Olympia Business Watch

SEIU's OTHER Initiative -- Cripple State Pension Returns

From Brad Shannon at The Olympian: 

The Service Employees International Union filed a citizen initiative to the Legislature on Thursday that could limit the state's investment in major private equity companies, specifically those getting questionable tax breaks or with poor records of treating workers and the environment.

Two things are notable here:  First, apparently SEIU really can distinguish between an initiative to the Legislature and an initiative to the people.

Secondly, this idea would, as the State Investment Board points out, have a major detrimental effect on the investment strategies of the state and its effect on the beneficiaries of those investments as well as the taxpayers who would otherwise have to pony up to backfill the state's obligations.

SIB executive director Joe Dear said the initiative is troubling and would "destroy our ability to invest in our highest-returning asset class. If it's approved, it will cost taxpayers and beneficiaries millions in higher taxes and contributions."

...

The SIB would be authorized to take into account "additional investment risks posed by lack of transparency, poor employment practices, environmental impacts, and other indicators of irresponsible corporate behavior," the text of the measure says.

But Dear said, "No private equity firm that we want to  do business with will do business with us under these terms."

That would harm pensioners, he said, because $13.9 billion of the pension system's $62.2 billion is invested in private equity, which has returned 12.6 percent over the past decade compared with about 7.9 percent for pension holdings as a whole.

Apparently SEIU is serious about the initiative, and Shannon perhaps unintentionally saves the best line for last:

Cook said SEIU is serious about pushing the measure.

"You've seen us run initiatives. We'll spend whatever it costs," she said.

Indeed.

Rethink the I-1029 Petitions, Says the PI

We've been following, here and here, the ongoing kerfuffle over the legitimacy of SEIU's I-1029 petitions.  This morning the Seattle P-I editorial page agrees that Secretary of State Sam Reed ought to rethink the position he's taken on these "egregiously mislabeled" initiative petitions.

More on I-1029

This morning at our Governmental Affairs Council retreat at Alderbrook, AWB members heard a short presentation on the merits, as well as the legal shortcomings, of the I-1029 initiative from a representative of one of the members of the Community Care Coalition.  In the latter regard, it appears evident this group will justifiably challenge Secretary of State Sam Reed's peculiar decision to process I-1029 as an initiative to the people when the petitions direct him on their face to submit the measure to the Legislature. 

We touched upon all of this yesterday, here.  In comment to that post, Tim Eyman also directs attention to the reliably sensible editorial page of the Tacoma News Tribune, where it leads off today with the question "Are Washingtonians smart? Or are they dumb?"  As in, with respect to what they sign when they're asked for a signature on a petition to government. 

Realizing the SEIU's mistake means there's going to be an error one way or the other, the Tribune concludes with the key point:

As secretary of state, Reed may have the legal discretion to do what he did – though that’s likely to be challenged in court. The bigger issue is how much credit to give the voters who lent their signatures to it. Supporters of I-1029 are essentially saying that virtually all 300,000 missed the critical “to the Legislature” language and ought to be given an initiative to the people instead.

But that’s giving their inattention the benefit of the doubt. If their carefulness were given the benefit of the doubt, I-1029 would be headed for the 2009 Legislature, not the 2008 ballot.

What to do with the I-1029 Petitions?

Competing views on what to do with the legally defective I-1029 petitions today from Dick Davis's syndicated column and the Seattle Times editorial page. 

Quick background: I-1029, the local Service Employees International Union's initiative to require certification and more training of long-term care workers (and, one imagines, some how, some way, some day mint more SEIU members from which union dues can be extracted) was filed, numbered, and processed as an initiative to the people for the fall ballot.  But the actual petitions prepared by SEIU, signed by voters, and turned in earlier this month uses the statutory formula for an initiative to the Legislature, a constitutionally distinct species of direct democracy.    

Secretary of State Sam Reed, later aided by the Attorney General's office, has taken an Alfred E Neuman approach to the misstep.  He's decided to process the initiative for the fall ballot, thus choosing to ignore the directive of the petitioners themselves and instead honor SEIU's presumed intent in filing the initiative.  I-1029 opponents, the Community Care Coalition, have rightly called foul, and appear ready to seek a judicial remedy.  Lastly, initiative metaphysician Tim Eyman has weighed in to propose a via media -- don't reject the petitions outright, and don't put the thing on the ballot,  but rather effectuate the will of the petitioners as evidenced by the clear language of the petitions -- send the matter to the Legislature.

