Olympia Business Watch

It's All About Jobs!

Don Brunell — Tue, 09 Feb 2010 10:44:33 -0800

One of the main economic cornerstones in President Obama's State of the Union address was the issue of job creation, and for good reason. The latest Harris Poll shows just one in ten Americans (10%) believe the current job market of their region of the nation is good while 70% believe it is bad, and one in five (20%) say it is neither good nor bad.

Looking at the different regions of the country, the South seems to be the "best" place for jobs right now as 14% of Southerners say the job market in their region is good while 64% believe it is bad. The Midwest is the worst as only 6% of Midwesterners say their job market is good and over three-quarters (76%) say it is bad.

According to the Harris Poll, most people do not see a light on the near horizon for the job market. Just 7% of Americans believe the job market has already started growing while 14% say it will start to improve in the next six months. One-quarter (24%) say the job recovery will begin between six and 12 months from now while two in five (39%) say it will not happen for another year or longer.

As Washington lawmakers start talking about new taxes to re-balance the 2009-2011 state budget, they need to remember that employers in Washington, whether they be a small business along Main Street, a major employer like Microsoft, a hospital, school, university or college, non-profit charity like Goodwill, or your doctor or dentist, have already had their workers compensation rates and unemployment taxes increase this year. Taxes are a costs of doing business and for families struggling to make ends meet and put a few dollars in the bank for their children's college education.

In Olympia, they need to connect the dots and do the math. It is the cumulative impact of costs of the federal, state and local governments which must be considered before each separate set of elected officials goes about increasing taxes and fees. It all comes from the bank account.

That's what the American people are saying in poll after poll. Allow the private tax-paying sector to restore its footing, create jobs and generate more revenues for government through increased economic activity.

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

Brunell: Best way to help the unemployed? Create jobs

Jason Hagey — Tue, 09 Feb 2010 10:23:21 -0800

The best way to help those who are unemployed is to create new jobs, AWB President Don Brunell writes in his weekly column.

But employers can't spend money on hiring if they're paying it into the state's unemployment system instead.

And yet that's exactly the scenario that Washington businesses are facing right now. Many businesses were forced to lay off employees to survive the recession, which meant more workers received unemployment benefits.

State officials need to replenish the rapidly diminishing unemployment trust fund so what do they do? Raise taxes.

It's the ultimate no-win situation, Brunell writes. A true Catch-22.

And it would only be made worse if lawmakers chose now to expand benefits.

Read the full column here.

Massachusetts Presents Yet Another Test for the President: The Answer Maybe Blowin' in the Wind

Don Brunell — Mon, 08 Feb 2010 16:19:27 -0800

According to the Washington Post, Interior Secretary Ken Salazar journeyed out into Nantucket Sound on a Coast Guard vessel last week to signal the Obama administration's readiness to put some muscle behind wind energy. Salazar has to resolve a battle over building a wind farm on 25 square miles of open water of Nantucket Sound not far from Cape Cod and Martha's Vineyard. The Post reports:

The nearly decade-long fight over whether to construct a 130-turbine offshore wind farm near Martha's Vineyard has spurred numerous state and federal regulatory reviews. It has cost millions in lobbying fees and has prompted an intense political debate on Cape Cod and in Washington, setting those who back renewable energy against those who want to preserve the natural beauty of Nantucket Sound.

With many other obstacles resolved, including the wind farm's potential hindrance to navigation and fishing and harm to birds, the tribes represent the Cape Cod project's latest challenge: They practice a sunrise ritual every morning on the sound and say they may have artifacts buried beneath the seabed.

The venture stands as a critical test of whether the Obama administration, which views investing in renewable energy as key to reviving the economy and combating climate change, can launch the clean-energy revolution it has promised voters.

Wind energy still remains a tiny player, providing less than 2 percent of the nation's supply. Although the United States leads the world in total wind capacity to its power grid, it ranks fifth on a per-capita basis. Last year, China outpaced it for the first time in terms of new installations and manufacturing of wind turbines.

In Washington, Gov. Gregoire faces the same dilemma with several wind projects. She just approved the Desert Claim Wind Project in Kittitas County near Ellensburg and the state's Energy Facility Site Evaluation Council is considering the application of the Whistling Ridge Wind Farm near White Salmon and adjacent to the Columbia River Gorge.

