Olympia Business Watch

Trial Lawyers Astroturf Ref. 67

Congratulations to Cheryl Tucker at The News Tribune. In the papers Inside the Editorial Page blog, Tucker describes the WSTLA letter-writing campaign against Referendum 67.

The letter writers fail to identify themselves as lawyers (or staff of legal firms), although a quick check of Google and the Yellow Pages confirms that that's exactly what they are. You'd think with all those law degrees between them that the mouthpieces could come up with their own words and not have to crib.

Why are lawyers so intent on passing Ref. 67? It might have something to do with how the measure calls for up to triple damages plus attorney fees for claimants if an insurer is found to have "unreasonably" denied a claim for coverage or payment of benefits.

She adds that the biggest opponents to the R-67 are insurance companies. AWB and a lot of business groups also oppose the measure, figuring it will drive up insurance costs, hurt small businesses, and lead to a deluge of opportunistic litigation and hurried settlements.

She also says:

I fully expect we'll get a similar deluge of anti-67 letters, and they're likely to be maddeningly similar, too.

I hope not. We can do better. For a good (and brief) video overview of the referendum, check out my interview with AWB general counsel Kris Tefft.

 

Public Records: The Empire Strikes Back?

At AWB we've been generally supportive of recent open government and public records initiatives in Washington, and have written supportively about federal reform efforts.   

Over the weekend, this issue reached a boil as news came that Governor Gregoire has appointed Seattle City Attorney Tom Carr to chair the 13-member "Sunshine Committee" set up by the Legislature to review exemptions in the state's public disclosure law.  Not everyone is pleased. 

This puts "Darth Vader" in charge of the committee, charges Greg Overstreet, formerly the AG's Open Government ombudsman, at his new law firm's Open Government blog.  Open government advocates have crossed light sabers with Carr's client before and have not forgotten.   

This controversy will likely burn hot before it burns out.  David Postman picked it up, as did Strange Bedfellows and Sound Politics.  But it'll go beyond the blogosphere.  Overstreet is definitely right when he says:

We suspect the editorial pages of the papers around the state will be discussing the Carr appointment in the coming days .... Just a hunch.

And it won't be a love-fest.  It's hard to understate the zealousness of the newspapers on public records issues.  This should prove the old adage about picking fights with those who buy ink by the barrel.      

At the same time, Tim Ford, Overstreet's successor as the Open Government Ombudsman in the AG's office, casts a more conciliatory tone, quoted in the PI:

"I can work with anybody, and we're going to have productive meetings," he said.

We hope it all works out.  May the Force be with you.

Brunell Column: Business & Government Should Play by the Same Rules

Don's column in today's Columbian considers how lighter regulation of government finance places taxpayers and investors at risk. Citing a recent speech by Christopher Cox, Don writes:

Christopher Cox, chairman of the Securities and Exchange Commission, says shaky financial management in the public sector puts investors and taxpayers at risk. He's calling for tougher scrutiny of state and local governments.

To make his case, Cox points to the financial collapse of New York City in the 1970s. A decade later, our state added buckets of red ink to the ledger with the billion-dollar default by the Washington Public Power Supply System.

What's happening here?

Washington performs better than many state and local governments, both in disclosure and performance. Still, we could do better.

Washington owes its public employee pension fund $5.7 billion. ... for the past four years, Washington lawmakers skipped the recommended payments to whittle down that debt.

This year, despite sitting on a $2 billion surplus, state lawmakers decided not to pay those missed payments. And because pension funds are invested, just one missed payment costs taxpayers $564 million in lost investment income.

 

it's a good column.

US Chamber, NAM, support FOIA reforms

In today's New York Times, the business section looks at Congressional legislation pending to reform the federal Freedom of Information Act (FOIA), the law that allows citizens, trade associations, and of course journalists, to pierce the veil of obscurity that often surrounds the machinery of government.

The Times, citing examples, notes the federal sunshine law has stopped working, resulting in wrongful denial of public records requests and abusive delays by federal agencies without any meaningful consequences.

And so the oddly-if-optimistically titled "Openness Promotes Effectiveness in Our National Government Act of 2007" (OPEONGA?) is moving through the US Senate, with support from AWB national partners the US Chamber of Commerce and the National Association of Manufacturers.  It would among other things provide tight deadlines for complying with records requests, provide consequences for wrongful denial, and establish an ombudsman to resolve disputes.

This may be deja vu for Open Government watchers in Washington.  We've been through much the same debate over our own Public Disclosure Act the last few legislative sessions.  Attorney General Rob McKenna has made a cause celebre of bringing more sunshine to government, making public records requests more user friendly, and putting place our own state open government ombudsman.  Progress in this regard, which has been substantial, is nicely cataloged on his website.

Personally-identifying information and private commercial information in the hands of state regulators ought to be shielded for important policy reasons.  But beyond that, sunshine in government state and federal -- is essential to accountability.  A wag put it best recently, saying, "the era of 'trust me' government is over."    

Brunell on Beatles, and Bugs

Don's column in the Columbian last week took a look at forest management practices.

The Kenai Peninsula may be best known for its world-famous salmon runs, but it is the area's white spruce forests that have captured the spotlight now, underscoring serious problems with our forest management practices.

Bark beetle infestations have turned the Kenai's once rich, green forests into a barren landscape of dead and dying trees. Because these trees are fire hazards, wildfires in Alaska have jumped threefold since 2004 - and Alaskans are bracing for another record fire year.

A related beetle preys on western inland forests. The problem could be managed better.

To deal with these threats, President Bush proposed his Healthy Forests Initiative a couple of years ago. It would create firebreaks, salvage commercially valuable burned timber, and replant the forests outside wilderness areas and national parks. The idea was quickly shot down by folks in Congress who believe that any timber harvesting in national forests is taboo.

 

Given the number of acres scarred by wildfires, Congress should reconsider that policy. ...

