Olympia Business Watch

Brunell: Dams are the Northwest flood busters

If not for the extensive series of dams along the Columbia and Snake rivers, the Northwest would be experiencing the same massive flooding that's occurring along the Mississippi River, AWB President Don Brunell writes in his weekly column.

The historic flooding could end up resulting in the highest flooding since since the $16 billion claims following Hurricane Katrina, Brunell writes.

In 1948, before the dams along the Columbia and Snake were completed, a levee broke on the flood-swollen Columbia, killing 16 people and wiping away the city of Vanport in what is now North Portland.

"Those who want to remove the dams from the lower Columbia and Snake rivers don't talk about how those dams prevent widespread devastation," he writes. "But we should all remember that without those flood busters, we'd be in a world of hurt."

Workers' comp round-up

At long last, the Legislature has passed legislation aimed at fixing some of the problems with the state's workers' compensation system. But what exactly did they approve and what does it mean for your business?

AWB's Kris Tefft has prepared a detailed report of the various bills that made it out of the Legislature this year, including House Bill 2123, the 11th-hour compromise that cleared the way for lawmakers to pass a budget and get out of town.

The bill will, among other things:

• Create a claim resolution option beginning Jan. 1 for injured workers age 55 and over. In 2015, the age limit drops to 53, and it drops to age 50 a year later in 2016. The option allows for the settlement of all aspects of an allowed claim excluding medical benefits.
• Require that settlements must be approved by the Board of Industrial Insurance Appeals.
• Provide a wage subsidy up to 50 percent of wages for up to 66 days to employers who bring injured workers back to light duty or transitional work.
• Call for a study of the frequency and severity of occupational disease claims with a report due by Dec. 1, 2012.

A break in the logjam on workers' comp - vote coming today

It's not perfect. It's less than what employers wanted.

But it's progress, at long last.

Gov. Chris Gregoire and the leaders of the four legislative caucuses struck a deal Sunday that is expected to bring significant savings to the state's troubled workers' compensation system.

Details of the agreement, including the exact bill language, were unclear late Sunday, but the deal was expected to stave off double-digit workers' comp premium hikes next year for the vast majority of Washington employers.

"It's not the full reform we were seeking," said Kris Tefft, AWB's general counsel and government affairs director for workers' compensation. "This package is much less than what we wanted, but it's more than what we have now. It's a true compromise."

Organized labor, which has fought workers' comp reform for years, denounced the deal as "atrocious" and "absolutely astounding." But House Speaker Frank Chopp, who had been standing firm with labor, called the agreement a "fair deal for everyone," including injured workers.

When asked about labor's opposition, Gregoire said it's normal for some groups to express concern whenever there is change. "This is a fair package," she said. "Their interests were discussed."

Good for Kevin

Rep. Kevin Parker (R-Spokane), pictured here speaking to students at the Gonzaga Business Week session last summer, is an AWB member who owns and operates Dutch Brothers Coffee franchises in Spokane.  He also is a hit as a speaker on free enterprise and opportunities at Business Week each year. 

Yesterday, KXLY-TV in Spokane carried a story called: "State legislators soaking up thousands in per diem pay.   Parker said:  "I do not take per diem in a special session. Basically we're in overtime and that costs the taxpayers a lot of money."

Right now, State Representative Kevin Parker is sleeping on a couch, and it's not even his couch.  Parker, like many lawmakers, is refusing the $90 per diem state law allows them for travel, lodging and food. He simply won't take it during the special session. So when he's in Olympia he sleeps wherever there's a spare couch.

That special session itself is costing taxpayers around half a million dollars. 

Good for Kevin!

Brunell: Tax amnesty a bright spot in our dismal economy

The recently completed - and wildly successful - tax amnesty program gave state coffers a welcome boost, but the one-time windfall is no substitute for substantive reform, AWB President Don Brunell writes in his weekly column.

Allowing injured workers the option of a lump-sum settlement, which is broadly supported in the Legislature, would help rescue the state's failing workers' compensation system and save struggling employers more than $2 billion, he writes.

