Olympia Business Watch

Say hello to three new state agency directors

 

Carol Nelson, Department of Revenue director, left, Dale Peinecke, Employment Security Department commissioner, center, and Joel Sacks, Department of Labor & Industries director, speak Tuesday at AWB's Spring Meeting in Spokane. Photos: Dan Brunell/AWB 

The recently appointed directors of three state agencies -- Employment Security, Labor & Industries, and Revenue -- introduced themselves Tuesday to AWB members.

Dale Peinecke (Employment Security), Joel Sacks (Labor & Industries), and Carol Nelson (Revenue) joined in a Q&A panel led by Gary Chandler, vice president of government affairs, that touched on a variety of areas where government and business intersect, including taxes, workers' compensastion and workforce training.

Peinkecke and Nelson both emphasized their extensive business credentials -- Peineck spent the first 20 years of his career with Alcoa and another 17 years with aerospace companies, and Nelson had a long career in banking -- while Sacks spoke about the early part of his career attempting to reinvent government at the federal Occupational Safety and Health Administration.

All three pledged to work on ways to make government more efficient and to work together with business.

Herrera Beutler, Hastings, McMorris Rodgers and Reichert honored as Spirit of Enterprise recipients

Four of Washington's 10 members of the U.S. House of Representatives were honored by the U.S. Chamber of Commerce for their 2012 voting records in support of free enterprise and employers. To qualify, a member must have a 70 percent or higher voting record on the U.S. Chamber's legislative scorecard.

The Chamber's prestigious "Spirit of Enterprise" award is given annually to members of Congress based on rankings it gives for key business votes outlined in its yearly publication, How They Voted. This is the twenty-fifth year that the U.S. Chamber has formally honored the accomplishments of this select group of members of Congress.

Since being elected to Congress, Representatives Jaime Herrera Beutler (3rd), RIchard "Doc" Hastings (4th), Cathy McMorris Rodgers (5th) and David Reichert (8th)--all Republicans--were honored with annual Spirit of Enterprise Awards.  All are Republicans. 

The last Democrat to score higher than 70 percent was Sen. Patty Murray and that was in 2004. She was recogized with the Spirit of Enterprise Award that year.

Herrera Beutler, like Hastings and McMorris Rodgers, served in the Washington State Legislature before being elected to Congress. She was elected in 2010 and re-elected last November.  She represents southwest Washington, which is the Third District including Vancouver and Longview.  Herrera Beuter has a lifetime 100 percent voting record with the Chamber.

Hastings is the chairman of the United States House Committee on Natural Resources and was elected to Congress in 1995. Hastings owned and operated a small family business and served in the Washington State House from 1979 to 1987.

Hastings Fourth Congressional District covers central Washington, our state's agriculture belt, and the Hanford Reservation. It includes Yakima, TriCities and Moses Lake. 

Hastings has a lifetime 94 percent voting record with the Chamber.

McMorris Rodgers is the U.S. Representative for Washington's 5th congressional district, serving since 2005. Her district runs from Walla Walla to the Canadian Border with Spokane as its largest population center.

She is currently the highest ranking Republican woman in Congress, serving as the Chair of the House Republican Conference. She is only the second woman to serve in that capacity, following former Congresswoman Deborah Pryce, who served from 2003-2007.

Similiar to Herrera Beutler, McMorris Rodgers voting record with the U.S. Chamber in 2012 was perfect at 100 percent.

Before being elected to Washington's Eighth Congressional Distict, Dave Reichert was King County Sheriff.  He led the investigation which solved the Green River Killer case. Reichert served with the King County Sheriff's Department beginning in 1972 until elected to Congress to succeed Jennifer Dunn in 2005. 

HIs district runs from Lake Washington on the west to Lake Chelan in the east and includes Wenatchee, Ellensburg and Issaquah.  Reichert has a 86 percent voting record with the Chamber.

The Chamber's designated "key votes" are recorded floor votes on issues established as priorities by the Chamber, on which the Chamber informs Congress of its position on prior to the vote.

The Association of Washington Business is our state's Chamber of Commerce.

 

 

Brunell: New federal regulations will boost the cost of gas -- again

President Obama wants to invest more than $20 billion on roads, bridges, highways and ports as a way to stimulate economic growth. At the same time, the Environmental Protection Agency announced new mileage standards and air quality rules that could raise the price of gas as much as 9 cents per gallon.

It's as if one part of the federal government was trying to rescue a floundering economy while another part tosses it a concrete block, AWB President Don Brunell writes in his weekly column.

"With our teetering economy, it's vital that Congress and the Obama administration carefully weigh any benefit of new regulations against their impact," Brunell writes.

State lawmakers play a role, as well.

Washington legislators want to increase the state's gas tax 10 cents per gallon, a move that would bring the total of state and federal taxes to 65.9 cents -- third highest in the nation.

There is no question that Washington needs additional money to repair roads, bridges and highways, Brunell writes. But how the gas tax is structured -- and how the money is spent -- will determine whether it harms or helps our economy.

Health care costs and uncertainty are top of small business owners' minds--frustration boiling over

In the latest U.S. Chamber of Commerce small business survey, employers across the country say they need certainty.  As for how government call help them, 87% of small business owners are looking for more certainty compared to 5% looking for assistance.

Clearly, 79% of small businesses still think the American economy is off on the wrong track, and 27% lost employees in the last year.

Requirements of the health care law are now the biggest concern for small businesses, having bumped economic uncertainty from the top spot which it has held for the last two years.

Seventy seven present say the health care law will make coverage for their employees more expensive, and 71% say the law makes it harder for them to hire more employees. One third of small businesses plan to reduce hiring as a result of the employer mandate, and 31% will cut back hours to reduce the number of full time employees.

On energy, 77% of small businesses see higher energy prices as an immediate threat to their business, and 80% do not believe the Administration is doing enough to keep gas prices low, increase domestic energy sources, or develop an energy policy that supports American jobs.

With regard to taxes and regulations, eight out of ten small businesses (79%) support comprehensive tax reform and over half (52%) indicated that the tax code should be made less complex. Regarding regulations, 84% say that regulations, restrictions, and taxes negatively impact their ability to do business.

The first quarter, 2013, U.S. Chamber of Commerce Small Business Outlook Survey was conducted online between March 14 – 26 by Harris Interactive among 1,332 small business executives (defined as executive level position in a company with fewer than 500 employees and annual revenue less than $25 M).

AWB members are asked to participate in these quarterly polls as well. 

OFM director: Senate budget is overly optimistic about savings

 

State OFM Director David Schumacher speaking April 4, 2013 at AWB's Lobby Lunch meeting. Photo: Dan Brunell/AWB

The state Senate's proposed 2013-15 budget is overly optimistic about how much money the government can save by becoming more efficient, David Schumacher, director of the state Office of Financial Management, said Thursday.