Wouldn't it be wiser to log the beetle-killed trees while they have commercial value and put people to work on logging sites and in sawmills?

Wouldn't it be better to thin forests to prevent the devastation caused by beetle infestations and forest fires?

Yes.

Will Negotiations Keep Referendum 67 off the ballot

David Postman blogs today that Safeco and PEMCO insurance companies may take a pass on Referendum 67.  a group called Consumers Against Higher Insurance Rates had filed a referendum to put to a public vote Engrossed Senate Substitute Bill 5726, which passed last session flying under the Orwellian banner "Insurance Fair Conduct Act."

There's more to say about all this, but start with Postman's blog and follow the links.

UPDATE Postman clarifies Safeco's position here.

Safeco has, in fact, committed to donating about $230,000 to the Ref. 67 campaign, adding to what is already a $650,000 campaign account to qualify the measure for the November ballot. But the company is also committed to working with Gov. Christine Gregoire, legislators and trial attorneys, to see if there can be agreement on a package of changes to the law.

At this time, it seems highly like that the initiative will gather the signatures required to qualify the referendum.

Good Counsel on Housing, Planning and Transportation

Steve Francks, CEO of the Washington Realtors, has a thought-provoking op-ed in today's Seattle Times. The lack of affordable housing near job centers puts a lot of people on the road for hours a day. A Realtor once explained it to me by saying, "buyers drive 'til they qualify."

Here's Steve's thought:

The price for ignoring the relationships among transportation, employment and housing needs is degradation of transportation, environmental and economic resources, which threatens everyone's quality of life. While policymakers struggle to find a way to pay for more roads, poor growth planning is forcing more middle-income families onto the highways, where they suffer long commutes to live in a home that fits the family and the budget.

By thinking and planning more precisely and more creatively, we can get commuters off the roads and back into the communities where they work and, by all rights, should be able to afford to live.

It's a good commentary. Read the whole thing.

Family Leave Still Alive in Limbo

As we mentioned yesterday, the governor thinks voters should have a say on a new family leave tax. Here's a link to the AP story in the Olympian.

The News Tribune says family leave might die or got to the voters.

I prefer the former.

Adam Wilson's blog in the Olympian sees the measure splitting Democrats.

But not quite like this.

Big Push on Family Leave Bill

Family leave legislation passed the  Senate March 14. But having made it out of House Appropriation Committee March 31 as title-only bill, it's far from a done deal, as Ralph Thomas reports in the Seattle Times.

That's good. Along with other business groups and several editorial pages (for example, here and here), AWB believes this is a jobkiller.

Rachel La Corte of AP writes on the bill in a weekend story. In it, AWB member Judy Coovert opposes the mandate.

"There is a desperate need for balance between people's work lives and their family lives," said Coovert, co-owner of the company that manufactures and distributes printing and corporate marketing material. "We've done that ourselves and achieved that balance. We've done that without government mandate."

Don Brunell makes a similar point in the article.

"We believe that employers have the responsibility to provide that kind of leave to their folks and have good benefits, period," said Don Brunell, president of the Association of Washington Business. "But we don't encourage them to rely upon state programs."

A look at the bill's fiscal note shows that the bureaucracy claims more than 40 percent of the program budget in the first biennium in which the legislation would take effect. Among the expenses: $600 task chairs for the 83 new employees required at L&I. Nice.

Two View of Fire Retardent Ban

When you're lobbying a complicated issue, it's hard to beat a supportive front-page story in one of the state's larger daily newspapers. The PI obliged supporters of HB 1024 today.

Here's how they frame the issue.

If approved, the new law would ban the sale and manufacture of deca-containing mattresses in Washington beginning next year. A 2005 survey by the Ecology Department found that mattress makers in the state already stopped its use. Deca can be replaced by a safer chemical called melamine or the mattress can be built with a fire-resistant barrier, such as one made of naturally fire-resistant fabrics.

The bigger fight is over a deca ban in upholstered, residential furniture and in computers and TVs. That last item is important because between 45 percent to 80 percent of the deca use is in TVs. ...

They mention us.

Opponents of the legislation -- primarily the PBDE industry and the Association of Washington Business -- object to passing a ban before the deca alternative is identified.

The Seattle Times editorial today agrees.

The bill, House Bill 1024, is full of holes, and for a good reason: The case for doing something decisive has not been made.

Of course, it's not a front page story. But it makes good sense.

The Columbian Swings at Paid Family Leave

The Columbian editorial Monday takes a dim view of the swinging hammock passed by the Senate last week.

Governments should create safety nets for people experiencing crises. And Washington state has a variety of safety nets in place. But now lawmakers are poised to create a hammock for all Washingtonians -- regardless of financial need -- and even paid in part by people who will never take a turn in the hammock.

Senate Bill 5659, passed by the Senate Wednesday, would grant five weeks of paid family leave to any worker taking time off from his or her job to care for a newborn or ailing family member. Who pays for the hammock? That'd be all of us.

It's a bad idea.

Lawmakers supporting this new entitlement think that at 2 cents an hour, the price tag isn't offensive. But local, state and federal taxes add up. ...

Neither businesses nor taxpayers should be required to pay people for work they do not do, beyond the customary vacation pay and sick pay. And governments should stick to safety net programs for people in true hardship, rather than hand out money to anyone who takes time off to care for a family member. Call your state representatives and urge a "no" vote on establishing a state-run family and medical leave insurance program.

Excellent idea.

PI Acknowledges AWB Concerns with Climate Change Legislation

In a Sunday editorial, the Seattle PI applauds Senate passage of Gov. Gregoire's proposed climate change legislation, SB 6001.

Critical global warming legislation is now in the House of Representatives. SB6001, which passed the Senate on a strong 35-13 vote, would put a variety of good ideas into force, helping the state stay somewhat abreast of other areas' measures.

The measure would give the force of law to global warming goals issued by Gov. Chris Gregoire. Although some would like to slow down for more discussion among stakeholders, the goals are modest enough to warrant going ahead.

