Boeing and attitude impact revenue forecast By Jan Teague. President/CEO
Dr. Arun Raha, Executive Director of the Economic & Revenue Forecast Council, spoke Tuesday to the Washington Research Council on the latest information for Washington State. Dr. Raha was very careful not to comment on policies that impact revenues such as tax proposals or reducing programs. He noted that it was his job to research and evaluate the data that is used to forecast state revenues.
Raha highlighted Washington's problems including the prediction of the state's construction getting worse and falling faster than the nation. He noted that real estate excise taxes were down 45 percent from one year ago. There is also bad news on car sales, which represent 10 percent of retail sales. And exports - the Boeing factor - were down 33 percent in the fourth quarter but largely due to the union strike.
Raha talked about the Boeing factor quite a bit noting that Boeing can make a difference to Washington in a recession. In the early 1980s when the recession was driven by the cost of lumber, Boeing gave the state some momentum. But in the 2001 recession, we lagged the nation in the state's recovery since plane orders were down. This time Boeing has momentum with a significant number of plane orders.
If Boeing continues to manufacture and export its planes as expected, the state's revenue forecasts for our recession should be as accurate as can be predicted. A number of people at the meeting discussed the possibility of Boeing incrementally making decisions to pull out some of its operations from the state.
Although Dr. Raha was not there when this was discussed, people did think the result could be a very long term recessionary climate for the state. While there might be some kind of an opportunity for new growth during the year, it could easily be offset by a loss of Boeing activity. So if Washington had incremental economic development and at the same time Boeing announced a new plant closure, or announced that it would be building one of its planes in some other part of the world, then the state's economy would be flat each time that occurred. Stimulus plans would not pull the state out of its situation as lawmakers hope.
Dr. Raha was asked if he thought we could have inflation with the Federal government printing so much money. He noted that if China keeps its prices down and keeps sending us goods, then the U.S. would be OK. But if there was too much money chasing too few goods, then we could have inflation.
On the bright side, Dr. Raha continues to say that the real problem is that people have money but are afraid to spend it. When I was asked by the person sitting next to me when retail was going to pick up, I told him in the spring when the weather was brighter and women began to look at the spring season. Once they are in a better mood, shoppers with pent up demand will spend and have a good time doing it.
I hope I am right. Dr. Kriss Sjoblom with the Washington Research Council told us that studies show that hearing from an economist is the same as hearing from your next door neighbor (or from me). The opinions are worth about the same. But when you hear from someone like Dr. Raha who works full time doing revenue forecasting, the predictions were much more accurate. Here's hoping that the blended opinions of Dr. Raha and me are right and that there will be more retail spending in the spring.
Committee cut-off passes and several bad bills die By Mark Johnson, Vice President Government Affairs
Both policy committee and fiscal committee cut-offs have passed in this session of the Legislature. Bills that failed to make it out are not likely to receive further action during this session.
I hedge because nothing is truly "dead" until session is over. The current 105-day session is scheduled to end on April 26. I have seen bills added to the budget or resurrected in the final hours of a session. Anything is possible. The cut-off rules are more like "guidelines". With that said, several bad bills have gone away....at least for the time being.
*HB 1609 and SB 5679 would have expanded the recently adopted mandatory paid family leave program and instituted a new payroll tax on employees. This program, which the Washington Retail Association opposed, would have cost millions in this difficult economic time. The Legislature should do the smart thing and repeal it.
*HB 1735 would have established a "living wage" which would have been higher than Washington State's already nation-leading $8.55 an hour.
*HB 1947 would have allowed cities to adopt a "trip tax" for businesses based on the number of visits made to their establishments. Retailers are trying to attract customers, not limit them.
*SB 5393 would have increased the taxes paid on our insurance policies. In 2010 alone the impact would have been $29 million.
*HB 1069 would have required retailers to shield or turn off their signs and parking lot lights to prevent "light pollution" or "sky glow". The new added costs would have run in the millions.
*HB 1387 would have eliminated the out-of-state resident sales tax exemption costing retailers $250 million in lost sales.
*SB 5626 would have imposed an additional $1-a-pack tax on cigarettes that would have resulted in lost sales especially at convenience stores.
*SB 5960 would have allowed cities and counties to impose a new 6 percent tax on utilities. This would have cost retailers millions in new operating expenses.
In these tough economic times when retailers are struggling to stay in business, government should not spend its time thinking up new ways to regulate or tax us. Instead it should think of new ways to limit regulation and lower taxes so we can hold on to our employees and keep our doors open.
