Washington Policy Blog

If This Van Pool's Rockin'

March 11, 2010 in Blog

If This Van Pool's Rockin'
You don't hear that much about van pools as a transportation option,
but researcher Michael Ennis from the Washington Policy Center says
we're overlooking a commuter method that's cheaper to operate than
light rail, buses or commuter rail...KUOW audio (about two-thirds of the way through)

Polling for ObamaCare

March 10, 2010 in Blog

For essentially the past ten months the public polling on ObamaCare has been remarkably unchanged. Roughly 55% of the Americans polled are either moderately or strongly opposed to the Democrats' health care reform while 40% of the public is in favor of the reform. Scott Rasmussen of Rasmussen Reports, a large national polling organization, and Doug Schoen offered a coherent reason in today's Wall Street Journal (here).

Most Americans (perhaps as many as 85%) are happy with their health care and their health insurance. The vast majority of Americans, however, are concerned with the economy, jobs, and the federal budget and deficit. Rasmussen and Schoen argue that the majority or people in this county feel the Administration's health care reform proposals will make the economy worse, will increase the federal budget and will enlarge the deficit.

Consequently, no matter how many speeches Obama gives nor how vigorously the Democrats argue for health care reform, the American public isn't buying it. Expanding the government's involvement in health care while claiming to not increase taxes or add to the deficit does not pass the credibility test with the American public.

Senators: No per diem for special session

March 10, 2010 in Blog

Several Senators introduced a bill today to prohibit lawmakers from receiving per diem if called into a special session.

According to SB 6883 - Restricting the payment of legislators' expenses:

"During any special session of the legislature convened within thirty days following a regular session of the legislature under Article II, section 12 of the state Constitution, no member of the legislature shall receive any allowances for per diem expenses under Title 44 RCW."

As we previously discussed, if a special session is called it should be done by the Legislature and not the Governor to ensure that it is limited to only the budget.

Congress hears how schools in other countries are organized to outperform U.S. schools

March 10, 2010 in Blog

In Canada, 15-year-old students are on average more than one school year ahead of American 15-year- olds.  Finland's school system is one of the best performing systems in the world, as it has highly qualified and trained teachers (weak teachers are forced out of the classroom).  South Korea has achieved a 96 percent high school graduation rate, the world's highest.  And Poland, in less than a decade, has raised the literacy skills of its 15-year-olds by the equivalent of almost a school year.  The New York Times reports these observations from yesterday's Congressional testimony of Andreas Schleicher, a senior education official at the Organization of Economic Cooperation and Development in Paris.

The education advantage enjoyed by the U.S. in the years after WWII is eroding quickly, says Mr. Schleicher, as a greater proportion of students in more and more countries graduate from high school and college and score higher on achievement tests than students in the United States. 

How are these countries achieving this? Here is what Mr. Schleicher says:

"More successful nations maintain central control over standards and curriculum, but give local schools more freedom from regulation.  The question for the U.S. is not just how many charter schools it establishes, but how to build the capacity for all schools to assume charter-like autonomy, as happens in some of the best-performing education systems."

This is very interesting.  Could it be possible that Mr. Schleicher has read Washington Policy Center's educational reform plan, Eight Practical Ways to Reverse the Decline of Public Schools ?   

More likely, principals in Canada, Finland, South Korea and Poland have the freedom they need from excessive regulation to focus on achieving results for students.  Success is only possible when principals have certain autonomy from regulation and authority and control over their budgets, staff and educational programs.  Principals can then be fairly held accountable for results.  

Principals in Washington State have no such autonomy or authority over their schools, and therefore cannot be held accountable for results---not yet anyway.

House ghost bill is failed Senate car insurance increase

March 10, 2010 in Blog

Riddle me this.

The Senate fails to adopt SB 6871 (car insurance increase) on March 8 by a vote of 20-26.

The House Ways and Means Committee holds a public hearing and schedules for executive session HB 2365 (a title only bill) for today.