Now, that's a predictable editorial stance from the PI. Still, we were mildly surprised by this acknowledgment.

As on some other parts of the bill, the Association of Washington Business would prefer waiting on the stakeholder process. There could be a healthy compromise here: a moratorium on allowing the new greenhouse-related investments while the discussions go on.

For an informative podcast on the issue, listen to Mike Hudson's Lobby Lunch interview with Tony Usibelli of the state department of Community, Trade and Economic Development.

Union Bulletin Questions Senate Family Leave Bill

Saturday, the Walla Walla Union Bulletin raised timely questions about the Family Lave Bill recently passed by the State Senate. (See details in this post.)

The U-B editorial highlights a key employer concern.

The proposed supplement of $250, while certainly better than nothing, is not enough money to make ends meet if someone is off work for five weeks. It's likely - if not certain - that there will be a push to increase the supplement, much like there is constant pressure to boost the minimum wage to a ``living'' or ``family'' wage.

This would drive up the cost to taxpayers. Inevitably, there would be a few who would abuse the system.

We fear this well-intended plan will balloon out of control. As it grows, it will become an entitlement that fuels resentment. Taxpayers won't be happy about the cost and employers - as well as fellow employees - could grow weary of having to cover for employees away from their jobs for three months

Further, as AWB's Kriss Tefft points out in an e-mail to me:

One of the arguments against the leave is the $250 will never be enough; that it is below minimum wage; that advocates will come back for more.  An important thing to keep in mind in that regard is that unlike workers’ comp time loss, which is not subject to taxation, the paid leave benefit in California has been held by the IRS to be taxable as income.  Indeed, our bill makes provisions for withholding taxes.  Nobody talks about it, but the benefit is going to be LESS than $250 depending on tax bracket.  A married filing jointly in the 15% tax bracket would only see a $212.50 benefit.  Spouses at the 25% tax bracket – with income starting at just over $63,000/year, would only see a $200/year benefit. 

This is simply a bad idea, adding a costly burden to employers and many workers in order to benefit a few.

Lobby Lunch Podcast: Climate Change

Yesterday's Lobby Lunch speaker was Tony Usibelli. Director of  the Energy Policy Division of the state department of Community, Trade and Economic Development. He joined Mike Hudson for a short podcast interview on the Governor's Climate Change Challenge.

Family Leave Bill Panned in Everett Herald

This morning, the Everett Herald runs a timely editorial pointing out the problems with SB 5659, paid family leave.

Washington would become just the second state in the nation (joining California) to offer such a benefit, which would come in addition to the 12 weeks of unpaid family/medical leave already available under federal law. (The federal version applies to business with 50 or more employees.)

This is not an area where Washington can afford to be out front. Its generous unemployment insurance and workers compensation programs already make the state one of the most expensive in which to do business. Adding another costly employer mandate will give job creators one more reason to stay away.

The Herald endorses several Democratic priorities advanced this session, including more spending for education and children's health care.

But on paid family leave, Democrats are over-reaching, and putting the state's economy at risk.

Democratic Gov. Chris Gregoire, who has attempted to walk a moderate line while proposing hefty spending increases, should send a signal of responsibility by saying she'll veto a paid family leave bill.

Well said.

MORE The News Tribune disagrees with us.

Paid Family Leave Passes Senate

Yesterday, the Senate passed SB 5659, mandating paid family leave. The vote on this JobKiller can be found here on our JobMakers web site.

The Olympian carries the AP story by Rachel La Corte.

The bill now goes to the House. If it passes there and is signed into law, Washington and California will be the only two states with paid-family-leave measures on the books. ...

The Office of Financial Management was working Wednesday to calculate the bill's cost to the state after the amendments. The initial fiscal note attached to the measure pegged its cost at nearly $200 million for the 2011-2013 biennium.

                        

But opponents said the costs are likely to increase, and one lawmaker called the measure a "new tax, a new entitlement and a new bureaucracy."

Count AWB among those opponents.

Ralph Thomas reports on the bill in the Seattle Times.

If lawmakers approve the $250-per-week benefit, Washington would have one of the most generous paid-leave programs in the nation.

The legislation, Senate Bill 5659, is a top priority this year for a broad coalition of advocacy groups and labor unions.

And Richard Roesler reports on it in the Spokesman-Review.

Critics, mostly Republicans, called it an unnecessary tax on workers.

"I feel in my heart that pretty soon, if this bill passes, that we'll hear 'People can't live on $250 a week so we're going to have to increase this tax,' " said Sen. Janea Holmquist, R-Moses Lake.

"I see this as the beginning of a very, very large bureaucracy," said Sen. Tim Sheldon, D-Potlatch. He and Mary Margaret Haugen of Camano Island were the only Democrats to vote against the proposal.

Right.

You Can't Talk about THAT at Work

As Ralph Thomas reported in the Seattle Times yesterday, some things are just too sensitive for employers to discuss with their employees.

Under the new legislation, House Bill 2383, it would be illegal for companies to require employees to attend meetings or "participate in any communications" on non-work-related issues, such as religion, politics or union-organizing matters.

Correct me if I'm missing something here - there are a lot of places I haven't worked - but has there been a rash of mandatory prayer meetings or political rallies at the workplace? No, this is pretty clearly another version of legislation introduced earlier to keep employers from talking to employees about unionization.

Labor leaders this year had initially pushed for legislation specifically targeting aerospace companies. That bill would have prohibited Boeing and its contractors from collecting hundreds of millions in state tax breaks unless it agreed to remain neutral toward union-organizing efforts. ...

But that bill met resistance from some Democrats — including Gov. Christine Gregoire — who weren't comfortable targeting a particular industry. So labor leaders this week decided to try a broader approach aimed at curtailing so-called "captive audience" meetings by all employers.

AWB's Kris Tefft clarifies it a bit more.

"This is kind of a gag order on the entire business community," said Kris Tefft, general counsel for the Association of Washington Business. ...

