NFIB prep work on small-business agenda ready for lawmakers
In his first report of the session, State Director Patrick Connor writes about the spadework already done on the small-business agenda.
The 2019 Washington State Legislature convenes Monday. NFIB is still digesting pre-filed bills and updating its hearing schedule as committee agendas for next week continue to trickle in.
Gov. Jay Inslee’s $54 billion budget proposal and the Olympia grapevine indicate this is going to be a very challenging year for small business. Moreover, despite session beginning Monday, several rule-making efforts in which NFIB is engaged are still underway.
Taxes
Governor Inslee’s initial budget plan relies on $3.7 billion in new and increased taxes. Chief among the tax hikes is his call for increasing the B&O tax on services from 1.5 percent to 2.5 percent of gross revenue. That is estimated to raise $2.6 billion – 70 percent of the governor’s proposed tax package would be picked from the pockets of our state’s job creators. In addition, Inslee’s budget includes establishing a new, 9 percent capital gains tax.
Nearly 500 NFIB members contacted the governor and lawmakers last month, when the plan was announced, expressing their opposition to the B&O tax hike.
Public sentiment also appears to be on small businesses’ side, for now. Crosscut released an Elway Poll summary showing 59 percent of respondents oppose the governor’s B&O tax hike; only 37 percent favor it. Respondents also object to a capital gains tax, with 53 percent against and 44 percent for it.
Labor
Rumors continue to swirl that a restrictive scheduling bill will be introduced this year. NFIB expects it will be something akin to Seattle’s so-called “secure scheduling” ordinance, although we’d be surprised if the Legislature employs a 500-FTE threshold and limits the mandate to the retail and hospitality sectors.
Rep. Monica Stonier will again introduce a bill requiring a portable benefits package for gig economy (or “on demand”) workers. At its core, the plan is little more than an assault on independent contractors and individuals using technology to make extra money from a “side hustle.” Conflating self-employed and employees, the scheme would effectively unionize your Uber drivers, Wag dogwalkers, and TaskRabbit handypersons, forcing them into collectives under the guise of higher pay, paid leave, health insurance, and retirement benefits. Never mind that independent contractors, as well as these misnamed on-demand “workers” (or most anyone else), can already purchase an individual health plan, open an IRA or savings account, and take as much leave as they want, whenever they want.
Meanwhile, NFIB is still engaged with the Department of Labor & Industries (L&I) on several rule-making efforts still underway.
- Overtime rule. The employer community met recently with L&I staff to discuss the department’s second pre-draft rule. This version has narrowed the proposed salary threshold to 2 to 2.5 times the state minimum wage. That equates to $56,160 – $70,200 as the minimum salary that could be paid to a qualifying worker to be exempt from overtime when the rule is slated to take effect in 2020. For certain tech workers, the minimum salary would be three to four times the state minimum wage, or $84,240 – $99,840 in 2020 to be overtime-exempt. Discussions are ongoing. You can follow the rule on L&I EAP engagement portal or NFIB Washington’s own webpage about the issue.
- Tips, Gratuities, & Service Charges. NFIB submitted comments this week generally in support of L&I’s draft administrative policy addressing the requirements and restrictions on tips contained in I-1433, the minimum wage and paid sick leave initiative. The department has an engagement site for this issue as well.
- L&I staff has requested a meeting with NFIB to discuss our comments on rules for determining Washington-based employees, also resulting from I-1433. Basically, this rule would help clarify whether Washington’s minimum wage, sick and safe leave and other workplace regulations apply to workers in other states employed by Washington firms, or workers located in Washington that are employed by out-of-state businesses. Special thanks to Leadership Council Chairman Kerry Cox and Vice Chairwoman Lois Cook for providing comments to the department, and assisting NFIB in drafting its comments, which will be the subject of this particular meeting.
- Lead rule. NFIB is still awaiting an updated draft rule addressing lead exposure in the workplace. NFIB met with L&I technical staff in late August to discuss our concerns with any questions about their nearly 60-page proposal.
- Workers compensation pension discount rate (PDR). NFIB was the only organization to testify on L&I’s PDR rule during its November public hearing. The rule resulted from our successful efforts to pass Senate Bill 6393 last year. The bill allows L&I to shift reserve funds and lower its annual investment return expectations to 4.5 percent for the State Fund, while permitting self-insured employers to continue on a slower reduction from 6.5 percent to 4.5 percent over several years. This should result in State Fund workers compensation premiums being set based on more realistic expectations of investment earnings, while protecting pension reserves.
Environment
Despite an initiative failing at the ballot box for the second time in two years, the governor and legislative proponents are still intent on implementing a carbon tax. Public support of such a measure is fragile at best. While Elway reports 56 percent of voters would support a carbon tax, “if done right,” only two-thirds of them would still favor it if gas and electricity prices would increase, which they would. Support tanks to only 37.5 percent if those costs would increase.
