When 10,000 rallied at the Capitol on April 8, 2011, several speakers urged opposition to lump-sum buyouts in workers’ compensation — also known as “starve and settle.”

OLYMPIA (June 19, 2013) — The state Department of Labor and Industries announced today that it is transferring $242 million from workers’ compensation reserve funds to cover expenses because the controversial new “structured settlements” program isn’t saving the system as much as advertised.

Jeff Johnson, President of the Washington State Labor Council, said in a statement today that the news comes as no surprise, but is still disappointing.

“Organized labor argued all along that projected savings were wildly off base. Those inaccurate projections from 2011 were the biggest reason legislators legalized the lump-sum buyouts in the first place,” Johnson said. “Now some legislators want to double-down on this failing experiment by expanding the buyouts and they have a new set of ‘projected savings’ that are also grossly inflated.”

He urged to “stop chasing phantom savings down this rabbit hole. It’s harming injured workers and their families.”

Here’s his full statement:

Statement by Jeff Johnson, President
Washington State Labor Council, AFL-CIO
Wednesday, June 19, 2013

The Department of Labor and Industries announcement today that cost savings from structured settlements are less than expected comes as no surprise. Organized labor argued all along that projected savings were wildly off base. Those inaccurate projections from 2011 were the biggest reason legislators legalized the lump-sum buyouts in the first place. Now some legislators want to double-down on this failing experiment by expanding the buyouts and they have a new set of “projected savings” that are also grossly inflated.

The good news is that the workers’ compensation system is in stronger financial shape than it has been in five years. Even after taking out this $242 million, the system’s reserves increased 19 percent to nearly $700 million in the second half of 2012. As has happened for decades, the workers’ comp system and its reserves recover from recessions as the economy recovers. After two years of zero rate increases in 2012 and 2013, and even with today’s announcement, the system is in stronger financial shape and there is no reason to believe a significant rate increase is in store for 2014.

Organized labor and other advocates for injured workers continue to oppose structured settlements. The only way they save money is if injured workers and their families accept less money than they would otherwise receive. The fact that it’s not saving as much money as its supporters promised is evidence that many workers understand these buyouts are not in their best interests. That’s why buyout supporters inserted language in this year’s legislation that explicitly prevents state officials from considering what’s in the “best interests” of injured workers when approving certain buyouts. Such legislation undermines and weakens this important safety net, and ultimately would shift costs to taxpayers in the form of social services for disabled workers whose buyout has run out.

Lawmakers should stop chasing phantom savings down this rabbit hole. It’s harming injured workers and their families.

The letter offers historical context to the Republicans’ effort to legalize and expand lump-sum settlements, which Johnson considers part of their gradual effort to privatize the system. He describes a 15-year “drum beat” from corporate lobbying groups and conservative legislators to undermine workers’ protections in the name of Washington’s business competitiveness.

Here is the letter in its entirety:

June 16, 2013

Dear Governor Inslee, Speaker Chopp, Minority Leader Murray, and Majority Leader Sullivan,

Even though my staff and I have written many thousands of words about our workers’ compensation system over the past decade, I find this somewhat difficult to write, so bear with me. My ask is very simple – I am asking you to take workers’ compensation policy changes off the negotiating table.

After Governor Locke vetoed 43 of 46 anti- labor bills that came to his desk in 1997-1998, as a gesture to the business community, he created a Competitiveness Council comprised of 18 representatives of business and two from labor. The assertions coming out of this group began an all too familiar drum beat: “Business costs are too high. We are uncompetitive.”

Even though objective analyses of the data does not support these assertions and numerous national business indexes have pointed out that Washington State actually has a very good climate for doing business, the drum beat continued to get louder.

Historically Washington State has been recognized for a very strong workers’ compensation system noted for relatively decent benefits and premium rates in the middle to lower third in the country. One reason for this has been that workers pay between 25 and 30% of the total premium.

