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Richard S. Davis
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Brad Shannon reports this morning on new taxes proposed by freshman Democrats in the House: Freshmen Democrats in the House introduced a bill that targets favorable tax treatment for large home lenders and out-of-state shoppers. They say it would raise $170 million for K-3 programs in public schools.... ...HB 2078 specifically targets first-mortgage interest earnings of banks that exceed $100 million a year and would end tax breaks for out-of-state shoppers. It would raise more than $80 million a year from each tax. Missing in this representation of the mortgage interest earnings exemption, in particular, is that if the tax... Continue reading
Posted Apr 12, 2011 at WashACE Blog
Depending on who's speaking and what precisely they're talking about, education reform and consolidation proposals in Olympia are moving, stalling, changing or dying. The AP reports: The governor's plan would eliminate the State Board of Education, the Department of Early Learning and nearly 10 other departments, boards and committees and place their functions under a new Department of Education. The Office of the Superintendent of Public Instruction would still oversee K-12 education but most administrative matters would move to the new department. Under Gregoire's proposal, the governor would - starting next year - nominate a secretary of education, who would... Continue reading
Posted Mar 3, 2011 at WashACE Blog
Brad Shannon reports on the status of negotiations on workers' comp reform. Business representatives are working hard alongside the governor's office and the Dept. of Labor and Industries to convince lawmakers that major workers' comp reforms are essential this session in order to avoid double digit rate increases in industrial insurance rates. Richard Davis at the Washington Research Council blog says that like unemployment insurance, "The state workers' compensation system is ... in critical need of reform." The business community is advocating three main reforms: 1. Defining occupational diseases to assure that treatment for a sickness covered by workers' compensation... Continue reading
Posted Feb 25, 2011 at WashACE Blog
Lawmakers have reached agreement on how to fill more than half of the $550 million budget hole for the remainder of this biennium. The Seattle Times reports this morning that: The agreement trims several state programs, including the state's health-care program for the poor and aid for the disabled, as well as transfers funds from other programs. The plan cuts the deficit by about $370 million, with about $242 million in cuts and $125 million in transfers. According to Brad Shannon, in Tacoma News Tribune, The agreement would leave about $200 million of the deficit unsolved. But Chopp and others... Continue reading
Posted Feb 17, 2011 at WashACE Blog
We've written here before about efforts to repeal tax incentives/exemptions/loopholes/breaks/whatever in order to find more money in this cash-straitened legislative session. In my column in the Puget Sound Business Journal Friday, I challenge the assumption that there's a lot of free money laying around. Still, the myth persists. In the last 48 hours two Seattle Times business columnists lend their voices to the chorus claiming business incentives are depriving the state of funds necessary to maintain "the commons." Brier Dudley, the Times' technology writer, takes on the research and development credit. Starting in 1994, the state offered to defer sales... Continue reading
Posted Jan 31, 2011 at WashACE Blog
In my column this morning I look at the disconnect between the union agenda in Olympia and the interests of Washington employers, taxpayers, and ... not incidentally ... the members of private sector unions who depend on a growing economy. A more pointed commentary in the Wall Street Journal by Fred Siegel reminds us of how recently public employee unions emerged as a political force. In the 1930s, New York Mayor Fiorello LaGuardia warned against it as an infringement on democratic freedoms that threatened the ability of government to represent the broad needs of the citizenry. And in a 1937... Continue reading
Posted Jan 26, 2011 at WashACE Blog
Business groups urge immediate action on important unempllymnet insurance reforms that will provide tax relief to employers. We wrote about Gov. Gregoire's proposal here. In his column, in the Columbian, AWB president Don Brunell provides both personal and professional persepctive.Read the whole thing - here's the policy crux: This year, employers are asking the Legislature for relief. They’re requesting a temporary reduction in UI premiums until the economy improves. After recovery, the employers will repay that money into the state’s UI trust fund to ensure our state can pay unemployment benefits without borrowing from the federal government. ...When high UI... Continue reading
Posted Jan 26, 2011 at WashACE Blog
I've been remiss in not flagging this New York Times piece from last Sunday. (h/t Don Brunell, who wrote about it here.) The NYT sets the tone up front, based on a reading of the inaugural remarks of two dozen governors. The dismal fiscal situation in many states is forcing governors, despite their party affiliation, toward a consensus on what medicine is needed going forward. The prescription? Slash spending. Avoid tax increases. Tear up regulations that might drive away business and jobs. Shrink government, even if that means tackling the thorny issues of public employees and their pensions. That's a... Continue reading
