House committee hears report on the aerospace cluster By Jan Teague, President/CEO
Today at a work session on key industry clusters that impact geographic areas, Bill McSherry, Special Advisor to the Office of Financial Management, spoke about the aerospace industry and its economic impact on the Kent Valley and the Seattle area.
McSherry told the House Community, Trade and Economic Development Committee that Boeing represents 15 percent of the state's economy, employs almost 80,000 workers and creates 225,000 jobs in the state. Suppliers are located in 30 of Washington's counties. The Renton plant alone contributes $170 million dollars to the state in Business & Occupation taxes.
An industry cluster such as Boeing brings money into the state rather than just circulating money from one industry to another. This is significant to the state in more than the dollar number usually reported. New money coming here has more value. I think that added value gets overlooked.
This is a week when Boeing is getting a lot of attention from the Governor, who wants to study aerospace jobs and educational support. Also this week, WashACE released a report on how the state would suffer economically if Boeing moved elsewhere.
What I think is missing in all of this talk is a demonstrated effort from the Legislature to assure Boeing keeps its plants in Washington State.
While the legislative focus now is on getting stimulus dollars into the economy to create new jobs, the attention on creating a competitive business climate is not really on the table. These new jobs being created with stimulus money will be very expensive because they are coming from tax dollars funded by long-term debt. And, there is no guarantee that these jobs will last because the stimulus money is a one time shot.
When is it the right time to consider what it takes to keep the good jobs we have? When the economy is good, a competitive business climate is not a priority. And so it would seem that when the economy is bad, it isn't either.
Boeing has specifically asked the Legislature in writing and in testimony for reforms in unemployment insurance and workers' compensation.
From my observations, there haven't been any concrete bills that indicate an impressive change in these state programs. Can strides in an educated technical workforce make the difference to Boeing? Yes, but I think they could ship in talent from India if they wanted to. So it seems that the real competition that could attract Boeing to another state is in the cost of doing business.
More discussion should occur on the topic of "what if Boeing left?" I know it would be very hard on retailers who are the suppliers of commodities to the company and to its workers. We need strong industries such as Boeing to be treated with great care, not just talk of studies.
I think other states looking to attract Boeing in this economic climate are eager to see our state make the mistake of taking Boeing for granted.
WRA testifies at Port of Seattle hearing on clean truck program
WRA Vice President of Government Affairs Mark Johnson testified Tuesday before the Port of Seattle Commission in favor of the proposed Clean Truck Program.
Johnson cited the incentive based, proactive and positive nature of the CTP as reasons WRA members support the proposal. Absent from the program are the imposition of container fees and other punitive and costly regulations. Additionally, the Seattle port will allow users to determine which technology best fits their business model in their efforts to achieve the emission reduction goals.
Some ports in California have taken the wrong approach to address emissions that have resulted in a loss of business, as recently reported in the media. Retailers are struggling to keep costs down in this tough economic environment. When ports raise their costs of doing business, retailers are forced to reexamine their business practices.
WRA commends both the Port of Seattle and the Port of Tacoma, which recently adopted a similar clean truck program, for reaching out to stakeholders in a collaborative process to ensure environmental goals are achieved and a vibrant business climate is maintained.
WRA will continue to work with Washington state ports to ensure our members are able to import their products in a fast, cost effective and environmentally friendly manner.
Thousands come to Capitol to protest taxes
An estimated anti-tax crowd of 5,000 protested government spending on the steps of the Capitol at noon Wednesday.
The demonstration was one in a series of national, anti tax Tea Parties recalling the spirit of the 1773 Boston Tea Party. Those who rallied coined the acronym TEA for the phrase Taxed Enough Already.
Speakers criticized President Obama and Democrats in the state Legislature for taxpayer-financed bailout programs and talk of proposing tax increases to restore spending cuts coming in the 2009-2011 state budgets.
Conservative Seattle radio talk show host Kirby Wilbur recalled an ill-feted proposal last year to tax car owners by the size of their engines.
"They're running out of things to tax," Wilbur said of legislators. "What's next?"
Legislators, state Auditor Brian Sonntag and anti-tax activist Tim Eyman were among speakers who urged the protestors to make this week's rally the beginning of a campaign to defeat future government bailouts or attempts to raise more taxes.
Sonntag said raising taxes will not help the nation recover from the recession and asked the crowd to support his efforts to find savings in the cost of state government.
"With the support of people like this, it makes my job a lot easier," Sonntag said.
The crowd broke into a chant of "no more taxes" during a speech by Sen. Janea Holmquist, R-Ephrata. She urged the crowd to hold legislators accountable for government spending by reminding them whose money was being spent.
"It's not their money they're spending," Holmquist said. "It's your money they're spending."