But union leaders and their supporters in the Legislature are apparently betting that the economy will recover on its own.

They're wrong, Brunell writes. Arun Raha, the state's chief economist, reported last week at AWB's Spring Meeting that tax collections are flat, the economy has slowed and Washington still has 176,000 fewer jobs than it did when the recession began.

"Against this backdrop, it is more critical than ever to help employers keep or grow jobs," Brunell writes. "Sadly, it appears some lawmakers still haven't gotten the message."

TVW takes a revealing look at Oregon's workers' comp success story

The Legislature has come to a virtual standstill over ... workers' compensation.

Unlikely as it may seem to some political observers, the decidedly un-sexy subject of workers' comp reform has emerged as the main stumbling block this year in the state Legislature. Within the debate, something known as voluntary settlements have become the primary focus of argument.

Jessica Gao, host of TVW's The Impact, tracked down a pair of Oregon officials -- one former and one current -- for this report on workers' compensation. And they both had some interesting things to say about voluntary settlements.

Gary Weeks, the former head of the state agencies overseeing workers' comp in both Oregon and Washington, called them a necessary part of a complete workers' comp system. Weeks -- who entered into the current debate here in Washington earlier this year with a letter supporting voluntary settlement agreements -- reiterated his position in the interview.

He also dismissed Gov. Chris Gregoire's proposal to limit voluntary settlements to workers 55 or older, saying age shouldn't matter.

John Shilts, the current administrator of the Workers' Compensation Division of Oregon's Department of Consumer & Business Services, spoke about the successful turnaround of Oregon's workers' comp system since the landmark 1990 reform package agreed to by labor and business.

Raha delivers usual mix of good, bad news in usual comic fashion

Washington's economy continues to emerge from the recession, but the recovery is fragile and uneven, Arun Raha, the state's chief economist, said Wednesday during the second and final day of AWB's Spring Meeting in Spokane.

Things were starting to improve, and then the world began to worry about the Greek debt crisis, he said.

The economy gained strength again during the holiday shopping season, and then gas prices shot up and Japan suffered a devastating earthquake, tsunami and nuclear crisis.

For anyone in the audience who has heard Raha speak before, his address was a familiar mix of good and bad economic news. And Raha, who has gained a reputation for explaining complex economic terms in clear -- and often humorous ways -- didn't skimp on the comedy, either.

Right from the start, he announced that in addition to his title as chief economist, he has been given a new one, as well: chief scapegoat.

Even though Raha obviously isn't personally responsible for Washington's economic health, it falls on him as executive director of the Economic and Revenue Forecast Council to deliver the (usually bad) news to lawmakers about how much money is expected to come into the coffers.

Raha also provided an update to a long-running joke that may not be as funny for him as it is for others: His house in New York is still for sale.

Later, he scored his biggest laugh of the day by managing to bring Osama bin Laden into a discussion about the state's housing market. Bin Laden, Raha said, bought his compound in Abbottabad, Pakistan for $1 million in 2005. It recently appraised for $250,000, so assuming bin Laden went with a standard 80/20 mortgage, "it's pretty safe to assume he'll be under water for a long time."

The jokes helped soften the blow of a report that contained a lot of bad news. Some of the sobering statistics:

McKenna: A choice between economic competiveness or high unemployment

It's your choice, Washington: High unemployment or economic competitiveness.

That was the gist of Washington State Attorney General Rob McKenna's message today at AWB's Spring Meeting in Spokane.

While the state's unemployment rate is officially 9 percent, if those who have given up looking for work and part-time workers who have lost full-time jobs were counted, the unemployment rate would be 19 percent, McKenna said.

"If you don't have a job, everything else is almost immaterial," said McKenna. "The effects of unemployment are devastating."

McKenna called for a six-point plan to make Washington more competitive and bring down unemployment rates. For McKenna, the key issues are predictability in the state's regulatory environment, tax and fiscal policy, putting more money into job creation instead of regulation, good infrastructure, a world-class education system and immigration policy reform.

