Olympia Business Watch

Lawmakers say they can work on budget and chew gum

Jason Hagey — Fri, 27 Jan 2012 12:07:08 -0800

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.

Springer began his remarks by noting that he spoke to the Association of Washington Cities the day before. The health of local governments and the business community are intertwined, he said.

Lawmakers are looking for ways to lessen the burden on local governments, such as consolidating the vast array of junior taxing districts. "Hopefully that will translate into a better environment" for the business community, he said.

Springer highlighted a few other issues important to business, including stormwater permits. Lawmakers are looking at ways to make them more efficient, he said. And he praised Rep. Dave Upthegrove, D-Des Moinse, for making it his "personal mission" to make changes to the renewable energy law that resulted from Initiative 937.

"Right now, there are things in the new bill that everybody will hate," he said regarding I-937 changes. "That's where you start."

Frockt, who moved from the House to the Senate following the death of Sen. Scott White last fall, said he is still getting his feet wet in his new job. But he said the Senate Democratic Caucus's agenda includes a strong emphasis on developing a sustainable budget over the long run, something that AWB and other business groups have been advocating for years.

Regarding education, Frockt said he is hopeful the Supreme Court ruling in the McCleary v. State of Washington case will force some kind of "grand bargain" that will finally straighten out K-12 funding.

Cuts in education funding have taken a big toll on schools, he said, noting that a grief counselor had to be called in from a high school after White's death because the elementary school his son attends did not have a counselor of its own.

Higher education cuts will be unavoidable, Frockt said, but his caucus will look for ways to mitigate them. There is a strong interest, he said, in science, technology, engineering and math -- or STEM -- programs, highlighting another area of importance to the business community.

One bright spot regarding budget talks: Springer said he has observed more coordination between the House and Senate and Republicans and Democrats than usual this year, something he hopes will carry over into cooperation.

Also, Springer sought to reassure observers about the length of the legislative. When asked whether it was really a 60-day session, he replied "Of course it's a 60-day session."

He didn't rule out a special session to follow, however.

AWB's Lobby Lunch series continues next Thursday with invited guests Sen. Mike Hewitt, R-Walla Walla, and Rep. Richard DeBolt, R-Chehalis.

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

Don Brunell — Fri, 27 Jan 2012 09:26:37 -0800

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.

Mandatory paid sick leave bill would hurt business and workers

Jason Hagey — Wed, 25 Jan 2012 17:20:45 -0800

Representatives from businesses large and small spoke out Tuesday against a proposal that would make Washington just the second state in the country to require employers to provide workers with paid sick leave.

For small employers with narrow profit margins, Senate Bill 6229 would add signficantly to the cost of doing business, forcing some to eliminate other worker benefits -- such as health insurance -- to make up the difference.

For large businesses, even those that already provide workers with paid sick leave, the bill would be an administrative burden and could conflict with existing labor contracts.

For example, Boeing's recent landmark agreement with the Machinist's union does not include an include a waiver for the proposed state law, meaning the contract and the state law would be at odds, Carolyn Ladd, a Boeing attorney, told members of the Senate Labor, Commerce & Consumer Protection Committee.

Proponents of the bill said it's needed to make sure that sick people don't report for work at restaurants and elsewhere, spreading disease.

But business owners said there are already ways to accommodate sick workers and protect public health without adding an expensive state mandate.

Lobbyists from AWB and other groups opposed to the bill attended Tuesday's hearing, and another one today on companion legislation, House Bill 2508,

But most of the testimony came from small business owners like Karissa Bresheare, the owner of a small chain of espresso drive-thrus, and Paul MacLurg, an AWB member and owner of a Lacey fitness center.

Bresheare said her staff of approximately 90 baristas use a shift-swapping system that allows workers to call upon a pool of on-call co-workers to take a shift if needed, for illness or any other reason.

Employees who miss a day can then use the same system to make up the hours later to keep from losing money, she said.

MacLurg said his workers rely on a similar shift-trading system. The proposed law would add about $500 or $600 per month in expenses, he said.

