The Governor’s State of the State address today asked the legislature for four policy changes—pass a budget; ask voters to approve a half-penny sales tax increase; pass her school reforms; and, pass a major transportation and jobs package. A fifth request was snuck in at the end of the speech, to pass a marriage equality bill.
Noticeably absent was any proposal to improve the state’s small business climate.
Small businesses have traditionally led the way out of recession, creating the jobs that stimulate the economy. The only job creation mentioned in the governor’s State of the State are those that would be created with the Governor’s proposed $3.6 billion transportation plan, funded by an unspecified assortment of “fee” increases.
The proven method to get the state’s economy back on track is not by government officials creating jobs, rather by providing small businesses an environment in which they can thrive and create jobs.
Small business owners, entrepreneurs and policymakers from around the state participated in the Washington Policy Center’s Statewide Small Business Conference on September 15, 2011. The conference attendees identified 7 key policy reforms needed to improve the state’s small business climate, which will spur job creation and speed economic recovery.
WPC sent the business community’s 7 top policy recommendations to the governor on November 10, 2011.
- Workers’ Compensation: Revisit the voluntary settlement agreement as passed by the state Senate in 2011 – $1.2 billion
HB 2123, allowing workers aged 55 and older to choose structured settlement agreements for workers’ compensation claims, will save the state an estimated $1.12 billion over four years. Rejected Senate bill SB 5566 would have allowed voluntary settlement agreements as an added option for all workers, giving them the choice of taking lump sum one-time payments, periodic payments for a set length of time, or traditional indefinite workers compensation. SB 5566 would have saved $1.2 billion in just two years, saving the state twice as much as it is currently saving under HB 2123.
- Unemployment Insurance: Reform the displaced worker retraining program
Washington’s unemployment insurance system imposes the second highest per-employee cost in the nation, which has resulted in large tax increases for employers. Tightening enrollment in our worker-retraining program could reduce the costs of our unemployment system. There are currently 12,738 people enrolled in colleges through the retraining program, 181% of the 7,036 students allocated in the budget. Clearly this rate of overuse is unsustainable. Tightening enrollment requirements would ensure only people who would most benefit from retraining have access to these limited funds.
- Tax Simplification: Simplify sales taxes by using an ‘origin-based’ tax (as opposed to a ‘destination-based’ tax) and creating a flat rate for out-of-state businesses
Washington implemented a destination-based sales tax in 2008 as part of a national effort to streamline sales taxes. Unfortunately, the destination sales tax streamlines nothing for local Washingtonian businesses. Under the old system of origin-based taxes, a retailer only had to keep track of sales tax laws in their locale. Now, they must learn a new set of rules for every jurisdiction where they ship a product. The burden of managing multiple sales taxes limits businesses from expanding into new markets outside their jurisdiction. Similarly, small business owners expressed support for a flat rate sales tax for out-of-state businesses, which would lead to greater investment in Washington State and would simplify business deals across state lines.
- Regulatory Reform: Review regulations to ensure that Washington rules don’t exceed federal regulations
Regulations translate into business costs that small business owners must pass on to their customers. By enacting state regulations that are more stringent than federal laws, lawmakers force Washington businesses to operate at a competitive disadvantage compared to businesses in other states. Washington officials have also created unnecessarily high operating costs for the companies that drive Washington’s economy. While large companies have the ability to absorb these extra costs, complying with each new regulation is a struggle for small businesses.
- Health Care: Enact Tort Reform
Businesses have long advocated for reforming our medical liability system. The current system is inefficient and unpredictable, increasing health care costs for business owners around the state. By establishing a cap on the non-economic damages which a jury can award, eliminating joint and several liability, and implementing a predictable schedule of damages and an early-offer program, health care costs could be reduced by as much as 10%. These savings would be passed on to businesses and their customers, giving our economy a sizable boost.
- Transportation: Do no harm in transportation policy – do not reduce lane capacity
Mobility is key to a small business’s ability to survive and thrive. Transportation projects should focus on improving travel times for the 85% of travelers who use motor vehicles. Instead, many of our projects disproportionately focus on the 15% who use alternative forms of transportation. Worse, a number of projects actually reduce lane capacity, rather than expand it. Plans such as replacing the 520 bridge with no increase in general purpose lanes, reducing Highway 99 from six lanes to four lanes, and replacing the reversible center HOV lanes on I-90 with light rail, will increase commute times and make it more expensive to run a successful business. Under current plans, the number of unrestricted general-purpose highway lanes through Seattle will decrease over the next 15 years.
- Mandatory Paid Sick Leave: Do not follow Seattle in enacting statewide paid sick leave
Business leaders were adamant that mandatory paid sick leave significantly increases their operating costs, thereby increasing costs to their customers. The one-size-fits-all mandate prevents businesses from offering more cost-effective benefits, such as telecommuting or a flexible work schedule to address employee illness. Business owners do not want to see this inefficiency and its higher costs imposed at a state level.