We need all energy sources in the future and cannot limit ourselves to areas or generating fuels. We must work hard to perfect them all to make them compatible with the environment and continue to conserve. The fact is the amount of electricity our homes, businesses, hospitals, schools and cities need in the future will only grow with our population.

As with everything in life, there are trade offs. Renewable energy is no exception.

Don C. Brunell, President (DonB@AWB.ORG)

The National Debt: Do You Know How Much You Now Owe?

Don Brunell — Sun, 07 Feb 2010 07:00:21 -0800

President Obama announced his 2011 Budget which is $3.834 trillion dollars with a projected deficit of $1.267 trillion or 8.3% of GDP (gross domestic product). As of Feb. 7, our total national debt was $12,348,804,540,946.54 or $12.35 trillion which is larger than the economies of China, the United Kingdom and Australia combined.

The national debt is growing with the spending spree in DC. According to the Congressional Budget Office and the Office of Management and Budget, our national debt will grow an additional $9 trillion over the next decade, to more than $20 trillion. During that time, the United States will accumulate $2.5 billion in new debt each and every day. That’s $1.72 million per minute, for the next ten years.

According to the Department of the Treasury, foreign holders of our national debt are owed a combined total of about $3.3 trillion. As reported by the Treasury Department, the top ten countries and entities holding U.S. debt are: China, Japan, the United Kingdom, Oil Exporters, Caribbean Banking Centers, Brazil, Russia, Luxembourg, Hong Kong, and Taiwan.

The Treasury Department estimates that our debt to China is approximately $776.4 billion, having grown more than $240 billion in the last year. That is more than $10,000 in debt for the average American working family---just to China.

The estimated population of the United States is 307,795,997 so each citizen's share of this debt is $40,146.02.

The National Debt has continued to increase and that is before Congress tacks on trillions for health care, cap and trade, new federal stimulus programs, and other yet to be identified spending programs.

Part of the way President Obama plans to pay for his new round of spending is to eliminate the 2001 and 2003 Bush tax cuts families making more than $250,000 per year which impacts a ton of family-owned, small businesses which are the backbone of our economy and nation.

No wonder Americans are squeamish about tax increases at the state and local level. In Washington, lawmakers are considering raising taxes to fill a $2.6 billion hole in the current state budget. While $2.6 billion may seem like pocket change in light of the federal budget, it would take a two-cent sales tax hike to fill---IF lawmakers rely solely on taxes to cover the gap. A one-cent sales tax produces about $1.2 billion a year--depending upon how much we spend for cars, clothes, appliances and other goods.

Hopefully, Gov. Gregoire and our legislators will "Connect the Dots and Do the Math" by looking at ALL taxes the private sector employers and working families are faced with. Remember employers, whether they are small business, companies the size of Boeing, hospitals, schools, non-profits such as museums, and charities such as Goodwill, have already seen their unemployment and workers compensation taxes increase this year.

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

California strangling the goose that lays the golden eggs

Don Brunell — Fri, 05 Feb 2010 11:50:38 -0800

California, the Golden State, seems to be in an economic tailspin. It has massive revenue shortfalls--$21 billion out of a $100 billion annual state budget.....and there is no resolution in sight. One of the key reasons for this seemingly economic death march is the subject of an Op-Ed in today's Sacramento Bee by Jack Stewart, President of California Manufacturers and Technology Association.

The Subject: California's strangling government regulations, smothering inspections and general attitude of regulators toward employers...and the legislature's failure to reign in the bureaucrats.

Sound familiar?

Since 2001, California has lost nearly a third of its manufacturing base, a 32 percent decline in just eight years. The impact has been devastating: 600,000 lost jobs, $75 billion a year in lost wages and $5 billion annually in lost tax revenue, money that once helped balance the state's budget.

What about all of those green jobs to replace typical manufacturing jobs, Stewart writes: "with state's emphasis on green jobs, they still account for less than one percent of the state's workforce.."

Stewart wrote:

Manufacturing and other companies are leaving California or failing to expand, in large part, because of the state's notoriously expensive and uncertain regulatory environment. Businesses are afraid to invest here because the rules keep changing while the cost of compliance spirals ever higher.

Even Trend Magazine has weighed in saying:

"It's difficult for most employers to make a solid case for starting up or expanding business in California. Government regulations seem perversely aligned to discourage people from doing business here. Last year one California company told the Legislature it had been inspected by regulators 165 times in 2008, nearly every two days, and that inspections had increased another 26 percent in 2009. Reports like this scare other companies away."