Ned Witting, one of the owners of Tacoma-based Print NW, said the bill would lead to a 10 percent increase in operating costs and a 50 percent cut in profit at a time when the entire industry is struggling.

It isn't just the business community that's concerned about the proposal, either.

Representatives from school districts and other education groups said that even though they already provide paid sick leave -- and they are sympathetic to the legislation's goal -- the way it's written could conflict with labor union agreements and generate additional costs for the state.

Throughout the country, state and local governments are debating paid sick leave requirements. So far, only a few have adopted them.

In September, Seattle became just the third city in the country to adopt such a mandate, joining San Francisco and Washington, D.C. In June, Connecticut became the first state to adopt a paid sick leave requirement.

At the very least, lawmakers in Olympia should wait a year to see how the Seattle ordinance plays out, suggested AWB member Steve Salins of Renton-based Shuttle Express.

Betty Neighbors, founder and president of Terra Staffing Group, agreed that lawmakers should wait to see how the Seattle ordinance plays out.

As it is now, it the proposal would add tremendous expense to business -- and carry a number of unintended consequences.

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

Jocelyn McCabe — Wed, 25 Jan 2012 14:52:23 -0800

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 legislation n. The package includes 17 bills, though three of the six aerospace bills, Justin noted, were passed during the December 2011 special session.

Topping the governor's agenda for the 60-day session: four K-12 bills, including legislation aimed to reconfigure teacher and principal evaluations and another (HB 2537/SB 6177) to reform how teachers are assigned. According to Justin, the teacher assignment bill grew out of the governor's involvement in settling the 2011 Tacoma Public Schools teacher strike. A fifth education bill (HB 1973/SB 5639), addresses the replacement of the Higher Education Coordinating Board.

The governor's three remaining aerospace bills may not have the necessary support to advance this session. Justin admitted there was little appetite for the governor's proposal to extend B&O tax credit. Justin said Gregoire will continue to work her two remaining aerospace bills -- on workforce coordination and aerospace research at the University of Washington.

One Gregoire proposal AWB has openly supported this session is her tax simplification measure (SB 6176 and HB 2490) -- "and this is one she really, really wants -- and it's not going to be easy," Justin said. The aim of the bills is to make the state Department of Revenue the sole collector of business and occupation taxes, similar to the way sales tax is handled. The change will result in considerable savings in time, money and frustration for employers, especially small businesses. But the cities fear it will cost them money and are pushing back with a host of arguments that state officials have debunked.

"This is something you're going to see a lot more movement from her on in the coming weeks," Justin said. "We will work it aggressively and we will encourage as much help as we can from the association and individual businesses as well," he said. "We would truly appreciate your help on this one."

Other bills on government reform, marriage equality, lottery privatization and health exchange benefits legislation are also on the governor's docket, but it's her tax proposals that garnered the most attention at the luncheon. Justin said the governor will continue her push for both the half-cent increase in the state's sales tax as well as her transportation package -- which includes a $1.50/barrel tax -- for maintenance and operation of state roads and ferries, though the transpo package has "a long, long way to go."

This week, AWB is scheduled to host leaders from the House and Senate, including Sen. David Frockt, Senate Majority Assistant Floor Leader and Rep. Larry Springer, Deputy Majority Leader for Jobs and Economic Development.

President's manufacturing agenda needs action behind it.

Don Brunell — Wed, 25 Jan 2012 12:22:46 -0800

In his state of the union address, President Obama outlined his manufacturing blueprint for America. In a follow-up press release today, the National Association of Manufacturers (NAM) said: "A True Manufacturing Renaissance Goes Beyond Words." NAM has released its own road map for restoring American manufacturing.

The Association of Washington Business (AWB) has been our state's manufacturing association for over 100 years and affiliates directly with NAM. AWB's Institute conducted a series of manufacturing focus groups around Washington and conducted manufacturing research in 2011. AWB recently released its findings.

AWB found that Washington manufacturing has an annual economic impact of $132.2 billion and exports $52.4 billion each year. The average annual compensation for workers in manufacturing is $77,460 based on 2009 data and it supports 285,300 other jobs.

