There's more. Read the letter and the TNT blog post. I think there's little doubt that the language in ESSB 6580 sets the stage for increased regulation that will damage the economy. A veto here is appropriate.

UPDATE The TNT has more on environmental groups' opposition to the veto, expressed in their letter. We continue to believe the veto is justified and necessary.

NAM Climate Change Report Blows Your Socks Off

The National Association of Manufacturers (NAM), in cooperation with the American Council for Capital Formation (ACCF), just released the results of a study assessing the potential economic impacts of climate change legislation proposed by Senators Joseph Lieberman (I-CT) and John Warner (R-VA) on both the federal and state levels.  This eye-opening report concludes that if their legislation is passed into law, by 2030, it could lead to employment losses nationally of up to 4 million jobs, electricity price increases of up to 129 percent, gasoline price increases of up to 145 percent and a loss of household income of up to $6,752 per year.

S. 2191, American’s Climate Security Act of 2007 would set a limit (cap) on carbon dioxide emissions from fossil fuel use.  Each covered facility would be given allowances based on past emissions. Companies that emit less carbon dioxide than permitted by their allowances could sell (trade) the excess to those that do not. S. 2191 sets an aggressive target requiring that emissions decline to 15 percent below 2005 levels by 2020.

A sampling of the report's findings would blow your socks off:

• Gross Domestic Product (GDP) losses of between $150 and $210 billion by 2020 and $663 to $669 billion by 2030;
• Employment losses of 1.2 to 1.8 million in 2020 and 3 to 4 million in 2030;
• Household income losses of $739 to $2,927 per year by 2020 and $4,022 to $6,752 a year by 2030;
• Electricity rate increases of 28% to 33% by 2020 and 101% to 129% by 2020; and,
• Gasoline price increases (per gallon) of 20% to 69% by 2020 and 77% to 145% by 2030.

Remember these changes only apply to the United States and our competitors in India and China have shown little interest in addressing climate change. 

The report breaks out the impact on individual states as well.  (See State of Washington)  The U.S. Senate will begin considering the bill in June.

Don C.Brunell, AWB President

AWB, Chambers and Labor Weigh-in on Tanker Deal

The Association of Washington Business (AWB), Washington's state chamber of commerce, the Washington Roundtable and more than 30 local chambers of commerce signed letters supporting Boeing's request for the Pentagon to reconsider awarding the aerial refueler tankers to Northrop, Grumman and EADS (Airbus).  "From what we have limited information we've seen since the contract was awarded three weeks ago, we believe the Air Force and Washington's Congressional Delegation should look more deeply into the contract," AWB President Don Brunell said.

In a related move, Brunell and Washington State Labor Council (AFL-CIO) President Rick Bender co-signed a similar letter to Washington's Congressional Delegation and the Secretary of the AIr Force (Michael Wynne) supporting Boeing's request.  That letter was presented at the rally in support of Boeing's request yesterday (March 19) in Everett.

Boeing believes there is enough conflicting information to merit reconsideration of the $35 billion deal contract to build 179 replacement tankers for Boeing's current KC135 which went into service during President Eisenhower's Administration.  If reversed, the new tankers would be built on an 767 air frame assembled at the Paine Field plant near Everett and generate billions for the northwest's economy.  If the current contract stands, the aircraft would be a modified Airbus A-330, much of which would be manufactured in Europe.

Don C. Brunell, President