A striker amendment is introduced to HB 2365 for the Committee to consider. The striker is the text of SB 6871 which fail!
ed the Senate.

The punch line is?

Another title only ghost bill on the agenda today

March 10, 2010 in Blog

Stop me if you've heard this before, a legislative committee is holding a public hearing and is scheduled to take executive action on a title only bill at 12 p.m. today.

Based on the one sentence text of the bill it may be more appropriately named the: "Everything and the kitchen sink so we can go home act of 2010."

The final language ultimately adopted (once it eventually becomes available) could be the best thing since sliced bread, but we won't know until after the fact.

Details, or lack thereof rather, below:



History of Bill

as of
Wednesday, March 10, 2010 7:50 AM

  Sponsors: Representative Linville
    Apr 16  First reading, referred to Ways & Means. (View Original Bill)

    Jan 11  By resolution, reintroduced and retained in present status.
    Mar 10  Scheduled for public hearing and executive session in the House Committee on Ways & Means at 12:00 PM. (Subject to change) (Committee Materials)
Go to history...
r />
Available Documents
Bill Documents Bill Digests Bill Reports
Original Bill
Bill Digest

Is a special session necessary?

March 9, 2010 in Blog

Running against a constitutional clock to adjourn in a few days some lawmakers are openly discussing the need for a special session to balance the budget and raise taxes on recession strained Washingtonians.

As noted by the Seattle Times:

"Past a longshot," was how Sen. Rodney Tom, D-Bellevue, summed up the odds Monday for an on-time finish.

The regular session is required under the state Constitution to end by midnight Thursday. A special session, which would have to be called by Gov. Chris Gregoire, would bring inevitable criticism about the extra $20,000-a-day cost to taxpayers for legislators' expenses.

But some Democratic leaders say a brief special session — say about a week — could be justified given the size of the state's budget woes.

39;re dealing with the largest fiscal problem the state Legislature has faced since the Great Depression," said Sen. Ed Murray, D-Seattle, one of the budget negotiators. "I think we need to go into a short special session to get it right."

After rejecting calls for a special session last fall when the state's finances further deteriorated, do lawmakers deserve overtime if they fail to do their job during the constitutional 60-days provided?

There is another solution as highlighted by House Speaker Pro Tempore Jeff Morris.

Morris told the Capitol Record:

"I think something that’s not been widely talked about is not adopting a budget at all !
is an option. We have a supplemental budget -– if we didn’!
t adopt one and if we got into a cash flow issue, the governor has the authority to start doing across-the-board cuts . . . if we can’t get people together with either an agreed to budget number or what taxes are need to buy state services back then that would be an option. That would probably be the most draconian but one that would be the most expedient."

According to RCW 43.88.110 (7):

"If at any time during the fiscal period the governor projects a
cash deficit in a particular fund or account as defined by RCW 43.88.050,
the governor shall make across-the-board reductions in allotments for
that particular fund or account so as to prevent a cash deficit, unless
the legislature has directed the liquidation of the cash deficit over
one or more fiscal periods . . ."

Lawmakers chose not to solve the state's budget deficit last fall and are on the verge of failing to do so again during the 60-day 2010 Session. State law provides a remedy for the Governor to balance the budget if the Legislature is unable to do so.

If a special session is called, however, it should be done by the Legislature and not the Governor. According to Article 2, Section 12 of the state Constitution, only a special session called by the Legislature is limited to a specific topic. If called by the Governor, lawmakers are free to consider any bill or policy.

The last thing taxpayers need is a "Christmas tree" special session where votes are traded in exchange for new shiny ornaments of spending or policies.

State and local bus ridership continues decline

March 9, 2010 in Blog

The American Public Transportation Association (APTA) has just released their 2009 fourth quarter ridership report for all public transit agencies across the country. Nationally, bus ridership is down about 5.15% from 2008. You might remember that for most transit agencies, ridership spiked to all time highs in 2008.