All of which Dick's piece nicely explores.  And that is a stark contrast to the Times' effort, which it seems misunderstands or brushes aside the structure, function, and purpose of any petition to the government, the importance of the distinction between initiatives to the people vs. to the Legislature, the statutory formalities that initiative petitions must contain, and the nature of the error here.  Calling the use of the statutory form for a petition to the Legislature a "minor mistake," the Times concludes the error "was not important enough to nullify 300,000 signatures."   

But there's the rub.  300,000 (or more likely, 240-250,000 valid) signatures are on a petition to the Legislature regardless of how the sponsors filed the measure back in March.  Reed's current trajectory ironically does nullify those 300,000 signatures because it takes an action contrary to their express directive.  It honors SEIU's presumed intent as sponsor, excuses the union's apparent printing mishap, and assumes the voters were ignorant or mistaken in signing the petition.      

Either way, handling I-1029 will involve tolerance for irregularity.  If Reed is forced by court order to submit the initiative to the Legislature, that will be contrary to its sponsor's affidavit and the measure would bear a way-off serial number (were this correctly filed as an initiative to the Legislature, it would have likely been called I-409).  But it seems to me those irregularities have less gravity than assuming voters didn't know, or didn't care, about the plain language of what they were signing, a position which effectively removes them from the constitutional equation and reduces them to mere cogs in a sponsor's signature-harvesting combine.

Davis, Eyman, and the Community Care Coalition have touched upon the better argument here.

State Supreme Court Looks at Wind Farm Case

Yesterday afternoon, my colleague Chris McCabe and I took in oral arguments at the Temple of Justice in Residents Opposed to Kittitas Turbines v. the Energy Facility Site Evaluation Council.  The case involves the effort to site a wind farm in the Kittitas Valley between Cle Elum and Ellensburg in response to Washington's mounting push toward alternative energy sources.  The AP briefly noted yesterday's arguments here. 

Some neighboring landowners object to the project on what appear to be mostly aesthetic grounds, and have appealed to stop the project.  Kittitas County objected to the state siting scheme which would preempt its local zoning and land use ordinances, and  appealed to stop the project.   But because of the strong push in our state energy policy toward renewable and alternative energy sources (with I-937's unfortunate statutory exclusion of hydropower as a renewable resource), AWB has vigorously supported the project through the EFSEC and gubernatorial approval process.

And so AWB, joined by the Northwest & Intermountain Power Producers Council, filed an amicus curiae ("friend of the court") brief in this case which can be read here. 

Much of yesterday's argument appeared to turn on the justice's interest in whether the Supreme Court actually had jurisdiction to hear the appeal or whether the case had to proceed through a lower court first.  This important but seemingly arcane issue somewhat obscured interest in the bottom line that AWB put forward in its amicus brief:

Energy developers are already anxiously awaiting the outcome of this case as an indicator of the regulatory climate for future energy investment in Washington.

That is, with the clear public policy push toward renewables, will the regulatory process to site new facilities be fast, fair, expedited, and efficient, or will it be, like all too many land use processes, slow, cumbersome, and litigious?

Brunell: Supreme Court Takes Union "Neutrality" off the Table

AWB President Don Brunell's column today in the Vancouver Columbian expands upon the US Supreme Court's June 19th decision invalidating California's restriction on employer communications about labor unions, something we blogged about here.

The bottom line is the significance of the decision here in Washington State:

The high court’s ruling should be the final stake in the heart of a similar union-backed proposal here in Washington. Democratic Gov. Chris Gregoire took the issue off the table last legislative session pending the outcome of the California case.

...

Unions in our state are expected to launch a campaign between now and the 2009 legislation session to convince legislators that their proposal is different than California’s debunked law. But lawmakers should not waste their time or taxpayers’ money on this proposal. The Supreme Court’s decision has clearly put an end to Washington’s employer gag rule.

