Olympia Business Watch

Brunell: Rising price of gas no mystery

As the price of gas passes $4 on its way to $5 a gallon, the finger-pointing in Washington, D.C., has reached a frenzy, AWB President Don Brunell writes in his weekly column.

As if on cue, the Obama administration has launched another investigation into charges that speculators are manipulating prices.

But the reason for the recent spike in prices is obvious: It's a simple case of supply and demand.

The principle driver of gas prices is the price of crude oil, Brunell writes. "When the price of crude oil jumped from $68 a barrel last year to $115 this year, gasoline prices spiked accordingly."

And why is the price of crude oil rising?

"The unrest in Libya and Egypt, coupled with strikes by oil workers in Yemen, Oman, Gabon and Ivory Coast, has cut production. Less supply means higher prices."

The United States has enough oil reserves to power the nation for 300 years without OPEC, but much of the nation's untapped reserves are located in places hat have been put off limits by the government or are too costly to develop.

"Suffering at the hands of of foreign oil suppliers while we're sitting on 300 years worth of untapped oil reserves is like a family starving with a basement full of food," Brunell writes.

Layoffs, then closure for iconic Tacoma food processor

After 93 years, a Tacoma food processing company is closing its doors. 

Pinnacle Foods Group LLC announced this week it will stop production of the Nalley's South Tacoma facility by June 25. According to published reports, 139 of the plant's 160 workers will be laid off. Production is being transferred to a Pinnacle-owned Armour Canned Meats plant in Fort Madison, Iowa.

While several factors may have contributed to the plant's closure -- including a decision to move production closer to the source of their famous chili ingredients -- certainly last year's move by the Legislature to nix a tax exemption didn't help matters.

Years ago, the Legislature approved a B&O tax exemption for processors of perishable meats, including Nalley's. The exemption was challenged and brought before the state Supreme Court in 2005, and again Nalley's -- and about 125 other companies -- retained its standing under the exemption.

Last year, the cash-strapped Legislature rescinded the exemption in an effort to collect more revenue. (In this case, about $18.8 million over five years.) That, in turn, raised the tax rates for some of the exempted companies, including Pinnacle. 

Was it the only factor in Pinnacle's decision to close the Tacoma Nalley's? No.

Was it another consideration for a company operating in an already difficult economy? Research on competitiveness would say yes: When you take away those exemptions, you increase taxes, which means less money for re-investment, expansion and jobs. In the case of Nalley's and most every other business, that's a big consideration for many employers barely keeping the doors open these days. 

For a company already on the edge, losing a tax exemption may be the final straw.

Nalley's should serve as reminder to lawmakers that attempts to raise revenue by closing exemptions could have the unintended consequence of reducing jobs -- and lowering state revenue.

2011 Worker Memorial Day: Honoring those who didn't come home

Several hundred people gathered Thursday in Olympia to remember the 92 Washingtonians who died last year as a result of illness or injuries suffered on the job.

The annual Worker Memorial Day served not only as a chance to honor and remember those who died, but also as a somber reminder of the need to continually improve worker safety.

Gov. Chris Gregoire was among the speakers who offered condolences to the family members and friends of the deceased who gathered in the auditorium at the state Department of Labor & Industries headquarters building in Tumwater.

Gregoire spoke about witnessing their grief first-hand when she met with family members of those who died in the Tesoro refinery explosion, and she noted that it was an especially difficult year for those in service of the state, as well.

The departments of Corrections, Transportation and Natural Resources all lost people, Gregoire said.

Brunell: NLRB decision on Boeing plant is a dangerous precedent

During the 2008 presidential campaign, candidate Barack Obama promised organized labor that he would support their agenda. Now that he's failed to get the agenda through Congress, Obama has turned to regulation, AWB President Don Brunell writes in his weekly column.

The latest evidence of that is the National Labor Relations Board's move to shut down Boeing's non-union South Carolina production facility. The board, a supposedly neutral body that is in fact stacked with former union lawyers, claims that Boeing chose to locate a plant there out of "anti-union amicus" and that the decision violates federal law.

In truth, the move to South Carolina was a reasonable business decision that has created mor than 1,000 jobs and generated roughly $2 billion worth of investments, Brunell writes. And Boeing still has a strong presence in the Puget Sound, where its workers are among the best paid in America.

"Allowing the government or unions to dictate investment decisions and plant locations is a ery bad precedent to set," Brunell writes, "whether it be Congress, the president or regulators like the NLRB."

More workers' comp drama as session sputters to a close

The push to fix Washington's failing workers' compensation system gained serious momentum in the final week of the regular session -- and it looks to be a key issue the upcoming special session.

Here's a quick rundown on what happened just this week:

Four House Democrats refused to cast a vote yesterday during a second failed procedural motion aimed at forcing a vote on workers' compensation reform.

The unsual rebellion came after three of the party's liberal members pitched a conniption and introduced a trio of bills -- including one that would effectively dismantle the state's century-old workers' comp system -- as retaliation for a new workers' comp plan that eight of the party's moderates unveiled earlier in the week.

None of the bills is likely to go anywhere, but they send a message.

"We're not just going to let people roll over us," Rep. Sherry Appleton, D-Poulsbo, told Washington State Wire's Erik Smith.

AWB's Kris Tefft sees it a bit diferently. "They're really saying they would rather take down the whole system than hold an up or down vote on the most restrictive, regulated, worker-protective system of voluntary settlement agreements in the country."