Allow Retro's proviso group to suggest reforms to the program
A bill to reform retrospective rating workers compensation programs ought to remain in the Rules Committee where it now sits until a study group has time to make recommended changes later this year.
The Washington Retail Association's Tammie Hetrick has been participating in the study group that has been financed with $600,000 requested last year by Gov. Christine Gregoire. SB 6035, which proposes to reform Retro, would short circuit the work to date of the Retro Proviso Group, which expects to make recommendations later this year.
The Proviso Group has contracted with independent actuarial and consulting firms to evaluate Retro and determine where modifications or improvements need to be made. The work of these firms will encompass all aspects of the Retrospective Rating program.
In other words, the reform SB 6035 seeks already is underway with the Proviso Group's research. Its work and the money spent doing it would be wasted if the Legislature acted prematurely on the bill.
Further, the bill would do damage to many Retro programs, which legislators in testimony repeatedly have said are achieving their goals of creating safer workplaces while saving workers' compensation insurance premiums for employers. Smaller Retro programs in particularly would be harmed by passage of the bill and could not remain competitive, and probably would be forced to cease operations, Hetrick warned.
The current bill and amendments would restrict Retro groups from maintaining contingency funds that protect members and associations from charging assessments rather than paying refunds to employers. The bill was introduced last month shortly after the Department of Labor and Industries announced it had made mistakes on payments to Retro groups dating back to the 1990s.
The bill fails to address the issue of incorrect L&I payments, Hetrick said.
"As a member of the Retrospective Rating Proviso Study Group that was initiated by the Legislature last year, we are asking legislators to wait for results of our work before initiating legislation," said Hetrick, WRA's Vice President of Retail Services. "Although legislators all agree that Retro is a good program that provides safer workplaces and reduces claim costs, they want to make changes without fully understanding the program. We are meeting with legislators to educate them on the progress of this Retrospective Rating Proviso Study Group and explain that the bill proposed is premature."
Rep. Upthegrove seeks consensus on climate change
The chairman of the House Ecology & Parks committee acknowledged to a wary business audience last week that it will be a challenge to reach consensus on a bill to begin reducing greenhouse gas emissions in Washington State.
"The pathway is very unclear," Rep. Dave Upthegrove, D-Des Moines, told a business audience including Jan Teague, President/CEO and Mark Johnson, Vice President of Government Affairs, for the Washington Retail Association.
HB 1819, sponsored by Upthegrove, and SB 5735 are in committees awaiting possible votes in the Legislature. Though the fate of the bills is uncertain, Upthegrove said he's intent on showing some progress toward reducing greenhouse gas emissions in the session.
Requirements to achieving a "carbon-constrained world" are coming from the federal government, Upthegrove said.
The Washington Retail Association has joined several business organizations in opposing bills aimed at reducing greenhouse gas emissions. The bills would put Washington State on course to reduce greenhouse gas emissions 15 percent below 2005 levels by 2020. Major energy users including retailers would reduce carbon dioxide releases and be allowed to trade for the rights to emit gases.
Businesses oppose the bills because they would impose new costs during uncertain economic times, including layoffs and store closures in retail. Businesses including the Washington Retail Association members favor a national rather than regional approach to the problem. Currently, the Washington state greenhouse gas reduction effort is a regional effort.
Upthegrove appealed to the business audience to support the idea of building a network of electric vehicle plug-in stations around the state to demonstrate progress in greenhouse gas reductions. He also suggested that land use planning that encourages denser development and promotes the use of buses or walking also could result in progress toward his goal.
During a question and answer session, Johnson said businesses prefer financial incentives rather than mandates to begin working toward Upthegrove's goal. Upthegrove answered Johnson by saying that financial incentives could be a policy question worth exploring.
Lobbyist Clif Finch noted that the state suffers from conflicting environmental goals including different initiatives that both support and recommend de-emphasizing hydroelectric power. This confuses the business community and makes it harder to reach agreement, Finch said.
Upthegrove agreed with Finch that better coordination of goals was a worthy endeavor.
Despite policy challenges and business resistance that lies ahead for greenhouse gas reduction, Upthegrove said his goal remained to begin reducing emissions in the most economically feasible way. He did not offer further specifics as to how this goal could be accomplished.
Recession to last a year and a half, report concludes
The recession is forecast to last a year and a half and show signs of recovery next year, a new report by the state Economic and Revenue Forecast Council has concluded.