That budget, which differs substantially from Gov. Jay Inslee's budget proposal, relies on "some heroic savings assumptions" Schumacher told AWB members at the weekly Lobby Lunch gathering.

In fact, Schumacher said he would imagine the roomful of business lobbyists might actually prefer Inslee's budget to the Senate budget.

"This is the type of thing that this group would typically be pretty rough on," Schumacher said in reference to the Senate budget's proposed fund transfers and possibly unrealistic savings projections.

"That said," Schumacher continued, "the way that the governor's budget was able not to make social service cuts or fundamentally change some of those other programs is that he put $1.2 billion in new revenue on the board."

And that's the rub.

It's true that there are parts of the Senate's proposed budget that employers don't support, but it's also true that Inslee's budget proposal would raise more than $1 billion in new tax revenue largely on the backs of employers.

As AWB President Don Brunell noted last week, businesses don't support raising taxes at a time when the economy remains fragile and when the state's tax revenue is projected to grow approximately $2 billion without any increases.

A state House budget proposal is expected sometime next week. Once it's released, three budgets will be in play and leaders can sit down and talk about them with the goal of reaching agreement on a spending plan by April 28, the last day of the 2013 regular legislative session.

Regarding the chances that lawmakers will find a solution before the end of the regular session, Schumacher said, "I'm hopeful, but not optimistic."

Candidate Inslee: Fund schools with growth

When he was on the campaign trail, Jay Inslee sounded like someone who opposed raising taxes to pay for schools. 

He responded with a "yes" when asked during his first debate with rival gubernatorial candidate Rob McKenna whether he would take the idea of a new, voter-approved school funding source off the table.

And while it's true that Inslee said throughout the campaign that he wanted to close unspecified "tax loopholes," he seemed unequivocal during the AWB-hosted debate in Spokane about his belief that Washington schools should be financed through economic growth.

Now that he is governor, Inslee is proposing to raise $1.22 billion in new revenue for schools largely through the elimination of tax incentives and by making so-called temporary taxes permanent.

Economic growth, which is projected to raise an additional $2 billion in revenue during the next budget period -- without raising taxes -- is barely worth a mention.

Democratic state treasurer says Wash. business taxes are too high

Washington state Treasurer Jim McIntire speaking at the March 21, 2013 Lobby Lunch. Photo: Dan Brunell / AWB

Washington's tax system isn't working for anyone, according to state Treasurer Jim McIntire.

The regressive system over-taxes working families, McIntire said Thursday at AWB's weekly Lobby Lunch gathering, probably to the surprise of no one in the room.

But McIntire said he also believes businesses are over-taxed, a comment that he knew would raise an eyebrow or two.

"You don't often hear a Democrat say we over-tax business, but we do," McIntire said. "I want to be really clear that it's a problem in the state."

Gary Chandler, AWB's vice president of government affairs, asked McIntire to repeat the statement. He did.

And, McIntire said, you can add education and local government to the list of groups that are ill-served by the outmoded tax structure.

The problem, he said, is that Washington's system -- which includes a regressive sales tax, a complicated B&O tax and a property tax -- was created in the 1930s when the state had a goods-based economy.

Washington now has an information-based economy.

Brunell: One-stop tax collection makes sense

Last year, some of the state's larger cities worked together to kill a bill that sought to streamline collection of business and occupation taxes.

They said a centralized system didn't work for them.

The question they failed to ask, AWB President Don Brunell writes in his weekly column, is this: Does it work for the taxpayer?

Of course it does. Giving businesses, particularly small business, a centralized place to pay B&O taxes simply makes sense because it removes bureaucracy that costs time and money.

Seattle City Council President Sally Clark and Bellevue Mayor Conrad Lee are still fighting the measure, which was reintroduced this year. They say a streamlined approach will cost the cities money.

And yet they are proposing to set up their own streamlined collection system.

"If consolidating tax collection doesn't save money," Brunell writes, "then why are they proposing to do just that?"

Lack of money isn't what ails state budget, Baumgartner says

Sen Michael Baumgartner (R - Spokane) addressing the crowd at AWB's Mar. 7, 2013 lobby lunch. Photo: Dan Brunell / AWB

Washington state will have approximately 7 percent more money to spend in the next two-year budget than it had in its last budget, Sen. Michael Baumgartner, vice chairman of the Senate Ways & Means Committee, said Thursday at AWB's weekly Lobby Lunch meeting.

Many businesses would be pleased with that kind of growth, Baumgartner said.

But not state government.

Despite the growth in revenue, lawmakers could still be about $2 billion short of the amount they would like to spend.

And that, Baumgartner said, is the problem.

"It just speaks to the challenges of how our state government has grown and what this edifice has become and how it decides to spend money that even at a time when we have $2 billion more than we had -- that we spent -- last biennium, we're looking at a budget that on the books is probably $2 billion short of what some folks would like to spend," he said.

Lobby Lunch: Is transportation package and DOT reform either-or proposition?

Rep. Judy Clibborn (D - Mercer Island) speaks to the AWB lobby lunch crowd on transportation issues as Sen. Doug Ericksen (R - Ferndale) looks on. Photo: AWB / Dan Brunell

Before she formally announced her $9.8 billion transportation funding proposal, House Transportation Chairwoman Judy Clibborn, D-Mercer Island, said she was hearing from all sides that it wasn't large enough.

Business, labor, and environmental groups all wanted more, Clibborn said Thursday at AWB's weekly Lobby Lunch meeting. But they all wanted more of different things.

After the proposal was unveiled, and the public found out that it included a 10-cent-per-gallon gas tax hike, the discussion changed.

"One of the reasons I wanted to roll it out is have the public say '10 cents! Oh my God!'" Clibborn said. "So now we're tempering our conversation around 'What can you really do?"

The public reaction may have brought the talk back to earth in Clibborn's view, but it was clear that Republicans see it differently.

Rep. Ed Orcutt, R-Kalama, said the reaction from his constituents has been, "Oh my God, no!"

Supreme Court delivers 'sharp rebuke' to voters on tax limit

Yes. Yes. Yes. Yes. Yes.

Five times, Washington voters gave their approval to measures requiring a two-thirds vote of the state Legislature to raise taxes.

One time, a majority of nine state Supreme Court justices said "no," issuing a 6-3 ruling today that overturns Initiative 1053, the two-thirds tax measure that voters approved by nearly 64 percent in 2010.

And that's the opinion that prevails, at least for now.

The irony in the decision was not lost on Justice James Johnson who wrote in his dissenting opinion that the court's majority members claimed a "fear of tyrannical minority control" as a result of the two-thirds threshold.

