WashACE Blog

Congratulations are due all around on workers' compensation reform

House Bill 2123, the workers' compensation compromise bill, which passed the Legislature yesterday, and is on its way to Governor's desk, is the result of extreme heavy lifting by the business community, the Governor, and reform-minded legislators. Congratulations are due all around. See this morning's Seattle Times and the News Tribune for the most recent update.

AWB reports in its Fast Facts yesterday that

 House Bill 2123 is expected to prevent double-digit rate increases next year for most employers, in part by allowing for voluntary structural settlements. Organized labor denounced the plan, even though everyone from Gov. Chris Gregoire to House Speaker Frank Chopp – who had been firmly in labor’s corner – called it fair for everyone. 

While it doesn't do everything that we wanted, some success trumps no success...or as Erik Smith writes at the WashingtonState Wire and Richard Davis takes one step further, we're baby-stepping into a full workers' compensation solution. 

Here is a round-up of other reports on the legislature's recent workers' comp compromise:

Lawmakers race special session deadline in Olympia (Puget Sound Business Journal) 

AWB Statement on Workers’ Compensation Agreement (Association of Washington Business) 

Senate, House and governor announce agreement on workers’ comp (The Hopper, Senate Democrats Blog)

Statement from Speaker of the House Frank Chopp on the workers’ compensation reform (HDC Advance, Chopp Statement)

Gov. Gregoire’s statement on workers’ compensation agreement (Governor's Press Release)

Workers’ comp deal: “We have now produced what I consider to be a good system” (Capitol Record, TVW)

Lawmakers reach likely deal on workers' comp (Seattle Times)

WA leaders reach key deal on workers' comp changes (more from Seattle Times) 

Gregoire, legislative leaders reach deal on worker's comp (Political Buzz, The News Tribune)

 

 

Speaker Chopp, Let our legislators go home: Allow the House to vote on workers' comp

Make no mistake, the main thing holding the Legislature in Olympia is Speaker Frank Chopp who, in lock-step with organized labor, is setting the stage for double-digit increases in workers' comp rates. The increases will primarily hit small, locally based businesses in Washington, and the current stand-off in Olympia threatens to require a second 30-day special session.  Here are some of our regulars on the current status of work compensation reform and a budget for the upcoming 2011-13 biennium: 

House should allow vote on crucial reform, Everett Herald, and House should allow vote on workers’ comp reform, The News Tribune, Richard Davis

Something’s About to Give on Worker’s Comp – But What?, Washington State Wire, Erik Smith 

TVW takes a revealing look at Oregon's workers' comp success story, Olympia Business Watch Blog

State preps for July shutdown as budget talks stall, Associated Press, Mike Baker 

Organized labor is out-voted in the House on workers' comp reform...

...but, says Seattle Times Kate Riley, you wouldn't know it because Speaker Chopp won't let the issue come to a vote. In her editorial opinion today, Riley says Speaker Chopp needs to begin representing "all working families" (emphasis in the original) by supporting workers' compensation reforms that spur job creation and economic recovery, not just organized labor interests. She concludes, 

Citizens need lawmakers to step up and make difficult bipartisan decisions that put the state in better stead for a recovery.

Continue your calls and letters to House Speaker Chopp and urge him to bring ESH 5566 to the floor for a vote.

Freshman Dems propose tax increases on home buyers

Brad Shannon reports this morning on new taxes proposed by freshman Democrats in the House:

Freshmen Democrats in the House introduced a bill that targets favorable tax treatment for large home lenders and out-of-state shoppers. They say it would raise $170 million for K-3 programs in public schools....

...HB 2078 specifically targets first-mortgage interest earnings of banks that exceed $100 million a year and would end tax breaks for out-of-state shoppers. It would raise more than $80 million a year from each tax.

Missing in this representation of the mortgage interest earnings exemption, in particular, is that if the tax exemptions mortgage lenders now enjoy in Washington were eliminated, banks would pass the tax on through to home buyers.

Result: Home purchases become more expensive and Washington's current housing market, which is struggling mightily to recover, takes another hit.

The continuing hew and cry for "closing tax loopholes" is misleading many into believing there is some quick revenue fix for balancing the state budget. But budget challenges in Olympia have been for some time and continue to be due to legislative over-commitment of state taxpayers to unsustainably high spending.  

