Business Climate

WPC's Center for Small Business focuses on improving Washington's small business climate by working closely with business owners and policymakers. The Center provides accurate information and analysis on the state's regulatory climate, tax structure, health insurance systems, and more.

What's New

Speaking For Business

May 1, 2010 in In the News
Seattle Business Magazine
Seattle Business Magazine
Saturday, May 1, 2010

WPC offers forward looking policy ideas

April 29, 2010 in In the News
Wenatchee Business Journal
Wenatchee Business Journal
Thursday, April 29, 2010

Ghost Bills and Closed Meetings Fail to Solve Olympia's Budget Woes

April 17, 2010 in Publications

With Democrats very much in control in Olympia, and Republicans on the sidelines, one would expect the legislature to close this year’s looming $2.8 billion budget gap with orderly dispatch. Instead Washingtonians were treated to a dizzying round of closed-door meetings, surprise hearings, do-overs, missed deadlines and bills with no text.

Budget Brings a Cavalcade of Taxes

April 17, 2010 in Publications

Puget Sound Business Journal published this op-ed on April 23, 2010.

The 2009-11 supplemental budget recently enacted by the state Legislature, which increases taxes by $800 million, does not deal a fatal blow to any particular industry. Instead, legislators this year decided on the “death by a thousand cuts” approach to raising taxes.

Unfortunately, much of the tax increase falls directly on consumers and the business community, big and small.

State Workers' Comp Supplemental Pension Fund Bailed Out

April 16, 2010 in Blog

The Department of Labor and Industries this month announced that one of the funds that comprise our state's workers' comp system required a short-term loan in order to mete out its statutorily-required benefits to pensioners. L&I needs to borrow $15 million from the $3.2 billion Pension Fund. The Department says it will fully repay the loan within 45 days and with interest. 

However, according to a document issued by L&I, another rate increase to employers is possible in the near future; even if they acknowledge that rate increases have damaging effects:

"Q: Is there an alternative to an inter-fund transfer?
A: A mid-year SPF rate increase would have been another way to deal with this shortfall. But this could have a detrimental effect on businesse!
s and workers who pay this insurance premium
." (emphasis added)

Why did this fund dry up? According to the Department it had to do with the substantial decrease in hours worked by employees -- a 6.4% decrease from Q3 2008 to Q3 2009. Since part of the workers' comp premiums are based on the number of hours worked, and because Washington lost well over 100,000 private-sector jobs, the fund took a hit.

But that's not all. 

"Q: Did L&I raise premiums in the Supplemental Pension Fund in 2010?
A: The SPF premium rate was increased 16% in 2010, based on projected work hours and liabilities. This increase will help maintain the balance as money comes into the fund and is paid out. However, we expect to see other quarterly shortfalls in the SPF this year and in the first quarter of 2011 due to the depleted asset balance, depending on when reported h!
ours begin to increase as the state comes out of the recession!
." (emphasis added)

It is apparent that L&I is facing financial challenges, as are many state agencies. And while some will say the national economy is the cause of the fiscal problems, I would argue that the recession is actually showing the structural deficiencies in the system. Policymakers should use this crisis as an opportunity to reform the system so that the small business community will not have to fear mid-year rate increases or large future rate increases during tough economic times. 

But unfortunately, nothing was done to improve the system during the recently-concluded legislative session and so the business co!
mmunity is left to wonder, again, if another large rate increase is heading their way.

Update: Erik Smith over at Washington State Wire has a good run down on the situation from both labor and business perspectives.  

Workers' Comp fight for the ballot officially underway

April 15, 2010 in Blog

The Building Industry Association of Washington announced yesterday intentions to break up the state's monopoly of the workers comp system. The goal, according to BIAW, is to bring Washington in line with 46 other states that allow competition from private insurers in the industrial insurance market. 

In the wake of the 7.6% rate increase for 2010, the news that one of the big Workers' Comp funds stands a decent chance of becoming insolvent in the next few years, and the fact that Workers' Comp rates should have actually gone up almost 20% in order to actually p!
ay for its liabilities, BIAW will probably have some momentum behind its effort -- not to mention the fact that absolutely no reforms were even entertained during this last legislative session. 

The labor unions will come out hard and fast against this initiative, so expect a battle royale this fall.

Some background reading on Workers' Comp in Washington state: