This Session, There’s a Little Something for Everyone
March 2008
Looking back can give one a sense of pessimism or optimism. On one hand you can observe failures; on the other hand you can see room for improvement and discern a productive plan for the future.
The recently adjourned legislative session provides fertile ground for teeth gnashing as well as hope for the small business community. Concerns over legislation are common because, while one single piece of legislation may not crash an industry or particular business, a cluster of new regulations carries a lot more potential for harm. As Polish wit Stanislaw Jerzy Slec said, “No snowflake in an avalanche ever feels responsible.”
First, the bad news—a litany of do-nothing, feel-good legislation escaped the common-sense chopping block in Olympia the past few weeks. These included proposals to limit the miles you can drive your car, health care plans for small businesses that unwisely reduces choice and hamstrings the health insurance industry, and partial implementation of a paid family leave plan that still does not provide adequate funding.
Other frightening proposals that were introduced this year but will not be enacted included a tax based on the size of your car engine, unemployment insurance benefits for those in the midst of labor disputes, unionization of foster parents, the banishment of plastic bags from grocery stores, and an incredibly vague workplace-bullying bill.
It is interesting that the short legislative session is always full of legislation that is not designed to move – rather, the proposals are designed to placate supporters or raise the hackles of the opposition.
The better news—several laws passed that will help businesses weed through government bureaucracy, even if the current regime of heavy regulation and high taxes remain. Businesses also received some much-needed municipal tax clarification help with the looming Streamline Sales and Use Tax that goes into effect this July 1.
It is rather unfortunate that the small business community is resigned to a state of mind where the large celebrations come at the squashing of harmful legislation rather than the passing of helpful proposals.
But, small business owners are often content that someone told state government, “stop, you don’t get to interfere in this part of the business.” Truth be told, there are not many areas left of a business operation for policymakers to regulate.
So what about the future? If the small business community took some pleasure in bad proposals that died, what can they look forward to?
If you consider today’s missed opportunity tomorrow’s plan for action, then here is a list of ideas to shoot for next year.
First, if policymakers insist on moving forward with the paid family leave program they should reform it to exempt businesses that already provide the help. A long-feared unintended consequence of the paid family leave program is that businesses currently providing this benefit will drop their program in lieu of the state’s, which is most likely far less generous to employees. An exemption from the state program would help encourage other businesses to create their own systems.
Second, business and occupation tax reform. With almost 600 exemptions in the state’s tax code—a third of the exemptions applying to the B&O tax—it still punishes new and unprofitable businesses, and is the government’s way of micromanaging economic development through taxation policy. As our government continues to grow, it is eating up a larger share of the resources that provide for private sector economic development—the backbone of the economy. This could potentially lead to future tax increases, which is something that would preempt substantive tax reform.
Third, as health care costs continue to rise faster than the price of oil, policymakers need to stop beating around the bush and pass meaningful reform that allows for more choice and more competition. The dominant proposals in the past few years have all focused on reigning in costs through regulation or restricting plan flexibility. Small businesses take pride in their ability to adapt quickly to changing market fluctuations. The health insurance industry currently moves with the speed of a beached whale in large part because the health insurance market is so overly regulated and micromanaged by state bureaucracies.
It is an election year, which meant no boat rocking was bound to take place, regardless of the needs of the small business community. Policymakers this session did not pass many bills to help small businesses, nor were many doomsday bills passed. If you are an optimist, that means the future holds plenty of opportunities. And if you are a pessimist? Then you too have plenty of material to mull over.
Carl Gipson is director for small business and technology at Washington Policy Center. Contact him at 206.937.9691 or cgipson@washingtonpolicy.org. Visit www.washingtonpolicy.org for more information.