Posted Jan 19, 2011 at WashACE Blog
House Democrats unveiled their first steps toward resolving the shortfall in the current fiscal year, which ends June 30. It doesn't close the gap completely, but makes inroads, including a new twist on how to maintain the Basic Health Plan. Here's The News Tribune's description: Only about $18 million in immediate savings comes from ending Basic Health because those who get subsidized health insurance under the program will be moved to something called Basic Health Transition. It's meant as a bridge to 2014, when broader Medicaid coverage kicks in as part of the federal health care overhaul. Lawmakers hope to... Continue reading
Posted Jan 19, 2011 at WashACE Blog
Yesteday a Senate committee heard the governor's proposal to reduce and cap the socialized portion of the UI tax bill. The Seattle Times notes the familiar business-labor division. Lawmakers were pressed Monday to quickly act on two bills that Gov. Chris Gregoire's office says will save hundreds of millions of dollars for businesses and help spur the state's economy. But labor organizations are opposing parts of the bills, saying it doesn't help alleviate the financial crunch families without jobs have. Business organizations, in contrast, showed cautious support for the proposal. At the risk of belaboring the obvious, I'll point out... Continue reading
Posted Jan 18, 2011 at WashACE Blog
Stateline.org regularly scans the national landscape for policy and economic trends. Today they look at what seems to be the theme of the 2011 legislative sessions across the country: More of the same fiscal distress. When will the budget situation for states return to normal? Not in the foreseeable future. Although NASBO's Pattison thinks fiscal year 2013 will look better than 2012 for most states, there are signs that the road to recovery is going to be a long one. A big reason why is the nation's stubbornly high unemployment rate. Joblessness remains a drag on personal income tax revenue... Continue reading
Posted Jan 13, 2011 at WashACE Blog
The Washington State Labor Council's legislative agenda offers little in the unexpected. Oblivious to the results of the last election, the WSLC wants lawmakers to put a $3 billion tax package on the November ballot. Here's how The News Tribune characterizes it: Washington's biggest labor group wants lawmakers to put $3 billion or more in tax breaks on the ballot for suspension as early as this spring, in an attempt to avoid the worst proposed budget cuts. The kind of tax breaks the State Labor Council is contemplating for a proposed three-year moratorium include sales tax exemptions for business services... Continue reading
Posted Jan 13, 2011 at WashACE Blog
Yesterday, a panel of four economists, including Kriss Sjoblom of the Washington Research Council, shared their perspectives on the state economy. It's a good overview of the state, looking at regional differences as well as close looks at housing, construction, and other industrial sectors. Bottom line: Things aren't going to rebound here (or anywhere) quickly. I've embedded the clip, beginning with regional economist Dick Conway's comment that the bleak state revenue forecast may be too optimistic. Well, the forecast council acknowledges risk. Clearly, it would be a mistake for lawmakers to assume that an economic recovery will solve the state's... Continue reading
Posted Jan 13, 2011 at WashACE Blog
The ongoing recession has taken a toll on voters' opinion of public employee pay and benefits. According to Rasmussen Reports, ...40% of Adults favor a 10% pay cut for all state employees to help reduce state spending. Forty-one percent (41%), however, oppose an across-the-board pay cut like this. Nineteen percent (19%) are not sure. (To see survey question wording, click here.) Perhaps not surprisingly, while 60% of entrepreneurs and a plurality (45%) of private company workers favor a 10% pay cut for public employees, 75% of those employed by the government do not. Gotta like that "perhaps." The polling firm... Continue reading
Posted Jan 12, 2011 at WashACE Blog
Looks like the early reviews of the governor's speech range from 3-1/2 to 4 stars. Some of that may be early session caution - there's a lot of time to sort details - and some the natural inclination to maintain a "we're all in this together" tone in the first week. As we've said before, there are no easy options left. In my column this morning, written before the state of the state, I commend the governor for seizing the mic and framing the debate last week. Over at Olympia Business Watch, AWB president Don Brunell says the governor has... Continue reading
Posted Jan 12, 2011 at WashACE Blog
A must-read in Governing magazine. State and local governments across the nation face staggering unfunded pension liabilities, many much worse than what this state confonts. In Governing, Girard Miller analyzes the situation and available options. Interested readers should read the whole, thoughtful and remarkable comprehensive column. Here's a takeaway: Pension reformers in a few states have explored the feasibility of amending state constitutions to preserve public employers' rights to change benefits formulas on a prospective basis, but this would be a difficult idea to present to voters unless part of a more comprehensive package. Some pension critics are exploring whether... Continue reading
Posted Jan 11, 2011 at WashACE Blog
Gov. Gregoire delivered her state of the state message today, acknowledging the tough times and pledging resolve and optimism. Early coverage in The News Tribune, Capitol Record, and SeattlePI.com. Continue reading