And yet through a single decision, "a court of nine people (actually only six votes) is imposing their policy preferences over that of the 1,575,655 voters who passed Initiative 1053 and the millions who qualified and passed similar tax protections."

If the irony is noteworthy, so too is the fact that the court decided even to take up the issue.

Justice Charles Johnson observed in his written dissent that by doing so, the court had abandoned its longheld practice of staying above the political fray.

Video Rewind: Rodney Tom, Ann Rivers and Richard DeBolt

Last week, our weekly Lobby Lunch series featured Senate Majority Leader Rodney Tom, D-Medina, Sen. Ann Rivers, R-La Center, and Rep. Richard DeBolt, R-Chehalis.

Transportation figured prominently in the discussion, which came the day after Rep. Judy Clibborn, D-Mercer Island, unveiled a $10 billion transportation funding proposal.

Also, as noted in a previous blog post, Tom suggested that Gov. Jay Inslee's choice to lead the state Department of Transportation may encounter a difficult confirmation hearing.

Here are some video highlights of the rest of the meeting, starting with DeBolt's observations about the 2013 session so far -- a session that he believes sees a "chasm of philosophies" in the House of Representatives that's as deep as he's ever seen.

#awbday13 rewind: issue panel videos

Thanks to all who took time out of their busy schedules to attend AWB's 2013 Legislative Day Wednesday in Olympia.

We were grateful to have the support of TVW, Washington state's very own public affairs television network, at this event. Their team joined us for two issue panels and the governor's luncheon keynote remarks. We also blogged these sessions, plus others throughout the day, so if you missed out on the trip to Olympia, you can get caught up on things online.

Transportation Panel (blog post here)

 

Tax & Fiscal Panel (blog post here)

 

Gov. Inslee Remarks to 2013 Better Workplace Awards Luncheon (blog post here)

 Other issue area panels (video not available):

• Legislative Leadership (blog post)
• Employment Law Panel (blog post)

Is workers' comp reform an endgame bargaining chip?

Don't rule it out.

That's coming from three legisaltors who should know: Sen. Steve Conway, D-Tacoma, Rep. Mike Sells, D-Everett and Rep. Mike Manweller, R-Ellensburg. The trio of lawmakers who serve on the Commerce and Labor committees in the Senate and House all conceeded today the very real possibility that key workers' reform bills may not be dealt with until the very end of session this year.Their remarks were delivered during the final policy panel of today's AWB Legislative Day in Olympia.

The panel was sponsored by Littler in Seattle and moderated by Littler's Doug Smith, chair of the AWB Employment Law Committee. (The chairwoman of the Senate Commerce & Labor Committee, Sen. Janea Holmquist Newbry, R-Moses Lake, was invited to attend but did not participate due to other legislative commitments.)

Sells, chair of the House committee, has seen many a legislative session come and go and understands the machinations of the legislative process as well as anyone.

"Workers' compensation reform will always come up and be an issue," said Sells. "I think transportation is a bigger issue this session. We need to be looking at higher education -- if we don't have trained workers, if we don't have strong middle class families, if we don't look at education funding, doing some of this other stuff is almost cosmetic," he said.

Legislative leaders talk taxes, regulation and cultural divide

There aren't enough votes in the state House of Representatives to consider a constitutional amendment requiring the Legislature to approve tax increases by at least a two-thirds vote, state Rep. Larry Springer said Wednesday.

Furthermore, Springer, D-Kirkland, told an audience at AWB's Legislative Day: "I think a supermajority is a really bad way to conduct business."

Springer's fellow legislative leader panelists Sen. Rodney Tom, D-Medina, leader of the Majority Coalition Caucus in the Senate, and Rep. Richard DeBolt, R-Chehalis, minority leader in the House of Representatives, take a different view on the issue.

But it doesn't matter. As Springer observed, the math doesn't add up, at least this year.

The math is different on some other issues this year, however, thanks to the shakeup that put the Majority Coalition Caucus in charge of the Senate.

Tom, one of two Democrats who broke ranks and joined with Republicans, emphasized one of the differences that's already been seen as a result of the coalition: The first bills to pass out of the Senate this year are a trio of workers' compensation bills.

Budget panel: Bipartisan spirit key to 105-day session

You can't say the budget voices in Olympia lack enthusiasm for their work. It's arriving at a consensus on the budget that's the challenge. 

Speaking before AWB's Legislative Day crowd, four legislators central to the state's budget writing process shared their views on the current challenges they face trying to bring their colleagues together around a budget this session.

State Sen. Andy Hill, R-Redmond, his Democratic colleague Sen. Jim Hargrove, D-Hoquiam, Rep. Gary Alexander, R-Olympia and Rep. Ross Hunter, D-Medina, served as panelists for today's AWB Tax & Fiscal Policy session, sponsored by Peterson Sullivan LLC. And while none could promise a tidy conclusion to things in 105 days, all four did offer some hints as to what drive them in their budget decisions.

Thanks to the leadership shuffle in the Senate with the new Majority Coalition Caucus, Hill now serves as the chair of the powerful Senate Ways & Means Committee  -- unseating his colleague Hargrove from the spot (for all of two weeks, Haragrove joked). For Hill, getting to "yes" on the budget by April is doable without a special session and it has to focus on outcomes rather than just funding programs.

"No one's really talking about the outputs and what we're buying," said Hill of previous budget processes. "When you 'fund' things, you get the money but you're not sure what you're buying.You're not really sure what you're going to get."

Hill said his work as Ways & Means chair is driven by four numbers:

• 0 - for the deficit he hopes to achieve after working on this budget in order to avoid another budget crisis next January; 
• 4 - the number of years for which the budget will be balanced. Last year, Washington lawmakers approved a measure requiring a four-year balanced budget, the first state in the nation to do so;
• 21 - representing their efforts to fund education (early learning, K-12 and higher ed) for the 21st century; and
• 105 - that magical number for completing the budget in the 105-day regular session.

Brunell: Washington slips in Best States ranking

Washington should be looking over its collective shoulder after studying the latest Forbes Best States for Business scorecard, AWB President Don Brunell writes in his weekly column.

For the third straight year, Utah ranked No. 1, while Washington slipped from seventh to 11th.

The trend is particularly worrisome because of the way Utah is winning the contest: It's luring aerospace companies -- including Boeing and Sedro-Woolley-based Janicki Industries -- to build new manufacturing plants.

All but one of the top 10 states in the Forbes ranking are right-to-work states, Brunell notes. And Washington is unlikely to become a right-to-work state.

But if the state is going to compete with states like Utah, lawmakers need to level the playing field by reducing Washington's regulatory burden.

"Competition for Washington's aerospace jobs will only intensify in the future," Brunell writes. "So state lawmakers shouldn't assume that, just because companies like Boeing and Janicki are here now, they will be here forever."