Over the last 14 years our system has endured two separate $ 200 million premium rebates to employers by Governor Locke, a $ 315 million premium holiday by Governor Gregoire, and the Dot Com bust and the “Great Recession” where the system’s reserves lost over $ 2 billion as a result of the two economic downturns. Nonetheless, rates on average over this time period have been modest.  There have been no premium increases over the past two years. Employer costs rank 22nd in the country, lower than South Carolina and California. And as the economy has improved, so has the contingency reserve fund which now sits just below $ 1 billion.

That our workers’ compensation system could survive both political manipulation and  two economic crashes is a testament to its strength and resiliency.

Nonetheless,  the drum beat continued. In 2011, we in labor and I in particular worked with Governor Gregoire to put together a plan to help reduce long term disability. This plan pulled from ongoing work by expanding the COHEs, creating a statewide medical provider network, and borrowing a “Stay at Work” program that had been successful in Oregon.

But the drum beat got louder. Even Governor Gregoire picked up the sticks. I was told that we needed to find more cost savings in the system. Given the veiled threat of settlement agreements and privatization, we offered up a COLA freeze on benefits and a significant change in the way Permanent Partial Disability Awards were considered in pension cases. All told the estimated savings came in at over $ 800 million. We now know that these savings were closer to $1.3 billion.

The drum beat became deafening. The business community wanted more, the republican’s and “road-kill Democrats” wanted more, labor said no, but the Governor and Democrats gave more. For the first time in the 100-year history of our workers’ compensation system, settlement agreements became legal for workers 55 years of age and older, sliding to 50 years of age and older in 2016.  Labor was told that lots of protections, so-called sideboards, to protect the injured worker were built into the bill, including a “best interest of the worker” standard.

Fast forward to 2013. Bad workers’ compensation policy is back on the table in exchange for the budget. What may not be obvious for all but what is painfully clear to us is that what republicans and the business community ultimately want is to privatize the workers’ compensation system. Having failed with I-1082, having failed with electing Rob McKenna Governor, the next best route is through expanding the settlement agreement process. Why? Because the most severely disabled workers in the state, when placed under tremendous financial distress will, as we have seen from 46 other states, settle for significantly less than they would otherwise receive. This is how corporations and insurance companies can squeeze a profit out of the workers’ compensation system. But to make it work you need a large enough pool of desperate workers who make the wrong choice.

I am troubled by what I hear about workers’ compensation offers continuing to be exchanged at the end of last week. My understanding is that the Majority Republican Coalition Caucus rejected an offer which would have expedited the slide to 50 and takes down a major sideboard of the 2011 legislation.

Some have argued that expediting the drop to age 50 is not a big deal since we were going there anyway. That is equivalent to arguing that a revenue source set to expire in 2016 might as well be taken away now. This would hardly be a good deal for the people of Washington State. In the one case you forgo three years of needed revenue and the other you put younger workers in jeopardy three years sooner than called for under current law.

For those that want to argue that the Zimmerman case will be lost in the courts, we only need to remember that the odds were not in favor of the ACA passing the U.S. Supreme Court last year. Let’s let the judicial branch of our government do its job. Should they strike down the “best interest” for represented workers language we can always come back and introduce a bill explicitly mandating that the “best interest” standard be used for all injured workers.

The workers’ compensation system is financially stronger than it has been in five years. Expanding or expediting settlement agreements won’t have any appreciable effect on premium rates. But it will take us one step closer to privatizing the workers’ compensation system; one step closer to the goal of those who would turn our workers’ compensation system into a profit center. For this reason alone workers’ compensation policy ought to be taken off the table.

But there is another reason to take workers’ compensation policy off the table. The struggle going on for the last 140 days has been a war over leadership and values. The Republican Majority Caucus expects that, just like in 2011, they can wring major concessions from the Governor and the House. They have used workers’ compensation, along with other policy bills, to hold the operating budget hostage. If you let them win on this it will set the tone for negotiations over the next three years. Democrats have been right on the revenue message, on the operating budget priorities, on a robust capital budget, and on the transportation financing and investment package. You have the best message that the public is not hearing.

