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Addressing Washington’s skilled worker gap

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With an aging workforce and new jobs appearing weekly across the state, one thing is clear: Washington needs to double down on preparing to fill close to 740,000 skilled job positions by 2021 or risk leaving them open – and allowing the need for the services they provide to go unmet.

Key stakeholder recommendations include investing more in Career and Technical Education (CTE), informing students in middle and high school of skilled career opportunities in addition to the four-year college path and focusing on connecting high school students with postsecondary education.

Washington Roundtable: Filling the high school to postsecondary gap

Washington will have an estimated 740,000 job openings between 2016 and 2021 due to a lack of qualified workers, according to a report by the Washington Roundtable. In response, the nonprofit set an objective to have 70 percent of Washington students earning a postsecondary degree by 2030.

“Our goal is that Washington students have the opportunity to fill the jobs that Washington companies have created,” said Neil Strege, Vice President of the Washington Roundtable.

Approximately 430,000 of the estimated jobs to be filled will be as a result of individuals who are leaving the workforce. Incremental new jobs make up the remainder of the 740,000.

“About 70 percent of those 740,000 jobs require some postsecondary experience, and the credential necessary to achieve those jobs go up as you go from entry level to pathway to career,” said Strege.

Less than one-third of Washington students who started 9th grade in 2006 went on to earn a postsecondary credential. In order to meet the 70 percent goal, Washington would need to almost double its current postsecondary achievement rate.

“Students have to graduate from high school ready to take on the postsecondary pathway of their choice. We know that achievement gaps start before they start school.

“Getting students through the K-12 system and graduating with skills to go beyond that pathway is priority number one,” Strege said.

Washington’s high school graduation rate and postsecondary graduation rate have gone up over time, he added, but the percentage of students who go from high school to college has stayed relatively flat.

“We are looking to reengage students who don’t go from high school to postsecondary. Our message to students is to choose the path and job category right for you and…right for that job.”

 Rep. Jim Walsh: Fund career and technical ed

State Rep. Jim Walsh (R-19) told Lens the state should focus more on CTE to address skill gaps.

“We have a problem with skilled trades because jobs are going unfilled and no one has the training to do it. We are funding more money through CTE, primarily through the two-year college system, and that is the tool that I think will be best to fill that gap.”

Training more people at the community college level requires more money in the system, however.

“We are bringing parity to funding programs at two-year schools in the way that similar training programs in educational departments are funded at the four-year schools.”

Presidents from schools such as Grays Harbor College and Big Bend Community College in Moses Lake are already taking great steps, he added, where the presidents of those institutions are coordinating locally with trade unions and employers.

“The Legislature needs to promise those presidents that want funding for their programs that as long as they show us that they are market-responsive, we will happily write the check to help fund that.”

Business: Rebranding the industry

In the business sector, employers have noticed a need for a focused approach on training programs and outreach.

According to a Home Improvement Research study, 70 percent of remodelers indicated they were

experiencing a job shortage, and 33 percent said they were experiencing an average of 3.9 weeks in delays

for new projects. There are 158,000 unfilled construction sector jobs across the country, according to the

Bureau of Labor Statistics.

In response, the Home Depot Foundation announced this month that it would spend $50 million on training 20,000 skilled men and women to fill the skilled worker pipeline by 2028.

Wendy Hutchinson, Vice President of Public Affairs for Millennium Bulk Terminals (MBT) said the company has worked with local school districts to help rebrand the industry. This outreach includes taking part in construction fairs to help junior and high school students get acquainted with the trades.

“I think it’s important that the state recognized that construction jobs are important,” she told Lens. Even though the jobs can be temporary, “they still provide a living for people as they move from one construction job to the next.”

Hutchinson added that MBT has placed importance on preparing for the next generation’s workforce.

To assist with the construction of its facility, MBT signed a Project Labor Agreements (PLA) with the Longview/Kelso Building and Construction Trades Council which allows labor to train apprentices as they work on the export terminal.

“It’s all privately funded; tax payers are not footing the bill to do that. But if labor unions don’t have big projects, they won’t take on new apprenticeships and do training.

 “We are committed to using labor members on our project. We look forward to the day we can contribute to the next generation’s workforce.”

Labor: Partnering with academia

Mike Bridges, President of the Longview/Kelso Building and Construction Trades Council, told Lens that local school districts have worked with the Building and Construction Trades to allow labor members to showcase what the construction sector and other industries have to offer.

“Instead of just cycling through or catching students in classes or at lunch time, they set aside meeting time for kids and parents to ask questions and see what the trades have to offer.”

He added that many parents like himself are already thinking about student debt and how their children could get an education while working so that they don’t have debt when they finish.

“It starts the conversation for them to plan for something even if it’s not to get into the construction trades. It gets the mindset on other options out there…other than four-year institutions.”

Bridges added that there may be a misconception that there is a skills gap and not enough training to resolve it.

“All our programs can grow with the demand…it’s not that we don’t have people applying; we only start people we can keep busy. The opportunities are the only things that stop us from doing more.”

Bridges added that students have been told over the past 15 or 20 years that they would be lucky to make minimum wage if they don’t prepare for a traditional college path.

“We are trying to change the narrative that construction can be a secondary option, when it could actually be your primary option.”

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Trump tariffs would harm small business

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Following President Donald Trump’s announcement of new tariffs on aluminum and steel imports, U.S. lawmakers and business stakeholders are saying that the levies would have unintended consequences that would harm small businesses and consumers.

On Mar. 1, Trump announced that his administration will be imposing 25 and 10 percent tariffs on steel and aluminum imports, respectively, starting Mar. 23.

During the announcement, Trump said: “You are going to see expansions of a lot of the companies…if we give you that level playing field. You are going to hire up more workers and your workers are going to be very happy.”

Trump added that the U.S. will need great aluminum makers for national defense.

He then addressed business leaders in those sectors: “…You will have protection for the first time in a long while, and you’re going to regrow your industries.”

Yet this will not be the case for smaller businesses, Kevin Duthie, Chief Operating Officer for Seattle-based Standard Steel Fabricating Co, told Lens. The business deals with custom fabricated steel and buys raw product from supply houses and mills.

Duthie’s take is that the tariffs will drive up local material prices and affect the availability of the company’s products.

“The tariffs will cut down the amount of imports…available which is traditionally cheaper and is giving the mills a good chance to drive up the price.”

Duthie said the company has already made changes on its bid proposals in response to the rising prices. He added that he will now have to work to make sure the business’ price margins aren’t eaten up.

“Without exempting certain countries from this tariff, it will hurt small local businesses. It won’t hurt the big mills or the steel guys across the state because they are juicing up our prices.”

Duthie said his company won’t be able to get more domestic product because production is already capped. Down the line, companies might run into material shortages and the price of construction may rise exponentially, he added.

“Everybody who touches steel will be directly influenced by this whether they know it or not.”

In Trumps’ proclamation, he cited a concern with the size of aluminum imports posing a potential national threat. One week later, he clarified that Mexico and Canada would be exempt from the tariffs, as well as other countries who apply for relief.

In response to the news, U.S. Rep Dan Newhouse of Washington (R-4) joined 106 Republican colleagues in writing a letter to Trump, highlighting their concerns that the tariffs would have unforeseen consequences on consumers and business owners.

“Trade supports jobs in Central Washington, and 40 percent of jobs in our state are tied to international trade,” said Newhouse. “Tariffs are essentially taxes on trade that are passed on to American businesses and consumers, resulting in higher prices.”

The letter’s signers urged Trump to consider several strategies to address any concerns brought by the tariffs. One suggests allowing U.S. companies to petition for duty-free access to imports if national sources are unable to provide them. Another would ask for the grandfathering-in of existing contracts for purchasing steel or aluminum to minimize negative effects on projects currently in progress.