Richard Davis's blog on the Washington Research Council's tax loopholes paper and  a subsequent Crosscut column explain the role and complexities of tax exemptions in Washington's tax system. 

The News Tribune calls "'Loophole repeal: An imaginary budget solution," saying 

the “loopholes” targeted by the protestors tend to fall into two categories: Expendable but piddly, and potentially lucrative but also justified.

Not everyone in the political environment currently surrounding the budget debate is interested in fully understanding the why's and wherefore's  -- as they say, "you don't want to wreck a good story with the facts!" -- but the information on tax exemptions is available. 

U.S. Chamber: Washington "poor" place for job creation, due to its state labor and employment policies

 A new study from the U.S. Chamber of Commerce, The Impact of State Employment Policies on Job Growth, reviews all 50 states for the effects of 34 key state labor and employment regulations on the unemployment rate and new business formation.

States, like Washington, that received a "poor" rating "have [labor and employment] policies that inhibit job creation in most categories...," according to the study. On the upside we have the greatest "potential to substantially increase job growth by adopting less burdensome policies."

According to the study, 

laws and regulations that inhibit the ability of workers and firms to negotiate and enforce efficient contracts raise the cost of labor, reduce employment and productivity,and slow economic growth.

The factors contributing to Washington's problematic rating include:

• Numerous labor and employment mandates that exceed federal standards
• Daily overtime rate on public construction contracts
• Very high wage ceiling for income subject to unemployment insurance tax
• Very high workers’ compensation benefits
• State minimum wage in excess of federal minimum wage
• Relatively high number of restrictions on employer inquiries into applicant and employee history
• No right-to-work protections

More reason for meaningful workers' compensation reform with passage of ESB 5566.

 

 

 

WRC discusses tax preferences with Robert Mak

The Washington Research Council's Kriss Sjoblom appeared on Up Front with Robert Mak on Sunday to discuss Washington's tax preferences and explain their purpose and complexities.

Here is a link to the program. The tax preferences segment begins 9 minutes in to the 20-minute program, following a discussion with the Pierce County Assessor. 

In response to questions from Mak and assertions from Mak's other guest, Adam Glickman-Flora of SEIU Healthcare 775 NW, Kriss explained the importance of tax certainty to business and the complexity of the tax exemptions in question, and pointed out that there is a system in place for reviewing all of the state's tax preferences on a ten year cycle.

He refuted Glickman-Flora's assertion that business doesn't pay its fair share, saying that business pays more than 50 percent of Washington's taxes, giving it a high ranking compared with other states across the country. The Council on State Taxation compares the 50 states in this report:  Download COST-State Business Tax Study.

Benchmarks for a Better Washington launched by Washington Roundtable

The Washington Roundtable has launched a new system for evaluating Washington's standing as a world-class state. Called Benchmarks for a Better Washington, the Roundtable uses 12 criteria that provide clear, independent, state-by-state measurements of how we’re doing in providing quality education, creating a climate of innovation that attracts investment and encourages job growth, and building a transportation infrastructure that is safe, reliable and efficient. 

The Roundtable will evaluate Washington's progress against these metrics annually and develop year-by-year strategies for advancing or maintaining Washington's position in each category. 

 Go here for the Benchmarks for a Better Washington Fact Sheet.

 

Seattle Times urges Speaker Chopp to move workers' compensation vote in the House

The Seattle Times Sunday urged House Speaker Frank Chopp to "unstick" ESB 5566, the workers' compensation reform bill backed by the governor, a bi-partisan coalition in the Senate and by the business community, saying 

This is the bill organized labor and the trial lawyers portray as an attack on workers. It is not. It is more protective of the workers than the law in most other states, and it protects all workers by stabilizing the state fund.

 Keep your calls and emails letters coming to your state representatives in support of this legislation.

Bi-partisan workers' comp reform stalls in the house as committee pursues a lose-lose solution

Bi-partisan workers' compensation reform (ESB 5566), which was passed by the state Senate a couple of weeks ago, is stalling in the House Labor and Workforce Development Committee. The House should not let union opposition block progress of this important legislation. 

