What is happening to retail? By Jan Teague, President/CEO Retailers are delaying remodels and major capital investments this year. Some have done reorganizations, cutting the number of non-store employees. Some have frozen salaries or have had their 401K profit sharing programs eliminated. Company cars are less common and travel has been cut. Retailers are trying to find ways to use less capital. Survival is questionable.
When I asked our members what challenges they faced I got a very serious answer from one specialty retailer who said the situation was very grave. He went on to say that he thought his company was facing the same challenges as others. He said the situation was the result of many things, some of which were caused by things in his control and some out of his control. He characterized the company as larger than life, yet smaller than a dot on the map to large businesses. He considered his scenario closest to those at the grassroots level, the people trying to start a new business and nurturing it to a level of maturity where it is a part of the social and economic fabric of the community.
So what has contributed to such a difficult situation? In his own words:
*Non business-friendly, inconsistent municipalities - permits, signs, banners, sales, etc. *Rising taxes transitioning priority from caring for people and customers to caring for government *Tax benefits to competing retailers *Rising prices and cost of living *Minimum wage increases *Labor laws making performance accountability of employees unrealistic *Healthcare costs and healthcare affordability differences between tech and retail *Uncompromising Family and Medical Leave Act provisions that do not compensate for costs and losses in productivity. *Rising fuel costs for consumers and businesses *Import buying power *Employee "award" taxes and payroll policies *Washington's tight reign on "honest" or timing price errors on the retail floor *Increased cost of regulations on consumers in the name of safety or care for individuals unwilling to take responsibility *Decreased access to multi-use trail systems from hiking to motorcycles *Increased regulation of hunting or shooting access or periods *Increase regulation and mismanagement of sport fishing *Increased regulation on product sales such as spray paint in some areas *Restrictive gun laws instead of mandatory training, education and safety programs *Increased costs of school and extracurricular sports for youth *Schools' inattentiveness to the employers of the community and their youth
The complexity of rules in our society has created many problems for the free market. Another of my retailers pointed out that the most successful small business is one that involves the entire family. A family has more at stake in its business and works very hard to make it successful. Business skills are not a necessity to start a business, but passion for the business is necessary. Usually, our small businesses have been thinking about their business for a long time before they commit their resources to it.
Retailing is an expensive business to do. Regulations, costs for inventories, and employment costs make the retail industry a business that is not for the weak at heart. In these trying times, I have seen a number of my retailers close.
If you were to ask how retailers are doing, the answer from Washington state lawmakers might be something like this: "We are doing better than other states." But from where I sit, right here at my desk, the answer is different. It is complex due to the complexity of each retail line. The retailers who sell the basics are in, and everyone else is out. But as my member described above, we not only have the problem of a consumer spending freeze, we have a long list of factors, some unique to each retail line. It is becoming increasingly difficult to be a retailer and to continue to be a part of the community.
Retro bill barely surviving Legislative review so far ESSB 6035, which would foul up a successful workers compensation program in the state, has narrowly cleared another hurdle toward final consideration by the Legislature.
The unpopular bill backed by labor unions and trial attorneys passed the Senate in a 25 to 24 vote last month, and passed a House Health and Human Services Committee review by an 8 to 7 vote earlier this month. It now rests in the House Rules Committee for possible further action.
The bill would impose burdensome and confusing reporting requirements on associations that manage popular retrospective rating workers compensation programs. The new costs would slow the processing of claims, add costs and reduce employers' refunds regularly being delivered by the successful retro programs. A recent amendment on this bill continues to limit what associations can do to help their members and places very costly requirements on groups that will provide an unfair advantage to larger groups that can afford the costly independent audits and requirements of the bill.
"This bill will shut down smaller groups," said Tammie Hetrick, the Washington Retail Association's Vice President of Retail Services, "They do not generate enough money from their retro programs to hire auditors. Those companies will just move to larger groups, having the opposite effect of what legislators intended."
Association retro programs win insurance premium refunds for companies that maintain safe workplaces. If they keep claims low and overpay premiums, companies are awarded refunds for preventing injuries on the job.
The bill is nothing more than what it has been dubbed during floor debates this Legislative session: "Retrobution." In this case, it is political payback to the Building Industry Association of Washington, which legally has used a portion of the refunds it wins its workers compensation clients to back political candidates of its choice.
"This very bad bill that is trying to find a problem to fix is moving forward no matter what the costs to businesses are," said Hetrick. "It is a shame when politics drives legislation instead of policy or need."
A letter this week seeking support for the bill from state Democratic Party Chairman Dwight Pelz confirms the political motivations behind the Retro bill. In the letter, Pelz frowns on "conservative trade associations" who legally use a portion of refunds to support candidates of their choice. He does not identify any associations in the letter.