Stewart concluded: "

"If we're serious about reversing California's reputation as a lousy place to do business, we need to get serious about regulatory reform. We don't need to dismantle environmental, worker or consumer protections to improve California's regulatory climate. But we do need to remake the system so it's lean, efficient, predictable and accountable, with common-sense rules that are fairly applied. It's a smart way to begin repairing our image (and our economy) because it can be accomplished quickly and without costs......"

If we are not careful and don't pay attention to our regulatory climate, it will be: "Ditto for Washington!"

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

State's budget woes are 40 percent self-inflected, lawmakers tell AWB

Jason Hagey — Thu, 04 Feb 2010 17:27:33 -0800

Minority Republicans in the Washington Legislature began warning three or four years ago that the state's budget was not sustainable, state Sen. Mike Hewitt told AWB at our weekly Lobby Lunch meeting.

"No one would listen," said Hewitt, R-Walla Walla. Some 40 percent of the current $2.6 billion budget shortfall is self-inflicted, he said. "It should not have happened."

Now that it has, majority Democrats are talking about raising taxes to plug the budget hole -- and Republicans don't have enough votes to stop them, he said.

Hewitt was joined by Sen. Linda Evans Parlette, R-Wenatchee, and Rep. Richard DeBolt, R-Chehalis, for a discussion that centered on the budget crisis, job-creation and taxes.

Washington has a spending problem, not a revenue problem, Parlette said. As evidence, she said Washington's state budget rose 33 percent, or more than $8 billion, during Gov. Chris Gregoire's first four-year term.

That's more than it rose during Gov. Gary Locke's eight years as governor, she said.

Even so, "We're going to see tax increases this year," DeBolt said.

Some light was shed yesterday when Democrats unveiled a plan that includes amending Initiative 960, which requires a two-thirds vote in the Legislature to raise taxes.

Other highlights of the luncheon:

Regarding jobs, DeBolt said Washington has lost approximately 170,000 private-sector jobs during the recession, but it has gained roughly 8,300 government jobs, according to the state Employment Security Department.

Washington has an opportunity to attract companies from California and Oregon as long as leaders here don't make the same mistakes as those states, Hewitt said.

Repealing tax exemptions that prompted companies to make capital investments sends the wrong message to other businesses that may be considering a move to Washington, Hewitt said.

Workers' compensation reform will not happen this year, Hewitt said.

Next week, AWB's Lobby Lunch guest is Sen. Margarita Prentice, D-Renton.

Lawmakers see green energy and nuclear in Washington's future

Jason Hagey — Wed, 03 Feb 2010 17:28:55 -0800

In the future, energy generation must move closer to the end user, Rep. John McCoy, D-Tulalip, said Wednesday during the final panel discussion at AWB's Legislative Day in Olympia.

Whether it's called alternative energy, green energy or some other name, distributing generating stations need to be located closer to people.

"We can only string so much grid," McCoy said during the Environmental Issues panel.

Fellow panelist Rep. Larry Haler, R-Richland, spoke about the need for new nuclear power plants throughout the U.S., and at Washington's Hanford Nuclear Reservation outside the Tri-Cities.

The world is experiencing something of a "nuclear renaissance," Haler said, noting that 63 new power plants are slated to come online throughout the world in the next decade including nine this year, but none in the U.S.

A new kind of "modular" reactor is particularly promising; he described a plant capable of producing 45 mega-watts of power and costing just about $2 billion to build compared to $10 or $12 billion to build an equivalent non-nuclear plant.

"I'm looking forward to using the Hanford site to test that technology," he said.

In addition to the two lawmakers, the panel included Tony Usibelli, assistant director of the energy policy division of the state Department of Commerce.

Usibelli spoke about the plan to update the state's energy strategy for the first time since 1993. The process will likely be similar to the one used in the earlier update, he said.

That one included an advisory council of approximately 20 to 25 people made up of representatives from the business community, consumer advocates, energy industry, local governments and state legislators.

SB 6421, which addresses the update, lays out that basic configuration, he said.

