California tax increases failed with voters By Jan Teague, President/CEO
Last week, California voters sent their legislators a clear message on that state's growing budget crisis: live within your means.
Voters soundly rejected five ballot propositions meant to patch a projected revenue shortfall of $21.3 billion after getting help from President Obama's stimulus money. Their shortfall is roughly the same percentage of budget it was in Washington State, but how California dealt with the problem was quite different.
They made cuts in education, health care, human services and prison spending but not enough to cover their costs.
Democrats hoped to stave off deeper cuts by sending the voters a series of propositions for raising or shifting money. No rank-and-file Republican would vote for the plan. The Insurance Commissioner, Steve Poizner, who is running for Governor in 2010, issued a statement: "It is astounding to me that while the Obama White House is proposing a tax cut for 95 percent of all Americans, the Sacramento politicians are proposing a tax increase for 95 percent of all Californians."
One key proposition would have increased taxes to fund local schools and community colleges. Another would have borrowed against future lottery proceeds. Two other ideas would have shifted funds earmarked for early childhood development and mental health programs into the general fund. The only proposal California voters approved prevents raises for state elected officials in budget deficit years. Voters approved it with a 74 percent majority.
But to increased taxes and transferring funds, California voters resoundingly, with majorities in the mid 60 percent range, told legislators "no," live within your means and make more cuts.
What is different for Washington State legislators is their ability to pass a budget without a supermajority. Sixteen states require a supermajority to raise taxes, but only three require it for passing the budget. California's Republicans played a key role in their refusal to vote for the budget plan. So their lawmakers had no choice but to ask voters to transfer funds around. Here in Washington State lawmakers transferred funds as they saw fit.
But our lawmakers did some pretty heavy polling to test the voters' interest in increasing taxes. They finally decided that a public fight over tax increases would likely just waste everyone's time and money and be defeated.
I think California voters have shown our lawmakers that they made the right decision not to propose a tax increase. Our lawmakers relied on their polling data and used their political instincts about the voters' angst over the recession.
I think this voter response will serve as a strong reminder to our lawmakers as they look at budget adjustments for next year. That process will start earlier than you might think, particularly if the revenue forecasts are lower than expected.
California Governor Arnold Schwarzenegger has released a revised budget that calls for up to $9 billion in more cuts, including the layoffs of 5,000 state workers and $7.5 million in borrowing from local governments and the investment market. We will all watch with interest to see how California tightens its belt. What works in California often gets tested in Washington State.
Economic reports are mixed this week
Consumer confidence is rising even as home prices continue to fall, according to new economic reports released this week.
The Conference Board's Consumer Confidence Index reached its highest level in eight months in May. The rating was 54.9, compared to 40.8 in April but still well below 100, which indicates a health economy.
Regardless, economists saw the May confidence rating as a significant outcome.
"Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months," Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement. "While confidence is still weak by historic standards, as far as consumers are concerned, the worst is now behind us."
The confidence index is important to retailers because it a reliable gauge of people's willingness to spend, the key ingredient in economic recovery from the recession. The Conference Board attributed rising confidence to a two-month stock market rally, helping shoppers feel better about their retirement funds.
Real estate news, nonetheless, continued to be discouraging in May.
Home prices fell at the fastest annual rate on record in the first quarter of the year, though the pace of month-to-month declines has begun to slow. Nationally, home prices have fallen 32.2 percent since peaking in the second quarter of 2006 and are at the lowest levels since the end of 2002.
Source: Associated Press
Audit finds unemployment insurance errors
A federally required audit has found that Washington overpaid unemployment claims in nearly 12 percent of a sampled caseload.
The internal audit sampled 480 claims out of 319,440 paid last year.
Common reasons for the overpayments include claimants not meeting their weekly work-search requirements or not reporting when they have returned to work, an announcement by the Department of Employment Security said.
"It's a small sample, but it's enough to show us where we're doing well and where we might be able to achieve additional improvements," said Karen Lee, Employment Security Commissioner.
Though federal regulations require the audit, there is no federal standard for benefit accuracy. The U.S. Department of Labor is expected to issue a report in August about a national review of benefit payment accuracy.
About 170,000 people are collecting unemployment benefits in Washington State.