Moreover, the governor and some legislative leaders are again pushing for a low-carbon fuel standard (LCFS), which NFIB blocked in 2015. Re-christened a “clean fuel standard,” the scheme would require reformulation of gasoline and diesel to reduce its carbon intensity. California and Oregon have adopted similar requirements. The California LCFS has increased gasoline prices 12 cents per gallon, and 9.5 cents per gallon for diesel.
Speaking of gas tax increases, Senate Transportation Committee Chairman Sen. Steve Hobbs has proposed using proceeds from a new carbon tax, along with another six-cents-per-gallon gas tax increase, to help fund an expanded transportation budget that would include more money for fish passages, electric ferries, a new I-5 Columbia River bridge, among other projects.
NFIB has again joined the Affordable Fuel Washington (AFW) coalition opposing a carbon tax and low carbon fuel standard.
Health Care
The governor’s office has asked NFIB to convene the #transparencyWA coalition we led in 2015, which won passage of legislation to create a statewide All Pay Claims Database (APCD), to consider changes to that legislation. Basically, the project has not achieved the level of success expected under the management of the Office of Financial Management (OFM). The project’s lead contractor has quit or been terminated. Reports required by the current law have not been produced. The coalition will review a forthcoming bill draft next week that we expect will reassign responsibility from OFM to the Health Care Authority and make a few other largely technical changes to better ensure a successful project relaunch. A successful APCD should make health care cost and quality data readily available that will ultimately allow employers and families to make better-informed decisions about which health insurance plans include the highest quality medical providers at the best prices, as well as which facilities offer the best value for specific medical procedures, that fit their particular needs. It should also spur competition to improve medical provider performance and reduce costs.
The governor this week announced plans for a public option health insurance coverage through Washington Healthplanfinder, our state’s Obamacare Exchange. In a nutshell, the proposal would require health insurers to offer a standard benefit design plan, tied to Medicare reimbursement rates to medical providers, in the Exchange. The proposal envisions subsidies to help lower health insurance premium costs, but no details about funding levels or sources have been released. As a result of our work on the Patient Out-of-Pocket Cost task force, NFIB has supported the concept of requiring Washington health insurers to offer a standard benefit design plan that would reduce cost-sharing – deductibles, co-payments, co-insurance – by shifting those costs into monthly premiums, especially for consumers with conditions requiring ongoing high-cost treatments or medications. However, we have not supported the notion of requiring all plans to be standard benefit design plans. NFIB has long supported flexibility and innovation in health plan design to better meet the needs and budgets of small business owners and the families they employ. The governor’s office contacted us after the announcement and indicated NFIB will be invited to participate in discussions about the bills.
Regulations
Some good news for a change … NFIB’s work to force cities to establish a uniform, minimum threshold of earnings before requiring a municipal business license for non-resident businesses is now in effect. Previously, a business located in one city that used a company vehicle to deliver a product to a customer in another city could be required to obtain business licenses in both cities. Conversely, Amazon could ship that same product to the same customer by common carrier and not be subject to the local business license requirement. In many cases, the cost of the business license was as much or more than the profit made from the sale and delivery. Starting this year, businesses making deliveries in company vehicles will have to have $2,000 in sales in that second (third, fourth, fifth, etc.) city before a separate municipal business license is required – so long as they do not have an office, branch, warehouse, or other physical location in those other cities. Many larger cities already had revenue thresholds in place, although not all were clearly identified online or on business license applications. Cities may still adopt higher thresholds above the $2,000 minimum.
NFIB will participate in a stakeholder meeting next week on an L&I request bill that would give the director power to increase contractor bonding requirements based on a final judgment against a contractor for poor performance on a single residential project. NFIB has been engaged in negotiations with the department about the bill for several months. Many of our suggestions have been incorporated into the latest draft of the bill. However, NFIB remains unconvinced that a “one strike, you’re out” approach would be fair for contractors or beneficial for consumers. We’ve suggested an alternative approach; L&I should be collecting and analyzing data we requested to determine the efficacy of our proposal. Moreover, we are pushing for additional changes to the make-up of a task force that would suggest additional rules or restrictions on residential homebuilders. We are working to ensure that panel is not stacked in favor of added regulations that would become barriers to entry for new contractors seeking to do business in our state. Rep. Tina Orwall will be the House sponsor; L&I has also approached Sen. Hans Zeiger to sponsor a companion bill in the Senate.
Finally, NFIB is awaiting comments from the governor’s office, L&I, the Employment Security Department, and the Department of Revenue about NFIB’s Small Business Bill of Rights framework. NFIB member Rep. Andrew Barkis and Rep. Mike Chapman, the leads on NFIB’s successful bill of rights inventory legislation, have already agreed to be the sponsor and lead co-sponsor of a bill this session. Our hope is by vetting the bill with key agencies, we can again avoid opposition from the administration and secure broad, bipartisan support of the plan.
Small Business Day at the Capitol
NFIB’s Small Business Day at the Capitol has been set for February 7. Send an email to Member Support Manager Stacy Jenkins for additional information.