Last Tuesday Governor Inslee struck the right tone and message when he declared that it was too late for “ideological policy bills.” This struck a chord with the Democratic base, including labor, who have watched the party make concessions on everything from workers’ compensation to all-cuts budgets. It is also a message that will resonate with the general public if they get to hear it and if you stick to the message. Walking back on that message will just create more discouragement. The opportunity still exists to express the values embedded in all three budgets and to put the blame where it rightfully belongs.

With regard to workers’ compensation the message would be something like the following. In 2011 we approved major reforms to our workers’ compensation system that haven’t been fully implemented yet but that have so far saved $1.5 billion and have helped to avoid rate increases over the past two years. Meanwhile, as the economy recovers, the system is now running a surplus and reserves are quickly being restored to safer levels. The responsible course is to allow those 2011 changes to fully take effect and then to assess their impact on injured workers and their families and on employers’ costs. It would be irresponsible to rush through more contentious cost- cutting legislation under the duress of a potential shutdown of state government. While there is no imminent threat to our workers’ compensation system there is an imminent threat to our education system and other state services our citizens rely on.

The war over leadership and the direction of our state will be won by consistently fighting for democratic values and not trading bad policy for budget items.

I respectfully ask you once again to take workers’ compensation and other policy bills that adversely impact workers off the table.

Sincerely,

Jeffrey Johnson, President
Washington State Labor Council, AFL-CIO

ALSO at The Stand:

Why workers’ comp? What’s the emergency? (June 14)

GOP’s workers’ compensation “reform” bad for injured workers, Washington State (by Sen. Steve Conway, June 14)

Labor, community groups, injured workers advocates urge Legislature to oppose workers’ comp bill (June 13)

Phantom workers’ comp rate hikes threaten government shutdown (June 10)

Workers’ compensation system posts strong gains (May 6)

(See Sen. Steve Conway’s column posted today at The Stand for an explanation of SB 5127 opposition.)

As the clock ticks on the Legislature’s second overtime session and the Governor’s staff prepares for a potential state shutdown, the Washington State Labor Council, AFL-CIO, is urging state legislators to ask themselves: “Why workers’ comp?”

This flier, which is being distributed to all Washington state legislators, explains that the financial condition of the state workers’ compensation system has improved with the economy. Lawmakers who warn of looming “tax increases” on employers have bad, outdated information. In fact, there is no reason to believe workers’ comp rates will go up in 2014, just as they didn’t go up in 2013 or 2012. So why is the contentious SB 5127 so urgent that it’s worth threatening education funding and a state government shutdown?

Here is the text of the flier, with links to the sources:

 The Washington State Labor Council, AFL-CIO,
urges all state legislators to ask themselves…

WHY WORKERS’ COMP?

Why are Republicans in Washington’s State Legislature so adamant about workers’ compensation “reforms” that they are willing to risk $160 million in education funding and perhaps even shut down the state government?

Because they’ve got bad information.

If it was true that “without this bill, there would be a $2.2 billion tax increase on employers over the next 10 years,” as Sen. Janéa Holmquist Newbry (R-Moses Lake) continues to say, one might understand and perhaps even share their desperation. But it isn’t true. That statement is based on a fantasy scenario from a year ago — which was based on numbers from a year before that — that assumed no economic recovery.

The truth is, as the economy has recovered, so has the workers’ compensation system.

In December 2010, the State Auditor warned that our workers’ comp system was in dire financial shape. Recessions hit the system hard because it relies on investment earnings to subsidize costs, just like private insurers do. In order to mitigate rate increases after the Great Recession, reserves were drawn precariously low. That’s why the Legislature approved workers’ compensation changes in 2011.

(Click to enlarge.)

That’s also why the Workers’ Comp Advisory Committee asked Labor & Industries (L&I) to present scenarios on how to rebuild reserves. The worst-case of L&I’s scenarios presented in June 2012 envisioned 19% rate increases for 10 straight years to fill a $3.1 billion gap. Republicans immediately vowed more “reforms” to cut costs and avoid this “mother of all tax increases.”

