Olympia Business Watch

Brunell makes the case for sustainable budget in Tri-Cities, Walla Walla

Today, AWB President Don Brunell is traveling to Eastern Washington to talk with AWB members and area businesses about the 2012 legislative session. 

At the heart of his discussions: the need for a sustainable, long-term state budget for Washington state. Brunell was meeting with members of the Tri-City Regional Chamber of Commerce and Walla Walla Rotary Club to talk about the continuing struggles of this year's Legislature and the politics that continue to delay progress on the budget.

As Brunell and other AWB members and AWB government affairs staff have advocated all session long, raising taxes isn't the solution to what ails the state budget. The right thing to is to overhaul the budget and figure out how the state can live within its means.

"Without systemic change, we face a future of ever larger deficits," wrote Brunell in a Feb. 17 column. "That's a real solution that will foster economic growth and create jobs."

This morning, the Associated Press reported lawmakers remain at an impasse despite being halfway through the special session -- and with an April 10 deadline a mere two weeks away. If they can't broker a deal, Gov. Chris Gregoire can call lawmakers back for a third special session (there was already one special session to deal with the supplemental budget back in December) or make across-the-board cuts, something she has publicly decried because of the impact on areas such as public safety. 

Leaving town without a balanced budget going forward should not be an option. Forcing the next Legislature into a deficit situation only carries the problem forward.

As The Seattle Times observed Wednesday, "This is a seminal moment in state government. Legislators can fix the budget or they can pretend to fix it. In our view, legislators need to fix it for real."

Tax Compliance Time Costs $227 Billion

SUNDAY BLOG:

I found this on Newsmax.com and thought I'd pass it along. The costs of compliance with our complicated federal tax laws as all of us file our 2011 federal income tax is rarely mentioned. All we hear is who isn't paying his or her fair share....while those in Washington, D.C., burn through money like drunken sailors and drive our nation further and further in debt......how about the value of our time?  

The National Taxpayers Union reports that Americans spend some 7.6 billion hours a year complying with the tax code — the equivalent of 3.8 million full-time employees working all year long just on tax compliance. If those workers were paid the average rate for a civilian employee, the total cost would be more than $227 billion. 

Americans also pay $35 billion out of pocket for assistance in filing their taxes, with the average non-business individual filer spending $160 on tax assistance — professional help, software or other services, according to the Independent Women’s Forum (IWF), a nonpartisan research and educational institution. 

In 1980, 38 percent of Americans used a paid preparer to handle their tax forms. In 2007, the most recent year with available data, nearly 59 percent used paid assistance. 

Tax compliance weighs heavily on corporations as well. The National Taxpayers Union estimated that in 2009 compliance expenses alone would cost U.S. corporations $159 billion.

“That’s around half of what those companies had to pay in taxes, a startling statistic, attesting to the corporate tax code’s incredible inefficiency,” says IWF Managing Director Carrie Lukas. “Think about it: For every dollar the government raised in revenue from corporations, companies had to pay out $1.50.” 

Companies pass on compliance costs to consumers, of course, by charging higher prices on goods and services.

Corporations lose time and money not just by complying with tax laws, but also by working to minimize their tax payments. That money could be used instead to hire workers and expand production, stimulating the economy instead of retarding growth. 

Don C. Brunell, President

P.S.  I wonder what the total cost would be if someone could figure out the value of our time spent figuring out our state and local taxes?

Turner makes case for Supreme Court to rule President Obama's costly sweeping health plan unconstitutional

Today's Oregonian op-ed piece by Grace-Marie Turner, founder of the Galen Institute which is a  respected health care think-thank based in Washington, D.C., concludes: "The law is wrong for America, and the sooner the Supreme Court overturns it, the sooner we can get on the path to patient-centered reform that fits our economy -- and our Constitution."

Turner, who spoke at AWB's Policy Summit in 2010,  went on to say the Patient Protection and Affordable Care Act, often referred to as Obamacare, is unconstitutional to its very DNA. The Supreme Court can save itself and the country years of litigation by striking down the entire law when it issues its decision this summer.

Two key provisions in the health overhaul trouble Turner as well---the individual mandate and mandatory Medicaid expansion.

On the individual mandate, she wrote: "The law requires virtually everyone in the country to have health insurance starting in 2014. This is the first time the federal government would require private citizens, under penalty of law, to spend their own money on a private product."

The law also requires states to expand their Medicaid programs to cover families earning up to $30,000 a year. Lawyers for the 26 states that are challenging the law will tell the court during oral arguments this violates the Tenth Amendment's protection of states' rights.

Medicaid, a program designed to pay medical expenses for the poor, is the largest health program in the country, Its costs are already drying up spending of education, roads and public safety. Many states warn this huge Medicaid expansion could send them into bankruptcy.

