Theft numbers gigantic and growing By Jan Teague, President/CEO
I could hardly believe the breakdown of numbers, but it's true. Organized Retail Theft in Washington State is a much bigger problem than I previously reported. According to a Coalition Against Organized Retail Theft Report from June 2008, Washington State loses almost $49 million dollars in state sales taxes from all retail stores!
But my point from my previous column remains the same; Organized Retail Theft is on the rise and it is not only retailers that are losing. The Washington State Legislature should take notice. The state, which is strapped for cash, is losing a bundle - $49 million for just one year! Even local governments that can't afford to prosecute these crimes are losing money. As these retail theft rings continue to understand the lack of prosecution, their tactics get more sophisticated and the theft numbers continue to rise.
With the Legislature about to begin, it seems to me that this issue should gain attention. The Legislature should discuss an investment in criminal prosecution. It should pass stricter laws that help retailers with theft. It surely would help to increase the revenues from sales tax. It's an investment with a strong return to the sales and Business & Occupation tax base. We haven't even begun to calculate the B & O losses to the state or local governments! Legislative leaders who write the state budget should be very interested in calculating their tax losses. I think they would have even higher numbers than I am reporting. A stronger effort to stop this theft would benefit us all.
It's well known that theft rings target several stores in one day and the merchandise is then moved and sold through fencing operations such as flea markets, pawn shops, Internet sites and swap meets. Today, the most popular items targeted by these groups are goods in high demand commanding a near retail resale price, such as designer clothing, Benadryl, Crest Whitestrips, Prilosec, gift cards, electronics and Similac infant formula.
There has been a shift in recent years to selling stolen items online. Thieves can make close to 70 cents on the dollar through online sales as opposed to roughly 30 cents on the dollar through black markets or physical fence locations. As a result, retailers estimate that 40 percent of merchandise being sold through auction sites is likely stolen if it is "new in the box", a popular way of selling to consumers to provide them peace of mind about the product.
Stories of organized retail crime have been rampant this year. In Florida, law enforcement officials uncovered a theft ring with stolen merchandise estimated to total between $60 million to $100 million dollars. In New Jersey, FBI and other law enforcement officials announced indictments against one of the Gambino crime family's highest-ranking members and 22 other members. Cities across the country including Kansas City and Minneapolis have also uncovered multi-million dollar organized retail crime cases.
In the last twelve months 85 percent of retailers who responded to a 2008 National Retail Federation Survey reported being victims of organized retail crime. The survey was completed by 114 loss prevention executives from all segments of retail, including drug stores, supermarkets, mass merchants, home improvement, apparel, department and specialty stores.
The Washington Retail Association has made this issue a top priority hoping to address the seriousness that theft rings pose. In the past few days, I have had a number of media calls asking for information. I think everyone is interested in what is happening. It's a trend that is not good for society. It's a problem that makes sense to address.
Research council releases state spending report
With the introduction of the Governor's budget proposal this week, legislators will be examining how state spending has contributed to the revenue shortfall of at least $5 billion.
The Washington Research Council has released a new report on state spending that can be a helpful tool in discovering that overspending has contributed to the state's budget woes.
Richard Davis, coordinator of the Washington Alliance for a Competitive Economy (WashACE) has written that state spending is outpacing revenue growth by 16 percent to 5 percent, respectively. WashACE is affiliated with the research council.
The Joint Legislative Task Force on Beer and Wine Regulations and the Joint Legislative Task Force on HVAC/R (refrigeration) Industry met this week to finalize their interim work. WRA has an interest because several members could potentially feel impacts from the work of the groups.
The Beer and Wine task force is chaired by Rep. Steve Conway, D-Tacoma and Senator Jeanne Kohl-Welles, D-Seattle. They were instructed by the 2008 Legislature to do a review and make recommendations to the Legislature on improvements to beer and wine regulations. Many of the current regulations have been in place since Prohibition. Topics discussed included out-of-state sales, extension of credit, buying in bulk and advertising. Democrats and Republicans on the task force generally agreed on most provisions. The task force will submit a report that will likely be drafted into legislation for the 2009 Session which begins January 12.