But just months later,  the state announced there would be no rate increase in 2013, just like there hadn’t been in 2012. Why? Because that worst-case scenario, which assumed no economic recovery while still building reserves so high they couldn’t possibly run out, was never realistic and L&I said all along it was not their goal.

Now, the system is running a surplus and reserves are up 64% — with no rate increases.

Since February 2013, when the State Senate first passed its “reform” legislation, L&I has reported that in the second half of 2012, the system had a net operations surplus of $250 million and boosted its reserves by 64% to nearly $1 billion. At the end of 2012, reserves were already very close to L&I’s actual bottom target range of 8.7% of system liabilities. No rate increases. No 10 years. Just an improving economy.

The only “emergency” here is the threat to our schools and our state government.

ALSO at The Stand, see:

GOP’s workers’ compensation “reform” bad for injured workers, Washington State (by Sen. Steve Conway, June 14)

Labor, community groups, injured workers advocates urge Legislature to oppose workers’ comp bill (June 13)

Phantom workers’ comp rate hikes threaten government shutdown (June 10)

Workers’ compensation system posts strong gains (May 6)

ORGANIZATIONAL SIGN-ON LETTER – OPPOSE SB 5127

We, the undersigned organizations, oppose the passage of SB 5127 or any inclusion of this bill in the operating budget because it is an attack on our state’s injured worker safety net, and it is not necessary to implement the budget.

SB 5127 presents a false choice for our state’s most disabled workers who have been injured on the job or fallen prey to an occupational disease. Disabled workers facing huge uncertainty and financial distress under SB 5127 would be offered settlement agreements that might seem beneficial in the short run, but in the long run would not allow them to sustain themselves and could lead to higher costs for the state when these settlements run out. It is time to say “No” to injured workers being forced to accept pennies on the dollar, sacrificing benefits that they would otherwise be entitled to under law.

The bill sponsors say that we need to pass this bill because rates are high in Washington State, and so that corporations won’t have to pay higher premiums in the future. But the truth is that workers’ compensation premiums are experience-rated. The safer a work place, the lower the premiums. Employers can control their rates by having a safe work environment. Further, since the beginning of 2012, the workers’ comp system has had no rate increases. Twenty-one states, including South Carolina and California, two states that Boeing is shifting jobs into, actually have higher workers’ compensation premiums than Washington State.

Washington State is continually cited (see here, here, here and here) as a competitive, attractive place to do business.  Labor and Industries presented good news on April 30 when it was revealed that the system’s Contingency Reserve funds increased 64 percent from $580 million in June 2012 to $953 million at the end of 2012. That number is significantly higher than Labor and Industries’ previous projection.

We urge you to oppose SB 5127 and work to pass an operating budget with new revenue to take care of our state’s education and human service needs, a capital budget to build necessary infrastructure and to put thousands of people back to work, and a robust transportation financing package to maintain and preserve our roads and bridges, invest in key economic corridors, and enhance mass transit and a healthy environment.

The Washington state organizations and citizens listed below urge you to please oppose SB 5127.