Tefft said it's not unusual for employers to hold employee meetings to discuss the trade-offs of unionizing. Federal law allows such meetings as long as employers aren't coercive or threatening.

"If an employer is facing a union-organizing campaign and is aware of it and objects to it, I do think it's a common practice to pull everybody together," he said.

Barring such meetings would be an unconstitutional infringement on employers' free-speech rights, Tefft said.

That last point is not incidental. And, of course, the employees attend the meetings on the clock. The legislation is just another bone being tossed to labor unions facing increasing rejection in organizing campaigns.

It's Not Easy Being Green

Still more evidence that this biodiesel thing is going to be a little harder than we've been told. Les Blumenthal, for the McClatchey papers, reports on the downside of using palm oil as a fuel.

.... the owners of what will be the largest biodiesel plant in the nation - at a deepwater port on Washington state's coast - are well aware of the environmental consequences of logging and burning some of the most biologically diverse forests in the world to provide the prime ingredient for a much-in-demand clean fuel.

   

"We recognize there are serious deforestation issues," said John Plaza, the founder of Imperium Renewables, which is building the plant in the Port of Grays Harbor. "It's not OK to clear rainforest to put palm down. But to demonize an entire industry doesn't do anyone any good. We need to solve these issues."

Demonizing entire industries has been, well, not uncommon with respect to the oil, coal, and nuclear industries. Here's a bit of insight into "clean" biodiesel from palm oil,

The forests are logged and burned to make way for the plantations, at times producing a thick blanket of smog that can cover parts of Southeast Asia for weeks and release millions of tons of greenhouse gases. The plantations also are moving into peat swamps, which are drained. As the peat dries, it also releases tons of carbon dioxide.

   

The trend is accelerating. Indonesia is already the third-largest producer of carbon dioxide in the world, behind the United States and China. By 2015, an area of Indonesia the size of West Virginia is expected to be covered with palm plantations.

   

"It's absolutely disingenuous to suggest that biodiesel made from palm oil is green or sustainable," said David Waskow, international program director for Friends of the Earth.

There's a place for biodiesel, certainly. And for coal, nuclear, and oil.

 

Momentum for Paid Family Leave

Mandated paid family leave may be in every employer's future, as Ralph Thomas reports in this morning's Seattle Times. He summarizes the legislation well.

Under the legislation now afoot in Olympia — Senate Bill 5659 — all workers would be entitled to up to five weeks of paid family leave per year. They could use it to stay home with a newborn baby or newly adopted child, to care for a sick relative or domestic partner, or as personal sick leave.

Payments would be capped initially at $250 per week, a figure that would grow with inflation. To cover the benefits, the state would impose a payroll tax of 2 cents an hour per employee — about $40 per year. The bill would allow employers to deduct the tax from employee paychecks.

It's expensive - likely to grow to $100 million a year by 2009. Behind California, it's the second costliest benefit in the nation.

Don Brunell acknowledges that it's going to be hard to stop this year. And, he points out, the costs are just beginning.

"It's not going to stop at $250 and five weeks," Brunell said. "I think it will go much higher down the road."

Business leaders also argue that the legislation creates a one-size-fits-all approach that doesn't leave employers enough flexibility in setting up leave policies.

Supporters point out that many other countries offer even more generous benefits. They don't point out the high unemployment rates, low productivity, and nearly bankrupt social insurance systems in counties pursuing the old European model.

Thomas writes that one group backing the measure has sent lawmakers more than 2,400 e-mail backing the measure. Employers need to be heard from!

Business Groups Fight Change in Vesting Law

February 26, a group of business associations and major developers wrote members of the State Senate in opposition to SB 5507, a bill that would upset existing property development vesting laws. This measure has not received much press coverage. It should.

As the letter, on AWB letterhead, says:

To extinguish the vested rights doctrine, as this bill would do, would be to remove all certainty and predictability from the process. Both public and private projects require a reasonable level of certainty and predictability.

Not that long ago, the Washington Competitiveness Council ranked regulatory reform as a top priority. Consider this finding from the first WCC report:

The current regulatory structure unnecessarily delays projects, increases project cost, creates unnecessary uncertainty, reduces operating flexibility, and increases barriers to business growth. It stirs hostility toward government. It wastes resources, increasing government costs. It leads to angry applicants and it encourages project opponents to manipulate the permitting system.

In the years after the report was released, state officials made progress. SB 5507 is a great leap backward. Worse, really.

Perhaps not the Worst Bill of the Session ...

... but a contender.

Tuesday AWB’s Kris Tefft testified with a number of manufacturers - large and small - including The Boeing Company, Hobart Machinery, Goodrich Corporation, and Toray Composites -- in opposition to House Bill 1828.

Don Brunell wrote about this one earlier.

This year, union leaders are pushing legislation in Olympia that would bar aerospace companies from getting state tax incentives unless they agree to remain neutral toward union-organizing efforts. Under the proposal, aerospace suppliers would lose their tax incentives if they "choose to encourage or discourage unionization." In reality, the law is intended to penalize companies that oppose union organizing efforts.

... If legislators and the governor bend to the unions, they will send the wrong message to Boeing and other companies who are considering whether to locate, expand or upgrade operations in Washington. While the bill targets Boeing suppliers in Washington, its impact is international.

Kris hits another reason lawmakers should take a pass. Call it the inconvenience of the First Amendment:

Employers do not give up their rights to free speech when they choose to incorporate; to take on employees; or even to pay taxes at one tax rate versus another. Yet this bill seeks to regulate the content of employer speech on the basis of tax rate.  There is no compelling governmental interest that could pass the kind of strict constitutional scrutiny this bill would receive.

AWB Lobbyists Work for Sensible Crane Regulation

The fatal crane accident in Bellevue last November has generated appropriate interest in appropriate regulation to assure crane safety. The concern, as always, is to establish wise regulation without creating unnecessary and costly burdens on business owners. AWB has a record of working with lawmakers for balanced solutions.