It's time to admit the obvious: Political will doesn't exist to pay for leave program

At this point, it doesn't make any sense to argue about the merits of state-mandated paid family leave for new parents.

The truth is that there is no money to pay for a program that lawmakers approved in 2007 without any idea about how or when it would be funded, and it's now obvious to all but its most stubborn supporters that it's time to take the law off the books.

The state Senate Committee on Commerce & Labor heard testimony Monday on a bill that would do exactly that.

Senate Bill 5159, sponsored by Sen. John Braun, R-Centralia, would simply repeal the unfunded, never-implemented family leave insurance program.

Braun told committee members that the idea for the program, which sought to give parents five weeks paid time off work to be with a new child, was the result of "good intentions," but added "we should stop fooling around with something we don't ever plan to properly fund."

Kris Tefft, AWB's general counsel and government affairs director for human resources, testified in support of the bill, saying the failure to fund the program was a de facto repeal.

"I think it's notable that the Legislature in 2007 lacked the political will to find a funding source or even an agency to implement this program," Tefft said.

Two years later, when the program was supposed to take effect, lawmakers "hit the snooze button," Tefft said, by delaying its start until 2011.

In 2011, still lacking the funding to implement the program, they hit the snooze button again.

Finally, with the release of Gov. Chris Gregoire's proposed 2013-15 budget, it appears, Tefft said, that lawmakers have "simply unplugged the alarm clock" until some later, unspecified date when they hope money will materialize.

Opponents of the bill shared heart-rending accounts of parents taking time off work to care for ill children. But the fact is, none of them actually benefited from the family leave program that's addressed in SB 5159 because it has never gone into effect.

There is literally no end to the number of things it would be nice to fund. Lawmakers must deal in reality - a reality in which, unfortunately, resources are not infinite.

More:

Crosscut: Family leave provokes fight in state Senate

KOMO News/Associated Press: Dueling bills introduced on paid family leave law

Brunell: California vs. Texas

California and Texas, two of the biggest kids on the block, have taken dramatically different approaches to attracting and retaining business over the last few decades, AWB President Don Brunell writes in his weekly column.

And their respective results offer lessons to Washington leaders about what to do -- and what not to do.

California, which once lured people and jobs by the millions thanks to its natural beauty, weather and a booming economy, has been in downward spiral since 1990.

High income taxes, oppressive regulations, high energy costs and high property taxes and labor costs have driven out businesses -- particularly manufacturers -- at an alarming rate. Since 1990, the state has lost 613,000 manufacturing jobs -- one-third of the state's manufacturing base.

Meanwhile, Texas has seen population growth at double the national rate thanks to lower taxes and less burdensome regulation. 

A 2012 survey by Chief Executive Magazine rated Texas No. 1 in the country for business, for the eighth consecutive year. California was rated the worst state for business.

The lesson is clear, Brunell writes. "By lowering the cost of doing business in Washington and easing the regulatory burden on employers, state officals can help existing businesses and attract new ones."

KIRO radio spots tell the story of business, AWB

 

Have you heard our new radio ads?

Judy Coovert and Lisa Janicki, two of Washington's most articulate and tireless ambassadors for business, are featured in a pair of spots currently running on KIRO 97.3 FM.

The ads are part of AWB's "We Mean Business" campaign, which seeks to build support for private employers and job-creation throughout Washington.

In one of the 60-second ads, veteran Seattle radio host Dori Monson talks with Coovert, co-owner of Printcom in Burien, about the disconnect between government and business, and how AWB brings business together to give employers a stronger voice in Olympia.

By themselves, each new regulation or tax might not seem like a big deal, Coovert says. "It's only" this much, or "it's only" that regulation.

"All of those 'it's onlys' add up to a sum total that makes it nearly impossible for small businesses to grow and create jobs," Coovert says.

Listen to the ad:

In the other spot, Janicki, chief financial officer of family-owned Janicki Industries, tells Monson about the toll that taxes and regulations take on the Skagit County manufacturer.

"The best thing our company can do is to hire more peole and pay their benefits," Janicki says. "Regulations and taxes reduce the number of people that we can hire."

Because Janicki and her colleagues don't have time to go back and forth to Olympia, she says they rely on AWB to be their voice.

Listen to the ad: 

The radio spots mark the latest in a series of "We Mean Business" ads that began with direct-mail post cards and first-person appeals in business news publications, and later expanded to include ads in Horizon and Alaska airlines' inflight magazines.

Each ad features a Washington business person telling their story about trying to survive and grow in a challenging business environment. A full list of the ads is available here. 

To find out more about contributing to our statewide media campaign to build greater support for Washington businesses and job creation, check out our "We Mean Business" page.

 

Employers urge Inslee to focus on four legislative priorities

Prioritize spending. Invest in education. Fund a statewide transportation investment plan. And make Washington more competitive with other states.

Those are the four most pressing issues facing state leaders during the 2013 legislative session, according to the leaders of three of the state's leading business organizations.

AWB, the Washington Roundtable and the Seattle Metropolitan Chamber of Commerce sent Gov.-elect Jay Inslee a letter last week laying out the legislative priorities, calling them the most urgent issues impacting economic growth and competitiveness.

Together, the three groups represent a diverse range of small, medium and large employers, all seeking an end to the sustained economic downturn.

"We believe these priorities are an integral part of what must be addressed this session as they are critical to job creation, quality of life and long-term economic recovery and growth," the letter states.

The leaders of the business groups pledged to work with lawmakers to:

• Prioritize spending: That means developing a sustainable biennial budget that prioritizes funding for services critical to economic recovery and growth.
• Invest in education: Employers hope to advance system-wide education reforms designed to increase overall student achievement, improve graduation rates and increase postsecondary participation and graduation. Washington ranks 37th in the nation for students graduation from high school, and 38th for the number of bachelor's degrees awarded per capita.
• Fund transportation: It's time for lawmakers to support a statewide transportation investment plan that funds the most critical maintenance, operations and preservation needs of our state highway system and completes projects underway in critical transportation corridors.
• Reduce cost: Lawmakers must take steps to foster a competitive business climate and encourage job creation. This includes retaining incentives, reducing duplicative or unnecessary regulations, and continuing to implement reforms in the workers' compensation and unemployment insurance systems.

Brunell: Focus is on private donors as need grows

Americans are a generous people, from the wealthiest 40 individuals who signed a "Giving Pledge" promising to give away at least half of their wealth to the local folks who quietly support the community, AWB President Don Brunell writes in his weekly column.

Unfortunately, the donations that come from small employers -- and often provide critical funding for local nonprofit organizations -- are now at risk of dwindling.

