CBW maintains a sophisticated political advocacy program, assuring that our unique banking perspective is heard and understood by our State’s policy makers. We advocate independently and aggressively on behalf of our membership, as well as collaborate with other financial entities and industry stakeholders to influence the legislative and political process.
Our President, John Collins and our lobbyist, Brad Tower, work closely with state legislators to actively shape public policy and monitor all governmental activity relating to our industry. During the legislative session, CBW Members receive weekly reports on legislative activity and join in a weekly teleconference with our lobbying team.
THE COST OF DOING NOTHING
By Brad Tower - October 2010
Said Mark Twain, “No one’s life, liberty or property is safe while the Legislature is in session.” In 2010 Washingtonians had to endure 2 special sessions due to a mismatch between the Legislature’s desire to spend and their capacity to do so. According to the latest economic and revenue forecasts, those currently seeking election, should they win, will be faced with a challenge that is at least double the magnitude of the 2010 budget crunch. Unfortunately, at this time the only thing I feel confident in predicting about the 2011 Legislative Session is that it is going to last for a very long time.
This expectation of overtime may or may not carry with it proposals for tax increases. If Initiative 1053 passes (by the time this article will be printed we will have those results in hand), it would take a supermajority vote in both the House and Senate to increase taxes – a threshold that is unlikely to be met. But lest you think the battle over taxes is won before it begins, let’s examine all of the different ways in which the Legislature can give meaning to Mark Twain’s warning.
First, we must consider the distinction between taxes and fees. Both take money from the population for use by the government. In theory, a fee is an amount paid that is directly associated with a product or service that is provided by the government and used only to defray the cost of such product or service. But given that the government has a monopoly on the provision of such services as licensing and examination of financial institutions, combined with the Legislature’s track record of sweeping accounts full of fee revenue into the gaping maw of the General Fund, it is easy to envision a strong push in 2011 to increase the relative portion of funding of government activities onto businesses through fees, even if taxes such as sales, property and B&O remain fixed.
One need not even go to the trouble of sweeping dedicated accounts. Many fees have only a tenuous link to the service provided. Others are for services that aren’t really services, but instead are hindrances to the person paying the fee. It is one thing for a sports team to pay for the services of a referee. It is another thing entirely to be forced to pay the salary for an opposing team.
Also consider that it is not in the Legislature’s nature to sit quietly when the coffers are empty. Legislation that requires business to spend money doesn’t come with the same restraints as legislation that requires the government to spend. Even when Legislators can’t agree that anything should be done, there is no limit to the Legislature’s appetite for additional mandatory reporting by business of everything from carbon emissions to employee demographics. When your workforce is stressed to the max, nothing motivates like requiring status reports every hour until the situation improves.
Still, whether it is paying for a government employee to read the submitted report, or spot-check the information submitted, or enforce a new prescribed business practice, there is a small cost to all of these actions. And we can expect the cost for these new hall monitors to be paid by the regulated parties through the use of fees.
Finally, there is the cost of doing nothing. The greatest example of this is at the federal level, where tax rates are set to increase dramatically on January 1st due to the expiration date on the rates established by the Economic Growth and Tax Relief Reconciliation Act of 2001, the Job Creation and Worker Assistance Act of 2002 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 under President Bush. But even at the state level, in the absence of legislation to improve the situation, Washingtonians face large increases in unemployment insurance rates and worker’s compensation rates (among others) that could snuff out our fledgling economic recovery. Not to mention the constant (and mostly neglected) need for elected officials to reign in state agencies that have grown dramatically under Democratic administrations since 1985.
Community bankers need to use their newfound recognition as the financial backbone of Main Street to inform Legislators, and just as importantly the public, on the challenges being faced by banks AND our customers. It appears that we will have plenty of time to do so while the Legislature is in session in 2011.