The panelists also discussed:

Initiative 937 -- McCoy noted that legislation he proposed this year related to the controversial voter-approved initative died last week. HB 3034 sought to make a number of modifications to I-937, which McCoy said needs to allow for more technologies. He bristled at suggestions he does not care about rate payers, saying that new technologies cost more at first but costs will drop over time.
Haler said he believes hydroelectric power should have been included as a renewable resource under I-937 rather than being counted as part of the state's baseload of power. Doing so "sullied the reputation of hydro that it's not a renewable (energy source) overall," he said.

The future of "green jobs." Haler called himself a "contrarian" in regard to the term, which he believes is a buzzword. "We need to focus on creating jobs," he said. "If they happen to be green, so much the better."

Ericksen wants more choices, fewer mandates, lower costs in health care

Paul Schlienz — Wed, 03 Feb 2010 17:03:50 -0800

Rep. Doug Ericksen, R-Ferndale, made a strong pitch for market-oriented health care reform at AWB's Legislative Day. Ericksen, the ranking minority member of the House Health Care and Wellness Committee, was initially slated to share the forum with Sen. Cheryl Pflug, R-Issaquah, and Rep. John Driscoll, D-Spokane, but the other two legislators were unable to attend due to commitments in the Legislature.

"The more we can encourage competition, reduce prices and increase access to health care, the more employees will have the kind of health care they want and the kind of health care their employers want to give them," said Ericksen.

Ericksen emphasized 10 steps, each reflected in legislation to enact them, that are needed to be reform Washington's health-care system:

Purchasing health-care plans approved in other states
Providing new choices for small employers (small group reform)
Offering young adult plans (19-34 year olds)
Allowing Health Savings Accounts (HSAs) for state employees

Encouraging and incentivizing health-care innovation

Providing an "opt out" for the "every category" provider mandate

Cutting taxes on health care plans

Reforming the Basic Health Plan (BHP)

Enacting comprehensive medical malpractice reform

Protecting the rights of Washingtonians to make their own health-care choices.

Ericksen was hopeful the first item on the list, HB 3015, an AWB supported bill allowing the purchase of health care across state lines had a good chance of passage since it has major bipartisan support and is sponsored by Rep. Eileen Cody, D-West Seattle, the chair of the House Health Care and Wellness Committee. Other bills, however, supported by Republicans that would have accomplished Ericksen's other goals did not make this week's legislative cutoff, and are considered dead for this session.

On the national front, Ericksen believes the efforts of Congress and President Obama to overhaul health care are also essentially dead.

"One thing Washington state has got to stop doing is waiting for the federal government to reform health care," We're not going to have a comprehensive health care bill coming out of D.C."

Ericksen cautions his fellow lawmakers to be careful in how they go about reforming health care.

"The Legislature is an amazing place," said Ericksen. "It is full of people who want to do good, but when they try to reach too far, their attempts to help people limit choice and end up hurting the people they want to serve."

Lawmakers say it's time to fix workers' comp and UI

Jason Hagey — Wed, 03 Feb 2010 15:40:54 -0800

Rep. Steve Conway pledged to work with the business community to resolve some of the problems with Washington's workers' compensation system.

"Does it need reform? Yes," Conway, D-Tacoma, said during the labor and workforce panel discussion at AWB's Legislative Day in Olympia.

Without some changes, the system is a "potential powder keg" of rate increases in the coming years, he said.

Conway, who is chairman of the House Commerce & Labor Committee, declined to give a hearing to HB 2950, a bill backed by AWB that proposed a series of moderate but important reforms.

Conway acknowledged that many in the audience were disappointed the bill did not receive a hearing. The real reason it did not, he said, is because there was not enough time in short, 60-day legislative session.

The major components of the issue include compromise and release, establishing medical provider networks, and occupational diseases, Conway said.

"I am absolutely committed to working with you on these issues," he said.

Rep. Cary Condotta, R-Wenatchee, joined Conway on the panel, and expressed excitement over the possibility of making headway on the issue.

"It sounds we're at least breaking through the ice a little bit," Condotta said.

The lawmakers also agreed that something needs to be done to address the volatility in the state's unemployment insurance tax system.

Just as employers are beginning to recover from recession -- and should be hiring new workers -- they are hit with huge UI increases, which dampens the job market.

Judy Coovert, co-owner of Printcom in Burien, offered her business as Exhibit A during a question and answer session. "My rate went up 347 percent," Coovert said.

Conway said he looked into the issue and determined that the state's system for calculating rates, which relies in part on a "social tax."

"We need to go back and re-visit this social cost factor in the unemployment insurance taxes," Conway said.

