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

Study: Tax Increases Threaten More Job Losses in Washington

January 11, 2010 in In the News
The Biz Coach
Source: 
The Biz Coach
Date: 
Monday, January 11, 2010

Tax Increases Will Cost Even More Washingtonians Their Jobs

January 11, 2010 in In the News
National Center for Policy Analysis
Source: 
National Center for Policy Analysis
Date: 
Monday, January 11, 2010

Possible tax increase could hurt workers (video)

January 11, 2010 in In the News
KNDU TV (Tri-Cities)
Source: 
KNDU TV (Tri-Cities)
Date: 
Monday, January 11, 2010

State taxes due to rise in 2010, hurting small business recovery

January 10, 2010 in In the News
Snohomish County Business Journal
Source: 
Snohomish County Business Journal
Date: 
Friday, January 1, 2010

Tech Policy Summit addresses broadband rollout

January 7, 2010 in Blog

CES_TPS Panel There is no question of the Internet's importance to our social and commercial way of life. It took about a decade, from the early 1990s until the early 2000s for society to truly wake up to the potential benefits that ubiquitous Internet connectivity could bring businesses and individuals. But, for as much connectivity we as a society have experienced (seriously, who doesn't have an email address or smartphone or laptop nowadays) there are plenty of ! households in this nation that either cannot connect or chose not to.

Spokesman-Review: Reform Workers' Comp in 2010

January 6, 2010 in Blog

The Spokesman-Review out of Spokane today editorializes about one aspect of workers' comp reform that businesses both large and small have been asking for years: the ability to agree to a settlement option with injured employees who have experienced injuries so bad that they require permanent disability benefits. 

The editorial board opines:

"Those workers would have the choice of either taking a full payment up front or collecting monthly payments the rest of their lives. The proposal includes safeguards to assure that an injured worker is fully informed about the advantages and disadvantages, usually with advice from a lawyer or a settlement officer at the Board of Industrial Insurance Appeals. The board’s appro!
val is required for any settlement, and the worker has a month to change his or her mind."

Opposition to this move often comes from labor groups concerned that workers might lose out on benefits. But no one pushing this option is actually asking for benefits to be lowered. This move would help clear up an administration problem for, in particular, small businesses, by closing the books on a claim earlier, while still giving the appropriate benefits to the injured worker. 

Again, the paper says,



"The settlement option doesn’t save the system money by shortchanging workers; it does so by avoiding years of administrative overhead expenses incurred to manage lifelong cases.

This reasonable reform won’t fix all the problems with Washington’s industrial insurance system, but it’s an important part of the solution."

Agreed. Look for more suggestions on fixing the state's workers' comp system in the upcoming small
 business post-conference report, to be released later this month. 

Auditor Sounds Alarm About Worker's Comp

January 6, 2010 in In the News
Washington State Wire
Source: 
Washington State Wire
Date: 
Wednesday, January 6, 2010

Audit hammers state's Workers' Comp system

January 5, 2010 in Blog

The state's auditor is required by law to conduct annual audits of the financial statements and actuarial assessments of the Workers' Compensation Fund. The latest audit shows that the Workers' Comp funds may be heading towards insolvency within as little as two years.

The workers' compensation system is made up of three components: the Medical Aid Fund, which pays for medical care for claimant; the Accident Fund, which pays non-medical claim costs such as wage replacement benefits, most vocational rehab, and disability and survivor benefits; and the Pension Reserve Fund, which pays benefits to all permanently disable pensioners. Both employers and employees pay L&I premiums.

It is no surprise that the contingency reserves for the Workers' Comp trust fund dipped substantially during the time in question (July 1, 2008 through June 30, 2009) gi!
ven what happened with the stock market and the economy in general, as the audit points out.

But one of the worries that we, and other business owners and groups have been saying in response to L&I's announcement of a 7.6% rate increase for 2010, is that it is not enough. No, businesses don't want an even higher increase in workers' comp taxes. The point is that the system is so broken, that the 7.6% increase during the worst recession in 70 years is not enough to make the system whole; which means that the tactic of raising taxes year after year in this area should be rethought. It's time for different measures. 

The audit says that there is 

"A 74.4 percent chance of insolvency in the Accident Fund within two years, 81.4 percent within three years and 89.5 percent within five years. A 3.9 percent probability o!
f insolvency in the Medical Aid Fund in two years, 12.9 percen!
t within three years and 26.5 percent within five years."

So, what if the Department wanted to raise rates in order to shore up the funds' possible insolvency? 

"The Actuarial firm calculated a range of break-even rate level changes...the firm's "best" estimate is that a 33 percent rate increase would be necessary for the Accident Fund to break even. The Department estimates that a 23.3 percent rate increase would be necessary for the Accident Fund to break even. The Actuarial firm believes the Department's estimate is outside a range of reasonable estimates." [emphasis added]

"For the Medical Aid Fund, the firm's "best" estimate is that a 24.5 percent rate increase would be necessary to break even. The Department estimates that a 21.5 percent rate increase would be necessary for the Medical Aid Fund to break even. The firm belie!
ves the Department's estimate is within range of reasonable estimates."

In other words, the Department (L&I) underestimated how much rates would have to go up in order to stave off insolvency in the Accident Fund.  But for 2010, the L&I approved 7.6% rate increase reflects in part a 4.5 percent rate increase in the Accident Fund and 8.4 percent increase in the Medical Aid Fund.

The business community has been sounding the bell about an unsustainable workers' comp system for awhile now, and that cost containment measures are needed in order to lower costs to the system. The Department recognized that raising workers' comp taxes by the 20-30% needed to shore up the funds would have resulted in an unrealistic burden on employers and employees. But let's hope the Department and policymakers also recognize that simply putting off higher workers' comp taxes until the economy improves is not the solution -- cutting co!
sts is. 

The Workers’ Comp Chokehold

January 4, 2010 in In the News
Seattle Business Magazine
Source: 
Seattle Business Magazine
Date: 
Monday, January 4, 2010