Newhouse cited Washington State Department of Agriculture (WSDA) statistics which show that the state produced and exported $7 billion worth of food and agricultural goods in 2016. This made Washington the third largest exporter of those products in the U.S.

“The success of our state and region’s economy is tied to effective trade relationships with reliable partners who purchase our goods,” said Newhouse. “I support targeting unfair trade practices of bad actors, but setting off a back and forth through broad, global tariffs can have unintended consequences that are harmful for economies like Central Washington’s.”

He added that he wants to work with the Trump Administration to protect Washington’s economy and its jobs that are reliant on trade.

 

The post Trump tariffs would harm small business appeared first on Lens.

Lens Video: Promoting free trade for agriculture

Washington agriculture and the Chinese trade war

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Washington agricultural businesses and producers need to find a new trade partner, and quick. That is what industry stakeholders are saying in response to China placing tariffs on 128 U.S. products including frozen beef, tobacco products, cars, whiskey, soybeans, flour and corn.

Starting Apr. 2, China implemented a 15 percent tariff on 120 of those U.S. products, and 25 percent levies on scrapped aluminum and several categories of pork products.

China’s retaliation is in response to President Donald Trump placing 25 and 10 percent tariffs on steel and aluminum, respectively, which began last month. Tensions are high as Trump announced this week he would place additional tariffs on $50 billion of Chinese goods. China followed suit. Now, Trump is considering upping the ante to $100 billion.

In response to the new levies, U.S. Department of Agriculture (USDA) Secretary Sonny Perdue released a statement saying: “The administration stands ready to defend agricultural producers who may be harmed. As we take a stronger approach to the way we handle trade as a nation, we will use all of our authorities to ensure that we protect and preserve our agricultural interests.”

However, the new focus will cause U.S. farmers to depend more on federal farm subsidies and cause them to “lose recently-developed Chinese markets to other competitors,” writes Washington Policy Center (WPC)’s Agriculture Policy Research Director Madilynne Clark.

She warns that Washington state will likely be one of the worst affected by the news, as it is the third largest exporter of food and agricultural products in the country. Last year, Washington shipped $18.2 million of fruit to China, which made up 23.7 percent of Washington’s exports.

April Clayton is an organic apple farmer and runs Orondo-based Red Apple Orchards with her husband. She told Lens that, “Eastern Washington state will be one of the hardest hit by this tariff if we don’t find a trading partner. A lot of fruit does get exported through China, especially Fuji apples during the Chinese New Year.”

She added that the agricultural industry tends to be hit the hardest by tariffs and trade wars. Also, China begin importing fruit from countries such as New Zealand or Australia.

“It’s a little bit devastating right now with farmers seeing a loss in net income,” said Clayton. “We can start to diversify, look for other income revenues. There is not a whole lot we can do besides get involved and get the message out there that we need trade in other countries for agriculture, so we can stay self-sufficient and food-secure as a nation.”

Margins for agricultural products are on the decline. Last year, organic Braeburn apples only sold for $24 for 900 pounds of fruit. Gala and Honeycrisp apples sold for more, said Clayton, but the state needs to find buyers for the state’s produce and agricultural products.

“We need to find a home for our fruit and our produce,” she added. “If we don’t, it’s going to affect the bottom line of farmers. If they go out of business, we will become food insecure and that is not a place we want to be in our country.”

Brad Haberman is the Second Vice President of Public Policy at the Washington Farm Bureau (WFB). He and his brother run a hay processing plant which exports alfalfa to China.

Although their product has yet to be hit by a new tariff, he fears that could change.

“If we don’t have the Chinese market it’s going to dump a lot of alfalfa into Japan, Korea and Taiwan, which is going to make the price go down on the hay because we are oversupplied,” he said.

Lowered alfalfa prices pull down the price of other hay too, he added.

“Any time you lose an export market it affects your pricing and your supply going to other areas,” he added. “You start to get an overabundant supply which normally causes the price to come down which we don’t want to see happen to any commodity or any farmer.”

“I’m hoping we can get to some sort of conclusion in a reasonable period of time and get everything flowing again for the other farmers too,” he added.

 

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How healthy is Washington’s manufacturing industry?

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Of recent interest to both state lawmakers and the business community is the health of Washington’s manufacturing industry. Since 2000, the sector has shrunk as part of the state’s overall workforce by three percent, according to a new report by the Economic Revenue Forecast Council (ERFC). Also, the total number of jobs has decreased in recent years.

This, among other concerns, inspired unsuccessful efforts this legislative session to reduce the state’s business and occupation (B&O) tax rate for manufacturers to match that of Boeing’s.

Clay Hill is the director of governmental affairs for tax and fiscal policy at the Association of Washington Business, the state’s de facto chamber of commerce. He told Lens that “this is a sector that’s losing employment, even as employment in all other sectors is doing really well in Washington, and I think we have to ask ourselves are we competitive or not competitive in growing jobs in that sector.”

Hill’s observation matches statistics from the National Association of Manufacturers’ annual report, which show that although the total number of manufacturers in the state increased between 2013-2016, there were almost 3,000 fewer jobs and the sector experienced a $300 million drop in economic output.

In 2016, the industry employed 286,300 workers and generated $58.4 billion, roughly 12.4 percent of the state’s gross domestic product. The average worker was also well paid, at $87,000 annually.

However, some industry experts caution against painting with too broad a brush when discussing manufacturing. The North American Industry Classification System (NAICS) lists many separate manufacturing subsectors that can be impacted differently by automation and economic globalization.

“Manufacturing is always doing better than people think it is,” Manufacturing Industrial Council Executive Director Dave Gering said. “It’s a way bigger part of the state economy than most people know. Aircraft manufacturing is huge. This a world-hub for that kind of thing. And we can get kind of inured to that.”

He also points to the state’s maritime sector, which includes ship repair and maintenance. The state has 26 shipyards and an estimated 60,000 Navy workers located in Puget Sound. The metal trades sector of manufacturing has also done well. In 15 years, its yearly revenue grew by 160 percent –from $4.7 billion to $12.3 billion — and increased its employment from 19,000 employees in 2002 to 34,000 in 2016. The metal trades are also mostly small businesses, with an average of 12 employees each.

Last year, Gering testified at a Senate Ways and Means Committee work session, arguing that  negative societal attitudes about manufacturing jobs need to change to encourage more students to enter related fields. The state Workforce Training and Education Coordinating Board anticipates that hundreds of jobs for manufacturing and production will go unfilled between 2016-21.

“Number one thing a kid can learn for their job security is welding,” Gering said. “That is the absolutely truth. Bottom line: if you’re a human being who likes to do that kind of work you should keep doing it.”

Yet he says that job growth, or the lack thereof, isn’t always an accurate reflection of industry health. Last year, Boeing announced it was ramping up production for its 737 from 42 to 47 planes a month in response to strong demand, despite a 4.7 percent employment decline that same year.

Part of the state’s industry job loss could be due simply to automation or increased manufacturing operations overseas, he said.

At the same time, robots aren’t the only cause for the job decline. The latest figures from the Bureau of Labor Statistics (BLS) show manufacturing employment is up in states such as Texas. In 2017 alone, Texas added 36,000 new jobs.

“There is a story related to manufacturing, and it’s not just a story that manufacturing jobs are being automated and they are just destined to lose grounds,” Hill said. “There are states that are finding the solution to that predicament rather than just saying that’s reason for never trying to improve our numbers in that sector.”

Hill also points to a December 2017 BLS report that showed the Pacific region (Washington, Oregon and California) had higher employee compensation costs compared to the South or Mideast. Perhaps underscoring that reality was the recent announcement by aerospace manufacturer Flow International that it was moving its manufacturing operations from Kent to Kansas, costing 110 local jobs.