This morning's PI has a story on the legislation currently being considered in Olympia. AWB is quoted.

Businesses worry the proposal goes too far and would regulate not only cranes used in construction, but also smaller cranes and equipment used to install power lines or move products along an assembly line.

Weyerhaeuser and Boeing are among the companies that do not support the bill.

"The key is that businesses involved in manufacturing of airplanes, forest products and also utilities providers use certain kinds of cranes in manufacturing," said Grant Nelson of the Association of Washington Business. "Either we need to define what construction is, or we need to add language that further clarifies which cranes are not covered."

The goal is workable regulation.

Two Out of Three Employers Still Offer Health Insurance Benefits

That's not a headline you'll see anywhere else. Most will report it the way the PI did this morning: "Fewer employers offering health plans." The story, which has been widely reported, comes from a state  Employment Security Department study.

The percentage of employers offering health benefits to full-time workers declined from 67.8 percent in 2004 to 67.1 percent in 2005 and to 66.4 percent in 2006, a two-year decline of 1.4 percentage points.

Health-insurance offerings to part-time workers had a slightly smaller decline, from 15.1 percent in 2004 and 2005 to 14.2 percent in 2006, a two-year decline of 0.9 percentage points.

This should be no surprise:

...the study found that industries with higher-percentage wage increases in 2006 also showed the largest decreases in benefit offerings.

The study did not produce clear data about the reasons for the decline. But the report notes that employers may have offset rising health-insurance premiums and rising worker wages with reduced benefit offerings.

Here's the department's press release, which is  headlined, "Fewer Washington employers offering health insurance." Here's a link to the 27-page study.

The bill report for HB 1569 says that health coverage through an employer in Washington declined from 71 percent in 1993 to around 66 percent in 2004." So, during a period of rapidly increasing premiums, the decline has been relatively small.

Given rising benefit costs, I'm impressed that so many small employers continue to find ways to make health insurance available to their workers. A problem? Yes. A crisis in employer-paid insurance? I don't think so.

UPDATE The Olympian finds a silver lining in the report. It makes state action more likely.

AWB Joins Associated Industries in Lawsuit

Last week, the board of directors of AWB voted to join Associated Industries in a lawsuit to overturn a Technical Assistance Advisory issued by Insurance Commissioner Mike Kreidler. Our press release briefly summarizes the issue.

The TAA threatens affordable health care coverage for hundreds of thousands of Washington citizens by improperly establishing new legal requirements governing premium rates of health plans offered to small employers by associations. The TAA alters existing law in place since 1995, which only the state Legislature has the power to do, said AI president and CEO Jim DeWalt and AWB President Don Brunell in a joint statement. ...

"Litigation is a last resort for us," said AWB president Don Brunell. "We have explained our concerns to Commissioner Kreidler but have reached an impasse. We disagree on the issue of his authority to change the law by TAA. To protect the interests of those small businesses that rely on us for affordable health insurance coverage for their employees, we reluctantly concluded we need to participate in this lawsuit."

In 1995, Gov. Mike Lowry requested legislation that enabled associations to offer more affordable health care plans to their smallest members – those with 2 to 50 employees. The Legislature agreed, swiftly endorsing greater rating flexibility for health plans purchased by small employers through association plans, opening up a more competitive market for small employers seeking to provide affordable comprehensive coverage for their employees.

Sunday, Bert Caldwell examined the matter in his column in the  Spokesman-Review.  Caldwell does a great job of presenting a balanced summary of a complicated story.

The litigation is the regrettable end to months of negotiations over proper interpretation of a 1995 state law intended to extend health and dental insurance to more employees of small companies. The law helped them hire and retain employees who might otherwise have moved on to bigger companies that offered attractive benefit packages.

The legislation worked ...

At its core, the dispute rises from disagreement over community rating versus experience rating when pricing insurance. Community rating sets prices according to claims filed by all members of an association, or any defined group, without making any distinction between companies with lots of claims and those who have few. All members pay the same rates.

... the controversy reflects the increasing national debate over expanding health insurance, the role of business in providing that coverage, and whether community or experience rating — or both — will figure in the allocation of costs.

In this case, it would be highly unfortunate if the result was less coverage, not more.

AWB, AI, and other associations offering affordable health insurance as intended by the 1995 legislation will work to assure that doesn't happen.

Climate Change Initatives Announced

Yesterday, the governor signed an executive order addressing global climate change. She establishes five goals:

• By 2020, reduce greenhouse gas emissions in the state of Washington to 1990 levels, a reduction of 10 million metric tons below 2004 emissions;
• By 2035, reduce greenhouse gas emissions in the state of Washington to 25% below 1990 levels, a reduction of 30 million metric tons below 2004;
• By 2050, the state of Washington will do its part to reach global climate stabilization levels by reducing emissions to 50% below 1990 levels or 70% below our expected emissions that year, an absolute reduction in emissions of nearly 50 million metric tons below 2004;
• By 2020, increase the number of clean energy sector jobs to 25,000 from the 8,400 jobs we had in 2004; and
• By 2020, reduce expenditures by 20% on fuel imported into the state by developing Washington resources and supporting efficient energy use.

And a stakeholders process:

The Director of the Department of Ecology and the Director of the Department of Community, Trade and Economic Development shall include representatives from business, including transportation, forestry and energy sectors, agriculture, local, county and regional governments, institutions of higher education, labor unions, environmental groups and other interested residents as appropriate in the development of Washington Climate Change Challenge.

The group will report back in a year. Here's the policy brief and press release.

Warren Cornwall and Ralph Thomas report on the announcement and various reactions to it in today's Seattle Times.

The announcements, from Gregoire, Senate Majority Leader Lisa Brown, D-Spokane, Sen. Erik Poulsen, D-Seattle, and King County Executive Ron Sims, excited environmentalists. ...