The lawmakers differed in their view of the credit market.

Conway said he believes the persisting lack of credit, especially to the construction sector, is a major problem that needs to be addressed.

Condotta said he believes over-leveraging is what created the economic crisis, and it won't be fixed by increased lending.

Businesses and individuals have adjusted to the new economic reality, he said. "I'm concerned that government hasn't seen fit to do the same."

McKenna talks workplace efficiency, helps honor 2010 Better Workplace Award winners

Paul Schlienz — Wed, 03 Feb 2010 15:37:46 -0800

Creating better, more efficient and productive workplaces was the focus of Attorney General Rob McKenna's luncheon speech at AWB’s Legislative Day. Additionally, McKenna helped AWB honor 18 companies with the 2010 Better Workplace Awards.

Near the beginning of his speech, McKenna took a poll of the assembled employers by asking them for a show of hands of how many paid their employees with automatic increases based on the number of years a worker was on the job. No one raised their hands.

McKenna then asked how many employers rewarded their employees based on performance. Within seconds, the entire room was a sea of raised hands. McKenna lauded the private sector’s emphasis on demanding excellent performance from its employees and lamented the fact that government, to a large degree, has not followed the same course as the private sector.

The Attorney General’s Office, however, under McKenna’s direction, is one agency that is emphasizing performance of its employees over other factors like seniority.

“At the Attorney General’s Office, we still operate within the state personnel system but we’re also the first state agency to fully implement a performance management system—and the largest of the seven agencies who participate in this program,” said McKenna.

McKenna’s office developed a rigorous program to establish measurable goals for each employee and to recognize strong performance. Employees at his agency receive awards based on such factors as achievement, professional conduct, innovation and initiative.

'The reason that performance management works, McKenna said, is that “People who are recognized are inspired to do better. One of the biggest morale killers is someone who is not doing the job and getting the same wages as good workers.”

Additionally, the 10 to 15 percent of AG Office employees who do not receive awards are placed under close scrutiny to determine what is lacking in their performance and to determine what remedies are needed.

The agency’s results speak for themselves. Among the AG Office’s achievements:

It saved or recovered $175,743,544 for taxpayers in fiscal year 2008, in addition to providing intangible benefits to citizens.
Was recognized for implementing a plan to save money by pooling AGO cell phone user minutes.
Had seven AGO request bills and budget requests were enacted by the 2008 Legislature
Its Sexually Violent Predator Unit successfully committed 13 of the state’s worst sex offenders to the Special Commitment Center.

“If only all of state government operated this way,” said McKenna.

McKenna also introduced the winners of AWB’s Better Workplace Awards, which highlight outstanding employee programs and workplace initiatives by AWB member companies. An independent panel of judges reviews all the nominees and evaluates the programs based on a variety of criteria, including their impact on employee morale, increases in worker productivity, improvements in recruitment and retention and reductions in the cost of worker training. AWB also gives Continuous Commitment awards to member companies that have previously won the Better Workplace Award and have continued to be innovators in their efforts to improve the employee work environment.

“Your efforts are the kind of efforts we should implement across state government,” he told the honorees. “Improvements in worker safety not only protect your workforce but they save money in the long-run. The training and advancement programs recognized today demonstrate that investments in staff pay great dividends. And the innovative benefit and compensation programs honored today reflect the tremendous flexibility and commitment Washington’s businesses provide to their teams.”

The 2010 Better Workplace Award Winners are:

Acme Concrete Paving, Inc. (Spokane)
American Distributing (Marysville)
Andelcare (Bellevue)
Birds Eye Foods (Tacoma)
Cairncross & Hempelmann, P.S. (Seattle)
Check Masters (Lynnwood)
Columbia Vista Corp. (Vancouver)
Concur Technologies (Redmond)
Enterprise Rent-A-Car (Renton)
Haskins Steel Co., Inc. (Spokane)
Humanix Staffing & Recruiting (Spokane Valley)
Marine View Beverage, Inc. (Sumner)
Medical Imaging Northwest (Lynnwood)
Pacific Power (Yakima, Sunnyside and Walla Walla)
Skils’kin (Spokane)
St. Luke’s Rehabilitation Institute (Spokane)
Sterling Savings Bank (Spokane)
Tenaska Ferndale Cogeneration Station (Ferndale)

Photos from today's awards ceremony are available on the AWB Flickr account.