In a statement, CEO David Savage said “the cost of doing business in the Seattle area has changed dramatically over the last few years, and the cost of manufacturing in the region continues to climb. As we look into the future, we expect these operating challenges to continue to increase, and we are taking the step now to combine operations in order to remain competitive in our marketplace.”

Last year, an Atlanta-based company announced that it would be closing its Southwest Washington pulp mill that has been in operation since before Washington’s statehood. However, statements made by a company spokesperson suggested the connection between the state’s business climate and the decision wasn’t clear-cut.

Nevertheless, Gering and Hill say a reduced B&O tax rate would be a huge benefit to the industry that has significant overhead costs.

“It’s certainly worth fighting over,” Gering said. “They (manufacturers) have to spend a lot of money to make money. Their revenue doesn’t reflect their profitability. If you’re a lawyer, you don’t have those costs.”

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Organic milk farmers surviving, not thriving

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Although market indicators in the 1990s pointed to organic dairy as the next fad, those farmers today are determining how to stay afloat in the midst of an oversupply.

Processors are asking organic dairy farms to limit their production until the demand rises again, forcing farmers to cut back on upgrades to their farms.

“It is always tricky predicting supply and demand,” Jay Gordon, Policy Director for the Washington State Dairy Federation (WSDF), told Lens. “It’s really a supply and demand imbalance. A few years ago, the market signals were telling everybody the organic market is growing and we need more farms.”

Organic dairy farms began emerging in the late 1990s and experienced steady growth since the early-to-mid 2000s. Now, there are approximately 52 organic dairies in Washington. Most are in Skagit and Whatcom Counties and hold around 150 cows per site.

Most producers ship through Wisconsin-based co-op Organic Valley. Processors such as Organic Valley prefer to make sure there will be enough demand before taking on a new farm, said Gordon, so they don’t have to turn around six months later to say the milk isn’t needed.

For the past two years running, the market has offered too much supply with too little demand.

“Now the processors are telling farmers to cut back and if you produce more milk, we will pay you less for it.”

Processors are incentivizing farmers to produce less organic milk by selling any excess into the conventional market.

Organic milk sells for around $23 per 100 pounds, while conventional goes for $14. Processors will tell the farmers they can only sell through the conventional market, so that’s the rate than can afford to pay.

Another challenge for organic farmers is organic feed production. Many farmers are scrambling to find good quality feed and enough of it, added Gordon.

It’s riskier to grow organic feed than conventional. “You don’t have traditional weed control and the variety of seed you can use is more limited….it means you forgo using antibiotics, pesticides and herbicides.”

Gordon is a crop farmer and says when evaluating his options, he knows the organic price is more, but there is a question as to whether the risk is worth the reward.

For now, lack of demand means organic dairy farmers have to think more conservatively when it comes to their purchases. They might replace parts of a truck instead of buying a new one or put off re-roofing a barn until prices improve.

“The first thing that stops are the capital purchases,” said Gordon. “It’s a pain to run old equipment, but all of the sudden you start running equipment and shop because you can’t afford to replace them new.”

This is the first fluctuation for the organic diary market, he added. Gordon gives credit to Organic Valley both for not overproducing for the market and for its forecasting.

Luckily, it doesn’t take much to get the product back in balance after an oversupply.

“A dairy farmer can look at their herd and take out 10 percent of the cows out of the herd, so the rest of the cows have more feed and more space, and then everything will get back in balance.

“Hopefully the demand keeps growing. More growth and a little change in supply will bring everything back in balance…the price will come up for those paying the bills.”

Dean Wesen is another Washington farmer who is hopeful for the future but is weathering the market until it improves.

“Two years ago was probably the best dairy had ever been for organic. We knew that the good times weren’t going to last forever.

“At that time, we purchased some tractors we thought we might need in the future and things like that. Now, we’ve cut back on any extra expense at all.”

Wesen and his four brothers run two Skagit County-based farms, Wesen Organic Dairy and Wesen Farms.

Wesen said one reason for the market changes is the increased popularity of butter. Part of the growth is from studies showing butter is healthier than people once thought, which is great for dairy in the long run. In the short run, however, it has caused an oversupply of nonfat dry milk.

Butter is made by taking cream out of milk, leaving excess nonfat dry milk.

“Even though butter went up, the price of nonfat dry milk has dropped drastically.

“It’s great that everyone wants butter again, but we have to figure out what to do with the milk that is left when you take the butter out. We are looking at new products…and new and innovative ways to use that product to have some value.”

Like many other farmers, Wesen and his brothers have to consider how to cut costs while their profit margins shrink.

This week, he attended a pasture meeting to discuss the most efficient ways to get more grass growth from their farm pastures.

“The most efficient way to get milk out of cows is through pasturing, so we are placing more emphasis on that,” he said.

He added that the business won’t cut back on grain too much, as it can interrupt the production cycle of a dairy cow.

Wesen said prices should improve over the next two years.

“For 30 years, Organic Valley has been made up of leaders in the industry, and I’m sure they will be able to figure things out to help the farmers out with these prices. It’s just going to take a little time.”

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Development picks up with Hirst fix

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Three months since Governor Jay Inslee signed Senate Bill 6091, commonly referred to as the Hirst fix, into law, representatives from the Legislature, the building sector and local government are detailing how their constituents and members are reacting, as well as what to expect for developments in the next year.

Senate Bill 6091 allows building permit applicants to pay a fee to build on plots of land that are reliant on well water for domestic use under certain yearly water drawing limits. It also clarifies that local governments can rely on Department of Ecology (DOE) instream flow rules to meet Growth Management Act (GMA) water availability standards.

Sponsored by State Sen. Kevin Van De Wege (D-24), the measure worked to address public concerns stemming from the 2016 Washington Supreme Court decision in Whatcom County v. Eric Hirst. The bill received a 35-14 vote on the Senate floor and a 66-30 vote in the House before being signed into law on January 19.

Shortly after the court’s ruling, Washington residents and local government leadership voiced concern that it halted building developments reliant on potable water, causing some counties, including Whatcom, to issue emergency building moratoriums.

Whatcom County Executive Jack Louws told Lens: “I think that the law has done a pretty good job of putting us back into business and giving us the ability for those in the community who want to capitalize on the opportunities on their property….”

He added that the law puts the state back in “the driver’s seat” as it relates to water issues and gives counties the ability to plan under the GMA.

During its first meeting after the bill became law, the Whatcom County Council repealed the existing building moratorium and approved a 60-day emergency ordinance allowing well approvals under the parameters outlined in SB 6091.

Now, the county is working through the planning commission and council to integrate the current ordinance formally into the Comprehensive Plan as required by state law.

He added that DOE has done a good job clarifying and giving clear direction for people halfway through the permitting process. The majority of people were able to proceed and finalize their projects since the bill’s passage.

“While the homeowner has ability to move forward, the bill also put the burden on the county to further plan for the impacts that the proposed new wells have on the watershed.”

Under the law, the county has an obligation to create a mitigation plan for the consumptive use impact of the wells proposed to be drilled over the next 20 years by February 2019.

Louws added that although there are still unresolved water issues beyond Hirst related to water quality and quantity, the law gave landowners reasonable certainty that they can do what they wish on their properties.

“Virtually immediately the law got development going again in those rural areas that were reliant on household wells,” Jan Himebaugh, Government Affairs Director for the Building Industry Association of Washington (BIAW), told Lens. “People were able to move forward with their dreams and my members were able to build them a home.

“This is everything for our guys who build across the state. If you don’t have access to water, you don’t have a home.”

The Hirst fix also prevented the state from losing out on $6.9 billion in direct and indirect spending each year while homebuilding was put on hold.

“We had members whose business dropped off 50 percent because they weren’t able to drill wells,” said Himebaugh.

