03/28/2008
The 2008 Washington Legislature will be remembered more for what it didn't do than for anything it did. While legislators filed a near record amount of bills for a "short" session, a large number of key issues were left until after the November elections.
A funding source for the new paid family leave insurance benefit?
Legislators weren't interested in levying new taxes on employers during an election year.
Comprehensive healthcare reform?
Legislative leaders couldn't muster much interest in prohibitive new payroll taxes to fund government-administered healthcare that restricts choice and does nothing to control costs.
New "union neutrality" laws that prevent small business owners from communicating with their employees about union issues?
Union leaders were told to wait until after the voters have their say in November.
New taxes on greenhouse gas emissions to combat climate change; a comprehensive plan to deal with transportation bottlenecks, freight mobility and congestion; a projected budget shortfall of more than $2 billion?
They were all put off to 2009.
This means small businesses will have their work cut out for them next session, especially if they fail to become engaged in the 2008 elections.
Underneath all the noise generated during this raucous session, NFIB quietly walked away with some vital victories that included:
- a reduction in potential lawsuits
- a clarification on the Streamlined Sales and Use Tax
- a boosted awareness on the diversion of workers' compensation funds
- and a curb on menu-labeling laws
Healthcare
Small business owners have consistently told policymakers that their number one concern is the cost of health insurance. Unfortunately, the 2008 legislative session made little progress in bringing about meaningful reform.
Early during the session, lawmakers held hearings on health care reform bills such as Senate Bill 6221, sponsored by state Sen. Karen Keiser (D-Kent), which would have created a universal healthcare system by replacing employer-provided health coverage with a massive new payroll tax. Other bills, such as House Bill 2640, sponsored by Insurance Commissioner Mike Kreidler, would have implemented mandatory catastrophic healthcare coverage, paid for by -- you guessed it -- new employer and employee payroll taxes. These ideas didn't get much traction this session, but it signals what lawmakers have in mind for the next session.
NFIB and its allies in the business community fought against two other anti-business healthcare bills this session with limited success. Second Substitute House Bill 2537 would have expanded the Health Insurance Partnership -- the pilot concept adopted last session that would have allowed small businesses to purchase healthcare for low-income employees through a state-run connector. Before showing that the pilot concept would even work, the bill would have greatly expanded the scope of HIP, dropping requirements that focused on low-income workers and setting up HIP to become the sole provider of healthcare in the individual and small group markets.
NFIB helped insert language that re-focused the HIP on low-income workers, but the bill that eventually passed creates a situation where taxpayer dollars are taken from businesses that already provide healthcare to subsidize the costs of those that don't, all while restricting health care choice and doing nothing to control the overall cost of health care.
NFIB also fought hard against Engrossed Substitute Senate Bill 6333, also sponsored by Sen. Keiser, which sets up a healthcare reform "road show" to get public input on several big government healthcare proposals. This bill uses taxpayer dollars to conduct public hearings around the state that the big unions will use to drum up support for a Canadian or Massachusetts-style healthcare reform plan.
In the end these types of supposed reforms only mean higher costs and limited options for small businesses in the future. Initially, this road show was to take place during the heat of the fall presidential campaigns. However, NFIB was able to get that timeline extended until after the elections.
Budget and taxes
NFIB was able to secure a small victory this session by passing Substitute House Bill 3126, sponsored by Rep. Liz Loomis (D-Snohomish), which clarified that local governments cannot use the new Streamlined Sales and Use Tax -- set to begin on July 1, 2008 -- as the sole basis for charging businesses local business license fees and B&O taxes. More than 78 percent of NFIB members voted in favor of this concept in their 2008 member ballot.
Another priority of NFIB members -- supported by 76 percent in the last member ballot -- was providing small businesses with a sales tax allowance, which allows businesses to keep a small portion of the sales taxes they collect as compensation for the cost of administering the tax. Most states that levy sales taxes provided a sales tax allowance. Unfortunately, Gov. Chris Gregoire didn't support this idea so it was pronounced dead on arrival this session.
Regarding the overall budget outlook, legislators failed to make the necessary spending adjustments to bring expenditures in line with projected revenues, so the Legislature will be facing a projected $2.4 billion budget deficit for the 2009-2011 biennium. If legislators can't reign in their spending habits (more than a 33 percent increase over the last four years) during relatively good times, how can they be expected to make responsible decisions when the economy goes bad? Next session, small businesses will need to watch their wallet -- with the projected budget deficit, House Speaker Frank Chopp (D-Seattle) acknowledged that there may be a need for tax increases.