That's because President Obama's is proposing to reduce the federal income tax deduction that wealthy people receive for charitable gifts from 35 percent to 28 percent.

Many small business owners file their taxes as individuals, so they can end up being defined by the government as "wealthy," Brunell writes.

The proposal has sparked a firestorm of protest from charity managers, who fear it will undercut support for their programs at a time when the need is greater than ever.

"While the changes target 'the rich,' Brunell writes, "the greatest impact would fall on the poor."

Voters send loud and clear message on tax measure

It wasn't even close.

That was the first sentence in a blog entry we posted on this site in November, 2010, after voters approved a supermajority tax measure by a wide margin.

Two years later, with essentially the same measure on the ballot, the result was remarkably similar.

It wasn't even close.

Initiative 1185, the latest in a long series of measures requiring either a two-thirds vote of lawmakers or a vote of the people to raise taxes, was passing this morning with nearly 65 percent of the vote, a slightly higher margin than 2010's 63.75 percent victory for Initiative 1053.

State lawmakers, especially majority Democrats, complain that the supermajority requirement ties their hands and thwarts democracy.

But they should by this point have no doubt about the will of the people: Voters want the supermajority in place -- even voters in left-leaning King County, where I-1185 is leading with a comfortable 54.48 percent of the vote.

Opponents of the supermajority requirement -- consistently and resoundingly unable to win at the polls -- are not done fighting. They have taken the battle to the courts, where they are arguing its constitutionality. The case is pending before the state Supreme Court.

But no matter what the court decides, lawmakers cannot ignore the consistent, clear message of the voters.

They want a supermajority requirement. They don't think it should be easy to raise taxes.

Brunell: What are we doing to our kids?

The short-term consequences are bad enough.

If Congress fails to avert the so-called "fiscal cliff" by the end of the year, 6 million jobs will vanish over the next two years, driving the unemployment rate to nearly 12 percent, AWB President Don Brunell writes in his weekly column.

Some of the changes awaiting midnight Dec. 31 include the end of last year's temporary payroll tax cuts will end, resulting in a 2 percent tax increase for workers, the end of some usiness tax breaks, shifts in the alternative minimum tax will mean higher income taxes, the end of the Bush tax cuts from 2001-2003 and implementation of taxes to pay for Obamacare.

But the long-term consequences of America's debt addiction are even more troubling.

If you paid out one dollar every second, it would take 496,000 years to pay off our $16 trillion national debt, Brunell writes.

Our children and grandchildren will pay the consequences for our generation's irresponsibility

McMorris Rodgers, Herrera Beutler, Hastings and Reichert honored for strong support of manufacturing

The National Association of Manufacturers (NAM) honored four members of Washington's congressional delegation with the NAM Award for Manufacturing Legislative Excellence for their support of manufacturing in the 112th Congress.  They voted more than 70% of the time for improving the climate for manufacturing.

The NAM Award for Manufacturing Legislative Excellence honors members of Congress who demonstrate support for policies that enhance the ability of U.S. manufacturers to succeed in the global economy. In the 112th Congress, 296 senators and representatives earned this distinction.  They were the only four from Washington.

Congresswomen Jaime Herrera Beutler (R-3) and Cathy McMorris Rodgers (R-5) scored a perfect 100% on the 37 votes that manufacturers identified as key measures to bring manufacturing back in the United States.  Among those votes was streamlining regulations, an issue AWB members has identified as a key issue which the Washington State Legislature and new governor needs to address as well. 

Congressmen Doc Hasting (R-4), chair of the powerful House Natural Resources Committee, earned the award for his 97%, and Dave Reichert (R-8) was the other recipient for voting 86% of the time for increasing manufacturing and the family wage jobs and benefits which accompany manufacturing.  On the House side, the following 2012 did not receive above a 70% rating to qualify for the awards: Rick Larsen (D-2), 32%;  retiring Norm DIcks (D-6), 29%; Adam Smith (D-9), 24%; and Jim McDermott (D-7), 19%.

Jay Inslee (D-1) did not receive a score because he resigned on March 20 to run for governor.  That prompted a special election and Washington state will hold a special election in November to replace former U.S. Rep. Jay Inslee for just one month - an election expected to be confusing for voters, burdensome for candidates and costly for the state.  In 2010 when the last NAM voting record which measured Inslee was announced, he voted with manufacturers 39% of the time.

In the U.S. Senate there were 27 key NAM votes including one increasing taxes on small manfacturers and family-owned businesses.  Washington's two Democrats, Patty Murray and Maria Cantwell, had identical 41% scores.

The Association of Washington Business is out state's Chamber of Commerce and Manufacturing and Technology Association.  AWB was founded in 1904 and has 8,000 members across our state.

On November 28, AWB will sponsor its annual manufacturing summit where we will award our manufacturers of the year.  They keynote speaker is NAM President Jay Timmons.

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

 

Lieutenant governor candidates spar over spending, ethics

The final debate of the AWB Policy Summit began on a light note, with moderator Peter Callaghan noting the musical ties of incumbent Lt. Gov. Brad Owen, a Democrat, and his Republican challenger, Bill Finkbeiner.

Owen is the frontman in a band that plays in front of school children, while Finkbeiner recently released a music video with Nirvana co-founder Krist Novoselic.

"This is actually not a debate," Callaghan said. "This is Lieutenant Governor 2012: The Musical."

The debate later turned testy, though, when Finkbeiner made an issue of Owen's use of surplus campaign funds to pay for alcohol and lunch for his staff.

It drew an angry response from Owen, who said he bought alcohol to entertain officials guests at his home and he treated his staff to special meals as a reward.

"That's a legitimate use of surplus funds and he knows that," Owen said referring to Finkbeiner. He added, "Bill is making a big deal that some people used (surplus funds) for suits and fixing their car, but I didn't."

Luntz calls on business leaders to improve their message

 

How many of you believe you are better off now than your parents were at the same age? How many believe your children will be better off when they are the age you are now?

Pollster and communications expert Frank Luntz posed those questions to a room full of Washington employers Wednesday during the opening address of the 23rd annual AWB Policy Summit at Suncadia Resort.

A fair number of hands went up in response to the first question, but considerably fewer to the second question.

"Is that America?" Luntz said. "Is that the American dream? If the answer is yes, something is wrong."

Luntz spent the next 90 minutes challenging his audience to help change the direction of the country and the state by changing the words they use to communicate with employees and the public.

Brunell: For manufacturers, actions speak louder than words

In his latest column, AWB President Don Brunell takes notice of all the talk about manufacturing from Barack Obama and Mitt Romney -- the president even promised to create 4.5 million new jobs, with half them in manufacturing.

It makes sense -- manufacturing jobs tend to pay well. According to the National Association of Manufacturers, manufacturing employees earn an average $77,186 per year.