State Rep. Jim Walsh (R-19) said the law “lifted the cloud” from the issuance of building permits and the development processes connected to them.

“Lenders are much more at ease about making good loans on construction projects and development projects because of the confidence they can have in permits being good and valid.”

Walsh added that local tax jurisdictions are also relieved because they were worried about a negative tax shift that would occur if rural parcels lose their value. The concern was that the property tax would shift from those properties to others and make them harder to sell.

The law also mandates that DOE create a Watershed Restoration and Enhancement (WRE) committee in Water Resource Inventory Areas (WRIA) where instream rules have not been adopted.

 “The Hirst fix doesn’t fix everything, of course,” said Walsh. “It basically returns southwest Washington to the status quo before the decision was made, but people still have to fight for good water policy.”

It is incumbent on the WRIA work groups, the local rule-making entities for water rules, to stay in front of the process and put forward plans that are good for residential, commercial and agricultural development and property rights, he added.

Walsh said his constituents remain very opposed to metering residential wells. The law allowed two existing pilot programs to remain active which meter residential wells

“I am very concerned about those metered wells programs expanding. I want to see them limited to those two areas.”

State Sen. Judy Warnick (R-13) said: “There hasn’t been a huge reaction from my constituents, but I think they are quietly going about building their homes and getting their permits.

“There are still some attempts to feel out what is available out there. One particular case was people who didn’t want to hook into a community well that was already there, which Hirst didn’t cover.”

Warnick added that she is monitoring the planning developments for WRIAs closely as they progress.

“The beauty of the bill is that we didn’t solve the problems for the local folks, but it was set up, so they could solve the issues pertinent to their districts.

“Give the law and the locals time to work,” she said.

 

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Lens Video: Washington’s trade future

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Lens sat down with Lori Otto Punke, President of the Washington Council on International Trade, to discuss what Washington state industries reliant on global trade are doing to respond to current trade negotiations.

The post Lens Video: Washington’s trade future appeared first on Lens.


Head tax “last nail in the coffin”

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In the latest development in the controversy surrounding the Seattle City Council’s proposed business tax plan, or “head tax,” Amazon has stopped development in downtown Seattle until the council votes on the proposal.

Stakeholders say Amazon has had enough of anti-business actions taken by city leadership, and the tax plan may be the final straw for business owners looking to continue operating in or considering a move to Seattle.

At the end of last month, the council released its proposal to raise $75 million for affordable housing options and to address homelessness.

The plan would require the largest 500 Seattle businesses to pay $0.26 per hour, per employee working in Seattle in 2019 and 2020. This “head tax” penalty is anticipated to cost business owners $500 per year per fulltime worker.

In 2012, the head tax would change to a business payroll tax which would take 0.7 percent. The Council is scheduled to vote on the tax plan on May 14, with meetings held through May 9.

Soon after its release, business stakeholders vocally opposed the proposal, arguing it would end up scaring away potential businesses and lower the number of low-income employees a company can hire.

On May 2, Amazon Vice President Drew Herdener said, “Pending the outcome of the head tax vote by City Council, Amazon has paused all construction planning on our Block 18 project in downtown Seattle and is evaluating options to sub-lease all space in our recently leased Rainier Square building.”

Combined, the project would provide more than 7,000 new Amazon jobs, not including any indirect jobs.

Jason Mercier, Director for Government Reform at the Washington Policy Center (WPC), told Lens that city leadership actions make it harder and harder for Seattle to appeal to new business.

“If Amazon is signaling that Seattle is no longer hospitable for a home-grown company with many employees, what open arms should another employer look for if considering to relocate here or grow when starting a business in Seattle?”

He added that Seattle will have to decide whether it will continue putting a target on the business community with anti-corporation and anti-growth comments coming from the city council.

“The surprising thing is not what Amazon is doing…they are just responding to the market that they have other options.

“In the last 24 hours, the shocking reaction is coming from the city council saying they are surprised Amazon would do this. It’s no surprise if they keep targeting business that they will look elsewhere.”

In an online statement, the city council wrote: “This was never a proposal targeting one company, but Amazon made the conversation about them when they expressed their intentions to pause construction on their new office tower pending a vote on our Progressive Tax on Business.”

The council cited that Amazon made $1.9 billion in profits in the fourth quarter of 2017, and estimated the company would pay $20 million annually from the proposed head tax.

Council members added that there isn’t enough revenue to provide enough affordable housing for everyone and provide shelter for those in need.

“While Amazon didn’t single-handedly cause this problem, they have contributed to the growing income inequality, displacement and housing affordability issues facing our City,” the council wrote. “It seems only fair…that we ask those…corporations to financially contribute to the public health and housing solutions designed to address those consequences.”

Mercier said the council must realize that it needs a thriving business climate in Seattle for its programs to succeed.

“I think you are starting to see a catalyst happen that we may have reached the tipping point from how much the Seattle business community is willing to tolerate before pushing back.”

Back in January the majority of the city council signed a letter saying that it recognized the problem with the relationship with Amazon, and they want to “reset” so the company doesn’t feel unwelcome in the city.

“Then they drop the head tax,” State Sen. Guy Palumbo (D-1) told Lens. “I think the company and other industries are getting the message loud and clear that Seattle doesn’t want business.

“It’s problematic not just for Seattle but for the entire state, because if the head tax passes I think that if they leave…the loss of 7,000 additional jobs would be the tip of the iceberg.”

Palumbo added that if city leadership keeps sending the same signals to business, Seattle may no longer be considered an innovation center.

“I see a lot of people questioning whether this is just hardball or a bluff to gain leverage over the head tax. I think everyone needs to take a deep breath and understand that this is probably the last nail in the coffin and is absolutely not a bluff…only the tip of the iceberg.”

Matt McIlwain, Managing Director for Madrona Venture Group, said Amazon’s presence in Seattle is important for attracting talented people who may work at a start-up, along with being able to observe the company’s successes and faults as it test innovative new ideas.

“I applaud Amazon for taking this action which communicates that the decisions of Seattle’s City Council will have consequences on job creation and economic opportunities for all Seattleites,” he added.

McIlwain continued: “I hope Seattle’s political leadership steps back to consider all the direct and indirect economic and civic benefits Amazon provides to our community and the world before making their final decision on the jobs tax.”

Seattle Mayor Jenny Durkan voiced concern about what Amazon’s decision could mean for all industries operating within Seattle.

“I’m deeply concerned about the impact this decision will have on a large range of jobs – from our building trades, to restaurant workers, to nurses, manufacturing jobs and tech workers,” Durkan said in a statement to the media. “At the same time, our City must urgently address our homelessness and affordability crisis and lift up those who have been left behind. I fundamentally believe we can do both by working together.”

Durkan added she would bring the city council, labor, business and community leaders together over the next few days to determine how they can resolve the issue and keep jobs.

 

 

 

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National associations join MBT lawsuit

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National trade and resource associations and several states are joining Millennium Bulk Terminals’ (MBT) lawsuit against Governor Jay Inslee and his administration for obstructing the company’s proposed export terminal from progressing through the permitting process.

Lighthouse Resources, Inc., MBT’s parent company, filed a lawsuit in January against the Inslee administration for unlawfully denying the company permits that are required for project approval. The company is now six years and two months into its permitting process.

And now, the National Association of Manufacturers (NAM), the American Farm Bureau (AFB), the American Fuel & Petrochemical Manufacturers (AFPM) and the National Mining Association (NMA) have filed an amicus brief on May 2 in support of MBT’s lawsuit against the Inslee administration for impeding progress of the business’ project.

Linda Kelly, Senior Vice President and General Council at NAM, told Lens: “The association is very concerned about the misuse of the permitting process to pursue an agenda that interferes with the federal government’s constitutional right to control foreign trade.”