Holmquist reported that Democrats have considered higher sales, property and business and occupation taxes and instituting income taxes as ways to balance the state budget. When Holmquist mentioned an income tax, which Washington does not have, the crowd began chanting, "no."
Eyman spoke in favor of his latest initiative attempt, 1033, that would use excess tax revenues above a state cap to reduce property taxes. The initiative has not yet qualified for the ballot, but a signature campaign is underway, Eyman said. The initiative would limit the growth in state government spending to inflation and needs related to population growth.
"We the taxpayers are totally tapped out," Eyman said. "The people need to take charge and decide" how much government spends.
Democrats in the Legislature have talked generally about proposing tax increases on a state ballot, but have yet to make a specific proposal.
Analysts warn against tax increases and of future state budget gap
As legislators work to approve a new state budget, independent analysts are warning of economic challenges ahead for the state.
A Washington Alliance for a Competitive Economy (WashACE) report warns of future revenue shortfalls considering how legislators have chosen to close the current $9 billion revenue shortfall for 2009-2011.
WashACE takes the Legislature to task for relying on one-time federal stimulus funds and other methods to close the current revenue shortfall.
"Federal stimulus funds and other one time resources like fund transfers and reduced pension contributions mean that there is likely to be a significant budget gap facing legislators in two years, when they write a budget for the 2011-13 biennium," the WashACE report concludes.
The group estimates a revenue shortfall of $2.5 billion to $3.8 billion in two years. To read the full report, go to researchcouncil.org and click on the "recent publications" tab.
In a separate report, the Washington Policy Center gathered more than two dozen economists to sign a letter to state officials urging them against proposing tax increases to restore some budget cuts in the state's proposed $33 billion spending plan. Though the Legislature's Democrat leadership has talked generally of the need to propose tax increases on a ballot later this year, they have yet to make a formal proposal.
"The state revenue forecast indicates we are mired in recession," wrote Dann Mead Smith, president of the Washington Policy Center. "The last thing lawmakers should do is inhibit our economic recovery by raising taxes and damaging our ability to turn the economy around."
Shifting money from the private sector to government will make it harder for companies to create jobs and depress consumer spending, WashACE concludes.
Legislators focus on a budget as adjournment nears
Thursday of this week marks Day 95 of the Legislature's long, 105-day session.
This week found Legislators working toward adopting a budget even as an estimated 5,000 protestors came to the Capitol urging them not to propose raising taxes in the current recession. Adjournment is scheduled on April 26.
Meanwhile, the Washington Retail Association is tracking issues and retail-related bills that could see action before the final gavel falls. Here is a summary:
*Legislature Democrats continue talk of proposing tax-related ballot measures including an income tax on the wealthy and a 0.3 percent state sales tax increase. No specific proposals have yet come forward.
*SB 5963 Unemployment conformity The bill stands tabled as labor unions press for amendments to boost benefits and make it easier to collect payments if you quit a job. WRA favors a bill without such amendments that passed the Senate and would reduce UI insurance rates for members.
*SB 5735 Climate change and cap and trade New language regarding "vehicle miles traveled" has raised great concern in the business community and spawned efforts to soften the language in the bill to avoid possible future taxes. Regardless, the bill now does not include mandates but calls for a two-year study into CO2 reduction possibilities, which is far less ambitious than Gov. Gregoire's hoped for when the session began in January.
*SB 6035 Retro It has been in the House Rules committee and would be another very close vote if it gets to the floor. The Senate approved the bill by a 25 to 24 vote. WRA has been lobbying hard against this bill that would establish an unwieldy bureaucracy to track the use of funds. This would delay and reduce refunds to members.
*HB 1402 Ex parte communications - workers' compensation This bill, backed by trial lawyers, would prohibit contact with doctors in workers compensation appeals. It has passed the Legislature and is headed to Gov. Gregoire for signature. WRA will send Gregoire a letter requesting a veto.
*SB 5531 Increasing Consumer Protection Act penalties The bill increases penalties from $10,000 to $25,000 and is headed to Gregoire for her signature. WRA lobbied successfully to reduce the initial proposal for a $75,000 penalty.
*SB 5282 BPA ban in bottles and cups The bill banning the chemical bisphenol A in drinking containers for children has reached the Senate calendar for a vote.
*SB 5225 Felony threshold The bill has been attached to the House budget on grounds the higher threshold ($750 instead of the current $250) would reduce incarcerations and save the state money. The bill includes WRA requests for an Organized Retail Crime Task Force and allowing retailers to recoup more of the losses they might suffer.
*SB 5433 Local option utility tax The bill is on hold, with support waning. It would allow local governments the option of charging up to a 6 percent tax to raise operating funds. WRA is continuing pressure to keep the bill in the Rules Committee.