Online university WGU Washington fills void for working students, business

Washington's higher education system is failing to keep pace with demand for educated workers, forcing employers to hire people from out of state.

"That's a lost opportunity for Washington," Jean Floten, chancellor of WGU Washington, recently told AWB's executive board.

The school is hoping to reverse the trend, Floten said, by making higher education more flexible and more affordable for working adults.

WGU Washington, a subsidiary of Western Governors University, is Washington's only state-endorsed online nonprofit university. 

It received the distinction last year after the Legislature agreed to a partnership, and the school has been working to raise its profile since then, partly through through a fun ad campaign featuring its billboard in Ephrata and partly through meetings like the one last week with AWB board members.

Floten came armed with statistics: By 2018, 67 percent of jobs in Washington will require a college degree, and yet the state ranks 48th in degree production, she said. More than 950,000 Washingtonians have started but not finished a college degree.

Brunell: Washington's Health Insurance Exchange - Paying More for Less

Washington's state health insurance exchange may not be the most exciting subject, but it's important to pay attention to what's going on with it, AWB President Don Brunell writes in his weekly column.

Right now, state bureaucrats are making decisions about the exchange that will affect the cost and availability of your health care benefits, regardless of whether your insurance company is taking part in the exchange.

All around the country, states are going through similar exercises. Some are creating open market exchanges, such as Utah, that gives more control to consumers, while others are following the Massachusetts model and opting for active purchaser exchanges, which emphasize state control.

Washington is moving in the direction of the active purchaser model, setting up a scenario in which some insurers may choose to leave the state, further reducing choice and competition.

That's why Gov. Chris Gregoire must heed the call to veto parts of the health insurance exchange legislation.

"Without that veto, Washington's health insurance exchange will mean loss of coverage, fewer choices, less competition and higher prices," Brunell writes.

 

Poll's show President Obama's health reforms remain unpopular--major reconstructive surgery needed

SUNDAY BLOG

As the U.S. Supreme Court starts hearing arguments on the constitutionality of the federal health care reforms which President Barack Obama, former House Speaker Nancy Pelosi (D-San Francisco) and Senate Majority Leader Harry Reid (D-Nevada) jammed through Congress two years ago, public opinion poll after public opinion poll show it remains very unpopular.

Bluntly, it needs major reconstructive surgery which perhaps the U.S. Supreme Court may prompt when it rules on the individual mandate.

Interestingly after two year, not all of the rules governing how "Obamacare" will work are written.   But one thing is for sure, health insurance and health care in general are becoming much more expensive. On Friday, my column dealing with the Washington State Health Exchange (state agency which will market health care plans)---legislation that AWB asked Gov. Chris Gregoire to partially veto--talks about costs increases and choice limitations.

On Thursday, The U.S. Chamber of Commerce published a compendium of public opinion polls showing the results of what people think of Obamacare.  Here are some the latest findings:

• AP-GfK Poll, March 8, 2012: “The poll found that 35 percent of Americans support the health care law overhaul, while 47 percent oppose it. That’s about the same split as when it passed. Then, 39 percent supported it and 50 percent opposed it.” — Jennifer Agiesta and Ricardo Alonso-Zaldivar, Associated Press.

• USA Today/Gallup Poll, February 27, 2012: Americans overwhelmingly believe the “individual mandate,” as it is often called, is unconstitutional, by a margin of 72 percent to 20 percent. Seventy-two percent of American adults and 56 percent of self-professed Democrats say that the provision in the health-care law signed by President Barack Obama that requires individuals to purchase health insurance or pay a fine is unconstitutional.

• Kaiser Health Tracking Poll, January 2012:: “54 percent of Americans say the Court should rule the individual mandate unconstitutional, while just 17 percent say they think it should be found constitutional. Roughly mirroring public views on the mandate, 55 percent of the public say they expect the Justices to find the mandate unconstitutional and 29 percent expect the Justices to find it constitutional.”

• Harris Interactive, January 30, 2012: “But the most controversial aspect of the law — the so-called individual mandate that requires all adults to have health insurance or face a fine — remains widely unpopular, with only 19 percent of those polled supporting it, regardless of political party affiliation.”

Hopefully, Gov. Gregoire will veto sections 6 and 7 of the state exchange legislation and the U.S. Supreme Court will rule in a way which will make health care choice available, lower costs and limit government's involvement.  

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

 

Transportation secretary sees bumpy financial road ahead

First, the state lost the motor vehicle excise tax as a source of revenue to fund the ferry system.

Then the recession hit, leading to a drop in the number of miles people drove. Combine that with cars that are growing more fuel efficient -- and will continue to improve for many years -- and there are serious questions about how long the gas tax will be a solid source of revenue to fund transportation projects.

Finally, the federal government -- long a reliable source of transportation funds -- is expected to hold steady or even reduce the flow of funds it sends to Washington state.