She added that the court’s decision could set a precedent which could apply to any type of exported manufactured good if the court allows the state to obstruct foreign commerce.

“The real reason that we jumped in as a national group was to show our position in the case, because it does have very serious implications beyond the current circumstances.

“Presumably, the project would get its water permit if the exports were wind turbines…you can’t have a system where you are only allowed to export what the state where the port is located approves of.”

Manufacturers are heavily reliant on the ability to access markets outside the United States, she added, and any interference with that ability is concerning.

“It is now in the hands of a federal court. They are respectful of what the constitution dictates, and hopefully we will get a good outcome in this case.”

Mike Bridges, President of the Longview/Kelso Building and Construction Trades Council told Lens the additional support across the nation validate sMBT and labor in their position that the company has met the necessary requirements to earn its permits.

“If we start applying the same standards of the denial of permits based on the things they have been denying Millennium, it will hurt more of that stuff tied to the fossil fuel industry; it will affect agriculture or anything that is imported or exported up and down the river or on the rail.”

He added that manufacturers need to get their products to market just like any other export.

“If the project will be built or denied based on how much ship or rail traffic will increase by its operation, then everybody will be affected by that, it’s not just any one commodity or group.”

On May 9, Montana, Wyoming, South Dakota, Utah, Kansas and Nebraska also filed a joint amicus brief backing MBT, as reported by Keep Washington Competitive (KWC).

In its filing, the six states noted the Inslee administration’s “long-documented public opposition to fossil fuels.”

The states continued: “The Defendants are trying to force on other states their policy preferences regarding the use of coal as a source of fuel, and thus, they are impeding the free flow of commerce. Today it is coal, tomorrow it could be natural gas or non-organic produce. The interests of the interior states in developing foreign trade are not subject to the barriers erected by the policy whims of states that control access to international markets through their ports.”

Bridges added that he anticipates that the extra backing from the national associations and the states will raise awareness among the public, as well as ports and businesses that rely on shipping and the rail corridor.

“I hope the general public will understand that this is bigger than this project and bigger than the commodity we are discussing which seems to be holding it up, even though it meets all the requirements of the environmental process.”

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Lens Video: Labor weighs in on proposed head tax

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Lens attended the Seattle City Council’s Finance and Neighborhoods public hearing and asked Chris McClain, Business Manager for Iron Workers Local Union 86, his opinion on the council’s proposed business tax plan

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Head tax passes despite business outcry

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The Seattle City Council has unanimously approved its head tax proposal that will impose a significant penalty on Seattle’s largest businesses in the name of raising money to address homelessness.

The tax would take effect at the beginning of 2019, requiring an estimated 585 of Seattle’s largest businesses to pay $275 per full-time worker per year. The tax has a sunset clause to end Dec. 31, 2023.

The council agreed to reduce the tax penalty from its original proposal of $500 per worker after a sustained outcry from the business community, heated debates, protests, and criticism from current and former public officials.

Nearly a decade ago, the council repealed a head tax of $25 per employee per year because of the challenge it presented to businesses during the recession.

Members of the business and labor communities strongly oppose the tax on the grounds that it will push current and potential employers out of the city. Those stakeholders also have expressed doubt that additional money will address the homelessness issue given that the council has already spent upwards of $160 million and the situation has not improved.

Unlike the previous proposal, the final tax plan does not require the head tax to transition to a payroll tax.

According to a recent McKinsey and Company report on the King County’s homelessness issue, the region would have to spend between $360 and $410 million to combat current levels of the problem.

In response to the rising likelihood of the tax plan’s passage, Amazon announced earlier this month that it would halt its downtown tower construction until the council’s vote and that it would begin looking at Bellevue for potential office space. Following the vote, an Amazon spokesperson indicated the company will continue construction but will remain cautious in the midst of the council’s “hostile approach and rhetoric toward larger businesses.”

Amazon is not alone in its stance; Zillow, Starbucks and 131 businesses including Redbox, SmartLabs and Expedia all have expressed their concern and disappointment over the council’s decision to penalize the city’s job creators.

During a May 14 public meeting of the full Seattle City Council, Councilmember Teresa Mosqueda said that she supported the tax because it focuses the council’s approach by investing in permanent housing programs and creating new shelter options in the community.

“We are trying to make sure that we both hear from the social workers, those who are experiencing homelessness, the housing advocates and experts…what we need most is the creation of housing units, and right now we don’t have the funding to do that.”

Council President Bruce Harrell said he understands Seattle residents’ anger and fear of what the city is becoming after hearing numerous comments on the tax plan.

“On one hand, people are looking at affordability of this city and death on the street…on the other hand people are saying ‘now you are trying to drive out business and good jobs and making policy or investment decisions that can kill our economy because we are a thriving city’.”

Harrell added that the city failed to convince the public that they will use the new revenue stream from the tax “wisely and strategically.”

However, Councilmember Kshama Sawant found fault with the amended proposal’s inclusion of a five-year sunset clause.

“Five years from now it would take another ordinance to have it continue…it is naïve of us to think that Amazon and other big businesses will not use a similar, brutal and extortionary tactic in four or five years in an attempt to stop the tax from being renewed.”

Jan Gee, CEO and President of the Washington Food Industry Association (WFIA), said that her industry’s problem is with the tax’s structure.

“This not just an Amazon tax, this is a tax on these family owned grocers, and stores like…West Seattle Thriftway, Metropolitan Market, Uwajimaya, your golden stars here in the community.”

Gee added that the tax will especially harm grocery stores because they have high gross sales, are labor intensive and make the lowest profit out of any industry, at one and one-half percent.

“You can see the tax structure has a disproportionate hit on the grocery industry,” she told the council. “I would ask you to slow down and look at what the impact is beyond Amazon and to your local family-owned businesses.”

Emily McArthur, Political Organizer for Socialist Alternative, however, urged the council to find even more money to address Seattle’s affordable housing and homeless problem, saying:

“…do not capitulate to Bezos’ bullying…we need $400 million a year to solve this problem, don’t water this down.”

Matt Dubin, attorney and candidate for State Representative in the 36th district, said the tax proposal will do little to solve the homelessness problem but would further divide the community.

“Over $200 million in tax dollars were spent on homelessness in King County last year,” he added. “That’s $17,000 for every homeless man, woman and child, and the problem got worse. “

Dubin asked the council to step back and work with members of the community to find a win-win solution for all.

The tax takes effect in January 2019 and Mayor Jenny Durkan has indicated she will sign the bill.

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BNSF Railway proposes bridge project to ease congestion

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BNSF Railway has proposed to build a second rail line that would run over Lake Pend Oreille in Sandpoint, Idaho to help prevent congestion on the current one-lane bridge.

Proponents of the project say it will bolster the movement of goods through the Pacific Northwest and Montana and increase efficiency by allowing trains to move in both directions across the lake instead of pulling over to the side and waiting. The seamless rail movement would also benefit businesses and industries looking to receive products as cheaply and quickly as possible.

The project would add a bridge parallel to the current one, which would allow for a more efficient flow of freight and passenger rail over the bridge, according to Courtney Wallace, Director of Public Affairs for BNSF Railway.

According to the project’s website, BNSF submitted its permitting documents in Dec. 2017 and the company is currently working with project lead agencies, the Idaho Department of Lands (IDL), the U.S. Coast Guard and Army Corps of Engineers as the proposal advances.

“It will allow the opportunity that goods we use every day are getting to their destination in a more efficient manner,” Wallace said during Keep Washington Competitive’s (KWC) May 14 tele-briefing on the project.

Currently, trains must wait on either side of the bridge while one train passes, which can cause a backup, and therefore a ripple effect into eastern Washington and Montana.

