Olympia Business Watch

Tefft: Workers' comp and UI prove that government reform is possible

Reforming government programs, especially when they're as entrenched as Washington's 100-year-old workers' compensation system, is not easy.

But it's possible.

That was one of the messages that Kris Tefft, AWB's general counsel and government affairs director, shared earlier this month at the annual meeting of the Washington Forest Protection Association.

The Legislature proved it this year by adopting significant reform legislation regarding unemployment insurance and workers' compensation, Tefft said during a panel discussion on government reform and streamlining.

The unemployment insurance legislation, approved early in the 2011 regular session, is expected to save employers $360 million.

Workers' compensation reform, passed in dramatic fashion at the end of the first special session, is projected to save $1.1 billion over the next four years.

As positive as that sounds, some employers will still feel the sting of higher workers' comp insurance costs next year. That's because the Department of Labor wants to begin rebuilding depleted reserves.

Capitol Holiday Kids' Tree donations surpass $21k

From Vancouver to Colville and from Oak Harbor to Walla Walla, as of today 126 Washington employers and families have contributed over $21,000 for the Holiday Kids' or Christmas tree at the state capitol. Employers and people from every walk of life donate to the tree and contributions range from $10 to $1,000. 

For nearly a quarter century, the Association of Washington Business (AWB) has sponsored the annual Holiday Kids' Tree Project, which has raised a total of more than $320,000. The tree stands in the Rotunda of our State Capitol in Olympia for people to enjoy during December and best of, there is no charge and the donations pay for the costs of the tree and decorations.

This year the 24-foot Noble fir tree was donated by AWB member Port Blakely Tree Farms. AWB also donated 5,000 new LED lights for the tree.   The Washington Forest Protection Association and its members provide the tree each year.

Gov. Chris Gregoire will light the tree at 6 p.m. next Friday with the help of Senior Airman Samuel Lovelady, a Patrol Leader from the 627th Security Forces Squadron/Joint Base Lewis-McChord, along with his wife Dana, their daughter Kaydance (age 4) and son Samuel (age 2). And no holiday tree ceremony would be complete without a special visit from Santa Claus. Tiny elves from Vancouver, WA, and Moses Lakes will assist Santa this year.

"AWB has sponsored the Capitol's Christmas tree since 1989 and it is one of the best things we do each year," said AWB President Don Brunell.  Monies are distributed to representatives from rural fire departments to buy and distribute gifts and food to families in their communities.

If you would like to contribute, consider going online to make a donation. A visual history of the tree program is available online.

Brunell: Our state health care exchange should preserve choice

Washington's Health Care Authority is moving forward with creating a health insurance exchange, even as the federal health care law heads for review by the U.S. Supreme Court.

There are plenty of questions that will need to be answered as part of the process, but AWB President Don Brunell writes about a fundamental one in his weekly column: Will the state exchange protect choice or reduce it?

The decisions the authority makes will either protect the private insurance market or reduce choice and put private insurers out of business, Brunell writes.

If the Health Care Authority members limits the insurance carriers can participate in the exchange, that will reduce choice. If they limit the types of health plans those companies can offer, that will restrict choice. If they compel insurers to participate in the exchange as a condition of operating in Washington state, that will reduce choice.

"These are all options under consideration," Brunell writes.

Make your voice heard -- send comments and suggestions to the Health Care Authority in Olympia, and tell your state legislator how you want Washington's exchange crafted.

Profits don't magically appear...it takes awhile even for Boeing

Michelle Dunlop of The Herald, Everett's daily newspaper, had an excellent article in today's edition about Boeing's new 787 airplane--the first of which was delivered to Japan's ANA airlines earlier this fall.

She penciled out the amount of time and number of 787 airplanes Boeing would have to deliver before it breaks even. How about 10 years and 1,100 airplanes.

Boeing has 821 orders for the 787. That gets the company most of the way to recouping the program's costs, but not all the way. It's assumed the company will have no trouble selling more airplanes for delivery in 2019 and beyond.