*HB 1138 Customer use of employee-only restrooms The bill is in the Senate Rules Committee. WRA is working to remove an amendment that would prohibit employees from accompanying a customer to the employee-only restroom door.
*There has been no action on an Employer Gag Bill that would prohibit employers from holding employee meetings to discuss union organizing campaigns. Leadership of the controlling Democrat Party earlier in the session announced their intention to drop consideration of the bill.
House debates creating food safety commission
Should retailers be responsible for notifying consumers of tainted food they might have sold?
Should food labels include more details about where it was packaged and what was done to increase its shelf life?
And should Washington create a Commission on Safe and Healthful Food to study food safety or decide whether to improve safeguards?
These were key questions raised during a workshop last week on HB 2309 before the House Environmental Health Committee. The bill sponsor, Rep. Tom Campbell, R-Spanaway, said he intended to hold more hearings during the summer before moving his bill for consideration and passage in the 2010 Legislative session.
The bill calls for the appointment of a 16-member commission of legislators, food producers, retailers and consumers. The bill does not specify whether a food safety commission would be part of a particular department of state government.
"It (commission) would really be a place to vet ideas," said Campbell. He further commented he did not intend to create what he called a "mini FDA (U.S. Food and Drug Administration)."
During much of the two-hour workshop, debate hinged on whether the state had enough protections in place to ensure food safety.
The bill intends to review state systems to protect food safety, methods for notifying consumers of food recalls and whether food labeling needs to contain more information.
Bill co-sponsor, Rep. Steve Conway, D-Tacoma, testified that a commission would function in response to growing consumer interest in food safety.
"People are beginning to get more concerned about where their products are coming from," he said.
Regardless, representatives of food handlers, farm producers and grocers testified that the commission was not needed and would duplicate the work of several agencies whose duties overlap in the job of ensuring food safety.
Calli Daly, spokeswoman for the Northwest Food Processors Association, said introducing state regulations on top of federal food safety regulations would only confuse consumers.
"They deserve a single standard when it comes to food safety," she said.
Patrick Connor, spokesman for the Washington State Farm Bureau, also expressed concerns about the bill. Several state and federal agencies already monitor food safety, making a state commission unnecessary, he said.
Further, Connor said the recession made it an inopportune time to be considering costly new labeling requirements for food producers.
WRA offers safety/loss prevention networking
The Washington Retail Association has begun offering its members a free Safety/Loss Prevention Networking program. This is an opportunity for safety and loss prevention specialists to get together with others in a group and share common safety/loss trends and solutions that come up in the retail industry.
WRA will be offering these meetings quarterly at various locations throughout Washington State. The first meeting will take place the end of May.
WRA has received a significant amount of interest from many members. Don't miss your opportunity to network with other specialists in your field and share trends that are occurring in the retail industry.
If you are interested in this program, please e-mail Tammie Hetrick with your contact information and we will include you in our notifications. The address is tammie@retailassociationservices.com.
Retail sales declined in fourth quarter, 2008
Overall retail trade in the state fell nearly 12 percent in last year's fourth quarter, when many retailers collect most of their revenues for the year.
Taxable retail trade during last year's holiday periods totaled $12.1 billion statewide, a drop of 11.9 percent compared to the same period in 2007, the Department of Revenue reported. The retail trade category excludes construction, services and other non-retail businesses and is considered a better measure of consumer purchases.
The breadth of the recession is evident in the department's report.
Fewer than 10 percent of the nearly 60 retail categories showed sales gains in last year's fourth quarter.
Categories suffering the largest percentages quarterly losses included new and used auto dealers, down 31 percent; jewelry and luggage stores, down 26.3 percent; apparel and accessories, down 15.3 percent; and department stores, down 9 percent.
The few bright spots in the quarterly sales reports included e-commerce and mail order sales, which increased almost 6 percent; and electronics and appliances, which increased 3 percent.
Source: Department of Revenue
Retail vacancies near 10 percent in state
The current liquidation of Joe's Sporting Goods brings to mind another negative outgrowth of the recession; increasing retail vacancies.
A new National Association of Realtors' survey estimates that Seattle area retail vacancies were close to 10 percent in the first quarter of the year.
The national retail vacancy rate stood at 11.8 percent in the first quarter. The National Association of Realtors projects the national rate will rise to 13.4 percent by the third quarter of the year.
The Midwest is the hardest hit region for retail vacancies, where they were 18.7 percent in Detroit and 16.9 percent in Columbus, Ohio. The lowest national rates were 3.4 percent in San Francisco, 4.7 percent in Honolulu and 5.4 percent in San Jose.
The association projects a dim year for vacancies as credit remains tight, consumer demand for shopping is low and fears of continuing layoffs have not subsided.
Sources: National Association of Realtors, KING-TV
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.