“This project will help with the volumes of goods currently being managed and sets us up for success in the future if traffic continues to grow.”

The project also has a stake in providing wages and jobs for local workers. According to Wallace, these employees living in Idaho make a combined payroll of $24 million per year.

“The railroads are here to facilitate trade in our region,” said Glen Bailey, Bonner County Commissioner. “This project will improve what has become a vital link between the Pacific Northwest and the Midwest, and family-wage jobs in between.”

He added that the additional bridge would decrease the bottleneck that slows the movements of goods including food, medicine and household products.

“The expansion is needed to ensure goods are reaching markets here in the Northwest and all over the world. Without it, our economy and quality of life would be negatively impacted.

“We can’t build this bridge fast enough, while being quick and as environmentally safe as possible.”

John Stuhlmiller, CEO of the Washington Farm Bureau (WFB) told call participants the project offers “congestion relief, private investment and safety improvement; it doesn’t get better than that.”

He added that WFB is most concerned about moving goods – agricultural products in particular – across the Midwest and through Washington state and its ports.

“It’s important to us to have farm-to-market access, which includes all methods of delivery in our world-class state. We are championing the improvements and are pleased with what is being done to upgrade the system.”

Stuhlmiller added that WFB supports the project’s focus on congestion relief and safety enhancements. “We need to continue to move to a faster, better network to keep up with the demands on that system to keep providing food and fiber for the world.”

There are two public hearings on the project scheduled for May 23: A morning session at the Ponderay Events Center in Ponderay, Idaho at 8 a.m. Pacific and an afternoon hearing at the Sandpoint Middle School gym at 6 p.m.

“We are excited to see the project go through the permitting process,” said Wallace. “There is a value for BNSF and our customers because it helps reduce waiting and helps us all get the goods we like every day.”

 

 

 

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Lens Video: Seattle head tax-not just an Amazon tax

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Lens asked Jan Gee, President and CEO of the Washington Food Industry Association (WFIA), her opinion of the Seattle City Council voting unanimously to pass the business head tax proposal and how her industry and the business community will react.

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Head tax shows Seattle is “hostile” to business

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The Seattle City Council’s unanimous passage of a business head tax sent ripples throughout the business community and economic development organizations who are sounding the alarm that the move threatens the current business climate and will deter potential companies from relocating to Seattle.

On May 14, the council unanimously approved its business head tax plan, which would charge an estimated 585 of Seattle’s largest businesses $275 per full-time worker per year. The tax would begin in January 2019 and continue until Dec. 31, 2023.

The move drew strong criticism from members of the labor and businesses communities, who argued that the council has already spent upwards of $160 million without seeing an improvement in the homelessness issue the tax seeks to address.

In response, several business owners and economic development groups are now saying that city council members have gone too far.

Jon Scholes, President and CEO of the Downtown Seattle Association (DSA), told Lens the association opposed the tax when it was in place in 2008, and it has been speaking out against the tax since it was reintroduced.

“We are familiar with the policy, and the research and experience from other cities that shows that it is a job killer,” he said.

Scholes added that the head tax makes Seattle the only city in the state that would levy a Business and Occupation (B&O) tax along with a tax on jobs.

“It puts us at a disadvantage in the region in particular for attracting jobs and having companies already here to grow further and invest.”

The last six or seven years have been filled with new taxes on companies in Seattle, he continued.

“In many ways, we’ve gone from an unpredictable business climate to a predictable, hostile business environment.

“It’s a troubling message to send to companies in your city and to spread throughout the region, state and country that there is a pretty dysfunctional relationship between city government and business,” Scholes continued. “It will have consequences if it continues for our economy and general tax revenues to the city as well.”

Scholes said businesses of all shapes and sizes across every sector have come together in the past week to fight the tax with their own dollars and resources. Business owners along with members from economic development groups make up the “No Tax on Jobs” coalition, which has raised over $300,000 in one day to place a referendum on the fall ballot to repeal the tax.

“We haven’t seen a response like this in many years in businesses from across the city … voters in Seattle also feel like they are not being listened to by the council on this issue or others,” he added.

To qualify for the ballot, the group needs to gather 17,632 signatures within 29 days of Mayor Jenny Durkan signing off on the tax.

“The reason we’re starting with a referendum is because we don’t have time to let the council shut down growth like this,” Saul Spady, President of Cre8ive Empowerment and the campaign’s secretary, told Crosscut.

Marilyn Strickland, President & CEO of the Seattle Metropolitan Chamber of Commerce (SMCC), said, “The Chamber does not believe that a tax on jobs is the best way to address our regional homelessness crisis, and will continue to advocate for an aligned, accountable approach to help get people off the streets and into permanent, stable housing.”

One reason that SMCC opposes the tax is that the Seattle City Council has “demonstrated an alarming recklessness about spending.

“Our region needs an aligned, accountable approach with … outcome-focused solutions guided by the best practices laid out by Pathways Homes and the Poppe report.”

Pathway Homes offers a resident-focused plan to reduce homelessness by transforming how homeless services are delivered and transitioning from short-term to long-term solutions.

The Poppe report, prepared by Barbara Pope and Associates, recommends the city reduce homelessness by addressing key underlying issues including the lack of affordable housing options and the lack of jobs that offer living wages.

Moving forward, SMCC recommends that city leadership consider two policies that do not require additional revenue: “The first is to pass common sense zoning laws that will allow more housing to be built citywide and do not discourage development. The second is to fix our fragmented regional system for homelessness services.”

 

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The new ‘battle for Seattle’

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It’s a fight where the battlefields are drawn by political jurisdictions, casualties are measured by lost economic output, and victories are determined by new employers and job creation.

In the statewide skirmish that’s intensifying over Washington’s business climate, the Seattle City Council’s unanimous vote approving a $275 per-employee job tax earlier this month may be the official opening shot in the new ‘battle for Seattle’.

Events precipitating the City Council’s May 14 vote strongly foreshadowed what was to come. The first sign of trouble was when Amazon announced plans for a second headquarters last year. In May, a planned rally in front of the Amazon Sphere by Councilmember Kshama Sawant was crashed by members of Iron Workers Local 86 after Amazon suspended construction of a building in anticipation of the head tax vote.

A May 8 open letter posted by Madrona Venture Group Managing Director Matt McIlwain and signed by more than 100 CEOS warned that “the message it sends to every business: if you are investing in growth, if you create too many jobs in Seattle, you will be punished. Sending this message to entrepreneurs, investors, and job creators will cause far greater damage to Seattle’s growth prospects than the direct impact on the businesses being taxed.”

The responses at the local, regional and state levels, respectively, have been swift – and weighted toward the opposition. Corporate giants such as Amazon, Starbucks and Vulcan have pledged more than $350,000 for an initiative to overturn the job tax ordinance. Although former Attorney General Rob McKenna believes the tax is legal, Minority Leader Mark Schoesler (R-9) has proposed a state law banning them.

Speaking at the Washington Policy Center’s Solution Summit in Spokane, Schoesler called the head tax “the most regressive tax we’ve seen. And I call it a ‘regressive’ tax, because it is. When you see a great startup…they don’t necessarily make money in the near term. We’re punishing them on the way up. It is every bit as nasty as a B&O tax.”

He added: “I’m really not that concerned about the financial future of Seattle. I am, though, concerned about my colleagues that represent King County that watch HQ2 leave. And I’m worried about the state’s share of revenue, because when they’re building those buildings, 6.5 percent of that is coming back to the state of Washington in sales tax.”

The economic relationship between Washington and Seattle was summed up by Sen. Guy Palumbo (D-1) at the WPC’s Solution Summit in Bellevue. “We’re all in it together. Whether you like it or not, Seattle is the economic engine of our state.”