Posted Jan 11, 2011 at WashACE Blog
Lawmakers return to Olympia today, with the economy, bucget, and job creation topping the political agenda. There's going to be a lot to disuss over the coming days. I'm still trying to understand last week's jobs report, and find I have a lot of company struggling to make sense of it. Here are a couple of useful links. Econbrowser: There might seem to be some conflicting signals from Friday's employment report from the Bureau of Labor Statistics. But I see a uniform message in the various numbers-- the economic recovery remains disappointingly weak. The FInancial Times: Markets hoped that December’s... Continue reading
Posted Jan 10, 2011 at WashACE Blog
The Senate Democrats' blog questions whether the governor's call for an education agency is radical or conventional. They lean toward conventional. ...looking at the rest of the nation, including Washington, D.C., what is being proposed is, in fact, the way of life in nearly three-quarters of the states. According to the Council of Chief State School Officers, 37 states and the District of Columbia have unelected administrators with various titles heading up state departments of education. I'm not sure it's the right question. Better to wonder whether the unified agency makes more sense than the current mishmash. I think the... Continue reading
Posted Jan 6, 2011 at WashACE Blog
In what has become Gregoire's reform week, the governor today rolled out ... make that floated ... the idea of a regional ferry district, along with a proposal for consolidating information services. Here's the ferry district crux: The governor will introduce legislation to create a Puget Sound Regional Ferry District to operate the ferry system. The district would consist of all or a portion of the following counties: Clallam, Jefferson, Kitsap, Island, San Juan, Skagit, Snohomish, King and Pierce counties. The district’s funds would come from fares, a state subsidy to fund a core level of service, and regional taxing... Continue reading
Posted Jan 6, 2011 at WashACE Blog
As we noted earlier, the year begins with a flurry of stories on public employee unions. A couple more pieces bear mentioning. In the Wall Street Journal, William McGurn identifies a critical fissure within the house of labor. These days the two types of worker inhabit two very different worlds. In the private sector, union workers increasingly pay for more of their own health care, and they have defined contribution pension plans such as 401(k)s. In this they have something fundamental in common even with the fat cats on Wall Street: Both need their companies to succeed. By contrast, government... Continue reading
Posted Jan 5, 2011 at WashACE Blog
Good blog post at Olympia Business Watch by AWB president Don Brunell. A three-year study by Washington's Joint Audit Review Committee found that most business tax incentives are functioning exactly as they were intended. They are either stimulating business or helping to level the field for Washington firms competing internationally. The Committee warned that ending the tax exemptions would simply cause businesses to move out of state. California is a prime example. Unlike Washington, it doesn't exempt manufacturing equipment from the sales tax. The California Manufacturers and Technology Association estimates the state lost $5 billion over 8 years in income... Continue reading
Posted Jan 5, 2011 at WashACE Blog
Here's the statement from SPI Randy Dorn: Statement by Supt. Randy Dorn on Gov. Gregoire’s Department of Education Proposal: Olympia - January 5, 2011 - In a press conference this morning, Gov. Chris Gregoire proposed creating a state Department of Education that would oversee the many “silos” that make up our entire education system, from early learning to K-12 to higher education. I’m pleased that the Governor is focused on education, and I have worked closely with her on many issues. I agree wholeheartedly that we need to streamline some of the processes. I’m concerned, first of all, that I... Continue reading
Posted Jan 5, 2011 at WashACE Blog
The governor's busy pre-session week continues. Today she announced a consolidation of education agencies into a single, cabinet-level department of education. Gregoire today announced her intention to create a single, cabinet-level Department of Education that will unite the state’s multiple education agencies to ensure priorities are aligned, and the focus remains on students. The new department will have full authority to run the entire Washington state education system, and will be led by a secretary who will implement effective evidence-based, student-centered best practices. “We don’t have an education system in our state today,” Gregoire said. “We have a collection of... Continue reading
Posted Jan 5, 2011 at WashACE Blog
For the governor, 2011 started with a flurry of announcements. (A day out of the office backed me up on some of this.) Consider: Her higher education task force ran out its recommendations yesterday. They make a lot of sense. Task Force Chair Brad Smith, Microsoft SVP and General Counsel, summarizes in this blog post: ...the task force settled on a limited number of direct and important recommendations (available at http://www.microsoft.com/about/corporatecitizenship/en-us/our-actions/in-the-community/washington-state/#Educationtab ), which are very much linked together to form a comprehensive approach. These recommendations fall into three categories: First, the state should adopt a new financial formula that combines... Continue reading
Posted Jan 5, 2011 at WashACE Blog