Bill supporters have couched their position as wanting to shed "sunshine" on the management of workers compensation funds.
But WRA's Hetrick doubts the sincerity of some legislators. Though the bill mandates reporting requirement on associations, it is silent about the fees that trial attorney's extract from workers injured on the job.
"If the bill truly is about sunshine, I would think legislators would want sunshine on all aspects of money being paid out," Hetrick said. "I'm surprised legislators are not concerned with the $40,000 to $50,000 an attorney takes form every injured worker they represent when they get a pension. That money is truly state money paid for by all the employers and workers in Washington."
The Retro refund money, on the other hand, only comes from the employers portion of premiums, not the workers.
"At all times, this is the employer's money just as each person paying the IRS gets a refund on the amount they overpaid," Hetrick said. "It (the refund) is that person's money and they can spend it exactly how they choose to."
SB 5963 UI conformity long overdue for action
By Mark Johnson, Vice President Government Affairs
The employer-backed UI conformity bill, SB 5963, has languished long enough. The House needs to pass it now and the Governor needs to sign it into law.
During the first part of session the agreement was that the Legislature would first pass a benefit increase for unemployed workers and then pass a conformity bill for struggling businesses. While the benefit increase, HB 1906, was signed into law February 16, SB 5963 is still waiting to be approved.
To further complicate the matter, the House Commerce and Labor Committee decided to amend SB 5963, which will increase costs to the UI system and eventually lead to a tax increase for struggling businesses. If these amendments remain part of the bill, we at the Washington Retail Association would prefer the bill be voted down.
The UI system is an important safety net for workers who are laid off due to "no fault of their own" except in some limited instances. The tax system, which is entirely employer paid, is a delicate balance of experience rating and socialized costs.
WRA respectfully asks that the House approve SB 5963, UI conformity, as it came over from the Senate without the costly changes made in the House Commerce and Labor Committee. Our long-tern economic recovery is depending on swift action.
Legislature winding down
With a bit more than two weeks remaining until adjournment of the Legislature, details have yet to surface about possible tax increases that lawmakers might propose to voters this year to restore budget cuts.
The Legislature has been working to cut spending to address an estimated $9 billion revenue shortfall in the coming biennium.
Preliminary polling shows, however, that state voters are unlikely to approve any ballot measures calling for tax increases.
The Washington Retail Association continues to monitor several bills whose outcomes will be determined in the coming days.
Bills and issues of interest to WRA include:
*HB 1402 Ex parte communications The bill, pushed by trial attorneys, has made the House floor calendar and will likely pass, despite WRA opposition. It would prohibit contact with physicians during appeals of worker compensation cases.
*SB 5531 Increasing Consumer Protection Act penalties WRA has lobbied to reduce proposed violations penalties from $75,000 to $25,000. The bill probably will pass.
*HB 1180 bisphenol A ban The Senate version of the proposed ban is the one in play. It does not include vague "other containers" language as that in the House bill. If the Senate version passes, Washington would follow Suffolk, N.Y. as the second governmental body to ban the chemical in children's containers.
*SB 5225 Felony threshold This item has been attached to the House budget proposal because legislators say a higher threshold ($750 instead of the current $250) would reduce incarcerations and save the state costs to operate prisons.
*SB 5826 Tamper-resistant prescription pads Appears to have no financial impact for the state. Pharmacies do not oppose the idea. It would require pharmacies to start writing on tamper resistant pads by summer of 2010.
*SB 5433 Local option utility tax The bill proposes allowing cities and counties to pass up a 6 percent utility tax to help them raise funds. WRA is working to defeat this bill as it would raise costs for members struggling in the recession.
*HB 1138 Consumer use of employee restrooms WRA is working to remove an amendment that would prohibit store employees from accompanying customers to the employee bathroom entrance.
*Income tax Governor Gregoire dismissed a new bill that would impose a 1 percent tax on people who make more than $500,000 a year. Washington currently charges no income tax. Gregoire thinks such a tax would be illegal and it appears the bill has little, if any chance, of getting a vote this session.
Businesses oppose plans to limit driving
A bill still alive in the Legislature that aims to reduce greenhouse gas emissions has new language causing concerns in the business community.
The language at issue has to do with vehicle miles traveled and what could eventually result, including taxing companies depending upon how far their vehicles travel.
SB 5735 aims to reduce annual miles traveled in vehicles by 18 percent by 2020 and up to 50 percent by 2050. The bill does not spell out how those goals would be accomplished. So far, the bill calls on the Department of Ecology to make specific recommendations to the Legislature in two years on how to reduce carbon dioxide levels in the air.