Tax Freedom Day comes later to Washington

On the day when your federal income taxes must be filed, those of us living in Washington need to know that "Tax Freedom Day" comes a little later for us.  Richard Davis, president of the Washington Research Council, wrote about that in last friday's Puget Sound Business Journal.

That means Americans will work well over three months of the year, from January 1 to April 12 (in Washington that is April 16), before they have earned enough money to pay this year's tax obligations to the federal, state and local levels.

As Washington lawmakers close down their regular session and gear up for a special session to resolve their budget differences, they need to remember a couple of key points from the column:

...Washington taxes business heavily. The Council on State Taxation reports that Washington businesses pay 51.2 percent of all state and local taxes, the tenth highest business share in the nation. The business tax amounts to 5.3 percent of gross state product, well above the national average of 4.7 percent.

...Simply put, we have an overall tax burden that is close to the national average. It’s slightly regressive and hits businesses more heavily than most states. We don’t need tax reform or higher taxes. If there’s a problem — and there is — it’s with unsustainable spending.

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

Brunell: Workers' comp on the brink of collapse

In Illinois, the workers' compensation system is so out of control that a state lawmaker introduced a bill to abolish it and put workers' comp cases into the courts, AWB President Don Brunell writes in his weekly column.

It hasn't come to that yet here in Washington, but the system is headed for collapse without some kind of major reform, Brunell writes.

The state Senate approved a bill that would begin to address the problem, but it's stuck in a House committee where Speaker Frank Chopp, D-Seattle, is refusing to let it come to floor vote.

This despite overwhelming support in the Senate, which approved it on a bipartisan 34-15 vote, as well as a letter from Gary Weeks, the former director of the state agencies that oversee workers comp in both Washington and Oregon.

There is still time for Gov. Chris Gregoire, Speaker Chopp and the House Democrats to act on workers' comp, Brunell writes.

"Wouldn't it be better to make the needed reform now before the situation becomes so drastic that lawmakers introduce legislation to toss it out completely?"

Workers' comp struggle on display at Lobby Lunch

Rep. Mike Sells was blunt: "I don't believe it will get out of the House," he said of Engrossed Senate Bill 5566, the business community's top priority of the session.

Sells, the House Labor & Workforce Development Committee chairman and one of two guests today at AWB's Lobby Lunch meeting, followed that with, "I'm happy to answer questions."

The audience had a few, but no sooner had Sells, D-Everett, answered them and departed for the Hill when Rep. Cary Condotta, the ranking Republican on the committee and second speaker of the day, countered with some reasons to be optimistic about the proposed workers' compensation reform bill.

Work is continuing, even at this moment, to find a way to bring it to the floor said Condotta, R-East Wenatchee.If lawmakers can find a way to accomplish that, he has no doubt it will pass in the House just as it already did in the Senate.

"The votes are there," he said. "They really are."

Senate budget banks on workers' comp bill

The Washington State Wire reported Tuesday that Senate Republicans were insisting that Engrossed Senate Bill 5566 be included in the Senate's budget proposal and, sure enough, here it is.

The bipartisan Senate spending plan assumes passage of the bill, meaning it is now officially NTIB -- Necessary to Implement the Budget.

It's an important designation because it means the bill did not die in yesterday's cutoff, despite organized labor's campaign to stall it in the House.

The bill achieved the status thanks to the Senate's recognition that voluntary settlements -- which have drawn the most heat from opponents despite clear evidence that they work -- would actually save the state something like $16 million in reduced workers' comp premiums over the next two years. That's in addition to the estimated $1.2 billion savings the bill would bring to the overall workers' comp system during the first two years.

"This makes it more difficult to walk away from," Senate Republican Leader Mike Hewitt, R-Walla Walla, told reporter Erik Smith.

AWB's Kris Tefft called it "a nice chunk of change in a tough budget climate."

It shouldn't come as a surprise that the Senate budget writers included ESB 5566 in their proposal. After all, the chamber already passed the bill with a strong bipartisan vote.

Still, it's getting harder by the day for the House to keep pretending the issue will just go away.

Support for Obama's health overhaul hits new low

The Associated Press-GfK pollshowed that support for Obama's expansion of health insurance coverage has slipped to 35 percent, while opposition stands at 45 percent and another 17 percent are neutral. That nearly ties the previous low in September 2009, when after a summer of heated town hall meetingsdominated by critics, only 34 percent supported Obama's approach.

The worry this time appears to be federal budget deficits driven by unmanageable health care costs. Among seniors, whose views are critical in any debate over health care, support for the law dipped below 30 percent for the first time in AP-GfK polling.

The poll showed the administration's message isn't getting through, particularly with seniors.

Fifty-nine percent of seniors oppose the new health care law, while only 29 percent support it. Disapproval of Obama's handling of health care among seniors has ticked upward to 62 percent, while Republicans are more trusted than Democrats to handle the issue, by a 51 percent to 36 percent margin.

By contrast, among adults of all ages, Obama's approval rating on health care stands at 52 percent, and 53 percent say they trust Democrats to do a better job.

The Associated Press-GfK Poll was conducted March 24-28 by GfK Roper Public Affairs and Corporate Communications. It involved landline and cell phone interviews with 1,001 adults nationwide, and has a margin of sampling error of plus or minus 4.2 percentage points.