Likewise, in Washington State, most agencies saw bus ridership fall between 1%-15% between 2008 and 2009. Sound Transit and Spokane Transit actually posted modest gains in bus ridership over the same time period, a remarkable feat given a deepening recession. The following table shows bus ridership (as measured in passenger trips) between 2007 and 2009. (numbers reported in 000's)

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While most agencies experienced falling demand in 2009, all but one were able to retain some of the gains from the record highs in 2008. As the economy stabilizes further, however, bus ridership will probably return to its average growth rates.

The number of passenger trips taken on buses is extremely low when compared to total passenger trips in the region. On average, there are about 14 million passenger trips per day in the Puget Sound region. According to the APTA, regional buses serve only about 420,000 passenger trips per weekday. This means buses only carry about 3 percent of all daily trips in the Puget Sound r!

UPDATED: Life Sciences and Research Targeted with 100% Tax Increase

March 9, 2010 in Blog

If you were up late last night (technically this morning I guess) you could have seen the House pass its tax package on a 52-45 vote. 

There is much to discuss about the 162 page bill that can be read here, but interesting enough amongst the menu of tax increases is a tax on the very life science industry the Governor has been pushing for several years. 

The language in the bill doubles the B&O tax 0.5 percent, from 0.484% percent to 0.984% percent (a 100% tax increase) for non-profit research and development, while for-profit R&D will see a 33% increase in their rate, from 1.5% to 2.0%:

"Scientific research and development services including but not limited to research and development in the physical, engineering, and life sciences (such as agriculture, bacteriological, !
fit research and development should be under the 0.484% catego!
ry, not the 1.5% category, which means the 0.5% increase represents a doubling of the tax rate, not thirty-three percent increase.  However, for-profit research and development is under the 1.5% service category and would see a 33% increase if this bill becomes law.

Legislature proposes $130 million of fee increases

March 8, 2010 in Blog

Long has there been arguments over what constitutes a "fee" increase versus a "tax" increase. It seems each year the legislature fights over the definition, even if the minds are made up about increasing whatever it is they end up calling it.

Senate Bill 6444, the supplemental operating budget, includes $130 million in fee increases over the next ten years. Many of these will hit the business community right in the pocketbook -- and so it doesn't really matter if it is a "fee" or "tax" increase; the point is that someone has to pay.

Some highlights ($$ total over 10 years):

  • Acupuncture license fee -- $1.2 million
  • Adult family home license fee -- $44.2 million
  • Animal massage practitioner license fee -- $230,000
  • Boarding home license fee -- $9.6 million
  • Dental license fee -- $8.3 million
  • Farmworker housing fee -- $1 million
  • Mental health counselor license fee -- $2.2 million
  • Nursing license fee -- $26 million
  • Nursing Assistant license fee -- $10.2 million
  • Nursing Home license fee -- $11.4 million
  • Optometry license fee -- $655,000
  • Respiratory Therapist license fee -- $2.2 million
  • Child care provider license fee -- $5.4 million

Not all fees are bad. Sometimes the fees go towards programs or expenses that incur costs from a specific activity -- one that a general tax should not pay for. But, as in the tax discussion, the increase in fees should be weighed carefully against the benefits of levying the fee because it just raises the cost of doing business.

Idaho Governor to taxpayers: We'll love you if your state won't

March 8, 2010 in Blog

Tax policy is one of the ways states compete with each other for businesses. It looks like Idaho Governor Butch Otter is taking this to heart.

Today Otter released a "love letter" to businesses in Washington and Oregon. Here is Otter's letter in full:

            It’s true that a rising tide lifts all boats. But how those boats are handled makes a big difference when the tide is out and the waters get rough.

            State governments across the country are dealing with the continuing national recession in different ways. In Idaho, our focus is on stability. Predictable tax and regulatory policies are what our employers need in order to maintain their operations through t!
his rough patch, and it’s what employers elsewhere are looking for when they consider expanding or relocating.

            Other states, however, have chosen some interesting and in my view counterproductive approaches. Last month, for example, Oregon voters approved their legislature’s decision to raise taxes on the wealthy and on many businesses by $727 million. The immediate result was that my phone started ringing – and so did phones over at our Department of Commerce. It seems that word has spread about our Project 60 initiative, and that we are open for business, including theirs!