But the bill, which has frequently been amended this session, contains new language that worries the business community. Many business organizations oppose the idea of financially penalizing companies for the miles they must drive to service their customers.
Further, the bill does not currently address how CO2 emissions already may have been reduced due to the recession.
Business leaders met this week to improve the bill before a possible vote by the Legislature. It passed the Senate in March by a 29 to 19 count and was in the House Rules Committee this week awaiting possible further action. The Legislature is scheduled to adjourn on April 26.
Business leaders say the current bill is premature because the Department of Ecology has not yet completed a report on the possible economic impacts of reducing carbon dioxide levels. The Community Trade and Economic Development Department also is in the midst of such a study and business leaders are urging the Legislature to await the economic impact reports before voting on SB 5735.
The business leaders warned that approving the bill prematurely could lead to economically harmful consequences including curtailing suburban development and adding new financial burdens on companies struggling to recover from the recession.
Treasurer warns $3 billion construction bond issue would be too expensive State Treasurer James McIntire has warned that a bill calling for $3 billion in energy efficiency construction around the state is too expensive.
HB 2334 by Rep. Hans Dunshee (D-Snohomish) calls for a public vote to approve $3 billion to make energy efficiency improvements in schools and other public buildings.
"The state legislative intent is to create jobs by issuing bonds for safety, health and energy efficiency improvements," an analysis of the bill says.
McIntire, however, warned this week that state borrowing is nearing its constitutional limits.
"The $3 billion of added debt called for in HB 2334 is too much," McIntire said. "It would threaten our credit rating and would affect the rest of our investments in transportation and public infrastructure." Source: Office of the Treasurer
Cap and trade not working in Europe A Washington Policy Center report refutes claims by Department of Ecology Director Jay Manning that a CO2 emissions reduction program could improve air quality in the state.
"Will it work?" the report by Policy Center Director Todd Myers asks. "The answer at this point, based on how it is working elsewhere, is 'no.'^"
Myers accuses Manning of using shoddy science and perpetrating a myth that a carbon dioxide emissions reduction program is showing benefits in Europe. A bill in the Washington Legislature would permit further study of such a program as part of an environmental initiative by several western states.
The business community has been against the bill, citing the added costs it would require during the recession. Further, business leaders concluded a national bill would be fairer than a potential patchwork of different state requirements.
Myers also reports that CO2 concentrations in the air fluctuate naturally, a position he said refutes Manning's claim that humans are steadily increasing CO2 levels in the air.
"To get the policy right," Myers writes, "it is time we honestly addressed the realities of cap-and-trade. To do otherwise invites failure."
Source: Washington Policy Center
Taylor appointed to fill District 15 district
Yakima County cattle rancher David Taylor has been appointed to fill a vacancy in the Washington House of Representatives.
Taylor, 37, will fill the unexpired vacancy of former District 15 Rep. Dan Newhouse, who resigned earlier this year to become Director of the Washington Department of Agriculture.
Taylor would have to stand for election this fall.
Commissioners from Klickitat, Skamania, Clark and Yakima counties selected Taylor from among three finalists to serve out Newhouse's term. Besides being a rancher, Taylor runs an agricultural consulting firm and a steel fabrication business.
Hearing this week on drug reimbursement cuts
A court hearing has been scheduled for Thursday of this week to determine whether a lawsuit will go forward challenging proposed Medicaid reimbursement payment cuts for prescriptions drugs.
The Washington State Pharmacy Association sued after the state planned to reduce how much it pays to pharmacies to dispense brand-name drugs to low-income children and adults.
Though pharmacies say the lower reimbursement rates would force them to close many pharmacies, the state Medicaid director said the price of drugs is exaggerated and pharmacies receive a fee for every Medicaid prescription they fill.
Last week, federal judge Robert Bryan suspended the state's plan to cut the reimbursement rate, which had been scheduled to start on April 1. State officials hope to save $200 million in the next two years on drug reimbursement payments including encouraging greater use of less expensive generic drugs. The rate cut Governor Gregoire ordered was 6 percent.
Source: Food Marketing Institute, Seattle Times
New pharmacy rule allows e rules Washington pharmacies must keep on premises current copies of state rules and laws governing the operations of pharmacies.
The rule, based in Washington law, has been amended to allow online access or electronic versions as acceptable references.
The rule previously required a copy of the law book to be "maintained in a binder." The state Board of Pharmacy stopped printing the law books after the 2003 edition.
Source: Department of Health - Board of Pharmacy
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.