Put it all together and it's leading Paula Hammond, Washington state's Secretary of Transportation, to wonder how the state will pay for its growing list of transportation needs.

"What do you do?" Hammond asked Wednesday during a presentation to AWB's executive board of directors.

Prices at pump impacting economy, elections

According to a Washington Post-ABC News poll announced yesterday, rising gas prices at the pump are having an impact on our economy and are hurting President Obama polls numbers.  

Washington Post writers Dan Balz and Jon Cohen wrote:  "Disapproval of President Obama’s handling of the economy is heading higher — alongside gasoline prices — as a record number of Americans now give the president “strongly” negative reviews on the 2012 presidential campaign’s most important issue." 

President Obama is under increasing pressure on rising energy costs, especially at gas stations.  His latest decision to pass on approval of the Keystone XL pipeline which would bring crude from Canadian oil sands to Midwest and Gulf State refineries even drew criticism from former President Bill Clinton. Clinton supports construction of the pipeline and wants TransCanada to find an alternative route.

According to Gary Langer, president of Langer Research and former director of polling for ABC News (and speaker at the 2010 AWB Policy Summit), even though 54 percent of those polled expect the president to be re-elected, Americans by a broad 65-26 percent disapprove of how he is handling the price of gas, which has gained 49 cents a gallon this year to an average $3.79.Strong critics outnumber strong approvers by nearly 4-1. And it’s important: A vast 89 percent are concerned about the recent run-up in gas prices; 66 percent are “very” concerned about it.

According to AAA-Washington, the average price of a gallon of gas in Washington is $3.98. Here is a sampling of pump prices posted by AAA today: Bellingham $4.08, Bremerton $3.98, Seattle-Bellevue-Everett $4.05, Tacoma $4.02, Olympia $4.03, Vancouver $4.02, Yakima $3.83, Tri-Cities $3.76, and Spokane $3.67

According to the Post: "Increasingly pessimistic views of Obama’s performance on the economy — and on the federal budget deficit — come despite a steadily brightening employment picture and other signs of economic improvement, and they highlight the political sensitivity of rising gas prices."

This Washington Post-ABC News poll was conducted by telephone March 7 to 10, 2012, among a random national sample of 1,003 adults, including land line and cell phone-only respondents. The results from the full survey have a margin of sampling error of plus or minus four percentage points.

Brunell: Export-Import Bank fuels trade and job growth

The Export-Import Bank of the United States isn't well known outside of the nation's capital, but it's an important part of the economy, AWB President Don Brunell writes in his weekly column.

What began with one loan to Cuba in 1935 for the purchase of U.S. silver ingots has grown into a substantial source of government-backed financing that supports export sales for thousands of U.S. manufacturers, including Boeing.

It operates at no cost to the taxpayer and in fact is returning money to the U.S. Treasury.

Unless Congress reauthorizes the bank soon, though, it will run out of funding ability, derailing pending sales of U.S. manufactured products and harming companies big and small.

President Obama has called for a doubling of U.S. exports by 2014 and recently asked Congress to reauthorize the bank and raise its lending cap, Brunell writes.

It makes sense for the nation, and especially for trade-dependant Washington state.

White House Quietly Increases Budget for Obamacare's Exchange Subsidies by $111 Billion

According to Forbes, the Obama Administration’s most recent budget proposal includes a massive increase in the estimated costs of exchange subsidies, wiping out a major portion of any claimed savings from the law.

For the years in which the two exchange budgets overlap – 2014 through 2021 – the White House states that it expects to spend $111 billion more in its new budget than it projected a year ago. In 2021 alone, the difference between the two budgets is almost $20 billion, implying that exchange spending will be up by over $200 billion in the decade following 2021.  

Health exchanges, such as Massachusetts' Connector, are required under the provisions of Obamacare. (Please see Don Brunell's column on health exchanges published last November).

Not surprisingly, employers and people like you and me are starting to see increases in our health care costs from the reforms that President Obama, then House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid jammed through Congress in early 2010. 

Business Insurance Magazine reports while most employers have not yet calculated the financial impact of compliance with the Patient Protection and Affordable Care Act (Obamacare), some estimate compliance with the law has driven their group health costs up by as much as 5%, according to a Willis Group Holdings P.L.C. 

Among those employers, more than 55% said their total health care costs had risen at least 2% as a direct result of the reforms. More than 15% of those employers said their costs have risen in excess of 5% since 2010. 

To offset those rising expenses, 62% of responding employers said they expect their peers to raise employee contributions for health care coverage. About 56% said they expect other employers to increase their plans' deductibles and copayments, while 51% said they think employers will shift more of the cost burden for dependent care to their workers.

Brunell: An example for us all

If there is one bright spot to be found from the recession, it is the increase in volunteerism it has prompted.

