Olympia Business Watch

Revenue Forecast

More financial news is due this morning, this time at the state level.

At 10 a.m. today, the Washington State Economic and Revenue Forecast Council is slated to hold a meeting to discuss the latest financial numbers based on Washington's revenue. You can watch it live on TVW.

Air Force One, An Airbus?

We are all too familiar with the battle between Boeing and Airbus over the aerial refueler replacement tanker, but there maybe another bidding war on the horizon.  It could be over the next Air Force One.

The original presidential jets were Boeing 707, one of which is on display at Seattle's Museum of Flight at Boeing Field.  Their replacements are Boeing 747-200s---twin aircraft. Air Force One is actually the call sign when the President is aboard the aircraft, but the President doesn't fly on just any aircraft.  It is specially equipped to be the Flying White House.

As Air Force planners contemplate the next generation, they are looking at the  upgraded, more fuel efficient Boeing 747-8 and the Airbus 380, according to The News Tribune, business writer John Gillie.

In case you are wondering about the replacement of Marine One, the presidential helicopter which is traditionally seen landing on the White House lawn, Lockheed-Martin has the contract. 

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

Rewards Help Encourage Students to Excel in Math and Science---Too Bad Washington Is NOT Part of the Action

Remember the National Science and Math Institute (NSMI) grant Washington left on the table because the Washington Education Association (WEA) would not agree to allow incentive pay for teachers outside the collective bargaining agreement?  It was a $13.2 million grant to help teachers teach math and science and reward students and teachers for passing the Advanced Placement (AP) math and science placement tests.

Well, it is working.  Incentives do!  According to a letter to the editor from Tom Luce, CEO NSMI, Dallas, in USA Today (9/16/08), the NSMI grant is working. 

• "This year, the organization launched the Advanced Placement Training and Incentive Program in 67 schools in six states, based on a pilot program in more than 100 schools in Texas.  Over 12 years, this pilot produced a more than twenty-fold increase in the number of participating students passing their AP math, science and English exams."
• "In our first year, our six grantee states have collectively seen nearly a 60% increase in AP enrollment among students, and more than 13,000 students are receiving more rigorous course work.

It would have been seven states if WEA and some school leaders would have "Just Said DO IT!"  Washington was the seventh state selected from 28 applying states and they "Just Said NO!" Talk about shooting ourselves in our foot! To bad for our state's students and in a time where every dollar in our state counts, we flushed $13.2 million.  I'm still having a hard time believing it and that grant was tossed over board a half year ago.

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

Economic Stimulus or No?

A new poll challenges whether those economic stimulus checks issued by the federal government last spring did what they were intended to do: stimulate the economy.

A Harris poll conducted last spring found that 45 percent of Americans believed these checks would help stimulate the economy. With school in session and summer now as fleeting as a Pacific Northwest tan, it turns out attitudes have changed. In an August follow up survey, pollsters found that more than half of Americans (52%) say spending the checks did not stimulate the economy and only 37 percent say that it did.

Interestingly, more than half of Republicans polled (52%) say rebate checks did stimulate the     economy while three in five Democrats (61%) and over half of Independents     (56%) say that it did not.

So where did the money go?

In April it was predicted the money would be spent paying down non-mortgage debt (38 percent) or adding to their cash savings (35 percent). One in 10 said they would use the money for technology devices or entertainment. Twenty-one percent said they would spend it on other things they wanted to buy.

August's poll numbers were closer to that target, with 36 percent of respondents paying down non-mortgage debt and 29 percent adding it to cash savings. Only five percent said they used it for a new gadget or entertainment. One in five actually did spend the money on other things they wanted.

World's First Carbon-Capture Clean Coal Plant Set to Fire Up in Germany

The world's first complete carbon capture and storage (CCS) demonstration project is set to start-up next to an existing power plant.  Built alongside the 1,600MW Schwarze Pumpe power plant in north Germany, the project will capture up to 100,000 tons of carbon dioxide (CO2) a year, compress it and bury it 3,000 meters below the surface of the depleted Altmark gas field. It will use an oxyfuel boiler, one of three types of CCS technology, involved burning coal in a pure oxygen environment and the resulting cal is injected into the gas field preventing it from entering into the atmosphere and adding to the greenhouse gas load.  The other CCS methods are pre-combustion involving the removal of CO2 before by pretreating the coals and post combustion which scrubs exhaust gases from a power station.

"Coal, which represents 40-50% of electricity [generation], is necessary and will continue to be necessary because of fuel safety and accessibility. It is one of the most shared resources around the world," said Philippe Joubert, chief executive of Alstom, the company that built the specially equipped oxyfuel boiler for the Schwarze Pumpe's Swedish owners, Vatenfall.

He said Alstom's research is aimed at keeping the world's options open on how electricity is generated in the coming decades. "Coal has to be used but it has to be clean."Today, in the United States, coal is the fuel which generates over half of our electricity.  According to the U.S. Energy Information Office, by the year 2030, it will still generate over half of our electricity even with all of the conservation and renewable generating sources we can develop and bring on line. So we have to move forward with clean coal technology as quickly as we can.   

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

Who's the Greenest of Them All?