"We need a Hippocratic Oath for government," said McKenna. "First, do no harm."

McKenna faults state government for not taking the needs of business in account by creating a confusing and highly regulated environment. He lauded voters for acting defensively and rejecting Initiative 1098 -- the ballot measure that would have created a state income tax, thus removing one of Washington's strongest advantages in attracting and maintaining businesses. McKenna, however, did stress that raising the B&O tax threshold so most small businesses could avoid paying it, as proposed in I-1098, was worth revisiting in the future. 

"Avoidance of taxes is the second strongest human impulse," said McKenna, who stressed that business will go to the states that offer the most attractive tax structure. "When you start a small business, it seems to me that the second emplyee should not have to be a tax accountant."

McKenna expressed frustration with the state's penchant for studying transportation infrastructure projects to death instead of acting decisively. In contrast, Hong Kong was able to build an entire new international airport during the time it took for all the process surrounding Sea-Tac's third runway to run its course and allow construction to begin on that important project.

"The state has to lead on transportation," said McKenna, who complimented Gov. Chris Gregoire on her commitment to seeing the 520 bridge and Alaskan Way Viaduct replacement projects through to their completion.

Additionally, McKenna would like to see the state take advantage of its high tech expertise and electrify its transportation system -- a measure that would reduce dependence on oil and bring down greenhouse gas production.

Canadian diplomat tells Wash. business leaders to look north

Denis Stevens, consul general of Canada in Seattle, made it clear Tuesday that Canada is ready and willing to partner with Washington businesses.

Stevens touted a long list of Canada's economic selling points during his address at AWB's Spring Meeting, including everything from low business taxes and a tech-savvy workforce to numerous free-trade agreements and an economy that weathered the recession relatively well.

"We've emerged in better shape than nearly every other economy around the world," Stevens said.

His message was aimed at strengthening what are already strong business ties between Canada and Washington state. Some statistics:

• In 2009, Washington exports to Canada totaled $5.3 billion, and imports from Canada totaled $11.8 billion.
• Canada was the state's second-largest export market after China, purchasing 13 percent of Washington's worldwide shipments. (Watch for the next issue of Washington Business for more on this topic -- due out next week.)
• Some 174,000 Washington jobs depend on trade between the two countries.

Stevens highlighted three points during his speech at Spokane's Davenport Hotel: Canada's business investment potential, the work that Canada and the U.S. are undertaking to improve perimeter security without hampering the flow of legitimate travelers and North America energy partnerships.

Boeing's Glover helps AWB honor 12 companies for Environmental Excellence

Green business is good business.

That was the message carried forward today by AWB's Environmental Excellence Awards, presented at Spokane's Davenport Hotel in conjunction with the association's Spring Meeting.Twelve AWB-member companies were honored for their initiative, innovation and outstanding achievements in environmental compliance, protection and conservation.

Bill Glover, the Boeing Co.'s vice president of environment and aviation policy integration, served as the luncheon's keynote speaker, sharing his company's achievements in improving its environmental performance.

"We believe that being aggressive in reducing our environmental footprint goes along with good performance," said Glover. "An environmental footprint indicates waste, and waste costs money."

Boeing is moving ahead with numerous environmental initiatives, including using energy saving natural lighting in its giant Everett plant, cleaning up old sites that became contaminated due to lower standards of decades past and aggressively pursuing recycling at all levels of the company.

Glover noted that Boeing's commitment to recycling can be seen in the airplane assembly process where the protective coating used during the installation of airplane flooring is now recyclable, reducing waste tremendously.

And these environmental initiatives are no small effort. Fully 70 percent of all Boeing investment includes some environmental improvement.

Perhaps Boeing's most significant green initiative is reducing the carbon footprint of its airplanes. Aviation demand grows by 5 percent per year, Glover said, and the company is working hard to make sure greenhouse gases do not grow with that increase in air travel. Boeing's airline customers have also  pledged their desire and intention to be carbon neutral by 2020.

"We try to use our name and reputation to leverage other people in a positive direction," said Glover.