            The businesses that have called are emotional about this subject, and they have every right to be. Rising costs – especially during a recession – could put some employers out of business, or at least prompt layoffs. Mo!
re than 2,000 Oregonians joined a Facebook group to protest th!
e tax increase and commiserate about the repercussions. No less an Oregon business icon than Nike’s Phil Knight calls it “Oregon’s Assisted Suicide Law II.”

            Legislators in the state of Washington are talking about even bigger tax increases to tackle a budget deficit that figures to be as big as Idaho’s entire State budget. Businesses in both states are like those in Idaho; they are facing the most challenging times in decades, and even incremental cost increases can mean the difference between surviving and closing up.

            The problem in Oregon is that folks were convinced that state government was what needed to be shored up rather than the jobs- and revenue-producing private sector for which state government is supposed to work. As a result, they’re chasing some of their cash cows to the b!
order. And I welcome those businesses with open arms.

            We now are reaching out to hundreds of Oregon businesses, and will do the same with those in Washington if the legislature there follows Oregon’s lead. We aren’t offering many bells and whistles, but what we can offer is a business-friendly State government, a highly qualified and motivated work force, and communities where people understand that while government cannot be the solution to their problems it can and must be a champion for their own solutions.

            Businesses small and large are the backbone of Idaho’s economy. They employ our citizens, who in turn can provide for their families. Businesses and individuals also pay reasonable taxes that enable State and local governments to provide such essential services as public schools and publ!
ic safety. And make no mistake: Any business that doesn’t pass along !
its operating costs to consumers – including their tax bills – doesn’t stay in business for long.

            Of course, Oregon businesses can choose to accept their higher tax burden, and many will. After all, I understand that the quality of life over there is pretty good. But they have nothing on Idaho in that regard.

            For those Oregon businesses facing a decision about whether to lay off employees or close their doors entirely, I have a proposal: Move to Idaho. The Tax Foundation rates our corporate tax burden at 17th in the nation, compared to Oregon’s ranking of 31st.   Our individual tax burden is lower, too. Those kinds of numbers can make a real difference to a bottom line.

            For Oregonians reading!
this: Find the best Idaho community for your business by visiting us online at www.gemstateprospector.com. Or call our Department of Commerce toll free at 1-800-842-5858 for details about available land, buildings and incentives.

            I’ll continue to share information wherever I can about Project 60 and our business-smart state. Find out what so many folks already know – Idaho is a great place to live, to work, and to create career-path jobs and opportunities.

Does SB 5912 Put Our First Amendment Rights in Danger?

March 8, 2010 in Blog

For centuries American citizens have reaped the benefits of their right to free speech and freedom of the press to express political opinions.  However, lawmakers in Olympia are considering legislation that could endanger our protections guaranteed by the First Amendment to the United States Constitution.  Senate Bill 5912 proposes a taxpayer funded program for State Supreme Court candidates who obtain at least five hundred grassroots contributions.  Participating candidates who qualify would receive sufficient public funds to run a competitive campaign.

The intended Bill did not pass after a floor vote in the State Senate on February 16th due to a procedural challenge.  Republican Senator Don Benton of Vancouver halted proceedings with a point of order, arguing that the $3 surcharge on court fees  was actually a “tax” not a “fee” – therefore, the bill would need a 2/3 vote to pass rather than a majority.  There were 27 confirmed “yes” votes of the 49 members in the senate.  Thus, the bill was set aside as Benton closed his argument by affirming, “This bill would use fees citizens are required to pay to support judicial campaigns for the Washington State Supreme Court. I challenged the new surcharge because it is not connected to the purpose for which the fees were designed – to cover filing costs. Therefore, the surcharge qualified as a new tax under I-960.”