WSJ on Yesterday's Supreme Court Decision on Union Neutrality

A nice piece on the WSJ editorial page today about yesterday's victory for employer free speech, striking down California's attempt to prohibit employers doing business with the state from engaging in communications with workers about labor union matters.  The Journal's bottom line:

At least 20 other states have rules similar to California's on the books or plans to pass them. Chamber of Commerce v. Brown should shut down such antibusiness targeting, and the U.S. will be fairer for it.

US Supreme Court Strikes Down Cali Union Neutrality Law

On a morning when our own state Supreme Court got it badly wrong on an important employment case, good news from the other Washington: the US Supreme Court struck down, 7-2, a California law imposing union neutrality requirements on employers doing business with the state. 

This long awaited decision, Chamber of Commerce v. Brown, ought to tamp down the top legislative priority of unions here in Washington to establish a broader prohibition on employer speech than what even California envisioned.   Indeed, Governor Gregoire cited the pending decision of the court in this case as the primary reason for asking the labor side to withdraw its bill in 2008.

Writing for the majority, Justice John Paul Stevens -- conventionally thought to be the most liberal of the high court justices -- held that the federal labor policy contained in the National Labor Relations Act (NLRA) preempts the attempt of California to impose a rule that prohibits employers receiving state funds from using the funds "to assist, promote, or deter union organizing." 

The NLRA preemption doctrine that captured the court's attention forbids states from regulating conduct "that Congress intended to be unregulated because left to be controlled by the free play of economic forces."  Noting its view under prior case law that "Congress struck a balance of protection, prohibition, and laissez-fair in respect to union organization, collective bargaining, and labor disputes," the court determined California's law attempted to regulate within "a zone protected and reserved for market freedom."

The court further elaborated on the inherent right of employers to engage in "free debate on issues dividing labor and management", that this First Amendment right is enshrined in the NLRA, and that it reflects a policy decision "favoring uninhibited, robust, and wide-open debate in labor disputes" involving "freewheeling use of the written and spoken word."   The constitution, buttressed by the NLRA, provides this freedom; states cannot by legislation or regulation take it away.

The state AFL-CIO proposal in Washington is broader than the invalid California law.  It doesn't hinge on the receipt or use of state funds by an employer.  It bluntly prohibits any employer speech about union matters if it can be viewed as a "required" communication -- in a staff meeting, perhaps in a company-wide e-mail, and so on.  It is enforced (like California's statute) by a strong litigation deterrent attempting to make the state's judicial branch the ultimate referee of permissible workplace speech.

But the high court was clear today:  States are not free to regulate what Congress left unregulated in the NLRA.  "When Congress has sought to put limits on advocacy for or against union organization, it has expressly set forth the mechanisms for doing so."  The law "calls attention to the right of employees to refuse to join unions, which implies an underlying right to receive information opposing unionization."  And the NLRA "expressly precludes regulation of speech about unionization" so long as the communications do not threaten or promise anything to the employee. 

Our state unions may be busy between now and the 2009 legislative session testing arguments to distinguish their proposal from California's overreach.  But today's decision should put an end to Washington's union neutrality bill.

(Cross-Posted at the WashACE blog)

Court Bows to Union, Tosses Competitive Contracting Rules

About a week ago, the Washington Federation of State Employees has won a major legal victory, getting the Department of General Administration's competitive contracting rules invalidated.  These "contracting-out" provisions, meant to provide increased competition and accountability, were major compromise components of the 2002 law that gave rise to enormously more robust collective bargaining rights for the public employees' union.  Jason Mercier at the Washington Policy Center has more here.

2008 AWB Session Review and Voting Record

We've just posted the 2008 Legislative Review and Voting Record to our website. AWB members will soon receive them with the May/June issue of Washington Business, which is in the mail now. Take a minute to review how your legislators voted on business issues in 2007 and 2008.

In the Senate, Republican Senators Jim Honeyford and Linda Parlette scored 100 percent in 2008.

Top ranking House members with 2008 scores of 96 percent were Republican Representatives Larry Crouse, Joel Kretz and Lynn Schindler.

Gov. Chris Gregoire received a 2008 score of 29 percent.