The HVAC/R refrigeration task force was formed by the 2008 Legislature after the failure of a bill designed to add additional requirements for HVAC/R workers. This would have increased costs to smaller convenience store retailers that rely on these refrigeration workers. The bill was supported by union interests and opposed by non-union independent businesses. The task force is also chaired by Senator Kohl-Welles and Rep. Conway. Unlike the beer and wine group, there is less agreement among members. Currently there are nine separate recommendations being considered. Because this was the group's last meeting, it is possible there will be majority and minority reports to the Legislature. There is a chance that a bill or bills will be drafted and introduced during the 2009 Session.
WRA will review both final recommendations and any legislation generated from them and will take appropriate action. If you would like a copy of either final report, please contact Mark Johnson, VP Government Affairs, at 360-943-9198, Extension 15 or at mark.johnson@retailassociation.org.
Gregoire introduces greenhouse gas proposal Businesses say proposal lacks economic impact details
A skeptical business community greeted Gov. Christine Gregoire's recent draft of a bill aimed at reducing greenhouse gas emissions in the state.
Gregoire has proposed issuing heavy industrial users free permits to emit greenhouse gases. Though Gregoire hopes to appeal to businesses by not charging fees for the permits, business leaders found her proposal lacking in economic impact analysis and worried that the bill could increase costs and worsen economic conditions beyond the current recession.
The state hopes to cap emissions from sources such as factories, power plants and gasoline to 1990 levels by the year 2020. Federal government officials are working on a separate bill while Washington is part of a regional effort with other Northwest states and Canadian provinces. Each polluter would get permits for their share of allowed emissions under the plans.
Though Department of Ecology Director Jay Manning told business leaders the proposal could create jobs in a so-called "green economy," his audiences faulted the bill for its lack of economic impact analysis. Other business leaders urged the state to wait because Congress could enact a federal bill that could eliminate any state pollution control regulations.
The Washington Retail Association is participating in efforts to reduce pollution, but is keeping an eye out for regulations that would financially punish businesses, force layoffs or threaten to close businesses and further damage the state's economy, which is in a recession.
Matt Steuerwalt, an aide to Gregoire, said a revised bill could still be submitted before the Legislature convenes on Jan. 12. Regulations in the bill would take effect beginning in 2012.
WRA attends legislative preview
The Washington Retail Association attended an Attorney General Citizens Advisory Committee on Energy, Telecommunications and Utilities meeting last week during which lobbyists, Legislative staff members and state government employees reviewed possible bills to be considered for adoption during the 2009 Legislative session.
Adjusting spending to eliminate the state's estimated revenue shortfall of at least $5 billion in the next budget biennium will dominate the session, said Matt Steuerwalt of Gov. Christine Gregoire's office.
Two other major efforts may involve approving a plan to reduce greenhouse gas emissions in the state and amending Initiative 937, which requires utility companies to promote conservation and invest in alternative energy sources.
The revenue shortfall may make it difficult for companies to obtain renewals of tax credits in the next state budget cycle, Steuerwalt said. Regardless, renewals of tax credits for companies that develop renewable energy sources will be sought and lobbied for, said Carrie Dolwick, policy associate for the Northwest Energy Coalition.
Amendments that might be sought for I-937 include adding new fuel sources, such as landfill gases, as permissible alternative energy sources and allowing projects such as wind farms to be built outside of Washington State, where wind may be a more reliable energy source.
The move to "green" power worried Tim Boyd, spokesman for Industrial Customers of Northwest Utilities.
Wind power, for example, may be less reliable and threatening to businesses, particularly in the current state recession, Boyd said.
He said his members favored development of more low-impact hydroelectric power as opposed to wind.