In communities all over the country, neighbors and volunteers have stepped in to pick up the slack when cash-strapped governments have been forced to reduce public services, AWB President Don Brunell writes in his weekly column.

In the Olympia-Lacey, a group of citizens recognized the need 25 years ago for a safe train station to replace the lean-to that served as the East Olympia Amtrak station.

The tipping point, Brunell writes, came after a train dropped off a man in a wheelchair one night in 1986.

"No one was there, the vandalized phones weren't working and he spent the entire night stranded," Brunell writes.

Crosscut recently featured the group of citizens who stepped up to that challenge by building and operating their own Amtrak station, with no help from the federal government or Amtrak.

They set an example for us all.

"Instead of complaining about problems, they -- and we -- should set about solving them with our time, skills and elbow grease," Brunell writes.

"Isn't that what America is all about?"

Fish experts predict another good year for Columbia and Snake rivers salmon runs

SUNDAY BLOG:

2012 fish return forecasts are for increased salmon returns to the Columbia and Snake rivers.  

The primary reason is favorable ocean conditions and that is great news as spring Chinook runs are about to start up the Columbia River from the Pacific Ocean to spawn.

The forecast is part of an upward trend.  Salmon counted at Bonneville, the first dam that salmon must navigate have been increasing.  The even better news is the runs at Lower Granite Dam on the Snake River, the last of seven dams salmon and have to navigate, have also been growing.  

Northwest Rivers Partners Executive Director Terry Flores wrote in her February monthly report: 2012 is predicted to be another really good year for returning salmon and steelhead with nearly all runs expected to be above 10 year averages. Favorable ocean conditions are the key driver with NOAA Fisheries saying a “rich biological community” and cool temperatures should provide productive conditions for fish.

The hydro system is doing its part too. Last year’s numbers showed young fish surviving downstream at levels meeting the performance standards set in the hydro system Biological Opinion of 93% and 96%. The only exception was steelhead at 95.3%, slightly below the standard of 96% for that species. Even better news, wild fish are making up a larger component of the runs in most cases.  

Let's hope the forecasts come true.

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

 

 

Justin: Governor will push for education, sustainable budget in final week

Gov. Chris Gregoire will spend the final week of the 2012 legislative session pushing education reform and a sustainable budget according to Jim Justin, the governor's legislative director and Thursday's Lobby Lunch guest.

Regarding the possibility of a special session, always a topic of speculation in Olympia when a session draws near to a close, Justin made it clear that Gregoire wants lawmakers to finish their work by the March 8 deadline.

The governor's response to members of the Roadkill Caucus who say they will stay as long as it takes to adopt their reforms is, Justin said: "Well, who's calling you back?"

Justin said Gregoire tried and failed to push for business and occupation tax simplification. "We didn't have any kind of success with that," he said, noting that some cities, particularly Seattle, aggressively fought against Gregoire's proposal.

Justin declined to comment in detail on the proposed Senate budget, saying Gregoire had not met yet with Sens. Lisa Brown or Ed Murray. However, he did offer that she didn't think the ending fund balance was high enough and she had some questions about some other pieces.

The Lobby Lunch meeting came the day before a dramatic Senate floor session in which Republicans attempted to take over the Democrats' budget.

Full video of Justin's remarks are below:

Bill says: "Build Baby Build!"

Remember John McCain's famous words in the 2008 Presidential campaign?

"Drill Baby Drill!"

That was the Republican candidates answer to help lower gas prices. Make crude more available from our vast petroleum reserves.

Well after President Obama put the Keystone XL pipeline on ice last month, former President Bill Clinton threw his support behind construction of the pipelines which would bring crude oil from the Canadian oil sands to Gulf State refineries.

Clinton told an energy conference in Maryland, that the pipeline should be constructed, but he blamed the system’s builder, TransCanada, for the fact that it hasn’t been built yet, Politico reports.  

Clinton says take another route around Nebraska's Sandhills and avoided most of the dangers, no matter how imagined, to the Ogallala [aquifer]. Great advice!

So how about a new political slogan for 2012?  "Build Baby Build!"  

Hurray for Bill!

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

House committee hears about power rates, taxes and slacker workers

SGL Automotive built a manufacturing plant in Moses Lake in 2010 to make carbon fiber for BMW automobiles, and for the most part the company has had a positive experience as a newcomer to the state, Steve Swanson, vice president of operations, told a House committee today.

Permitting went well, he said, and the company has found a relatively strong labor pool.

But SGL is alarmed by the prospect of electricity prices rising as much as 50 percent by 2014 for industrial users.

Sierra Pacific Industries - which has lumber mills and forest lands in Washington - has found success operating in the state. The company would like to expand here, but it has concerns about regulation and workforce development, said Sheri Nelson, community relations manager.

The No. 1 reason for losing employees, Nelson said, is they simply don't show up for work.