The Employment Security Department's toll-free number to report suspected unemployment benefits cheaters is 866-266-1987.
Source: Employment Security Department
Legislators to be honored at business luncheon
The Business Institute of Washington will honor five state legislators for their support of business issues during the 2009 Legislature.
The lawmakers being honored are Senator Tim Sheldon, (D-Potlatch); Senator Janea Holmquist, (R-Ephrata); Senator Jim Honeyford, (R-Sunnyside); Representative John Driscoll, (D-Spokane); and Representative Joel Kretz, (R-Wauconda).
The 2009 Business Stars were selected on their willingness to support pro-business legislation that will benefit the economy.
"We are working to show employers and their employees that a clear understanding of business' role in public policy is not only great for business, it's great for the State of Washington," said Erin McCallum, President of the Business Institute.
The awards luncheon will be on June 2 at the Seattle Sheraton. It will be the Business Institute's third annual Business Stars luncheon.
In a move to save money, the state will reduce Medicaid prescription reimbursement payments to pharmacies starting on July 1.
The cut will be one-third the size of proposed reimbursement rate cuts earlier this year that resulted in a court challenge from pharmacies that said deeper cuts would force them to close stores in the state.
The new rate as of July would be 84 percent of the average wholesale price for brand-name drugs, a cut of two percent. An earlier proposal to reduce the rate to 80 percent resulted in the court challenge, in which a Tacoma federal judge rejected the state's proposal on grounds that it had not been discussed in sufficient detail with pharmacies.
In a news release last week, the Department of Social and Health Services said the lower reimbursement rate will save $12 million a year in state and federal expenses. The federal and state governments jointly pay for Medicaid coverage.
Assistant DSHS Secretary Doug Porter said the reimbursement cut is in keeping with Legislature instructions set out when lawmakers approved the 2009-2011 state budget earlier this year. Porter said he does not anticipate a court challenge to the smaller cut in reimbursements.
To read DSHS' announcement about the rate cuts, click here.
Sources: Department of Social and Health Services, Associated Press
State changes monitoring of swine flu
The state Health Department has switched to monitoring hospitalized swine flu patients as opposed to monitoring the general spread of the disease as it did when the outbreak occurred in Washington earlier this year.
With the change to a tighter monitoring focus, only the state total of swine flu hospitalizations or deaths will be posted online. Those updates will be available about 3 p.m. on Fridays.
To visit the state's swine flu Website, click here. It contains lots of helpful background including facts sheets, symptoms and videos on flu prevention. A bi-lingual telephone line can be reached at 1-888-703-4364.
As of earlier this week, Washington State had 517 confirmed cases of swine flu.
Now that the strain is common in Washington, the state lab no longer is collecting samples from all patients with influenza. Instead, the state is focusing its resources on examining fatalities and hospitalizations from the swine flu strain. One swine flu death from swine flu has been reported in the state this year.
Though the swine flu strain has been milder than officials once feared, they still advise frequent hand washing, covering coughs and staying home from work or school if you experience flu symptoms.
Source: Department of Health, The Capitol Record blog
State agencies to conduct contractors, vendors seminar
Vendors and contractors wishing to learn more about doing business with the state may attend an all-day seminar scheduled on June 4 in Spokane.
Representatives from several state agencies will attend to answer questions and take suggestions on ways to streamline and simplify regulatory requirements.
The seminar will run from 8 a.m. to 4 p.m. at the Mirabeau Park Hotel and Convention Center. To register, including a $55 fee, visit www.ga.wa.gov/Events/EVESHome.htm.
WRA co-presenting health care conference in June
Steve Eastaugh, a health care educator and author, will headline the 7th Health Care Conference on June 3 at the SeaTac DoubleTree hotel.
The Washington Retail Association is co-presenting the event with the Washington Policy Center.
Dr. Eastaugh, a health care advisor to President Obama, will discuss the economics of health care and current federal health care policy reform proposals. Eastaugh works in the Department of Health Services Management at George Washington University.
The program will include a review of newly-enacted bills related to health care from the 2009 Legislature and panel discussions about new ways to deliver health care to employees and a demographic review of the nation's 45 million people without health care coverage.
For more information about registration, contact Lindsay LeVeque at 206-937-9691 or at lleveque@washingtonpolicy.org.
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.