Other possible bills would:
*Make it easier for the Utilities and Transportation Commission to catch unlicensed household goods movers. This might be possible by changing current enforcement procedures, said David Danner, UTC Executive Director.
*Expand development buffer zones to prevent trees from blowing down power lines in windstorms. This is an idea favored by Puget Sound Energy.
*Change the language is state law regarding company mergers. The idea would override the "no harm" clause in the law to include "net benefit to customers" as a standard for consideration of approving mergers, said Simon ffitch, chief of the Attorney General's Public Council section.
UI taxes falling for some businesses
For the first time ever, a thin majority of Washington employers will find themselves in the lowest unemployment-insurance tax bracket next year, the Employment Security Department has announced.
Fifty-one percent of employees will be in rate class 1 and together save $45 million in unemployment-insurance taxes next year, said Employment Security Commissioner Karen Lee. About 25 percent of the state's employers will see rate decreases while 18 percent will see rate increases.
The state unemployment insurance tax rates range from a low of 0.35 percent of payroll costs to a high of 6 percent. Employers are taxed based on their unemployment history during the previous four years and their employees' taxable wages. Employers who have laid off more employees are taxed at higher rates. Employers who made no layoffs during the past several years pay the lowest rate.
Lee said 2009 rates improved because of several recent years of low unemployment. The current state recession is sure to result in higher future tax rates. (Editor's note: The new rates were calculated before the recession and unemployment began to climb in the state).
"The recent economic conditions haven't existed long enough to significantly change employers' experience ratings at this point," Lee said. The $45 million tax savings next year follows this year's $87 million in savings, she said.
The state's unemployment account is about $4 billion, enough to provide about 20 months of benefits in a severe recession. Unlike other state's running out of unemployment funds, Washington's is one of the nation's healthiest, Lee said.
Source: Employment Security Department
L&I changes rules on insuring out-of-state workers
The Department of Labor & Industries has adopted new rules for employers with Washington employees working out-of-state.
Workers' compensation premium payment requirements have changed for some work being done out-of-state, the department reported.
Under the new rules, Washington employers no longer have to pay premiums to L&I if they are paying an out-of-state insurer for work being performed outside Washington State.
Previously, Washington employers had to pay premiums to L&I regardless if they were also paying workers' compensation premiums to an out-of-state insurer.
Washington employers no longer will need to pay L&I premiums for out-of-state work if:
*Their Washington workers in another state are working for longer than the temporary and incidental period. That period is 30 days or less within a calendar year.
*They submit new out-of-state "no premium" reports.
*They provide L&I a workers' compensation certificate of liability insurance issued by their out-of-state workers' compensation insurer.
*They report the out-of-state hours on a supplement out-of-state reporting form.
Safeway's loss prevention director, Jason Moulton, reports on a new local television show that could assist retailers in their efforts to combat organized retail theft.
"Washington's Most Wanted" airs Friday and Saturday evenings on Q13 Fox and MQ2, both in Seattle. The show is produced in cooperation with Crime Stoppers of Puget Sound.
To learn more about the show's reports and program schedules, click here.
Sources: Q13 FOX, Crime Stoppers of Puget Sound
WRA Website adds new features
If you haven't visited the Washington Retail Association's Website recently, please take another look.
We're putting more information onto the site more frequently as we near the next Legislative session. The quicker pace of additions to the site will continue through the next session and beyond.
A new right-hand column on the homepage now includes periodic video and audio updates on important issues, recent news developments of importance to retailers and several Internal Revenue Service business-related links to help retailers prepare for the upcoming tax season.
Our hope is that WRA members and the public at large will increasingly rely on the Website to keep abreast as issues related to retailers and their well-being surface or change.
And, of course, we invite your feedback and suggestions.
Please contact Jim Szymanski, Director of Public Affairs, with any thoughts you have regarding the additions to the site or further changes you believe might be useful. You can reach Jim either at 360-943-9198, Extension 12 or at jim.szymanski@retailassociation.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.