Dunlop reported that recovering that cost of developing and producing the airplane efficiently depends on how quickly Boeing can increase the production rate to 10 787s per month by the end of 2013 at the factories at Paine Field in Everett and in Charleston, S.C.

Dunlop wrote: Boeing workers and suppliers must quickly become more proficient at assembling the 787. This is a common phenomenon in manufacturing -- the more you do something, the better you get at it. In the case of the most complicated mass-produced product in the world, Boeing estimates, it won't be until sometime in 2015 when the revenue from each plane actually exceeds the cost of building it.

Too often today many believe that investments in products are recovered as soon as a product reaches market. They don't and profitability can often take years or decades. It involves a great deal of risk. New technologies can sometimes take longer than anticipated such as in the new composite 787. But rewards make it all worthwhile and in the case of the 787, the awards are shared with all of us in Washington and America.

Thank goodness Boeing has many proven and reliable aircraft lines which gives the company the opportunity to invest in new products. Recovering a $9.7 billion investment takes time even for the very best such as Boeing. Let's work to make sure Boeing and other businesses are successful in America and Washington state.

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

Small Business Saturday

More than eight of 10 Association of Washington Business members are small businesses.  Today, has been designated as Small Business Saturday to remind people to also shop at small merchants. 

Yesterday, was Black Friday, which is generally known as the biggest shopping day of the year.  So when you are shopping today and for the remainder of the holiday season, stop by your local small retailer too. 

There are lots of good buys there.   Thank you.

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

Happy Thanksgiving

Have a Happy Thanksgiving and be safe.  Please remember the needy and those who may be alone and lonely during the upcoming holidays.  Please say a prayer for our troops and their families and those searching for a job.

Even with all of our challenges these days, we still have much to be thankful for. 

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

AWB's Holiday Kids' Tree stands tall in Capitol Rotunda

If it seems a little early for the AWB Holiday Kids' Tree to go up in the state Capitol, it is.

With a special session of the Legislature starting Monday, Department of Enterprise Services volunteers and the coordinating staff at the Association of Washington Business had to shift into overdrive to get the tree up and decorated.

"We just needed to get it done prior to Monday," said Department of Enterprise Services volunteer Kari Moes while taking a break from handing ornaments up to another volunteer on a ladder.

About eight events are scheduled for the first day of the special session and security issues dictate there be no packages under the tree this year. "Everything's toned down a little bit for special session," said Moes. With the expected crowds and activity, an effort was made to keep the tree inside a relatively small footprint.

The 24-foot Noble fir tree was donated by AWB member Port Blakely Tree Farms. AWB also donated 5,000 new LED lights for the tree.Gov. Chris Gregoire will light the tree at 6 p.m. next Friday with the help of Senior Airman Samuel Lovelady, a Patrol Leader from the 627th Security Forces Squadron/Joint Base Lewis-McChord, along with his wife Dana, their daughter Kaydance (age 4) and son Samuel (age 2). And no holiday tree ceremony would be complete without a special visit from Santa Claus. 

For nearly a quarter century, the event has marked the end of AWB's annual Holiday Kids' Tree Project, which has raised a total of more than $320,000. So far this year, businesses and individuals have given more than $20,500.

Monies are distributed to representatives from rural fire departments to buy and distribute gifts and food to families in their communities.

"AWB has sponsored the Capitol's Christmas tree since 1989 and it is one of the best things we do each year," said AWB President Don Brunell.

If you would like to contribute, consider going online to make a donation. Monies accepted after Dec. 2, 2011 will go toward next year's program. A visual history of the tree program is available online.

Brunell: Thank goodness for farmers

With the holiday season nearly upon us, AWB President Don Brunell gives thanks to America's food producers, a group that leads one of the few bright spots in a persistently glum economy.

America's agricultural exports reached a record $127 billion this year and they are expected to grow another $2.3 billion in 2012, Brunell writes.

