Olympia Business Watch

Morning Coffee with Ron Brownstein

Everyone is just settling into their seats this morning as we get things rolling. First up is Ron Brownstein, political pundit and political scribe for The Atlantic and National Journal. So here we go!

I will updating this post as he speaks, so keep refreshing your browser to get the latest updates.

8:30: Selected quotes from Brownstien: “This is the most significant election since 1960.” “For the last twenty years, we have seen parity in American politics.” “In Colorado, the Democrats segmented the voters by class. The Republicans segmented voters by values. ” “This election is really a class inversion with Obama doing well with upper income voters and McCain with lower income voters.”

8:50: More quotes: "This election is 'Man versus Plan.'" "The Obama machine is one of the most sophisticated we have ever seen with hundreds of offices and hundreds of thousands of volunteers." "The Rossi and Gregoire 2004 is just another example of parity in American politics." "The approval ratings for Bush and Congress are an indication of people tired of gridlock in Washington, D.C."

9:00: “There will be a presidential debate Friday.” “McCain is risking the perception he has built as the experienced, rational leader with some irrational decisions.” “They can keep Palin away from the press, but she still hasn’t shaken off the perception with most Americans that are unsure that she is ready.” “The congress will be more Democratic. 10 seats in the House might change. In the Senate we might see a 4-7 seat swing."

9:10: Regarding health care: "The health care debate has always perplexed me." "The candidates really don't know handle the issue." "The business community and the insurance community are not at the same place as it was in 1993."

9:20: "I think that Obama should have picked Hillary. Biden has had a rough few weeks. It was a pick that didn't really shake up the election." "I always believe Hillary made a lot of sense. Hillary can do what Biden is only advertise to do."

Live Blogging from Semi-ah-moo!

Hello and welcome to a slightly soggy Semi-Ah-Moo Resort for the 19th Annual AWB Policy Summit.

There are a lot of things going on at the Summit this year. With elections just a few weeks away, we will be hosting four debates for statewide office, including the gubernatorial debate between Gov. Chris Gregoire and former Sen. Dino Rossi. For political junkies, this is like the Oscars, Tonys and the Emmys all rolled into one event.

But it's more just serious stuff. Tonight, members enjoyed a hilarious performance by The Capitol Steps comedy troupe. Tomorrow morning, Ron Brownstien,l political director of The Atlantic Media Group (including the Atlantic and The National Journal) will set up the day's events with an overview of the national political picture. Former legislator and political insider Denny Heck will then lead discussion of the state political climate along with Peter Callaghan of the News Tribune; Deirdre Gregg of the Puget Sound Business Journal; and Stuart Elway of Elway Research. Then, the debates!

You can keep up with all that is going on at the Summit by checking in here at the Olympia Business Watch throughout the Summit. Also, the gubernatorial debate will be covered by TVW and rebroadcast this Sunday starting at 6 p.m. (check local listings in your area!).

So please come back and don't be afraid to leave a comment!

UPDATE: Jocelyn McCabe, Gary Chandler, and I did a quick podcast review the schedule for Policy Summit.

To download: Click Here

 

AWB Member to Supply Biodiesel Feed Stock to Run Snohomish County Fleet

Merritt Wolfkill, owner of Wolfkill Feed and Fertilizer and Association of Washington Business board member, will start crushing canola, sunflower and mustard seed and shipping the mesh to Anacortes where Whole Energy will convert it to biodiesel.  The biodiesel then will be sent back to Snohomish County where it will be used to fuel the county's fleet of vehicles. 

The Wolfkill facility, dedicated on Sept. 23, in turn is fueled by methane gas from an old county landfill near Snohomish.  The operation will be featured in the November-December issue of Washington Business magazine which is devoted to our state's green economy.

Don C. Brunell, President (DonB@AWB.ORG)

Boeing Machinists Start Drawing $150 Checks from Strike Fund...Hopefully This Strike Will End SOON!!

Boeing's machinists, on strike since Sept. 6, will start drawing $150 a week in strike benefits on Saturday.  The union workers walked away from an 11% pay raise over three years and a $5,000 signing bonus.  The weekly amount for a machinist at work at Boeing is approximately $1,250 which includes overtime.

For more details on the contract offer the union members walked away from, see my previous post on Sept. 2.  Many people today don't make $34,000 a year let alone get a $34,000 salary increase and bonus.

Hopefully, this strike will end soon before too many Boeing workers and their families, the company and the state and local economies suffer any more losses.  This is not the best of times financially for many.

Don C. Brunell, President (DonB@awb.org)

More on That 2009 Workers' Comp Tax Increase

Earlier, we noted the proposed $57 million, or 3%, rate increase for 2009 in the three trust funds that make up the workers' compensation system. 

Something that isn't known as well as it should be outside Olympia is that in 2002, the Department of Labor & Industries, at the behest of the Governor's office and through the Legislature, began diverting millions of dollars of trust funds out of the workers' comp system to pay for the administration of other programs at L&I.

The workers' comp payroll tax underwrites, for example, administration and enforcement of the state's wage and hour laws, family leave laws, domestic violence leave laws, paid family leave (if the state implements it), apprenticeship programs, contractor registration, grain elevator inspections, a think tank on "Environmental and Occupational Sciences" at the University of Washington, and so on.