On the Republican side, Sen. Jim Honeyford, R-Sunnyside, Yakima County, worried that these initiatives could hurt Washington businesses and that Washington could be shouldering more of the burden than other states, or countries such as China.

Lawmakers continue to pursue their own agendas, however.

Meanwhile, the immediate focus in Olympia may be on the most detailed and potentially most controversial idea.

Poulsen said he will introduce legislation effectively barring Washington utilities from building new coal-fired power plants or from signing new long-term contracts for coal power, thereby preventing them from buying dirtier power from out-of-state power plants. That could mean higher rates for some power customers, as utilities are steered away from the cheap coal.

Avista is listed as a conditional supporter of the plan; Energy Northwest objects.

In the P-I, Lisa Stiffler and Robert McClure see the Times characterization of "excited environmentalists" and raise it one.

The announcements -- which followed gloomy projections released last week about the effects of global warming -- caused a practically giddy response from environmentalists, who called the proposals revolutionary.

AWB's Grant Nelson carefully avoids giddiness, providing a good assessment of next steps.

"We're certainly encouraged by Governor Gregoire's approach," said Grant Nelson, governmental affairs director for the Association of Washington Business, the overarching business lobby. "Certainly she set some ambitious goals around which, with involvement by all stakeholders, we can have thoughtful and deliberative discussions."

The governor's approach contrasts with more radical proposals under consideration.

State lawmakers have tackled global warming issues in previous years, including the adoption of California's strict vehicle emission rules, requiring the construction of energy-efficient buildings and requiring that in the future fuel contain at least 2 percent biodiesel and ethanol. ...

It's not clear how widespread the support is for the new rules. Senate Republicans declined comment, saying they needed more time and information. House Speaker Frank Chopp, D-Seattle, indicated that support might not come until next year.

It makes sense to wait for the stakeholders' recommendations before jumping the gun on an economy-damaging package that fails to accomplish its objective.

Free-Markets and the Housing Market

A PI editorial on housing affordability today leads with this:

Living in a free-market economy can produce some pretty screwy side effects, such as sky-high housing prices prompting those who could afford to buy to rent instead (while waiting for prices to drop), leaving those who could only afford to rent up a creek without a paddle. At the same time, a hot market creates a rush to buy; leading 38 percent of homeowners to pay 30 percent above their income level on housing.

No doubt about it. The real estate market has created some real affordability problems, forcing folks into long-term rentals when they'd like to be homeowners, and forcing others into long-distance commutes when they'd like to live near their jobs.

But don't blame the free-market economy. With tight government regulation of the supply of sites for new houses, this market is far from free. The high prices that the PI decries are largely the effect of these supply restrictions, as the Washington Research Council has written.

Lukewarm? Really?

Yesterday's Seattle Times reported that state lawmakers appear insufficiently hot under the collar when it comes to confronting global warming.

Yet reception to global-warming measures in Olympia this year has been cool so far.

Reporter Warren Cornwall compares Washington's so far measured approach to the more aggressive developments in Oregon and Washington (if you think it's bad here, don't go south for relief). He cites a number of climate change bills that have been proposed in the Legislature.

He gives AWB lobbyist Grant Nelson the last word.

On climate change, environmentalists have set their sights primarily on improving the fuel efficiency of the state motor pool, studying use of plug-in hybrid cars that can switch between electricity and liquid fuel, and spending $13 million to boost biofuel research and production.

That approach has won general support from the Association of Washington Business (AWB), one of the state's most influential lobbying groups. But statewide greenhouse-gas regulations such as California's would hurt Washington businesses and provoke a fight, AWB lobbyist Grant Nelson said.

"The main core of the environmental community is not really pushing those bills," he said. "A smart move on their part, I think."

MORE: George Will takes a look at global warming and its politics in a Newsweek column.

Climate Cassandras say the facts are clear and the case is closed. (Sen. Barbara Boxer: "We're not going to take a lot of time debating this anymore.") The consensus catechism about global warming has six tenets: 1. Global warming is happening. 2. It is our (humanity's, but especially America's) fault. 3. It will continue unless we mend our ways. 4. If it continues we are in grave danger. 5. We know how to slow or even reverse the warming. 6. The benefits from doing that will far exceed the costs.

Only the first tenet is clearly true, and only in the sense that the Earth warmed about 0.7 degrees Celsius in the 20th century. We do not know the extent to which human activity caused this. The activity is economic growth, the wealth-creation that makes possible improved well-being—better nutrition, medicine, education, etc. How much reduction of such social goods are we willing to accept by slowing economic activity in order to (try to) regulate the planet's climate?

Good question.

Vesting Rights

Regulatory certainty helps secure property rights. Under current state law, a landowner’s development rights vest when a building permit or subdivision application is applied for. Application costs can be high, with long delays before a local jurisdiction grants final approval.

Last week, AWB's Chris McCabe, joined by several AWB members testified against HB 1463 and SB 5507, legislation that would change our state’s vested rights doctrine so that development rights wouldn’t vest until the permit or subdivision application is “acted on” or approved. Chris sums up our concerns nicely in this statement from his testimony.

Our existing vested rights doctrine strikes an appropriate balance between the authority of local governments to change regulations and the rights of individuals to plan their affairs with reasonable certainty about what will be permitted by the local government.

If a local government can stop a project by changing its code every time it decides that it doesn’t like a project, this undermines the fundamental principles upon which the growth management act and regulatory reform are constructed.

If you share our concerns, please let your legislator know.

Changing the Rules

When government cannot be counted on to keep a commitment, business confidence in that government plummets. In Tuesday's Seattle Times, Ralph Thomas and Dominic Gates report on legislative efforts to rewrite the rules of the state's aerospace incentive package to make them more union-friendly.

Here's the background.

In 2003, as part of a bid to persuade Boeing to build its new 787 jetliner in the state, then-Gov. Gary Locke and the Legislature enacted a tax-incentive package worth more than $3 billion over 20 years. Those tax breaks were expanded last year.