Although Palumbo is “pretty confident” the head tax will get repealed, other cities on the West Coast aren’t waiting around to take advantage of it. The Greater Phoenix Economic Council has started an ad campaign to get Seattle businesses to move there. Already Amazon has announced plans to close its Seattle-based 130-person delivery support unit and move the jobs to Phoenix, though it says the decision was not in response to the head tax.

The day the Seattle head tax was approved, a letter to an undisclosed Seattle executive from the Greater Sacramento Economic Council touted the region’s business climate, specifically citing the lack of a head tax as well as its adjacency to greater venture capital opportunities.

Bellevue Mayor John Chelminiak has also expressed concern with how Seattle’s policies affect the rest of the region. In an interview with Geekwire, he said, “People recognize Seattle as the hub of this area. If you’re out selling yourself somewhere, you’re going to say that you’re in the Seattle area, because people recognize the name Seattle.”

Other regional and state leaders such as King County Executive Dow Constantine and former governor Christine Gregoire have also come out against the head tax.

Lens reached out to Governor Jay Inslee’s office for comment on the head tax and the voter initiative but did not receive a response.

In the meantime, some local, regional and state lawmakers are eager to not only distance their communities from Seattle’s policies, but also to capture any of its economic ‘leakage’. Pierce County and Tacoma city officials have proposed a $275 per-employee tax credit for new qualifying jobs that are created. Sen. Steve O’Ban (R-28), who represents Pierce County, has proposed a similar measure for rural counties struggling with higher unemployment rates.

In a statement he wrote: “Washington shouldn’t lose jobs because our largest city’s tax policy punishes job growth. If employers want to relocate, they should know that other counties are business-friendly and welcoming.”

Seattle’s fate in the conflict may depend on whether residents decide to keep the current council intact in the upcoming election. During WPC’s Spokane Solutions Summit, an audience member asked: “When are we going to fire the (Seattle) City Council? Sawant is not the problem. It’s the eight other people who vote with her and the mayor that signs it into law.”

McIlwain replied: “A number of the companies in Seattle have been reluctant to be public about challenging the city council on policy issues.” However, he added he’s “hopeful” that recent actions by companies such as Amazon, Alaska Airlines and Starbucks help these companies understand “the importance of being outspoken, because it will never end.”

Most residents aren’t happy with the council’s recent vote. A survey conducted by Strategies 360 for KIRO-TV found 54 percent of Seattle voters oppose the job tax.

McIlwain said that “what’s important here is that the community…the citizens, the businesses, our broader state community speak out against this idea (head tax) and hopefully overturn it at the ballot in November. Because I think that will send at least a message that the city council can’t run roughshod on bad policy ideas over the citizens.”

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Preserving Washington’s prosperity

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Eight years since Washington voters overwhelmingly rejected Initiative 1098 that would have created a progressive income tax, state revenue has grown from approximately $29 billion in the 2011-13 biennium to $41.7 billion for the 2017-19 biennium.

The latest estimates from the state Economic and Revenue Forecast Council (ERFC) indicate revenue streams will reach $48 billion by 2019-21, a near $20 billion and 69 percent increase in revenue since 2010. It’s also roughly the same amount of revenue that I-1098 backers estimated the income tax would raise within the same timeframe ($2 billion annually).

Moreover, the increased state revenue has led to billions in new funding for education, one of the arguments made for I-1098 by supporters.

Heading up the campaign against I-1098 was Madrona Venture Group Managing Director Matt McIlwain. As he sees it, the state’s fiscal situation since has vindicated a tax policy that encourages “growing the pot versus focusing on how to better divide the pot.”

It’s a narrative that he and others are also using, along with a strong legal argument, against the city of Seattle’s progressive income tax ordinance via Opportunity For All.

At Washington Policy Center’s May 23 Solutions Summit in Spokane, McIlwain told attendees that “really what we’re trying to pursue is getting the better policies to prevail.”

Although a King County Superior Court judge ruled against the city in November, the city is appealing to the State Supreme Court in the hopes sympathetic justices will overturn 80 years of jurisprudence holding that income is considered property under the state Constitution and thus subject to the uniformity clause.

Yet regardless of how the court rules, the damage to the city’s business climate has already been done, McIlwain said, pointing to Amazon’s decision last year to build its second headquarters outside Washington. “Actions have consequences – like your largest employer…sending some pretty strong signals since the Seattle income tax was passed, that they’d had enough.”

But there’s also the unseen consequences of unfriendly tax policy when companies such as Bellevue-based Smartsheet choose either not to expand or start up in the area. The company recently went public and is expected to bring in $150 million in revenue next year.

Initially, Smartsheet planned to open a new office in Seattle, but decided against it based on the city’s new tax ordinances, McIlwain said.

Until now, the city of Seattle has reaped the economic awards from the lack of an income tax, McIlwain argues. Its unemployment rate is 3.1 percent, and in the last five years, revenue has gone up by 35 percent.

“The economic opportunity is literally expanding,” McIlwain said. “Is some of that good fortune and lucky? Absolutely, but it also is we have a virtuous cycle of innovation and companies…creating all other kinds of jobs.”

However, either a local or a statewide income tax would disrupt that growth by driving it elsewhere, he added. McIlwain is “cautiously optimistic” that the Supreme Court will ultimately rule against Seattle. Even if a progressive income tax were made legal, state lawmakers would likely be reluctant to pass one.

And nearly a decade after I-1098 and with thousands of new residents , Washington voters are still as opposed to the idea as they were before, according to a poll conducted by the Washington Policy Center.

Such strong opposition might be attributed to how the issue is framed, McIlwain said. Before the campaign against I-1098 picked up, most Washingtonians actually favored the initiative because “narratives matter. Bill Gates, Sr. had a narrative about education funding. It didn’t hold up, in my opinion.”

Also using a similar narrative as Opportunity For All is the Choose Washington NMA Council, a campaign created by Governor Jay Inslee earlier this year to entice Boeing into investing its 797 development, production and assembly in Washington. Among its list of reasons why Washington is a “low risk” place for Boeing to invest is that the state “doesn’t have a personal or corporate income tax or a capital gains tax.”

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What’s up with retail downsizing?

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Several large retailers are thinking small when it comes to expanding their businesses and promoting sales efficiency, especially within urban neighborhoods.

Target has announced that it will build three urban-style stores by 2020 in Bellevue, the University District and Ballard. These locations will allow the company to meet the needs of more local communities, while using the reduced square footage to maximize its productivity.

Target isn’t the only one downsizing – smaller stores are being rolled out by other large retailers including Macy’s, Nordstrom, WalMart, Kohl’s and Lord & Taylor.

Another option that has seen some success involves remodeling existing stores and shrinking retail space to accommodate better guest turnover.

Renée Sunde, President/CEO of the Washington Retail Association, told participants at a recent International Council of Shopping Centers national conference in Las Vegas that downsizing is the new trend among big box retailers, which allows them to “position themselves in hubs for commerce and community.”

Most of these smaller stores will be between 20,000 and 40,000 square feet, where an average large retail store might cover 145,000 square feet.

“It allows them to move into untapped markets that cater more to the local clientele better supporting neighborhoods and urban communities,” said Sunde. “The smaller stores are performing well, producing twice the sales per square foot as regular stores, and supporting e-commerce by serving as convenient pick-up points for online orders.”

Not all retailers are going this route, she added. Some are remodeling to reduce their space and are leasing out the empty space to encourage increased foot traffic.

Target is one large retailer who has seen great success with downsizing since it opened its first smaller-scale store in Seattle in 2012. Two years later, the company implemented an even smaller version of that format which is what will be opened across the U.S over the next few years.

The new store design will feature two entrances: One for seasonal items and other featured products and another for easy pick-up of online orders and groceries. The locations will include parking spaces where team members can bring out online orders and new technology for finding items, scheduling deliveries and using mobile devices to pay for items.