The sector got another shot in the arm last month, too, when Congress ratified new free trade agreements with South Korea, Columbia and Panama. Tariffs and trade barriers will fall as a result, and Washington state stands to be one of the biggest beneficiaries.

The trade agreement immediately wipes out a 24 percent tariff South Korea imposed on Washington cherries, reducing prices by 75 cents per pound.

It also phases out South Korea's 45 percent tariff on most apple varieties over the next 10 years and immediately eliminates that nation's 18 percent tariff on frozen potatoes.

"So while our nation and state struggle with record budget shortfalls and a skyrocketing federal deficit, it is good to start this year's holiday season with some good news," Brunell writes.

 

Small business still gets stellar numbers!

From The Public Affairs Council:

The Public Affairs Pulse survey — a first-of-its-kind, in-depth survey of Americans' opinions on business and government — provides insight on attitudes toward issues ranging from corporate compensation and business' role in providing public services to crisis communication and lobbying. 

Among the survey's most noteworthy findings, more than six in 10 Americans have a favorable view of major companies.

Nearly three-quarters say companies are doing a good job of providing useful products and services. And, remarkably, 71 percent of members of "Gen Y" (age 18-34) have a favorable opinion of business.

Yet despite their overall positive view, Americans also see much to dislike. Many think CEOs are paid too much, while regular workers and lower-level managers are paid less than they deserve. And three-quarters (77 percent) feel there is too much power in the hands of a few large companies.

Americans also tend to think less favorably of a company that hires lobbyists. But, presented with a range of reasons for a company to lobby — including to protect jobs, create a level playing field or reduce costs — the public by and large approves of such activities. The public is generally not in favor of major companies getting directly involved in political campaigns, whether through paying for ads supporting a candidate or creating a political action committee.

The survey, commissioned by the Public Affairs Council and conducted Aug. 10 to Sept. 8 by Princeton Survey Research Associates International, is based on telephone interviews with 1,753 adults in the continental United States.

State revenue forecast mostly on target, but no cause for celebration

Washington's revenue outlook hasn't gotten any worse since the last forecast, Arun Raha, the chief economist, declared this morning.

But it certainly could.

The European debt crisis has the potential to become a banking crisis, and if that happened it could spread to U.S. banks, undermining the fragile recovery, Raha said.

"The risk scenario remains the same, heavily weighted to the downside," he said.

As it stands now, Washington has taken in $12 million less than expected since September, a drop that amounts to a half of one percent. The projected tax revenue over the next two years is $122 million less than previously forecast.

Boeing and software publishing both continue to do well, car and truck sales are improving and there are faint glimmers of hope in non-residential construction, Raha said.

Consumer spending is also "mildly encouraging," he said, but only because expectations were so low.

Consumer and business confidence remain weak, however, and unemployment is still a major problem. The nation's real GDP is finally back to pre-recession levels, but it's being produced with 6.6 million fewer jobs, he said.

 "We are in the aftermath of the Great Recession and nothing can be taken for granted," Raha said. "We've been here before in this recovery, only to be sucked back into the mire."

Rago: Health care reform has launched period of 'convulsive change'

As he travels around the country talking about health care reform, it's common to hear expressions of frustration and even depression, Joseph Rago said Tuesday during the keynote address at our Health Care Forum in Seattle.

And yet Rago, who won the 2011 Pulitzer Prize for his series of Wall Street Journal editorials challenging the federal health care bill that eventually became law, said there are some good things that have come from the debate.

If nothing else, it has focused attention on an issue that has dogged businesses and the economy for a long time, Rago said during an informal keynote discussion with Jeff Gingold, a partner with Lane Powell and moderator for the forum.

Rising health care costs have wiped out any wage growth above inflation, and until America fixes the problem the country will not fully recover from the recession, he said.

Unlike some opponents of the Patient Protection and Affordable Care Act, Rago said he believes states would be smart to move ahead with establishing their own health insurance exchanges. If nothing else, they will collect federal money.