The report projects a worsening national unemployment rate that could peak next year at 9 percent before beginning to improve. The slowdown in the state economy speeded up in the past four months, lead by a slowdown in construction and the home building industry. The number of housing units authorized by building permits in Washington has fallen to the lowest levels since the early 1980s, the report says.
Statewide, the report projects nearly a 27 percent drop in housing permits issued this month compared to the same time last year and an 11 percent drop in construction employment this month compared to March of last year.
Consumers and small businesses have contributed nearly 6 million pounds of old computers and televisions since a new, free recycling program began statewide the beginning of this year.
The program aims to keep the toxins in electronic components out of landfills. The Washington Retail Association was among the groups that supported the program, which is paid for by product manufacturers.
About half the volume collected statewide to date has come from King, Snohomish and Pierce counties, said John Friedrick, executive director of the Washington Materials Management & Financing Authority, which runs the program.
Each county in the state has collection points where consumers and small businesses can come to donate used computers, including laptops and televisions. Peripherals such as mice, printers, copiers, scanners and other devices such as cell phones cannot be donated.
Friedrick said he expects to collect 22 million to 26 million pounds of recyclable electronic equipment by year's end.
"I'm very happy with the program," Friedrick said. "It's been a success. The public obviously is aware of it."
The authority bills manufacturers on a quarterly basis to pay for the program. The authority then uses proceeds from the manufacturer payments to pay recyclers to safely dispose of the products.
For more information about the program and the addresses and hours of collection locations, click here.
Daughter succeeds her father in Legislature
Laura Grant-Herriot has succeeded her father, Bill Grant, who died in January while serving as Representative in the Legislature's District 16.
The Walla Walla Democrat, who was a farmer, died of lung cancer at the age of 71.
He was the Legislature's only Democrat from Eastern Washington and served in the seat for more than two decades.
Grant's daughter, a Democrat, was selected to fill out her father's term by Republican commissioners from Walla Walla, Columbia, Benton and Franklin counties, which comprise the Legislative district.
Grant-Herriot is an elementary school teacher. She has not spelled out her plans regarding the November election that will decide who holds the seat beyond this year.
Source: Seattle Times
WRA helps members resolve delinquent L&I taxes
With the current economic downturn, Labor and Industries (L&I) has reported that more companies are getting behind in paying L&I taxes.
The Washington Retail Association has been working with L&I to assist retailers in resolving outstanding accounts. The parties have been successful in resolving all affected member accounts for the third quarter of last year and are completing work toward resolving all fourth quarter accounts.
If you are unable to pay your premiums to Labor and Industries in a timely manner, please contact our office for assistance in working with L&I. We are finding because of cutbacks in various departments that new people are responsible for the premium payments and may not be confident regarding how to report and calculate premiums. WRA will be working with L&I to provide training to members to help them with online premium reporting along with assistance to employers who choose not to report online.
Tammie Hetrick, Vice President of Retail Services reported that employers are finding ways to reduce expenses. She said it's important that WRA assist members with the tools they need to keep their business running smoothly and avoid penalties and interest while meeting their L&I premium obligations.
Governor's Website will track use of federal stimulus funding
The state Office of Financial Management has set up a Website for local governments and the public to track how federal economic stimulus funding will be spent in Washington State.
Much is currently unknown about how the estimated $6.7 billion in federal funds will be spent in the state. But OFM and Governor Christine Gregoire say that details will begin to flow on the Website, www.recovery.wa.gov in the coming weeks and months.
In a statement regarding the new Website, Gregoire said that the federal stimulus will not solve the state's current budget revenue shortfall of $8.3 billion.
"While the federal economic recovery package will pump billions of dollars into our state economies to support and create jobs, the federal stimulus package is not a cure-all for our economy or closing the state budget shortfall," Gregoire said.
The site includes several links to help local governments investigate whether projects might qualify for federal funding. Also available on the site are a copy of the American Recovery and Reinvestment Act that authorized the federal funding and a list of project proposals submitted to OFM.
Sources: Gov. Gregoire's office, The Olympian
The Washington Retail Association, WRA, is a 501 C 6 trade association formed to advocate for Washington State’s retailers at the local, state and national level. Since 1987, the WRA has protected Washington's retailers from unreasonable taxes, fees, regulations and legislation. The efforts of the WRA benefit all Washington state retailers and help fuel statewide economic growth.
