Olympia Business Watch

Will Seattle's Bag Fee Sack WA Jobs?

In the debate over paper or plastic grocery bags, have we forgotten about jobs?

(Specifically, jobs in Washington state?)

In today's News Tribune, columnist Peter Callaghan beautifully illustrates the complicated politics of what seems like a very simple question:

Some outside the center of the universe known as Seattle have likely chalked it up to those wacky lefties. But I wonder if the folks on Elliot Bay realize that in adopting a 20-cent fee on paper and plastic bags they are taking an economic shot at rural Washington, where lots of people get paid for growing trees and making paper.

The benefit of those jobs ripples through the economies in the Olympic Peninsula, in southwest Washington and parts of Eastern Washington. But those jobs are in decline, and many who live there feel under assault, not just from economic changes but from political ones.

The new ban in Seattle will take effect in January. Shoppers at grocery, drug and convenience stores will pay 20 cents for each "disposable" bag, whether it's paper or plastic.

AWB Files Legal Brief in Brown v. Owen Lawsuit

This afternoon, AWB filed an amicus curiae ("friend of the court") brief in Brown v. Owen, the lawsuit by Senator Majority Leader Lisa Brown challenging the constitutionality of the provision of Initiative 601 that requires a supermajority vote of both houses of the Legislature to raise taxes.  From the brief's intro:

AWB makes this short amicus submission to add an additional dimension to respondent’s separation of powers argument, contending that the petition raises essentially a political question that the court, as a matter of prudence and restraint, should decline to reach. Should the court reach the merits and grant the writ, it would in essence absolve a coordinate and co-equal branch of government from the difficult political and policy choices it must confront under RCW 43.135.035(1) by invalidating the statute under the same constitutional principle – majority rule – that the Legislature may itself use at any time (and has used in the past) to avoid the statute’s procedural requirements. The court should refrain from granting a single member of a single political caucus of a single chamber of the Legislature the extraordinary relief of striking down an enhanced procedural requirement the full Legislature has chosen for itself when the full Legislature could, by its own authority and through its own processes, loose the binds of that requirement at any time. 

The rest can be read here.  The Supreme Court takes up the case on September 9th.

(Cross-posted at WashACE.com)

               

Following the Money

The federal government has completed its mail out of those economic stimulus checks to more than 130 million households, but testimony given before Congress last week by the National Retail Federation suggests the cash didn't make it past the local grocery store or gas station: According to this story: 

"Results are better than they would have been if Congress had not enacted the tax rebates," an executive from the National Retail Federation told a congressional hearing. "But consumer spending remains subdued because of the stresses of declining home values, escalating fuel and food costs, increasing unemployment and weak financial markets. We believe that a compelling case can be made for providing additional economic stimulus legislation."

Polling information by the NRF suggests that consumers who received their rebate checks spent 42.9% of it, "but that nearly half of the money spent had gone to gasoline (9.7%) or necessities such as groceries (10.4%)." Clothing and apparel, the next-largest category, got a scant 3.3% of the money. Survey respondents said 25.2% of their checks went to pay off debt and 17.1% went into savings.

Court of Appeals Misses on Municipal Tax Uniformity

Division I of the state Court of Appeals has released its decision in Group Health Cooperative v. City of Seattle, a municipal B&O tax case in which AWB submitted an amicus curiae brief.  The taxpayer actually prevailed for the most part in the case but it was an underlying issue that interested us -- the first precedential interpretation of the remedy provision of 2003's landmark municipal tax fairness legislation, EHB 2030. 

Here's what we wrote about EHB 2030 in 2003:

AWB’s tenacious six year effort to bring municipal tax fairness to Washington has finally paid off! EHB 2030 was signed into law by Gov. Gary Locke in early April. The signing of EHB 2030 marks the end of confusing local B&O tax codes, the elimination of the potential for double taxation and the preservation of the rules of fair tax treatment. Soon business taxpayers will be on the receiving end of a long-awaited, model B&O tax ordinance that creates uniformity, certainty, predictability and fairness in local taxation. Introduced by Rep. Lynn Kessler (D-Hoquiam), EHB 2030 ends differing interpretations of tax laws from the state to local level and from city to city. Thanks to this legislation, businesses that operate in multiple cities will no longer be forced to pay double or triple taxes on the same revenue. A long time priority of AWB, the Governor’s Competitiveness Council and the Gates Tax Study Commission is now a reality.

This bill, an executive request bill from then-Governor Gary Locke and Competitiveness Council priority, was enacted over the strenuous opposition of the cities.  One reason?  Section 14 of the bill, or RCW 35.102.140, provided a strong incentive for cities to come into compliance with the uniformity requirement:

A city that has not complied with the requirements of sections 2 through 13 of this act by December 31, 2004, may not impose a tax that is imposed by a city on the privilege of engaging in business activities.

In other words, comply with this law or lose the legislative authorization to impose a B&O tax while out of compliance.  In this case, it was pretty clear the City of Seattle was not complying with one of the provisions of the law relating to refund calculation -- in fact, an e-mail from the city's tax manager obtained through a public records request showed the city was actively thumbing its nose at the 2003 law.

Nevertheless, on this point, the Court of Appeals decided the Legislature couldn't have possibly meant such a draconian remedy for non-compliant cities:

While it is true that the legislative history supports the conclusion that the legislature intended the requirements of [EHB 2030] to be mandatory for cities imposing B&O taxes, there is nothing whatsoever in the legislative history suggesting that the legislature's objective was to impose a retroactive B&O tax revenue "death penalty" on municipalities found to have unwittingly enacted provisions of the model ordinance that were drafted in such a manner so as to be inconsistent with the statute.