Panels look at state exchanges, soaring costs stemming from health law

Does it make sense for Washington to press ahead with development of a state health insurance exchange, or would it make sense to slow down and learn from the experiences other states encounter?

Jeff Gingold, moderator for AWB's Health Care Forum, put that question to a panel made up of state Sens. Randi Becker, R-Eatonville, and Karen Keiser, D-Kent, and Molly Voris, health benefit exchange project manager for the state Health Care Authority.

The answers offered a glimpse of the differences that exist among the lawmakers and officials responsible for implementing Washington's health insurance exchange.

"Why wait?" responded Keiser. "I don't see why we would hang back," she said, adding that Washington has made mistakes but officials have learned from them.

Voris likewise argued for moving forward, saying the state has a better chance of crafting its own exchange and influencing the federal goverment.

AWB Health Care Forum underway

James Capretta, a fellow with the Ethics and Public Policy Center, kicked off AWB's forum on health care reform today with an overview that described the numerous questions that remain unanswered about how federal health care reform will actually work, and how the government will pay for it.

Most people won't notice any impact as a result of the law until 2014, and the long delay between its passage and implementation carries important political and substantive implications, Capretta said.

Already, the Obama administration has pulled the plug on a long-term care provision of the law known as as the CLASS Act that was supposed to save $70 billion, he said.

Other elements that were supposed to help pay for the law are failing to meet expectations or are under threat, including planned taxes on medical devices and rich benefit plans known as "Cadillac" plans.

Medical device manufacturers are fighting the planned tax on their products, and labor unions want to repeal the Cadillac tax, which isn't scheduled to take effect until 2018.

Don't forget about our state's high costs!

Shortly after Thanksgiving, state legislators will gather in Olympia to patch a $2 billion hole in the budget. No doubt it is a serious problem and many consequences are significant. There is more and more talk about raising taxes to fill at least part of the gap between the money coming in from our taxes and fees and the money the state spends.

Gov. Chris Gregoire (D) and lawmakers must also keep in mind that our state, because of tax structure, places a heavier than average burden on business when it comes to paying the initial or first state and local taxes. That is primarily because we assess taxes on gross income, such as our business and occupation and sales taxes, regardless of whether the corner grocer, service station or accountant makes a profit. That is a flaw in our tax system, but that is reality.

The other reality is our state government places higher costs on employers. That point came through in today's The Columbian in an article featuring Pendleton Woolen Milling, Inc., which is getting ready to celebrate its 100th anniversary next year. Pendleton, is one of the few remaining manufacturers of woolen textiles for men and women's wear, apparel, home products and upholstery.

Pendleton is one of AWB's oldest member. The company even designed and manufacturerd AWB's 100 Anniversary woolen blanket in 2004. The company is preparing for the sixth generation of the Bishop family to take over management. Charlie Bishop, vice president of mill operations at the Washougal plant, is a former AWB Board member and in the Columbian interview, said that staying competitive in an increasingly competitive global economy is the company's biggest challenge.

He went on to say: "the high costs of state workers' compensation insurance, unemployment insurance, stormwater fees, regulatory compliance and increases in the price of raw materials, including wool, are also major challenges for a domestic manufacturing plant."

The point Gov. Gregoire and lawmakers can't lose sight of is Washington is a high cost state and they need to find ways to lower costs for workers' comp, unemployment insurance, regulations and permits, stormwater charges and health care--and not just settle for raising taxes and fees. This is the time to find better ways to provide government services---and that can be done without weaking environmental standards, putting workers in jeopardy and providing for public safety and fire protection.

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

 

 

 

 

 

 

 

 

Thanks!

November 11 is Veterans' Day. It is a day to say thanks to all who serve our nation. Please remember them and their families in your thoughts and prayers. They are our country's best and they protect us 24 hours a day, 7 days a week and 365 days a year. Remember their families too. They often scrape to get by and spend many lonely hours worrying about their moms, dads, brothers, sisters, sons and daughters.