According to the fiscal note for ESB 5566, "...liabilities in the accident and medical aid funds will be reduced by $1.716 billion over the first two fiscal years, while payments will increase $987.7 million, resulting in a net savings of $727.8 million over two years."

Associated Press reporter Manuel Valdes says that the, "settlement option for the state's workers compensation system would result in savings of about $1.2 billion during the next two years."

 Instead of supporting the Senate bill, the Seattle Times reports the House Labor committee introduced:

A package of bills that cover several aspects to the system. Put together, the bills aren't major overhauls, but nips and tucks to try to save money and streamline some of the process. Overall, House leadership says they're bills would save about $150 million during the next five years.

Valdes reports that:

Rep. Mike Sells, D-Everett, chairman of the House's labor committee, said he doesn't plan to give the [Senate] bill a hearing, stalling its advance. But that doesn't entirely kill the [ESB 5566] because lawmakers can procedurally bring it up for a vote on the floor later on - a hard task.

Washington State Labor Council President Jeff Johnson argues, “We do have a fundamentally sound system,” according to TVW's Capital Record.

AWB's Kris Tefft challenges this characterization of the system in his testimony before Rep. Sells committee on Tuesday.

Erik Smith of the Washington State Wire has a good overall summary and quotes from Tefft's testimony as Tefft describes bi-partisan and governor, L&I, and business-supported ESB 5566:

“It has more sideboards and protections for injured workers than any of the 44 states that allow for the voluntary settlement of claims,” he said. “In addition to being voluntary, in addition to having to wait 12 weeks after the date of injury, the agreements have to be approved by a board that is appointed jointly by business and labor, the board of industrial insurance appeals.

“In the case of the worker that has no attorney, that agreement has to be certified to be in the best interest of the worker. So the idea that these are devastating to workers, or not in their best interest, is incompatible with the design of that bill.

  “We would love to be able to talk more about it with you guys, but it apparently is not scheduled for a hearing.” 

You can see Kris Tefft's testimony in the TVW video below:

 

 

Finally, Don Brunell's statement on workers' compensation just after Senate passage of ESB 5566 still pertains:

"Workers’ compensation reform is vital to the overall health of the state and its citizens. It deserves to be a stand-alone issue and not wrapped up in the end-of-session mechanics,” concluded Brunell. “This is a good bill for workers and employers. We need to keep it moving forward."

 

Keep your calls and letters coming to your legislators, especially your representatives. Tell them to get behind ESB 5566; bypass Rep. Sells committee, if necessary, and move it directly to the floor for a vote.

 

 

With revenue and certainty down, biennial spending plans should undershoot forecasts

Chief state economist Arun Raha announced this morning that estimated revenues available for the 2011-13 biennium are down an additional $700 million from earlier forecasts.

Governor Gregoire, responding to Raha's report, urged the Legislature to develop long-term budget solutions, avoiding one-time fixes. 

“We can’t rely on short-term solutions,” Gregoire said. “Short-term solutions may cause less pain now, but we need a budget that is both sustainable and long-term.”

WRC President Richard Davis wrote in January that the earlier $4.5 to $5.5 billion budget deficit should more accurately be understood to be about $2.5 billion. This is because the higher deficit estimates include about $2 billion in spending that has never actually been spent...on programs like voter-approved initatives 728 and 732 (class-size reduction and teacher pay). These programs, as well as more recent education finance reforms, are on hold due to insufficient funding. 

Nonetheless, even without counting these items, the budget hole has now deepened to more than $3 billion and there is no reason to believe that future forecasts will improve the revenue outlook. On the contrary, global economic conditions are more likely to contribute to a worsening revenue picture yet. Anticipating continuing reductions in revenue forecasts, Davis wrote earlier this week that lawmakers "should underspend the forecast..." for the next biennium.

We can't afford the government we've created, says Davis. Savings outlined in Thrive Washington papers being produced jointly by the Washington Research Council and the Washington Roundtable provide a roadmap for how to prioritize spending within the budget shortfall that exists.  In dialing back the state's spending commitments we should...after funding those mandated activities like basic education and public safety and health...maintain our commitments to the greatest extent possible to those activities, like higher education and transportation infrastructure, that will contribute to the state's long-term economic recovery.