Under the new legislation — Senate Bill 5700 and House Bill 1828 — aerospace companies would be disqualified from the tax breaks if they "choose to encourage or discourage unionization.

Encourage or discourage unionization? Really?

"The Legislature really pulled out all the stops to try to encourage Boeing to stay in this state," said Larry Brown, lobbyist for the Machinists.

Brown said about 85 companies have benefited directly from the tax incentives, but that union membership has not kept pace.

"We're not against the growth of the aerospace industry. In fact, just the opposite is true. We just want to make sure that workers aren't left behind," he said.

It's not about leaving workers behind, although I think it would have been more accurate had he said that they just "want to make sure that unions aren't left behind." It's about honoring commitments without adding job killing strings.

Business Raises Questions About Family Leave Proposal

Kelly Kearsley reports today in The News Tribune on a proposal by Rep. Mary Lou Dickerson (D-Seattle) for paid family and medical leave. The headline stinks. "Business vs. worker in family leave bill" completely misses the point. This isn't about pitting employers against employees. The vast majority of  businesses try to work with employees facing difficult personal or family situations. Imposing a new state mandate, raising costs and increasing regulatory burdens, creates more hassles than it's worth and damages the business climate.

Here's how Kearsey describes the legislation.

Under proposed House Bill 1658 workers would pay a premium of 2 cents per hour worked up to 40 hours a week. Workers could then claim up to $250 per week for up to five weeks to replace wages they might lose while caring for a sick family member or staying home with a new child.

AWB has questions.

... the Association of Washington Business and the National Federation of Independent Business, which represent small businesses, oppose the program and have concerns about how it would affect their thousands of members.

Gary Chandler, AWB’s vice president of governmental affairs, questioned whether the 2-cent-per-hour premium would support such a program and said such bills make the state less competitive for business.

Carolyn Logue, NFIB director in Washington, said many small businesses already work with their employees to grant sick or family leave when it’s needed.

Kearsley interviews the owner of a small electronics store in Tacoma who does just that.

“Employees are our company, and if we abandon them in a time of need, then it doesn’t bode well for the relationship,” Senner said.

AWB lobbyists are working to keep the state competitive for businesses of all sizes. The bill may be heard in committee as early as next week.

UPDATE: Today on KUOW's "Conversation," Jennifer Lambert, vice president of Talentum Search Partners and chair of AWB's Human Resource committee, discussed business's concerns with Rep. Dickerson.

JLARC Report on Competitive Contracting

When the Legislature passed comprehensive civil service reform, contracting out, and collective bargaining legislation in 2002, many in the business lobby were skeptical, believing that the competitive contracting provisions would not be implemented. The packaging made little policy sense, as each of the three provisions could be considered and adopted independently. There may have been some political sense to it - public employee unions wanted the right to bargain over compensation; businesses wanted the right to bid for state work - but the deal lacked balance. Labor vowed repeatedly to oppose contracting out and the Act tilted in unions' favor.

Now, the Joint Legislative Audit and Review Committee has released the first thorough review of competitive contracting. Unsurprisingly, they found little implementation.

This JLARC audit found that few agencies have competitively contracted for services in the 16 months since receiving authorization to do so. Agency managers reported two main reasons for not competitively contracting. First, managers perceive the process itself to be complicated and confusing, providing a disincentive to pursue competitive contracting. Second, competitive contracting is a subject of collective bargaining,
which creates additional challenges by requiring labor negotiations. Managers must bargain, at a minimum, the impacts of competitive contracting. Additionally, some agency collective bargaining agreements include provisions which prohibit agencies from competitively contracting.

Given the state's current focus on management improvement, efficiency, and accountability, not to mention the present unsustainable rate of state spending, lawmakers might want to give the report some attention. A little competition can be a good thing.

Unintended Consequences as Smokers Butt Out

When the voters kicked smokers out of bars and taverns, outdoor smoking picked up. But outdoor smokers, apparently, do not pick up, littering streets and sidewalks. That's according to this story by Brian Miller in the Seattle Weekly. Miller paints a bleak picture, an urban nightmare:

Cast out of restaurants and bars to huddle in alcoves, crouch under awnings, and shiver in the rain, Seattle smokers have to do something with the remnants of their last drag. Before, there were ashtrays inside. Now, unless standing next to a convenient steel garbage bin known to be free of potentially flammable debris (funny how hard those are to find), even the most environmentally sensitive of smokers revert to a familiar strategy: Drop butt to sidewalk, grind with foot, and walk away.

How soon before we see an initiative mandating outdoor ashtrays?

A Quick Round-Up

A lot happened in the last 48 hours that I haven't had a chance to post. For example:

• The US Court of Appeals for the Fourth Circuit, in Richmond released its decision upholding the lower court’s invalidation of the Maryland anti-Wal Mart fair share bill on ERISA preemption grounds.  Here's the Insurance Journal story, the Baltimore Sun story, and the lead plaintiffs press release. The implications for such measures in other states are clear.
• On a lighter note, Congressman Brian Baird took his chances on Comedy Central with Stephen Colbert. How'd he do? You be the judge. Part 1 here and Part 2 here.
• Back to something more elevating - the Alaskan Way Viaduct. The various options, if not the viaduct, are falling away The Seattle Times Joni Balter writes that the clock is ticking. And just like that, the chimes sound: it's over, no tunnel. Maybe.
• Governor Gregoire released her plan for "the next Washington." Here's the AP story.
• And, Art Buchwald died Wednesday. The TNT published his final column today.

Yet Another Flawed Oregon Workers' Comp Study Released

Oregon's Department of Commerce and Business Services has released its biennial report on workers' compensation rates. For some time, this report has been used to assert that Washington's workers' compensation system ranks among the nation's most efficient, providing low costs and high benefits. Last September, WashACE - a partnership among the AWB, the Washington Research Council, and the Washington Roundtable - released Workers Compensation 2006, which examined the problems with interstate comparisons of workers' compensation premiums, including different industrial mixes, occupational risks,  classification systems and more. The report also looked specifically at weaknesses in the Oregon study.