In order to enhance manufacturing in our state, elected officals and legislators need to focus on:

Competitive power rates to attract new manufacturers and retain existing companies.
Changes to Initiative 937 in order for manufacturers to remain competitive with other states.
Eliminating the lack of a skilled workforce to meet demand.
Protecting tax incentives for the growth of the manufacturing industry
Regulatory issues with several state and federal regulatory agencies that must be streamlined.

There are 7,158 manufacturers across Washington. Manufacturers range in size from Boeing with nearly 80,000 workers to Nelson Irrigation in Walla Walla with almost 200 workers. Manufacturing jobs are high skilled and pay family wages with benefits. They have been and are extremely important to our state's future.

As NAM says, actions, not glowing words, are needed at the state and national level is we are going to bring back manufacturing in America.

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

Brunell: Buying American products creates American jobs

Jason Hagey — Tue, 24 Jan 2012 16:57:17 -0800

With continued high unemployment, growing deficits and a sluggish economy, it's easy to think that a solution is out of reach.

But that's not the case, AWB President Don Brunell writes in his weekly column. By choosing to "Buy American," individual consumers can make a real difference.

Buying American is not anti-trade, but rather about consumer choice, Brunell says. He notes the case of Anders Lewendal, a Bozeman, Mont. contractor profiled by ABC News for building a home using only American-made materials.

Lewendal says that using just 5 percent more American products in construction projects would create 220,000 jobs. And yet the cost of his "all American" home was just 1 percent higher than homes built with materials manufactured offshore.

Former Cheers actor John Ratzenberger has become the face of the Buy American movement, and he's sounding the alarm about the shortage of skilled American laborers and craft workers that results from buying products from overseas.

It's not too late to turn things around. The Buy American movement shows that opportunities abound, Brunell writes. Even in the most dire situations.

Washington connection to Keystone XL pipeline

Don Brunell — Sun, 22 Jan 2012 17:11:46 -0800

Even though President Barack Obama said no last week, at least for now to Canadian energy company's proposal to build and operate the $7 billion, 1,700-mile Keystone XL pipeline, which would carry oil sands crude from Alberta to Texas, Congress may have the final say.

Meanwhile, Bloomberg reports that Canada may look west to find ways to export its crude to China. That could mean an all-Canadian oil pipeline to a British Columbia port.

According to a new legal analysis by the nonpartisan Congressional Research Service, Congress could trump the President. Congressional pipeline supporters are drafting legislation to overturn his decision to put the $7 billion Alberta-to-Texas project on ice.

Historically, U.S. presidents have made executive decisions on pipelines that cross borders. But Congress has the power to weigh in on the permits, four CRS legislative attorneys have concluded.

What does that all mean to Washington state beside the possibility of a new crude pipeline and oil export facility just North of our border? Maybe a new source of crude for our state's oil refineries which also get their crude from Canada via pipeline and Alaska by ocean-going tankers.

But the Midwest and Gulf states leaders say Keystone XL is too important to the U.S. economy and our national interest. The project remains the best option to supply crude oil to U.S. Gulf Coast refineries and getting crude from our Canadian friends makes us far less vulnerable to suppliers in hostile nations.

The U.S. consumes 15 million barrels of oil each day and imports 10 to 11 million barrels during a 24-hour period. Industry forecasts predict oil consumption will continue at these levels for the next two to three decades, so a secure supply of crude oil is critical to U.S. energy security.

A second important point for Washingtonians and all Americans is President Obama and other key elected and appointed officials need to look realistically are our nation's energy needs. Electricity, natural gas and transportation fuels impact every American family, hospital, factory, school, fire department and business. In the last decade there are so many key energy projects which have been canceled, delayed or litigated that we are all starting to feel the pinch in our wallets.

Regarding energy facilities deferred or canceled, the U.S. Chamber of Commerce finds that successful construction of the 351 projects identified in the Project No Project inventory could produce a $1.1 trillion short-term boost to the economy and create 1.9 million jobs annually. Moreover, these facilities, once constructed, continue to generate jobs once built, because they operate for years or even decades. Each year, the Chamber finds, the operation of these projects could generate $145 billion in economic benefits and involve 791,000 jobs.