But employers need actions more than words.

So with that in mind, Brunell offers five things that the president and Congress can do to truly help manufacturing, starting with eliminating policies that put American companies at a competitive disadvantage with global competitors.

"Campaign promises are nice, but in the end, they are only words," Brunell writes.

Check out the full column for the other suggestions.

Supreme Court says gas-tax lawsuit can proceed without tribes

The Washington Supreme Court sided with a coalition of gas station owners Thursday, ruling that a lawsuit the group filed over compacts between the state and some American Indian tribes can move forward even though the tribes are not a party to the suit.

The coalition filed suit in Grays Harbor Superior Court in 2010, arguing that the compacts -- which require the state to refund 75 percent of taxes collected at tribe-owned gas stations -- are unconstitutional.

But state attorneys argued successfully to have the case dismissed, saying it couldn't move forward without the tribes -- and the tribes could not be named as defendants because they have sovereign immunity.

AWB filed an amicus brief last year, urging the court to take up the case. The state, the brief argued, shouldn't be allowed to hide beyond the issue of tribal sovereignty.

"As representatives of one of the most taxed and regulated communities in Washington, AWB finds offensive the notion that state officers might act contrary to the constitution or contrary to state with respect to taxpayer money, but be insulated from any judicial check on that action simply because the illegality is with a sovereign entity within the state," wrote Kris Tefft, AWB's general counsel.

The court agreed, ruling 5-4 that the case should proceed.

"Sovereign immunity is meant to be raised as a shield by the tribe, not wielded as a sword by the State," Justice Debra Stephens wrote in the majority opinion.

The Washington Policy Center, which also filed amicus brief urging the court to review the case, blogs on the decision here.

Erik Smith at the Washington State Wire called the ruling a "major blow" to the deals that Gov. Chris Gregoire struck with the state's tribes.

The Associated Press covered the decision here, and The News Tribune's Jordan Schrader blogged on it here.

AWB files brief backing I-1053 supermajority to raise taxes

The Association of Washington Business filed a friend of the court brief Monday in support of Initiative 1053, the voter-approved measure requiring a two-thirds vote of the Legislature or a vote of the people to raise taxes.

The measure is under attack from an assortment of opponents who claim it prevented lawmakers from raising taxes during the 2011 legislation session in order to fund schools.

But the brief, written by Kris Tefft, AWB's general counsel, argues that neither I-1053 nor any of the three supermajority requirements that preceded it actually prevent lawmakers from raising taxes when there is sufficient support to do so.

In fact, lawmakers raised the very tax at issue in the I-1053 legal challenge with a two-thirds vote earlier this year.  

Instead, I-1053's opponents are merely "seeking an easier political environment in which to enact tax increases," the brief argues.

Three previous legal challenges have failed to overturn the right of the people to impose a supermajority requirement on the Legislature.

The Washington Supreme Court, which is scheduled to hear hear arguments next month on the latest challenge, should toss this one, as well, the brief argues.

In addition to calling out lawmakers for wanting an easier way to raise taxes, the brief highlights the tortured exchange on the House floor that was aimed at setting up the court challenge.

Opponents of I-1053 cite the failure of a specific piece of legislation, Substitute House Bill 2078, in their argument. But majority Democrats in the House were apparently more interested in orchestrating its failure than they were in making sure it passed, the brief argues.

"Rather than take actions that would have led to the passage of the measure, effort was instead invested in an elaborately choreographed set of colloquys preceding the floor vote, all evidently designed to tee up this specific legal dispute over the predestined failure of the measure," it states, adding that the website PubliCola confirmed that Democrats took the vote in order to set up the court challenge of I-1053.

"This is not a constitutional crisis," the brief states.

Oral arguments in the case are scheduled for Sept. 25, and it's on "expedited review," giving rise to speculation whether the court will render a decision prior to the Nov. 6 vote on Initiative 1185, whcih seeks to pick up where I-1053 left off, or prior to the start of the 2013 legislative session.

Jason Mercier of the Washington Policy Center blogs on the AWB brief here.

To view the orchestrated colloquy, click on the video below.

Governor, AG candidates meet on stage at AWB-GSI debates

Voters had their first chance Tuesday to see Washington's governor and attorney general hopefuls go head to head in a pair of debates sponsored by AWB and Greater Spokane Incorporated.

The first debate, between attorney general candidates Reagan Dunn, a Republican King County Councilman, and Bob Ferguson, a Democrat on the King County Council, was regarded by reporters as a lively contest.

Dunn emphasized his experience as a prosecutor, saying he was the only candidate with experience prosecuting criminals. Ferguson said Dunn frequently missed votes on the King County Council.

In the second debate of the day, Inslee and McKenna answered questions on everything from education and transportation to taxes and jobs.

The candidates agreed that more money should be spent on education, and they agreed that taxes shouldn't be raised to fund the increased spending.

But they disagreed on many other issues, including the federal health care law and whether the Legislature should need a two-thirds supermajority to raise taxes.

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."

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:

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.

Brunell: No more Band-Aids for the state budget

The small dose of good news that came out of last week's state revenue forecast doesn't change the long-term problem, AWB President Don Brunell writes in his weekly column.

As it is now, the state budget is unsustainable.

Without systemic changes, lawmakers will be dealing with growing budget deficits every year for years to come, something that Sen. Jim Kastama, D-Puyallup, illustrated in a video presentation.

Raising taxes isn't the solution. Even if legislators boost taxes by a billion dollars, the 2017 budget will still have a $4.4 billion deficit, Brunell writes.

Limping along and hoping the economy improves on its own isn't a good strategy, either, even though Washington has a long history of doing this.

The Seattle Times warns against "kicking the can down the road."

"Starting off $2 billion in the hole has become a usual thing with the Legislature," the paper writes. "It is the wrong thing to do."

The right thing to is to overhaul the budget and figure out how the state can live within its means.

"That's a real solution," Brunell writes," that will foster economic growth and create jobs."

Washington Business Week in Poland

Washington Business Week will be back in Poland for its fourth consecutive summer. Poland Business Week started as an outgrowth of the Seattle-Gdynia sister city relationship in 2008 and has now spread to three Poland cities--Gdynia, Gdansk and Boleslawowo. All are along the country's northern Baltic coast.

The Poland Business Week program has the strong backing of the U.S. Embassy in Warsaw as well as Boeing, Microsoft and several Polish businesses. Piotr Grodzki, founder of Speednet, a Gdynia based software company, has been deeply involved in the Poland Business Week program which last summer graduated over 250 Polish students and teachers.

Again this summer Washington business leaders, students and educators will serve as company advisers and mentors for the program. Those Washingtonians are all veterans of Washington Business Week.