In particular self-insured employers’ workers’ compensation costs are not included in the controversial Oregon analysis, conducted biennially by the state of Oregon, which assesses how Oregon’s workers’ compensation system costs stack up against similar costs in other states. While the study, therefore, only misses the 12 percent of Oregon’s workforce employed by self-insured employers, one-third of Washington’s workforce – those workers employed by 389 of the state’s largest employers – are ignored.

... Based on a sampling of just 50 (of about 450) of Oregon’s most common risk classifications, Oregon analysts caution readers—especially singling out Washington readers—to avoid generalizing about other states from the study’s findings (DCBC 2005). The Oregon study has gained critics, largely in reaction to the misapplication of its findings. Eric Oxfeld, President of the National Foundation for Unemployment Compensation and Workers’ Compensation in Washington D.C., for example, dismisses its applicability elsewhere saying the study is an “Oregon-specific study—done by Oregon to make Oregon look good.”

That last bit might be a little tough. Regardless, there's limited utility in the study outside Oregon.

Early in the session, AWB's Kris Tefft testified on a panel, outlining employer concerns. For a good overview of those concerns, look at this PowerPoint presentation the panel used. The crux: high benefits, high costs, and unnecessary complexity. Kris says:

I draw your attention to slide 4 which, while (necessarily) anecdotal, was our effort to point out that contrary to the Oregon study, the experience of our multistate self-insured members is that Washington IS a high cost state. ... So it just [isn't credible] to point to [that] study, an apples and kumquats comparison, and say Washington ranks 36th or 44th or what have you nationally in terms of cost.

As an earlier WashACE report puts it: "The ‘high benefit-low cost model’ for workers’ compensation ... is a myth." The benefits of the system become the system's costs. 

Eminent Domain Revisted

Last week's posting on eminent domain caused me to give the issue a little more thought. Here's what I came up with.

AWB's McCabe On King County Shoreline Management Review

As King County officials begin their first update of shorelines regulations in 30 years, the Seattle P-I  reports they plan to move carefully. AWB's Chris McCabe says that's the right approach.

When it comes to changes that could restrict land use and diminish property values, "we like to see government go slowly and really think about what they're doing," said Chris McCabe, environmental policy expert for the Association of Washington Business.

Green Coal in a Flat World?

Coal plants often get bad press. So this column by Thomas Friedman published in Sunday's Olympian caught my attention. Friedman's book, The World is Flat, is often cited by Gov. Gregoire to underscore the intensity of global competition. Friedman goes to Montana to examine coal's surprising environmental upside.

All environmentalists have their favorite "green" energy source that they think will break our addiction to oil and slow down climate change.  I've come out to Montana to see mine. It's called coal.

Intriguing.

Problems with Eminent Domain Abuse

Today's Wall Street Journal runs a commentary by Bill Maurer, executive director of the Washington state chapter of the Institute of Justice. Maurer, author of an analysis of the risks of eminent domain abuse recently published by the Washington Policy Center, makes the case that, despite protections written into our state constitution, we still face risks.

When Kelo came out, local governments and their lobbyists eagerly explained that ours was not a "Kelo state," and that the legislative efforts to restrict eminent-domain abuse in other states were unnecessary here. The Washington Constitution explicitly provides that "private property shall not be taken for private use" (except in very limited circumstances). "It can't happen here" became the oft-repeated message used to placate home and small business owners seeking legislative protections for their property.

When it comes to governmental abuse, "it can't happen here" really means "it is happening right now."

Read the analysis and the WSJ piece for examples. Unfortunately, there's no shortage of them. Maurer's Kelo reference is to the misbegotten U.S. Supreme Court decision Kelo v. The City of New London.

Last November, several state initiatives targeted eminent domain abuse. The American Planning Association provides a (clearly negative) review of such measures. Although there was more than a little confusion about it, this state’s takings initiative, I-933, did not target eminent domain.

Even folks who didn't like I-933 decry eminent domain abuse.  For example, today's editorial in the Seattle P-I.

Under state law, governments can declare areas blighted as a step toward acquiring private property to turn it over to another private owner for development. That's offensive, especially when Washington court precedents have developed (over time and in good faith) in a way that courts believe they can't interfere with any but utterly arbitrary actions by local governments.

As the P-I editorial says, strengthening requirements for public notification, something that is easily addressed and broadly supported, is a worthy step. But it's not enough.

The attorney general will convene a task force after the legislative session to look into eminent domain laws and determine what steps should be taken to strengthen them. Greg Lane, with the AG's office, told me this by e-mail:

No decisions have been made about the structure of the committee, members, etc. – though our strong preference is that all viewpoints will be represented.

The AG has requested legislation strengthening notification requirements. From Maurer's analysis, it's clear that much more will be required to assure the protections Washingtonians thought already guaranteed by the state constitution.

Tearing Down Wal-Mart -- Literally

The Wenatchee World reports today that a new Super Wal-Mart scheduled to open in Chelan in less than a month may have to be torn down because the city did not follow its own land use rules.  Chelan County Superior Court Judge Lesley Allan threw out the building permit.

The implications of the decision are still unclear, but Wal-Mart opponents say they will likely ask Allan to order that the 162,000-square-foot store be torn down.

A group called Small Town Chelan brought the suit. They're thrilled. The World quotes the groups spokeswoman Laurel Jamtgaard:

"They went ahead and built that enormous structure; they have stocked it and hired employees, and they are supposed to open in a few weeks. I wonder what will happen now?"

So do I. Unless Wal-Mart wins on appeal, I'd guess that thousands of people in the area will have seen their retail options diminished, others will have lost employment opportunities, and the region's competitiveness reputation will have taken another hit. Is this what's meant by regulatory uncertainty?