Keystone XL is shovel-ready.TransCanada is poised to put 13,000 Americans to work to construct the pipeline - pipefitters, welders, mechanics, electricians, heavy equipment operators, among other jobs - in addition to 7,000 manufacturing jobs that would be created across the U.S. Additionally, local businesses along the pipeline route will benefit from the 118,000 spin-off jobs Keystone XL will create through increased business for local goods and service providers.

According to the Los Angeles Times, even if the administration rejects the project, it may not be enough to kill it, industry analysts said. Americans' thirst for oil probably will push the administration and TransCanada to find a way to transport Canadian crude across the United States.

Let's hope so. Meanwhile, we ought to hope our Canadian friends don't run out of patience and give up on us.

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

Greener Skies over Seattle

Don Brunell — Sat, 21 Jan 2012 00:03:57 -0800

Two years ago, Boeing and Alaska Airlines teamed to promote a pilot project called Greener Skies over Seattle.

The Association of Washington Business (AWB) thought it was a good idea and contacted the Federal Aviation Administration (FAA) and members of Congress asking them to support it.

The FAA awarded Boeing a $3.1 million contract last October to implement the initiative. Now it is moving along to the point where the FAA will conduct environmental review meetings next week in Federal Way and Shorelines on January 25 and 26, respectively.

Greener Skies uses satellite-based flight guidance technology to enable aircraft to descend more efficiently and safely into SeaTac International Airport, resulting in a reduction of aircraft fuel consumption, emissions and noise in the Puget Sound region.

In intial testing of Greener Skies over Seattle, Alaska Airlines was able save fuel and reduce emissions by 35 percent compared to a conventional landing by using precision navigation called Required Navigation Performance (RNP).

Carriers equipped to fly these procedures will save a combined 2 million gallons of fuel per year or more, which equates to a savings of 22,400 metric tons of Co2 or removing 4,100 cars off the road each year.

AWB honors Raha

Don Brunell — Fri, 20 Jan 2012 13:10:06 -0800

AWB honored Arun Raha, the outgoing chief state economist, on Thursday in Olympia. Raha is leaving to become the corporate economic director for Eaton and will be based in Cleveland, Ohio.

Since his last day is January 31, AWB decided to honor him before he left the state.

Gov. John Spellman led the effort to create the Economic and Revenue Forecast Council in 1984. This law established a new process for producing official economic and revenue forecasts for the State of Washington. The director's job has been to project state revenues based on the performance of the economy.

Raha took over as the head economist in October 2008, just before the Great Recession hit. His initial gloomy quarterly forecasts were like a buckets of ice water compared to the regular surpluses predicted in previous years, Seattle Times reporter Andrew Garber wrote when publishing Raha's announcement.

"Since September we've pretty much been on target so I thought I'd quit while I'm still ahead," Raha deadpanned in a phone interview with the Times, with his usual dry humor. "I don't want to be one of those guys that quits when he's way past his peak."

Raha is a popular and entertaining speaker. He is known for his one-liners. For example, he told the legislature that return to normalcy is like a desert mirage. The closer you get to it the farther away it moves.

"We will miss you," AWB President Don Brunell said in presenting him with an AWB 100-year anniversary wool blanket woven specially for the Association of Washington Business by Pendleton Woolen Mills, Washougal. "You did your job well and didn't catch a break on the economy but your quick wit and sense of humor helped to soften the blow of the bad news you had to deliver."

In response, Raha told those attending AWB's lobby lunch on Thursday that he felt the working relationships between government and business were constructive and aimed at problem-solving. That is good when you are tackling the tough issues.

AWB operating short staffed

Don Brunell — Fri, 20 Jan 2012 07:57:25 -0800

AWB will open after 9 a.m. today, but short staffed. Heavy snow and ice prevents many of our staff from leaving their homes. Many of our folks are without power and some have been for a couple of days. Please be patient. We hope to be at full strength and operating at full strength by Monday.

Thank you.

Don C. Brunell (DonB@awb.org)