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Home / Press Releases - 2004 / Washington Lawmakers Must Avoid the 1993 Fiasco |
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Washington Lawmakers Must Avoid the 1993 Fiasco |
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Written On: November 17, 2004 |
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ABERDEEN—Speaking to the Aberdeen Rotary Club today, the Association of Washington Business’s (AWB’s) President Don Brunell said the new governor and state legislators must be very careful to avoid the 1993 legislative fiasco which resulted in tax, workers’ comp and unemployment insurance increases as well as a costly and restrictive state-sponsored health insurance plan.
“As best we can determine, at the end of the 1993 legislative session, employers in the state of Washington saw their costs increase by over $1.3 billion,” Brunell added. “We simply cannot afford that result after the 2005 Legislature adjourns because today’s economy is far more fragile than 1993.”
Brunell added that, with Washington’s state revenues unable to sustain the state government spending levels, AWB is concerned about a tax increase in 2005. “As best we can determine, the new governor and state Legislature will be faced with a revenue shortfall from tax collections of $1 to $1.5 billion.
“Coupled with that, our state is facing a crisis in higher education because of the current capacity at our state’s community and technical colleges and four year colleges and universities,” Brunell added. “We are expecting incoming enrollments to peak in 2008, and the Legislature will have to address that this year. It will be very expensive.”
Brunell said AWB is concerned the 2005 Legislature will rollback the unemployment insurance reforms enacted two years ago. “They are just starting to take effect, and they must have a chance to lower rates for employers.”
AWB points to the 2005 Competitiveness Redbook which shows that Washington led the nation in the average unemployment taxes based on a cost per employee in 1994 which were $695. The national average is $228. That same recently released Redbook which is published annually by the Washington Alliance for a Competitive Economy (WashACE) shows Washington is sixth in average weekly benefits at $312.10.
On workers’ comp, AWB is pushing for reforms. “Clearly, the Washington Supreme Court has redefined the issue with recent court decisions which have increased time-loss benefits. The 2005 Competitiveness Redbook shows that Washington benefits per employee are fourth highest in the nation at $624.60 per week.
“While part of that is due to the courts, the 1993 Legislature passed legislation to step up the average weekly benefit as well,” Brunell added.
Brunell said a key difference between 1993 and today is the fact that costs for reliable electricity have skyrocketed. “A decade ago we had the lowest residential, commercial and industrial electric rates in the nation, and those low rates would compensate for higher labor and regulatory costs and taxes. Not today, that advantage has disappeared, and we don’t see it coming back.”
According to WashACE’s annual report, industrial electric rates now are 23rd highest in the nation whereas commercial rates rank 36. Even residential rates rose from the bottom to 43. “We cannot rely on low-cost energy to make up the difference.”
Finally, Washington taxes employers at unusually high rates. The Washington Research Council found in its studies that business pays 54 percent of the state and local taxes including workers’ comp and unemployment insurance. “This is an unusually high burden when you consider Oregon employers pay 28 percent of the state and local tax load, and the nation average is around 40 percent.
While there are danger signs on the horizon for 2005, AWB remains hopeful that legislators and a new governor will not repeat the mistakes from 1993.
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