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2008 Legislative Preview: It’s all about the money |
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Written On: January/February 2008 |
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Written By: by Dan Brunell and Paul Schlienz |
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This year's 60-day legislative session will focus on many issues of interest to AWB members. Transportation, environment, unionization, paid family leave, land use, taxes and health care are among the areas to watch. Underlying everything, however, will be the budget and questions of how the state will pay for the programs and projects the Legislature approves.
In November, the Washington State Economic and Revenue Council released the forecast upon which Gov. Gregoire will base her supplemental budget recommendations for the 2008 legislative session. This forecast comes up $132.4 million short from its initial revenue estimate for the combined 2005-2007 and 2007-2009 biennia. Reflecting the much-publicized downturn of the housing market, the decline in the forecast of the real estate excise tax explains almost the entire overall forecast revision, fanning real fears that this is but an early sign of a larger economic downturn. Nevertheless, even in an uncertain economy, the state is facing daunting challenges that come with a big price tag.
Paying for transportation
Nowhere is this more obvious than in transportation. With last year's failure of Proposition 1 (the roads and transit funding measure in the central Puget Sound region), the removal from service of the Steel Electric ferries, the need for freight corridor improvements, ever-increasing traffic congestion, and unresolved questions of what will replace the aging Alaskan Way Viaduct and 520 bridge, few would doubt the need for transportation spending. Where the funding will come from, however, is less certain.
One thing that is certain is that tolling will play a role in future transportation funding. During the first week of the 2008 legislative session, Rep. Judy Clibborn, D-Mercer Island, will introduce a bill that will authorize the state to toll highway projects.
"The tolling bill clears up how tolls are imposed and says that the Legislature has control over state facilities," said Clibborn. "It gives a chain of command where if you're a port, city or county that's tolling, you have to have permission from the state if you're going to toll one of our facilities." Unlike earlier tolling projects, these tolls will be permanent.
Electronic tolls like those now in use on the Tacoma Narrows Bridge are coming to other projects, including the 520 bridge. Variable pricing, in which tolls go up during peak congestion times, is a distinct possibility. Nevertheless, congestion pricing — in which electronic tolls are set up on an entire highway system and drivers pay higher rates during rush hours — is not on the table.
"I don't think Washington is ready for congestion pricing yet," said Sen. Mary Margaret Haugen, D-Camano Island. "I don't see it in the foreseeable future. Someday, yes. But not in my lifetime."
With the failure of Proposition 1, will the Legislature move to bring a new, scaled-down transportation funding measure to Puget Sound region voters?
"It took six years to put that Regional Transportation Investment District package together," said Clibborn. "I don't think there are people who are going to be committing huge amounts of money to fund a campaign like that just now."
Meanwhile, Washington's ferries are being scrutinized after corrosion was found on its 80-year-old Steel Electric ferries and the state removed them from service. Hardest hit was the Port Townsend-to-Keystone route. The state now operates a temporary passenger-only ferry on that run, but vehicular traffic between Port Townsend and Whidbey Island must now use other, longer routes.
"We have an emergency with ferries," said Haugen. “Not only does that Keystone ferry serve the people who work on both sides, but is also serves small businesses as a freight corridor, and they’re being impacted big-time."
Another transportation priority is funding improvements to freight corridors, which are essential to Washington's trade-dependent economy. There is little debate over the need for these improvements, but the question of funding is extremely contentious.
Last year, a coalition of stakeholders — including ports, employers, transportation providers, farmer and others — rejected a proposal for a container tax to fund these improvements. Meanwhile, Alaska — which is heavily dependent on shipments from the Port of Tacoma — threatened to retaliate with a fuel-transfer tax if Washington imposes a container tax.
The issue remains unresolved. Opponents of the tax worry that a freight improvement study authorized last year by the Legislature may recommend a container tax in spite of the widespread opposition.
"There are better alternatives than container taxes or employer taxes for freight," said Amber Carter, AWB government affairs director. "We should look at tolls for very specialized corridors designed solely for freight."
Environmental concerns
Climate change continues to be a hot-button environmental issue in the Legislature. Last year, global warming discussions revolved around big policy initiatives like the Western Climate Initiative and a bill that focused on greenhouse gas from electrical generation. This year's climate change debate will focus more on basic, local issues. Already, there is a call from local jurisdictions to give more authority to cities or counties over climate policy — an idea that has not found favor with the business community.
"We believe climate change policy should remain at the state level in order to streamline the system and make it more transparent," said Grant Nelson, government affairs director for AWB.
Water issues have a long history of passionate debate in the Legislature. The 2008 session will undoubtedly look at this contentious area of concern. Overall, the business community is hoping the Legislature will take serious steps to site, plan, and fund more water storage capacity, especially in eastern Washington.
"As the climate changes, we need to build more water storage to address future needs," Nelson said. "This will not only make us more prepared for a changing world, but also help relieve some of the stress in eastern Washington over contentious water issues."
As with many other issues, however, it is unclear who will pay for the new storage capacity.
A major piece of environmental legislation from 2007 that remains important is the Puget Sound Partnership. Last year, Gov. Gregoire appointed David Dicks as director of the partnership, whose goal is to clean up Puget Sound. Since his appointment, the various councils and committees that currently make up the partnership have been developing their action agenda. This is a long-term process and will not be ready for the Legislature to take action until the 2009 session. One major concern is that there might be pending legislation regarding the Maury Island aggregate mine — nearly put out of business last year by a piece of unsuccessful environmental legislation — and other unrelated bills that legislators might use to tie to the Puget Sound Partnership debate.
The business community hopes to build upon the progress made last year in reforming Washington's burdensome land-use rules.
"AWB will continue to make land-use laws more streamlined and user friendly, especially within the area of transportation concurrency where infrastructure costs are disproportionate in their collection," said Chris McCabe, government affairs director for AWB.
According to McCabe, AWB will also continue last session's push to provide adequate land and density to allow for various developments as our population expands. "AWB would like to see the Growth Management Act return to its original intent, which was to manage growth instead of prohibiting it," said Pat Schneider, chair of AWB’s Land Use Committee.
One cloud on the horizon is a bill that would change Washington's vesting laws. The bill would prevent the development rights of a private landowner or public works project from becoming vested until after construction starts or issuance of a building permit. This would put private developers and public facilities at risk of losing millions of dollars invested in obtaining land-use approvals and building permits under the existing codes. AWB and a coalition of other business groups defeated this measure in 2007, but it will likely be back again this year. "AWB is prepared to fight this legislation again," said McCabe.
Health care, family leave and taxes
Washington's business community won a big victory last August when Spokane County Superior Court Judge Kathleen M. O'Connor ruled in favor of a lawsuit brought by Associated Industries and AWB against Insurance Commissioner Mike Kreidler. The judge ruled that the insurance commissioner could not make a new law by himself through a Technical Assistance Advisory, which would have devastated affordable association health plans — popular with small businesses — by insisting on community ratings when pricing insurance. This issue, however, may come back in the 2008 session in the form of legislation that would attempt to make Kreidler's Technical Assistance Advisory law through statute.
Should such a bill emerge, AWB, which is committed to encouraging the availability of low-cost health plans, would strenuously oppose it.
Paid family leave, passed during the 2007 session, is also due to emerge again as an issue in 2008. A task force including representatives of the business community will consider how the program should be shaped and funded. They will deliver their recommendations to the Legislature in 2008, before the program goes into effect in 2009.
"The employer community is working in good faith on this issue, because a bill was passed, a program is scheduled to begin, and what the task force ultimately comes up with will deeply impact our members," said Kris Tefft, government affairs director for AWB.
AWB wants the program to allow voluntary contributions, require those who use it to pay for it, reject any models that spend as much money in administration as in benefits, and remain consistent with four other existing family leave laws.
Property tax relief will also loom large in the 2008 legislative session.
During November's quick, one-day special legislative session devoted to reinstating Initiative 747's property tax cap, the Legislature also passed a new property tax deferral program.
"We are very concerned about the new deferral program and will be looking to the 2008 session to hopefully make some fixes to that program that would simplify it for local county assessors," Carter said.
AWB is also working with the Association of Washington Counties on legislation that would authorize annual reevaluations of property and reduce the burden of proof for those who challenge their property valuations. Currently, if a property owner challenges the valuation of his property, he faces one of the highest burdens of proof in the nation.
Ultimately, this legislative session will revolve around money, whether in the form of tax relief, taxes or deciding how much to spend in the face of an uncertain economic forecast.
"Nationally, we are looking at a scary situation with the housing market and the economy, and the recent dip in the state's economic forecast is very worrisome," Carter concluded. "The Legislature needs to hold tight on spending in a situation like this one."
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