Of course it isn't so much the Legislative history as the text of the law itself ("A city that has not complied . . . may not impose a tax . . .") where the Legislature's objective was clear -- and since we helped draft the statute, we felt pretty confident on this point. 

But, this decision is another reminder -- like last month's unemployment insurance decision from the Supreme Court repudiating another major 2003 enactment -- that what seems so clear before the Legislature often looks completely different through the prism of the judiciary.   

 

Is the SEIU Initiative in Trouble?

David Seago at The News Tribune thinks so. Seago, writing last week, noted that opponents wanted the initiatives tossed because of misleading language.

The Community Care Coalition, an industry group, urged Reed by letter to reject the SEIU petitions because they describe the initiative as an initiative to the people, which would require a statewide vote in November. But the text of the initiative calls it an initiative to the Legislature, which means the measure would first go to the 2009 Legislature, and then to the ballot if lawmakers fail to approve it.

Ask yourself what would happen if Tim Eyman were to make a similar gaffe.

Here's Seago's take, with a nice link to Political Buzz:

In an earlier Political Buzz blog post, a spokesman for the secretary of state's office said he thought the office would accept the petitions because he didn't think it was a big mistake.

I think it is a fundamental mistake...

I think so, too. And the folks at the Evergreen Freedom Foundation share their thoughts here.

Two Initiatives May Deepen Budget Hole

Credit to Chris Mulick of the Tri-Cities Herald for bringing to light the effects Initiatives 985 and 1029 could have on the state's $2.7 billion budget hole. Both initiatives apparently gathered the required number of signatures for the fall ballot. If both should pass, the budget problems worsen, with the deficit expected to exceed $3 billion. Here's how Mulick reports it.

Preliminary estimates from the Department of Revenue indicate that professional initiative promoter Tim Eyman’s traffic congestion measure – Initiative 985 –would cost the state about $290 million during the next two-year budget cycle and the rest of the current one.

And the campaign for Initiative 1029, a home-care worker training measure backed by the powerful Service Employees International Union, believes its measure would cost at least $23 million during that time. That number’s based on a nonpartisan analysis of similar measures before the Legislature this year.

Tim Eyman was quick out of the blocks this morning with an email arguing that I-985 would be good for the state's economy.

Nothing slows down our economy more than traffic congestion.  Nothing would boost our economy more than reducing traffic congestion.  State Auditor Brian Sonntag's performance audit report on transportation confirms that implementing his recommendations will result in a $3 billion boost to our state's economy.    

I-985 will boost our state's economy both by the implementation of its policies and by illustrating the public's support for making reducing traffic congestion the top transportation priority.

Stopping short of claiming that their initiative will be a boon to the economy, SEIU argues that, well, it's about more than the money. From Mulick's story:

Worries about its costs don’t stand up to its benefits, campaign manager Jeff Parsons said.

“How can we not afford to take care of our seniors?” he asked. “They need to have the best care we as citizens of the state of Washington can afford to give them.”

It's early days yet. And more analyses of the initiatives will be available before the election. It is safe to say, however, that it is about the money. (cross posted at WashACE.com)

"Changes" You Can Believe In?

Sometimes policy discourse can include a euphemism so apparently political that one has to simply stop and gawk.  So it is with yesterday's Senate Ways & Means memo showing the now $2.7 billion budget gap that Richard Davis highlighted here. 

As they have done in past, it is anticipated that the Governor and the Legislature will
use available reserves and implement spending reductions and/or revenue changes.

Revenue "changes"?

 

Senate Ways and Means Committee Budget Outlook: Now a $2.7 B Shortfall

A new outlook from the Senate Ways and Means Committee shows the effects of the June revenue forecast.  As expected, the hole has deepened to about $2.7 billion.

Ways and Means staff explain their forecast this way:

[It) generally reflects the assumption that future revenue and spending
corresponds to historical trends. However, due to the complexity and potential
volatility surrounding the state's economy and factors impacting state expenditures,
this estimate should be seen as a baseline estimate to inform the Legislature and the
Governor of the current budget outlook and aid in longer term fiscal planning.

As they have done in past, it is anticipated that the Governor and the Legislature will
use available reserves and implement spending reductions and/or revenue changes
to balance the 2009-11 budget.

I'd like to see a little more talk now about those "spending reductions and/or revenue changes."

Talking Taxes - About Average Burden ... and More

The revenue department's recent release of the annual fComparative State/Local Taxes data book gave the Spokesman-Review's Rich Roesler plenty of fodder for a good tax story today. The department relies on Census Data for interstate comparisons. That's generally considered the safest, most reliable source, but it has one large disadvantage: There's a substantial time lag. The new report covers 2006 tax collections, before the recessionary slide.

Roesler gets to the bottom line in a hurry.

...total state and local taxes in Washington are actually a bit below the national average. When taxes are weighed against personal income, Washington came in 28th highest among the states. Idaho came in 29th. (All the numbers are from 2006 data.)

... To be sure, there are some wince-inducing standouts: Washington's high gas tax, for example. The liquor tax is among the highest in the nation and, at about $2.03 per pack, Washington has the fourth-highest cigarette tax.

But the data suggests that even the state's property taxes compared to average income are relatively modest: Washington ranks 29th on that measure. Idaho was 30th.

New WashACE Brief Looks at Budget Gap

A new WashACE brief examines the impact of the latest revenue forecast on the state budget.