Does this now mean publicly funded judicial campaigns are out of the question in Washington?  The issue is still in limbo – ideas often times are revived after the cutoff and amended to other bills.  Campaign contributions and issue advocacy are forms of political speech and spending limitations violate First Amendment protections.  This idea could infringe upon the political expression of Washingtonians and inhibit the democratic process in our State.

-Teresa Totorica
Research Assistant, Washington Policy Center

Teacher's union drains $106 million away from public schools

March 8, 2010 in Blog

I was surprised to find out today that, according to Senator Mike Carrell, $106,330,450 million has been drained from public schools and put into something called the Rate Stabilization Reserve Trust Account, which has been placed under the control of the Washington Education Association.  See line 21 of last page of 2004-2008 990 federal tax returns, here

One of Senator Carrell's colleagues offered an amendment which would have transferred unused money to help pay for teacher health benefits.  The amendment was defeated. 

Before raising taxes, lawmakers should at least spend the money they already have, instead of maintaining this special reserve fund for the politically powerful teachers' union.

SBA Underlines Need for Small Business Expansion for True Job Growth

March 8, 2010 in Blog

A new statistical report from the U.S. Small Business Administration's Office of Advocacy underlines the link between job growth and small firm expansion. Often the conversation revolves around asking "how good is Washington state for business start-ups?" And while it is always important to lower the artificial barriers to market entry for new and aspiring entrepreneurs, the new SBA report points out that for true private sector job growth the focus should be on small businesses expanding their workforce. 

From December 2007 to December 2009, the United States lost 7 million net jobs. In that same period Washington state lost 95,950 jobs. Lawmakers on both sides of the aisle are looking at policies to recoup some of those lost jobs. So, how best to go about t!

According to the SBA report, targeting growth in small business is a wise investment; even more so than in new businesses. As the report points out, "Most small firms start small, stay small, and close just a few years after opening." But this is offset by the fact that "Almost all businesses start small...over the last 20 years, 95 percent of new employer firms started with fewer than 20 employees."

There is a very strong basis for the claim that firm formation has a strong impact on overall job creation, but then again, about half of new firms survive five years or more. So, the SBA points out that, in actuality, "the bulk of job flows takes place in existing firms' expansions and contractions." In fact, depending on what data set you look at, small businesses (using the under-500 employee federal standard) account for 65% or 88% of new net jobs nationwide. 

The authors of this report echo WPC assertions that !
small businesses are a logical group to look to for job recove!
ry as they have historically carried our economy out of recessions. Looking back, during the previous recession it was firms with fewer than 20 employees that led the jobs recovery, while businesses with more than 500 employee continued to bleed jobs and firms with 20-499 also lost jobs (but to a lesser extent as the big guys). The recession prior to that, in the early 1990s, it was the firms sized 20-499 that lead employment expansion, while the very small and very large firms dragged behind. 

Because our current recession is steeped so heavily in credit market woes, the authors expect to see net job gains primarily in the 20-499 sector, as opposed to the under-20 sector.

One interesting side note, however, is the declining size of new startups. Essentially, even as more people start businesses, the number of employees in those new businesses is becoming less and less. Pure speculation on my part is that the advent of the Internet, home-based businesses, !
and the simple fact that fewer people can do more through technology has something to do with this.  

Two other good resources regarding data analysis of small firm hiring and the impact on the economy include, "Where Will the Jobs Come From," and "Jobs Created From Business Startups in the United States," both from the Kauffman Foundation. 

Most transparent Legislature ever?

March 8, 2010 in Blog

Senate Majority Leader Lisa Brown was asked by reporters last Friday if the public has been given enough opportunity to participate in the discussion on the various tax proposals now being adopted.

According to the Capitol Record Brown responded:

“We’re far from done yet,” she said, when asked whether the public was given enough chance to weigh in on some of the proposals.

“I think our processes are much more transparent than when I entered the Legislature,” she said. “I don’t think members are being somehow secluded from outside influence.”

If this is what legislative transparency l!
ooks like I'd hate to see an opaque process.

Safe to say some don't share Brown's assessment of the Legislature being transparent: