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Dear Friends and Neighbors,

I hope you are getting a chance to enjoy a little March Madness with the NCAA Basketball Tournament. In Olympia, things seem to be just as maddening.

Economic revenue forecast

On March 17, the state’s chief economist, Dr. Arun Raha, released the quarterly revenue forecast for Washington.

State revenue is expected to be $778 million less for the combined 2009-11 and 2011-13 budgets:

  • $79.8 million less for the 2009-11 budget, creating a $229 million shortfall.
  • $698.4 million less for the 2011-13 budget, creating a $5.1 billion shortfall.

This means we must address a total $5.1 billion shortfall in our next biennial budget. While the revenue forecast makes a bad budget shortfall worse, we can still get this budget balanced within the 105-day regular session and with existing state revenues.

I hope we see formal budget proposals soon. It has been a frustrating process as the majority party seems to be playing a waiting game with sustainable, transparent budget solutions and continually delays action as the deficit grows. We have been here over 70 days and have yet to fully address our current biennial budget shortfall. Every day we put off balancing our budgets, we exacerbate the problem and it results in greater losses to our taxpayers.

To me, the revenue forecast is also a reminder that this legislative session is not just about the budget numbers. It is also about jobs and the economy. Until we can get Washington working again, the economy will not recover and we’ll continue to see these downward trends in state revenues. Let’s get people back to work, and reverse that trend.

Close ‘tax loopholes’ to balance the budget!

As I mentioned above, our economy is stagnant and revenues are slow to recover. Despite the struggles for employers and the economy, we are seeing requests to increase taxes or close “tax loopholes” to balance the state budget. The requests are coming from special interest groups and what they are actually talking about are “tax preferences.” One of the largest tax preferences is food. Who would want to close that so-called tax loophole? When we have this discussion, we must be clear what we are talking about. It is important to point out the special interest groups, who support the majority party, should be sharing their messages with those same legislators they are supporting. The members on the other side of the aisle are supporting a number of new tax preferences. Here are just a few:

Bill number Short title Original sponsor “Tax Loophole” amount
HB 1165 State agency small business support Democrat Marko Liias $103,395,000
HB 1184 Real estate firms B&O tax Democrat Marcie Maxwell $1,773,000
HB 1224 B&O deduction/mental health Democrat Tami Green $1,467,000
HB 1452 Amateur sports/taxation Democrat Kathy Haigh $2,262,000
HB 1554 Motion pictures Democrat Phyllis Kenney $16,000,000

I agree each tax preference should be reviewed for effectiveness. But, the fact is, tax preferences like the ones authorized in 2010 for affordable energy projects lead to the creation of good-paying jobs in Wenatchee and the surrounding region. Additionally, a similar tax preference for data centers created hundreds of jobs in and around Moses Lake. These are prime examples of how tax preferences can be beneficial to our economy and get Washington working again. What these tax preferences can do is create jobs and assist communities with well paying jobs. Without the preferences, these companies likely would have looked to other states for better options and a more favorable tax structure.

Workers’ compensation reform update

Senate Bill 5566, the compromise bill passed in the Senate to put in place some important reforms to the workers’ compensation system, is still sitting in the House of Representatives. We are hearing some of the Democrats would rather do nothing on workers’ compensation reform this session. That should not be an option. We need Senate Bill 5566 for these reasons:

  • The Department of Labor and Industries (L&I) pays $1.84 in benefits for every $1.00 in premiums it collects, the highest “combined ratio” of any public or private workers’ compensation insurer in the country;
  • Despite massive rate increases the past two years, the accident fund has a $360 million deficit (as of 9/30/10), and the supplemental pension fund has had to borrow money to meet current pension obligations;
  • According to the state auditor, if the current trend in rate increases hold, there is a 96.4 percent chance the accident fund will remain insolvent over the next five years and a 94.1 percent chance the medical aid fund will become insolvent within five years without annual double-digit premium increase on employers that pay into the fund;
  • According to L&I, these costs are not sustainable without annual double-digit premium increases on employers that pay into the state fund; and
  • The 2008 Washington Pension System Review (Upjohn Institute) confirmed one reason for Washington having one of the highest
    number of long-term disability cases and pensions in the nation is the absence of a “voluntary settlement option” for injured workers, which exists in 44 other states.
  • Total benefits paid in Washington grew from $1.3 billion in 1998 to $2.2 billion in 2008. That’s an increase of 70.4 percent, compared to 34.2 percent growth for all states.

Senate Bill 5566 does not reduce or amend a single statutory benefit level for injured workers. Rather, it provides a more flexible benefit option to workers, giving them more choices on what is best for them and their families. The Seattle Times editorialized in favor of this legislation as did the Everett Herald and Tacoma News Tribune.

Null power

My bill on null power, House Bill 1712, had a hearing in the Senate Environment, Water and Energy Committee. The bill has been amended and watered down a little bit. However, I believe the Senate will move it out of committee. Null power generally refers to renewable electricity from which the renewable or nonpower attributes have been separated. This bill will help with fuel mix reports and help Washington become a cleaner energy state than it already is.

Columbia River Crossing

As you know, the debate surrounding the Columbia River Crossing (CRC) and whether or not the project should be put to a vote, particularly the light-rail portion, continues on. The local newspaper seems to have a story on the issue almost daily.

I have been communicating with Attorney General Rob McKenna and his staff to find out if there is a problem with placing the light-rail portion of the CRC project on a county-wide ballot and if it can be binding or advisory. I will keep you updated on what we find out. I know many of you are very passionate about this issue.

I also submitted a letter to the editor to The Columbian to clarify my position and share it with the public. I believe it is important people are fully aware of where I stand – at the very least, the public should be allowed a vote on the light-rail portion of the CRC project on the November ballot.

If you have any questions on any of these issues or anything else before the Legislature, as well as any issues impacting the 17th Legislative District, please do not hesitate to contact me.

Thank you for allowing me to represent you in Olympia.


Paul Harris

State Representative Paul Harris, 17th Legislative District
426A Legislative Building | P.O. Box 40600 | Olympia, WA 98504-0600
(360) 786-7976 | Toll-free: (800) 562-6000