Liability issues
Trial lawyers were hard at work again this session seeking to increase opportunities for more lawsuits. As a member of the Liability Reform Coalition, NFIB worked hard to defeat proposals that threatened small business owners with expensive litigation and increased insurance premiums.
Senate Bill 6614, sponsored by Sen. Brian Weinstein (D-Mercer Island), would have introduced broad punitive damages in civil lawsuits for the first time. Washington is one of the few states that doesn't allow punitive damages in civil lawsuits and as a result, it maintains a rare economic advantage in regard to small business competitiveness. Fortunately, NFIB was able to stop this bill from getting out of the Senate Judiciary Committee.
One of this session's sweetest victories was the defeat of Engrossed Third Substitute House Bill 1873, an unnecessary and costly expansion of liability under the state's wrongful death statutes. The battle to defeat E3SHB 1873 went down to the wire, with the 2008 Legislature adjourning without passing this onerous bill. Local and state government budgets, and the taxpayers who support them, would have been the most burdened by the fiscal impact of this measure. The proposal also would have undermined the medical malpractice liability compromise of two years ago.
Employment issues
On an issue that is critically important to NFIB members -- diversion of workers' compensation funds – NFIB was able to get a little traction. Currently, nearly $60 million of workers' comp premiums are diverted to programs that have nothing to do with providing assistance to injured workers. More than 88 percent of NFIB members support ending this practice, but unfortunately only one, late-night hearing was held on the subject.
NFIB-backed House Bill 3387, sponsored by state Rep. Cary Condotta (R-East Wenatchee), that would have prevented further workers' comp diversions, but it died on a party line vote. On the bright side, because of NFIB members' phone calls and emails, we were able to get the attention of legislative leadership and hopefully will be able to resurrect the issue in the interim.
On the issue of paid family leave, the Legislature once again punted to the 2009 session. Lawmakers failed to come up with a funding source for this new benefit, perhaps fearing a backlash from small business owners in the November elections. NFIB continues to oppose this new program, because almost 100 percent of small business owners already provide this type of leave to their employees. Small businesses don't need an expensive new government mandate to do what's right for their employees. Expect this issue to return in full force next session.
Consumer protection
NFIB achieved a small victory on the menu labeling issue. On the 2008 Member Ballot, 72 percent of small business owners said that the Legislature should prohibit local governments from adopting their own menu labeling requirements for restaurants, bars, and grocery stores. Although it didn't become law, Engrossed Substitute House Bill 3160 did force King County to negotiate new menu labeling requirements that were much less onerous than the requirements it had adopted last year.
NFIB and its allies also stopped a dangerous bill that would have created a new and unique cause of action for financial institutions to sue small businesses for damages in the event of a customer data breach. Substitute House Bill 2838 would have started a dangerous precedent in state law, exposing NFIB members to costly litigation in the event of a data breach. This bill passed the House, but fortunately it did not make it out of the Senate prior to adjournment.
NFIB was able to help derail a massive union effort this session to impose costly and burdensome certification requirements for the heating, ventilation, air conditioning, and refrigeration (HVAC/R) industry. This legislation would have added significant costs to countless small businesses all across the state.
In spite of the fact that the unions couldn't substantiate their claim that regulating the HVAC/R industry was a public safety issue, Engrossed Substitute Senate Bill 5831 continued to move through the legislative process, before the business community was able to get the bill reduced to just a task force study of the issue, with recommendations to be made prior to the 2009 session.
NFIB was also able to stop Senate Bill 5343, sponsored by state Sen. Adam Kline (D-Seattle), which would have increased the felony theft limit from $250 to $750. In other words, criminals would be let off the hook if they steal less than $750 from small businesses. NFIB members would have been disproportionately punished by this shortsighted legislation -- $250 is a lot of money to a small business -- and businesses in Washington would have become targets for increased criminal activity under this bill. SB 5343 narrowly passed the Senate, but fortunately died in the House.
If you have any legislative questions on these or other issues, please contact NFIB/Washington State Director Troy Nichols.
To learn more about NFIB/Washington and the grassroots opportunities please contact Stacy Jenkins.