Poland Business Week is also drawing international attention. Educators from Denmark and Italy came to Gdansk last summer to learn more about the program hatched at the Association of Washington Business in 1975.

Roadkill Caucus members say they've gained respect

The Roadkill Caucus has gained a measure of respect in the Legislature since flexing its muscle last year during the battle over workers' compensation reform.

They won the fight, helping to bring about legislation that immediately halted what had been a steep and steady rise in workers' comp insurance rates.

Now the loose-knit band of moderate Democrats is attempting to force their fellow lawmakers to quit over-spending and adopt serious budget reform.

But even with their growing influence, it won't be easy.

That was the message three members of the group -- Sen. Steve Hobbs, D-Lake Stevens, and Reps. Deb Eddy, D-Kirkland, and Christopher Hurst, D-Enumclaw -- delivered Thursday at AWB's weekly Lobby Lunch meeting.

It's not an easy task, in part because of the vague-sounding nature of budget stability.

But it was made even more difficult this week by the otherwise good news that Washington's caseload forecast declined and its revenue forecast ticked upward, if slightly, for the first time in ages.

Transportation plan all about tolls, biding time

Any thought of going to voters with a major gax tax proposal was scuttled early in the legislative session, leaving lawmakers to ponder more modest fee increases -- and begin laying the groundwork for something bigger in a few years.

That was the message delivered Thursday by the leaders of the House and Senate transportation committees during AWB's weekly Lobby Lunch meeting.

The foursome -- Sens. Mary Margaret Haugen, D-Camano Island, and Curtis King, R-Yakima, and Reps. Judy Clibborn, D-Mercer Island, and Mike Armstrong, R-Wenatchee -- emphasized how well they work together despite party differences.

"Transportation isn't partisan," Clibborn said.

And they called on business leaders to join with them in backing the next major transportation initiative.

Whatever it is likely won't come until 2014. It's not wise to run a gas tax proposal in an off-year election, Clibborn said.

Whenever it arrives, it will almost certainly include a gas tax component -- although Armstrong would like to look for other funding options.

Tax simplification hearing shows cities would rather kill bill than compromise

Sen. Ed Murray said he was led to believe the two sides fighting over a plan to streamline collection of state and local business and occupation taxes were coming together.

That's why Murray, chairman of the Senate Ways & Means Committee, scheduled a last-minute hearing Tuesday on a substitute version of Senate Bill 6176, the governor's proposal to make the state the central collection point for B&O taxes.

But the sign-up sheets in the committee hearing room suggested otherwise, Murray, D-Seattle, said at the start of the hearing.

And the testimony from representatives of several cities confirmed it.

"I don't think we are anywhere near a good relationship," Seattle City Councilember Richard Conlin said when Murray pressed him about the nature of the negotiations.

Testimony from Randy Lewis, the Westport city administrator, further confirmed that the cities are more interested in stopping the legislation than they are in making it easier for small businesses to pay their B&O taxes -- regardless of what they may be telling lawmakers in private conversations.

"This bill takes away local control of our tax system," Lewis said -- incorrectly.

Brunell: When it comes to taxes, keep it simple

For Washington employers, paying taxes can seem like playing a game with 50 different sets of rules, AWB President Don Brunell writes in his weekly column.

It's anything but simple.

Gov. Chris Gregoire is trying to make it a little less complicated. The governor wants to make the state the single collector of all local and state business and occupation taxes, similar to how the state currently handles state and local sales taxes.

Some cities are pushing back against the governor's proposal saying they will lose money as a result, but Brunell notes that Gregoire is rejecting their claims.

"These horror stories of how they're losing money? No They're not," Gregoire said.

"If we ever need a reform that helps business," Gregoire said, "this is it."

Welcome to the first day of session, Hewitt says, on Day 25

Now that the state Senate has voted to legalize same-sex marriage, maybe lawmakers will turn their attention to balancing the budget.

That's clearly the hope of Sen. Mike Hewitt, R-Walla Walla, who began his remarks Thursday at AWB's  Lobby Lunch meeting by welcoming everyone "to the first day of session!"

In fact, lawmakers are now four weeks into the session -- seven weeks if you count last year's second special session -- and there has been "very little movement on the budget whatsoever," Hewitt said.

Other issues, he said, have "totally taken time away from what we need to do in a short, 60-day session."

The lunch meeting not only followed the Senate vote on same-sex marriage, but it also coincided with the release of the House Republican caucus's education budget.

Rep. Richard DeBolt, who joined Hewitt and Rep. Joel Kretz, R-Wauconda, at the meeting, said that after years of proposing a separate, stand-alone education budget and getting nowhere, he's pleased to see it finally get a hearing in committee.

Lawmakers say they can work on budget and chew gum

Sen. David Frockt and Rep. Larry Springer said Thursday that lawmakers are making progress toward balancing the state budget, despite charges from critics that they've been distracted by other issues such as abortion and same-sex marriage.

Most of the work is occurring behind closed doors at this stage of the 60-day session. But the legislators told AWB's weekly Lobby Lunch meeting that budget writers in both the House and Senate are hard at work.

"Not to be flip, but we actually work on a lot of things," said Springer, D-Kirkland. "We're all segmented. I think it's a misplaced concern to worry about that. Whether we are making significant progress on the budget sort of depends on who you ask, but I can tell you it's not for lack of trying."

Producing the budget will be especially hard this year because all the cutting in previous years leaves lawmakers with no easy choices, Springer said. Even so, the House is committed to producing a balanced budget that does not anticipate any new revenue, he said.

In other words, they won't make cuts with the expectation that programs will be restored later through a voter-approved sales tax hike, as Gov. Chris Gregoire has proposed, or some other plan that emerges from the Legislature.

"You have to assume that a revenue package will not pass," Springer said.

President's State of Union speech didn't address economic growth to create jobs or excessive regulations costing jobs

The fallout from Tuesday's State of the Union address continues. Tom Dononhue, president of the U.S. Chamber of Commerce, told the Fox Business channel it was a political speech "full of taxes and taxes, regulations and regulations, stimulus and stimulus. It doesn't address the two fundamental questions at hand and that is how do we drive growth into the United States to the extent that, number two, it creates jobs?"

"I heard a lot about how we were going to regulate things, how we were going to constrain things, how we were going to tax issues. But I didn't hear anybody say 'and here's what we're going to do to move forward, to liberate the free enterprise system in this country to put people back to work.' It was all about what government was going to do and what the president was going to do with the arm of government to see what he could do to put people back to work. But that's not gonna help," Donohue concluded.

Jay Timmons, president of the National Association of Manufacturers, responded: "The President deserves credit for highlighting manufacturing on a national stage, but presidential leadership requires more than speeches. President Obama had a chance to set a bold manufacturing agenda in motion, and he missed it."