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

McKenna, fresh from campaign kickoff, shares his 'New Direction' with AWB

On Tuesday, Rob McKenna reportedly served up "some familiar Association of Washington Business-style bromides" regarding government regulation.

That's how the Seattle P-I.com described part of the attorney general's breakfast speech kicking off his 2012 gubernatorial campaign, anyway.

On Wednesday, McKenna stopped by AWB's office in Olympia for a lunchtime visit with some of the state's business leaders, and he took aim at the remark.

"I just have to point out that people who write things like that have never been in a position to deal with the regulations that we're talking about here, as all of you have, as I have been as private legal counsel to small businesses and large companies," McKenna said. "This is not an abstract or hypothetical or idealogical issue. It is real and it has to be addressed in a real fashion."

McKenna makes it clear how he would address the problem in one of three white papers that lay the foundation for his campaign. The first of the papers, A New Direction for Job Creation in Washington State, offers a detailed list of proposals aimed at reducing unemployment.

They include an examination of regulatory policy, as well as competitive tax reform, ending the state monopoly on workers' compensation and liability reform.

But just as he did Tueday in his kick-off speech, McKenna spent much of his time Wednesday talking about education issues.

Brunell: GPS needs to control our skies, too

The GPS unit in your car is more advanced than the technology used by air traffic controllers.

That's something to think about the next time you're on a commercial airliner, AWB President Don Brunell writes in his weekly column.

It doesn't have to stay this way. Congress approved a new GPS air traffic control system known as NextGen in 2003, but it has yet to be fully implemented, partly because of the cost -- $40 billion -- and also due to bureaucracy.

Nevertheless, it's an investment well worth making, Brunell writes. Congestion and weather delays tied to the limitations of radar cost airlines and consumers almost $10 billion last year.

Some airlines are moving ahead. Alaska Airlines is using GPS to assist with landing at Juneau International Airport, and the company said it prevented 729 flight cancellations last year.

"This is an opportunity for the FAA to demonstrate that it understands the importance of efficiency, precise information and a timely response," Brunell writes, "in our air traffic control system and in our federal bureacracy."

Tax talk heats up on TVW - but will voters go along?

Labor union leaders are considering running a $2 billion Depression-era style bond proposal before voters sometime this spring.

That's according to Washington State Labor Council President Jeff Johnson, who joined AWB President Don Brunell on the latest edition of TVW's "Inside Olympia."

Brunell said it’s time for a comprehensive look at everything from taxes and tax exemptions to government priorities, but he cautioned against following the example of Illinois. Lawmakers there raised taxes on citizens and business and still have a $12 billion deficit.

Meanwhile, the Washington State Budget & Policy Center is proposing a new $1 billion capital gains tax.

In the end, Brunell said it doesn’t matter what labor or business thinks about taxes, only what voters think.

Coloradans tube tax hike

In Colorado, Proposition 103, which would have raised income and sales taxes to pour nearly $3 billion into education funding over five years, was defeated by an almost 2-to-1 ratio, a trouncing that came the same night many local tax issues also failed.

According to the Denver Post, supporters of the statewide ballot measure said it was never intended to be a permanent fix for the state's ongoing budget problems but would provide a tourniquet until the "Big Fix" comes. That so-called fix might be reconciling conflicting constitutional provisions they say hamstring the state budget, increasing taxes or both.

The defeat of 103 came the day Gov. John Hickenlooper announced he was recommending a budget that would cut funding for K-12 education by $160 per pupil, cuts that have followed two straight years of deep reductions for schools. Hickenlooper, a Democrat who remained neutral on 103, said he has recognized the need for a long-term solution to the state's budget, but Coloradans keep saying they're in no mood for tax increases.

A University of Denver report released in September said that in 12 years, the state will have only enough revenue to pay for K-12 education, prisons and health care for the poor. The report said the state should consider tax increases in addition to cuts.

There are lessons here for our state as well. Times are still tough and money is hard to come by.

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