Last year, Target built 30 smaller stores and the company is planning to continue the trend for a few years, according to Jacqueline DeBuse, a Target spokesperson.

“These have a really flexible design and allow us to go to neighborhoods or urban areas where a traditional-sized Target wouldn’t fit and allow us to reach new guests,” DeBuse told Lens.

Target will continue opening normal-sized stores if the situation arises, however DeBuse said the company’s primary growth will be focused on installing the smaller versions in neighborhoods or communities Target couldn’t serve in the past.

“Our team works hard to understand the local community and build an assortment of products to fit their needs and preferences,” said DeBuse.

For example, the Target in the U District will likely feature dorm decorations or other products designed for college life.

She added that Target understands that guests might leave the store on foot or use public transit in urban areas, so those stores would carry smaller quantity packs of paper towels, for instance.

“These stores do really well,” DeBuse told Lens. “They not only offer a really relevant and tailored experience for our guests, it also is a great operation at the same time.”

Both the Ballard and University District Targets will open in 2019 and will have openings for 50 team members each. The Bellevue store will open in 2020 and will employ 125 team members.

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Grocers embrace new tech to stay afloat

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Grocery stores across Washington are stepping up their efforts to modernize and reformat their stores to better highlight what online shopping can never quite satisfy: fresh meats and bread. Also on the horizon are new ways to speed up customer visits and streamline online order pickups.

According to a study by the Food Marketing Institute, online food and beverage spending is on the rise, making up an estimated 20 percent share of online shopping sales. By 2025, 70 percent of U.S. consumers are expected to buy groceries online, totaling $100 billion in sales each year. Amazon is one company which wasted no time capitalizing on this trend, touting an estimated 18 percent of online grocery sales last year according to One Click Retail.

As the online marketplace continues to grow, revamping is also being seen in the retail sector, where large retailers are downsizing to increase customer turnover rates and achieve more sales per square foot.

A Fred Meyer in Fisher’s Landing added new devices for scanning products at the end of last month to help lessen the amount of time customers are waiting in checkout lines. The revamp is being constructed in five of the seven Clark County locations.

“It allows folks to come in and take the helm of their own shopping experience and conveniently scan the items in,” Jeffery Temple, spokesman for Fred Meyer told the Columbian. “We’re continually looking at what our customers want and trying to optimize the experience and give them more choices in how they can shop with us.”

This is part of Fred Meyer’s “Scan, Bag, Go” program which will take effect in 26 of its stores this year. The option will be offered with traditional checkout options, which the company said in its release “helps…create a personalized experience for customers throughout their shopping trip, allowing them to view and download digital coupons, keep a running total of their order, and view the current week’s sales ad.”

Additional improvements for Fred Meyer stores include wider aisles, larger sections for produce, meat and seafood, more self-checkout aisles and bigger cashier stations.

“It streamlines the process to get our customers through faster and so our cashiers can focus on getting the goods rung up,” said Temple.

This is a similar improvement seen in the Amazon Go stores, however customers can pick up their items and be charged as they walk out the door.

Not everyone is excited about the faster checkouts – some worry that it will lead to fewer job openings for cashiers, where tasks that used to require several employees only will require one.

“It’s not necessarily going to take jobs away, it’s going to require different skills from employees,” said Jan Gee, President and CEO of the Washington Food Industry Association (WFIA).

She added that although a grocer might cut some front counter customer service positions, the business would still need people in the back to handle the new technology system.

Gee said that grocers need to embrace new technology, otherwise they will die out. With more and more reliance on online food and beverage ordering options, the grocery sector needs to be quick about implementing new handheld devices or optimized store layouts, she added.

“More and more people are finding the convenience of ordering their cans of beans and toilet tissues online.

“The evolution we are seeing in the industry is there are traditional grocery stores shrinking, but they are expanding offerings in the deli and the bakery. Those are the things people still want to go in and touch, feel, smell and pick out themselves.”

She added that grocers are redesigning the stores to focus where the stores have an advantage over online shopping options.

“Let Amazon have the green beans and the toilet tissues, it’s not the same level of profit in those as there is for your fresh offerings.”

Gee said although grocery stores will not embrace the Amazon Go style check-out option as quickly as convenience stores, grocers will be focusing on convenience in the form of online ordering and pickups at the store, especially in metropolitan settings.

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Giving local farms a boost

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One of the hardest challenges for a small, local farm is spreading awareness of its products and pushing its goods into market. In Woodinville, one nonprofit organization helps bridge the gap that exists between farmers and the restaurants who may be looking for fresh products from the community.

“We are intimately involved with how they grow, who they are and are very committed to telling their story to our customers and the community,” Liesel McWhorter, Farmer and Market Manager for 21 Acres, told Lens.

“We work really hard to let people know that a $5 or $10 purchase every week adds up to a whole lot of impact on a small family farm,” she added.

The organization hosts a number of farmer awareness programs and educational classes and opens up its community kitchen for local producers to make their products. It also buys and sells agricultural products in its year-round farmers market.

Although the property is home to several acres of farmland featuring broccoli, kale, asparagus, tomatoes and squash, the primary focus is on education, not production, according to 21 Acres Farm Manager Andrew Ely.

“The focus and philosophy here is to have the room and capacity to engage groups of people to work on an educational farm to learn from and see how difficult the work is,” Ely told Lens.

“Some of our duty is to teach other people what farming is, but also to promote the other local farmers that are here.”

Some farms that are represented are just minutes away, or even just over the fence, he added.

21 Acres also hosts summer camps where children can go on a walking field trip every week over to local farms to taste fruit.

“Those farmers reported a huge increase of sales from kids saying, ‘Mom and dad, let’s go to the fruit stand after summer camp ends’ and throughout the year.

“The impact of the summer camp and field trip program is unmeasured, but from talking to local farmers about how products move and getting feedback from kids telling parents they want to go here for fruit – that’s a pretty big step in the right direction.”

Shawn Miller is one local farmer who has experienced the benefit of 21 Acres’ outreach programs firsthand. He is co-owner of Tuk Muk Farm, located one minute away from the 21 Acres farm.

Tuk Muk specializes in Asian varieties of vegetables and the business tries to grow crops which are hard to find in local markets, aiming to serve communities who have “trouble finding food from their native country,” according to Miller.

The farm also grows radishes, beets and kale, and produces heritage breed pork and chickens. Miller added that Tuk Muk tries to focus on unique varieties to make itself more marketable to various restaurants looking for specialty products.

“In general, I think that it can be a challenge for a smaller farmer in particular…to get out into the world and represent your farm and local agriculture.”

Miller attributes part of the farm’s success to its close relationship with 21 Acres, which involved having some of the farm’s products featured in the dinners they host, which Miller said was especially helpful when the farm was starting up a few years ago.

Another helpful feature is the farm stand local food hub centered within the 21 Acres complex, which is only a bicycle ride or walk away from Tuk Muk. It gives restaurant staff, food organization members and visitors a weekly updated farmers list to see all the fresh products available from the local farms. A restaurant might piece together an order from several different farms and design a menu around the listings, added Miller.

“The difficulty I think is getting your name out there and getting in touch with people who are used to buying from some of the bigger produce conglomerates around and breaking into those markets and let local restaurants know you have good, healthy things.”

Tuk Muk also works closely with the 21 Acres kitchen staff and they receive feedback on their products. The 21 Acres staff has also helped Miller harvest or weed crops on his farm if he needed an extra hand.

“For us, moving through their market and through the kitchen and the food hub helps sell a lot of food that is later distributed to local restaurants,” he said. “I think they do a really good job connecting local farms through meetings, events and the food hub…to help promote local farms, and it’s a great help to us.”

 

The post Giving local farms a boost appeared first on Lens.

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