|
Home / Washington Business - January/February 2005 / Chair's Column: It's the Economy, Don't Kill It |
|
|
|
 |
|
|
|
Chair's Column: It's the Economy, Don't Kill It |
|
|
|
Written On: January/February 2005 |
|
|
|
Written By: By Tom Lemly - Chair, Board of Directors |
|
|
|
Tom Lemly is a partner in the Davis Wright Tremaine law firm in Seattle, where he specializes in all aspects of labor law.
I vividly remember 1993 when AWB tacked a banner on the side of our building. It said, “It’s the Economy, Don’t Kill It!”
That year was the low-water mark for business. For years, state legislators avoided tough budget decisions in the hope that our fiscal problems would go away. Then, faced with a fiscal crisis, lawmakers pushed through more than $1.3 billion dollars in new taxes, fees and employer-mandated programs.
Today, many employers have the same uneasy feeling as they did in 1993. They fear by Memorial Day they could see tax increases and added costs for workers’ compensation, unemployment insurance and health care.
They have good reason to be concerned. In 1993 lawmakers faced a $1.3 billion dollar deficit in a $16 billion budget. This year we face a $1.6 billion deficit in a $26 billion budget. Eleven years ago, then Gov. Lowry signed a budget which included a $668 million B&O tax hike. This year, outgoing Gov. Gary Locke proposes $640 million in new taxes to fund his 2005-07 spending plan.
It’s also worth noting that in both 1993 and 2005 Democrats controlled both houses of the state Legislature. It is also fair to say that in 1981 Republicans controlled the governor’s mansion and the Legislature when a bevy of new taxes were added to balance the budget. One of those taxes was a temporary sales tax on food.
Workers’ Comp Increases
Pushed by unions, lawmakers in 1993 approved a workers’ comp benefit increase, raising benefits to 120 percent of the average state monthly wage. Employers shelled out another $28 million a year.
In the past five years, two state Supreme Court decisions have increased the workers’ comp burden, increasing the wages workers receive while recovering from an injury or occupational illness. The Washington Alliance for a Competitive Economy currently ranks Washington benefits the fourth highest in the nation at $624.60 per covered worker. Unless the Legislature intervenes, workers’ comp outlays will continue to climb.
Eleven years ago lawmakers upped unemployment benefits to 70 percent of the average weekly wage and created a UI tax surcharge on employers to finance worker retraining programs. The $130 million those changes added to employer burdens made Washington the most expensive state in terms of the average cost of each worker.
Some key Democrats coming to Olympia this month have vowed to oppose any efforts to reform UI benefits. Washington currently ranks sixth in average weekly benefits for the unemployed.
Health Care
Employers were flattened in 1993 by sweeping health care changes that were to be the model for former First Lady Hillary Clinton’s national health care program. Only the “failure” of Congress to pass a required waiver kept the program from being implemented in Washington.
Some Washington legislators are expected to introduce a “play-or-pay” plan during the current session. Even California voters rejected this scheme. What it means is that employers either fund health care coverage for their workers or pay the state to do it for them.
Preserving a Fragile Recovery
Washington’s private sector is like a train of camels linked together crossing a desert. The goods and services they carry produce jobs, fuel our economy, and feed state coffers. The train is slowly recovering, but strapping on a heavy load of new taxes, fees and regulations will be the straw that breaks the camels’ backs. We cannot allow that to happen.
Our message to state legislators remains the same as it was 11 years ago: “It’s the Economy — Don’t Kill It!”
And yes, we saved the banner.
|
|
|
|
|