The answer might surprise you, depending on your age.

A new study from ICOM Information & Communications, a Toronto-based target marketing company, found that Baby Boomers are actually greener than their Gen Y/Millennial counterparts. Apparently both male and female groups 55 years and older are above-average users of environmentally friendly home goods in the U.S. According to the survey:

Women in this demographic were more than twice as likely as the average consumer to use green products, while men in the 65-to-69 segment came in second, more than 1.7 times as likely to buy and use such products as the average American.

Men and women 25-34 were identified as among the "least likely to buy," compared to the national average, the study found.

Why the disconnect?

Again, it all comes down to green -- money, that is. Of those Millennials who don't buy "green" products, 50 percent say they're simply too expensive and 17 percent of the survey respondents said they didn't think the products were much better for the environment. Older shoppers may also be more green in their shopping habits because they have more time to evaluate products and read labels before purchasing, the study said.

Supreme Court Upholds, Extends (?) Smoking Ban

This morning, in a deeply split set of opinions, the Washington Supreme Court upheld the constitutionality of Initiative 901 as applied to a private American Legion club and arguably extended the ban by wiping out the private club exemption entirely, so long as the club is also a place of employment.  The Olympian has a story here. 

The initiative's inconsistent wording caused tremendous headaches for employers anxious to ensure compliance with the new requirements, prompting AWB to issue a Q&A on the law's requirements in 2005.  A new Q&A can be added to that now in light of the court's case -- is a "private club" still exempt from the law's requirements?  Not, evidently, if it has employees.

Supreme Court Hears I-601 Lawsuit

The Washington Supreme Court this morning heard arguments in Brown v. Owen, a lawsuit we've been following with great interest and in which we submitted a friend of the court brief supporting Initiative 601. 

The basic question in the lawsuit is whether the supermajority requirement of I-601 to raise taxes is constitutional, but there are significant procedural issues in the way the lawsuit was brought that might keep the court from reaching that constitutional issue. 

The AP has this short blurb out, and a nice summary of the argument is in the Olympian this afternoon, accessible here. 

Jason Mercier with the Washington Policy Center took in the arguments and has these insights on the WPC blog.  The Evergreen Freedom Foundation, which also filed an amicus curiae brief in the case, has some additional thoughts on their blog.

The weight of commentary thus far seems to be that at least a majority of justices seemed reluctant to insert the court into a legislative squabble -- a nice touch of judicial restraint.  It seemed that way to me too, watching the argument, but the same justices had tough questions for both sides.  Sometimes our high court telegraphs its views through its questions; sometimes, things are closer than they appear. 

Time will tell.  A case usually gestates for about nine months before a decision comes out, but given the potential impact of this one on the 2009 legislative session, justices might work double-time to issue a decision.

Wind or No Wind May Not Be the Question About Future Wind Farms

In Washington, voters passed I-937 which calls for 15% of the electricity which utilities sell us come from "renewable sources" such as generators which rely upon wind, solar, biomass, wave and geothermal.  Unfortunately, in our state, nearly all of the hydroelectric power is NOT classified as renewable----which is the subject of a later discussion.

In Oregon, the renewable portion of electricity is 25% by 2025 and wind has shown to be the most promising source in both states----but there are problems.

First, potential wind power generating sites are limited.  Many are on the east side of mountain ranges or adjacent to gorges and there in lies the problem.  In Washington, two sites are controversial---one just east of the Columbia River Gorge and the other between Cle Elum and Ellensburg.  While both have strong potential to spin propellers to generate electricity, some object to them saying they are unsightly, impact their views and harm wildlife.

In Oregon, environmental groups are fighting projects in the southeastern part of the state which are adjacent to the Steens Mountain Wilderness.  According to The Oregonian, environmental groups claim the 250-foot turbines, access roads and transmission lines would harm fragile wildlife, such as sage grouse and pygmy rabbits, and destroy a scenic treasure.

Each of the projects would have 40 to 70 wind turbines and produce enough electricity for 30,000 homes and put much needed revenues into local taxing districts for school, roads and police and fire protection.  It would replace federal money when the federal timber revenue expires next year.

Basically, the ranchers, rural cities and community leaders wants the projects and a contingent of environmental groups don't.  So, the questions is, where will the electricity come from to meet the renewable requirements for 2020 and 2025? 

There are "trade-offs," a concept which seems to be an endangered species these days!

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

L&I Releases Draft Report on Workers' Comp Pension

Yesterday, the Department of Labor & Industries released a draft version of a report ordered up by the Legislature in 2007 on the worrisome fact that despite an overall downward trend in the frequency and severity of workers' comp claims in Washington over the last decade, the trend of putting injured workers on pensions has doubled.  The report is meant to look at some reasons why.   

Some factors to watch behind the "surge":

The fact Washington's system is unique in the country in that it prohibits workers and employers (and the state) from entering into final settlement of claims.

The overall litigiousness of Washington's workers' comp system and the strong correlation between legal representation and pension awards.

A push by L&I claims staff to clear out long-term claims and park them as pensions.

Comments on this draft are due to the research team by September 19th.  If you have any, send them my way (KrisT@AWB.org) and I'll pass them along.