"On regulations, for example, the President touted his Administration’s efforts to rein in some regulatory excesses and costs—$10 billion in savings over the next five years. But, Boiler MACT, Utility MACT, Cement MACT and the Cross-State Air Pollution Rule, to name just a few of this Administration’s rules, would impose costs that dwarf the savings highlighted by the President.

"And on labor, the President never mentioned the aggressive actions that the National Labor Relations Board took in the past year. If President Obama wants manufacturing to lead the economy, federal agencies cannot swoop in and tell manufacturers where they can do business."

Timmons concluded: "It’s 20 percent more expensive to manufacture in the United States than it is among our major trading partners — even after excluding the cost of labor. The best way to create an environment to increase manufacturing employment in America is to lower the cost of doing business through pro-growth tax rates, sensible legal policy, reasonable regulations and affordable and secure energy supplies."

The Association of Washington Business is Washington's state chamber of commerce and manufacturing and technology association as recognized by the U.S. Chamber of Commerce and National Association of Manufacturers, respectively.

Gregoire's staff lays out governor's final session agenda

Snow and ice did not deter the governor -- or rather, the governor's fiscal and policy leaders -- from kicking off AWB's 2012 Lobby Lunch series last week. 

Joining AWB members for lunch in Olympia last Thursday were Gov. Chris Gregoire's budget director, Marty Brown, and her legislative director, Jim Justin.

Brown, a longtime fixture in Olympia politics, did not mince words about the gravity of the challenge before lawmakers this session. While Brown believes the next revenue forecast will likely not be significantly different, caseload numbers are likely to shuffle the internal workings of putting together the supplemental budget. (State caseload figures are due out Feb. 10; the revenue forecast follows on Feb. 16.)

"This is tough. There is not an easy path to get this stuff done," said Brown. "There's a lot of uncertainty -- not so much in Washington state but...in the world economy. And our economy is not necessarily dependent on those things, but the consumer confidence that occurs with changes in Europe, activities of Congress, really is a key to our recovery."

Businesses are not back to full speed yet, Brown said, and any economic gains made through private sector hires are being offset by cuts in state and local governments.

"I don't see a real turn around, I don't see a real quick decision-making process here," Brown said, "but I also don't think [lawmakers] are going to stay long, either."

Given the legislative landscape, Justin characterized Gregoire's final policy agenda as a "fairly aggressive, broad" list of proposals for a 60-day session, offering thumbnail sketches of the governor's priority legislationn. The package includes 17 bills, though three of the six aerospace bills, Justin noted, were passed during the December 2011 special session.

Gregoire asks business for help with tax simplification, education reform

Gov. Chris Gregoire called on the business community Tuesday to help pass her final legislative agenda, which includes an element designed to help small businesses: tax simplification.

Gregoire flatly disputed claims from the state's largest cities that they will lose millions of dollars in revenue if the state takes over collection of business and occupation taxes, comparing her proposal to the sales tax.

The state currently collects sales taxes and apportions money to local governments.

"These horror stories of how they're losing money? No they're not," Gregoire said. "We will give it back," she said, adding "I think it's the right thing to do for the small businesses of the state of Washington."

Gregoire also asked business leaders to support her proposed half-cent sales tax hike and to help persuade lawmakers to pass her education reform agenda, which she called a prerequisite for raising taxes. And she highlighted one way that her administration trying to lessen the regulatory burden imposed on business.

All-cuts budget will come first, then talk of new revenue

Partisan divide was clearly on display as AWB's annual Legislative Day began this morning in Olympia. Members of the first panel, Tax & Fiscal Policy, agreed that lawmakers in Olympia will produce a balanced budget that does not include new taxes.

But once they have done that, the talk will turn to taxes. And the disagreements will begin in earnest.

Sen. Joe Zarelli, R-Ridgefield, one of four panelists, began by noting that the recession isn't the only reason the state finds itself in a budget hole. Years of overspending also contributed to the problem, he said.

He also reminded the audience that despite the dire straits the state budget is in, there is actually more money than there was in the last biennium.

"It's very important that we balance the budget, as difficult as it may seem to some, within available revenue," Zarelli said.

Sen. Kastama makes the case for a sustainable budget

Cutting programs and raising taxes might solve the state's immediate budget crisis, but it won't do anything to address the long-term problem.

Namely, expenses are rising faster than income.

Sen. Jim Kastama, D-Puyallup, explains the situation and -- and offers some solutions -- in a video to constituents. It's one of the best explanations we've seen for the state's seemingly never-ending budget woes.

He proposes eliminating some programs that have yet to be funded, addressing health care costs and making government more efficient. Whether or not you like those ideas, he makes a compelling case for doing something different.

"Even if we pass more taxes or make the cuts this year, the long-term projection in the state budget basically has to be dealt with, or else we will be in deficits every single year for the next five years," Kastama said.

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."

Brunell: Good news, bad news about cars

Today's cars are safer, more fuel-efficient and emit fewer greenhouse gases than ever before. That's the good news, AWB President Don Brunell writes in his weekly column.

The bad news is that the state's highway system has relied for decades on gas taxes to pay for construction and maintenance.

When cars got 10 or 12 miles per gallon, there was plenty of money to pay for projects, Brunell writes. But now that they're more efficient, they use less gas -- so there is less coming in to pay for highway projects.

And the problem will only grow as alternative fuel vehicles become more popular.

So what's the answer?

First, alternative fuel vehicles must pay their fair share. Tolls and special HOT (high occupancy tolls) lanes must also be part of the equation. Finally, transit schedules need to be adjusted so that buses and ferries no longer run at times when they are virtually empty.

"The good news is we have the technology," Brunell writes. "The bad news is we take too long to study, approve and build anything."

Gregoire lays out $2 billion in possible cuts, kicking off difficult budget debate

Gov. Chris Gregoire introduced a list of possible state budget cuts Thursday totaling a little more than $4 billion, including some $2 billion that she has tentatively chosen to include in her upcoming supplemental budget proposal.

They range from eliminating the Basic Health Plan and the Disability Lifeline medical program to cutting 15 percent from higher education and increasing class size by two students in Grades 4 through 12.

Gregoire made it clear she didn't like any of the options, but she also said lawmakers are running out of choices. The $2 billion in needed cuts must come from just $8.7 billion of the state's total $32 billion budget, Gregoire said, echoing what she told AWB members last month at our Policy Summit.

Critics attacked the governor's proposal, saying it should have included options for new taxes in addition to proposed cuts. Gregoire said she will turn her attention to revenue next, but she correctly noted that despite showing some signs of life, consumers and businesses both remain nervous about the economy.

"We need to restore consumer confidence in our state so people will spend," she said. "We need to restore business confidence so they will hire."