It amounts to about $13 million per year, and much more if you add in the state's OSHA enforcement.  And it has a direct impact on rates.

The simple fact is the Department wouldn't need to bring in (as much as) $57 million next year if these non-workers' comp programs weren't funded out of the workers' comp trust funds.

It illustrates how workers' comp can become an attractive and easy payroll tax to fund various programs outside the general fund, especially in tough economic times.

One of AWB's 2009 legislative objectives is to correct this misappropriation of employer- and worker-paid taxes for programs that have no ostensible link to workers' comp. 

Workers' Comp Taxes Up $57 Million for 2009

The Washington Policy Center blog commented on it first last week, but it's worth taking another look at the Department of Labor & Industries' 2009 rate announcement.

It's an average 3 percent increase, meant to bring in $57 million next year, largely to account for wage inflation and rising health care costs.  The percentage is an average across the entire system.  Individual firms' rates may vary depending upon risk class and claims experience.

Breaking the figure down among the three state funds, it amounts to a 1.8% increase in the employer-funded Accident Fund, a 3.2% increase in the employer/employee split Medical Aid Fund, and a 7% increase in the employer/employee split Supplemental Pension Fund. 

That's about a cut in half from what L&I's actuaries claimed the funds would need to break even next year -- $111 million, driven by a projected 12.3% increase in the medical aid fund, the fund whose premium was dropped by two thirds in the final announcement. 

Had the Department taken the break even rate in the medical fund, it would have increased slightly the percentage employees pay into the system, to about 28%.  The state's politically potent labor unions bristle at contributing any premium into the system, and are reliable opponents of proposed rates that increase that share.

So, as the Department's press release notes, "Washington is the only state where workers pay a substantial portion of premiums. Next year, their share would increase slightly but will remain just over 25 percent if the proposed rates are adopted."

The reason the Department can take less than break-even for rates is because the system maintains a sizable contingency reserve, currently at about $1.6 billion.  So in a certain sense it is using its surplus to buy down the employer/employee share of premium next year.

This might set up the system for a sizable increase this time next year, however.  Equity investments are a major part of the non-premium income of the medical aid fund, and a declining equity market means less money in.  Buying down rates with surplus reserves may be a politically smart option right now but only hindsight will show if it was economically sound.

UI Benefits for Boeing Strikers: Unlikely, Irresponsible

Late last week it was reported that the machinist's union had advised its members on strike with Boeing to apply for state unemployment insurance benefits.  This is an unlikely strategy, as today's Everett Herald points out, but it's also irresponsible. 

State law disqualifies striking workers from receiving UI benefits.  And there's a sound reason why -- not only are the workers not technically "unemployed," but making employers pay higher UI taxes to fund benefits for their workers who are on strike makes the employer, in part, subsidize the strike.  That upsets the balance that labor law strikes between negotiating parties.  In the jargon of traditional labor law, a strike is an "economic weapon" the union uses against an employer to force them to the table.  Resort to a strike is meant to inflict pain -- but on both sides, to incentivize bargaining, under conditions federal law regulates.  Subsidizing the strike through UI benefits (and taxes) undercuts the incentive to bargain.

Businessweek Examines Card Check Bill

A notable exchange on card check (which OBW has discussed most recently here) in this week's Businessweek magazine between Home Depot co-founder Bernard Marcus and California representative George Miller, one of the act's co-sponsors in the US House.  The exchange pretty much shows the latest thinking from business and unions on the issue and is worth a read.

Gulf of Mexico Oil Production Disrupted, But No Blowouts or Spills And Industry Workers Are Safe

Some activists like to remind us of the January 29, 1969 oil well blowout six miles off the California coast near Santa Barbara.  Unquestionable, it was an environmental nightmare and something we never want to see happen again.  From that disaster, oil producers, the ones who supply our cars, homes, hospitals, schools and transportation network with energy learned many valuable lessons.

Yesterday, Red Cavaney, president of the American Petroleum Institute (API) released an assessment of the impacts of Hurricanes Gustav and Ike which pounded the Gulf Coast.  As with Hurricanes Katrina and Rita, there were no industry lives lost, no blowouts like 1969 and no oil spills even though those massive storms shut down 25% of our nation's oil supply and 15% of our natural gas.  The areas impacted by both 2008 hurricanes houses 46% of U.S. refining capacity which is slowly coming back on line. 

API credits the industry with an advanced emergency preparedness program including sophisticated redundant communions systems, continuous emergency response updates and drills, and, prearranging supplies to respond quickly to disasters.

In the next weeks, Cavaney requests, we will need to conserve our use of oil and gas, hopefully, there will be no shortages or significant gasoline, natural gas or oil price spikes.  Conserving and using petroleum products is a wise idea in the long run.

Finally, as this is being posted, the price of barrel of crude was trading for $98, down from the record $147 a few months ago. 

Don C. Brunell, President (DonB@awb.org)

More Candidate Videos Online

AWB continues to add to its candidate video library for the 2008 elections.

This week, you can review comments by Dick McEntee, candidate for State Auditor. We've also recently posted presentations by Lands Commissioner Candidate Peter Goldmark, as well as those by John Ladenburg and Rob McKenna, candidates for Attorney General.

Coming soon: presentations by Doug Sutherland (Lands Commissioner), Brian Sonntag (Auditor), Terry Bergeson (SPI) and Randy Dorn (SPI).