• AARP Washington
• Aerospace Machinists 751
• American Federation of Teachers, Washington
• Association of Western Pulp and Paper Workers
• Boilermakers Locals 242, 502
• Bricklayers Locals 1/OR, 1/WA, 3
• Carpet Layers Local 1238
• Cement Masons Locals 72, 478, 528, 555
• Certified Electrical Workers of WA
• Corey Hubert, citizen
• Dave Brueher, citizen
• Economic Opportunity Institute
• ElderCare Alliance
• Elevator Constructors Local 19
• Faith Action Network
• Glaziers Local 188
• Heat & Frost Insulators Locals 7, 82
• IBEW 77
• IBEW Locals 46, 48, 73, 76, 112, 191
• Iron Workers Locals 14, 29, 86
• IUPAT Locals 10, 300, 364, 427, 1964
• Jack Smith, citizen
• James B Hart, citizen
• Jason Redrup, citizen
• Kay Haaland, citizen
• Laborers Locals 238, 242, 252, 276, 292, 335, 348, 791, 901
• Marla Katz, citizen
• Mental Health Action
• National Association of Social Workers – WA Chapter
• National Organization for Women, Washington State Chapter
• Operating Engineers Local 302
• Operating Engineers Local 370
• Parents Organizing for Economic and Welfare Rights (POWER)
• Professional and Technical Employees Local 17
• Puget Sound Advocates for Retirement Action
• Rep. Seth Armstrong (retired)
• Roofers Locals 54, 153
• SEIU Healthcare 1199 NW
• SEIU Healthcare 775NW
• SEIU Local 925
• Sheet Metal Locals 16, 55, 66
• Sign Painters Local 1094
• Sprinkler Fitters Locals 669, 699
• Statewide Poverty Action Network
• Street Pavers Local 440
• Teamsters Joint Council #28
• Teamsters Local 117
• Teamsters Local 174
• UA Locals 26, 32, 44, 290, 598
• UFCW 1439
• UFCW 21
• UFCW 365 (WPEA)
• UFCW 367
• UFCW Washington United Council
• United Faculty of Washington State
• Washington Federation of State Employees, AFSCME Council 28
• Washington State Association of Letter Carriers
• Washington State Association of Plumbers and Pipefitters
• Washington State Building & Construction Trades Council, AFL-CIO
• Washington State Council of County and City Employees
• Washington State Council of Firefighters
• Washington State Labor Council, AFL-CIO
• Washington State Nurses Association
• Washington State Senior Citizens’ Lobby
• Worker Center, AFL-CIO

“The budget and funding education is our priority and our paramount duty, and that’s where our focus needs to be,” Inslee said at today’s news conference. “The Senate majority is trying to leverage our obligation to Washington’s schoolchildren in order to pass its ideological agenda.”

That’s why the House and the Democratic Party took (policy bills) off the table. I believe nothing should get in the way of meeting our constitutional and moral duty to fund education for our children. But on policy, the Senate went to the edges, not to the middle. They said they wouldn’t fund education unless an unrelated set of policy bills was passed first. This should be a debate about education funding, not workers’ compensation, not tax breaks for millionaires, not anti-teacher bills, and certainly not anything like payday lending.

(See the entire press conference below.)

TAKE A STAND! — Click here to send a message to your state legislators urging them to reject all policy bills, avoid a government shutdown and pass the operating, capital and transportation budgets!

Inslee said he is convening his top staff to make contingency plans for an unprecedented July 1 shutdown of state government if legislators refuse to pass a budget. But he said he remains optimistic that can be avoided by all parties staying focused on their paramount duty, setting aside their agendas not related to the budget, and making compromises.

“I won’t give up,” the governor said. “I’m committed to finding a solution that’s fair to all parties and meets our obligation to Washington’s schoolchildren. My vision will not be clouded by ideology. I take my responsibility to govern seriously and I’m going to work diligently to prevent us from getting to July 1 without a budget.”

1)  Click here to send that message to your legislators, AND

2)  Call the Legislative Hotline at 1-800-562-6000 and leave that message for your legislators, AND

3)  Share this message and/or this link — http://tinyurl.com/mdwl8hf — with your fellow union members, your family and your friends around Washington State via email, Facebook, Twitter or whatever means you choose, so they can contact their legislators, too.

So far, legislators in the House have stood strong against the Senate’s efforts to hold the budgets hostage unless they first get contentious policy bills that would harm working families. Lawmakers in both houses need to hear from their constituents that the game of chicken has gone on long enough. Our state can’t risk a costly Washington, D.C.-style government shutdown over political gamesmanship. The time for passing policy bills is long over. The Senate needs to stop holding budget negotiations hostage to unrelated policy bills, and seriously negotiate and approve the budgets necessary to avoid a government shutdown.

For more information, read WSLC President Jeff Johnson’s column, Senate brings toxic destructive, D.C.-style mentality to state. For information about one of the anti-labor policy bills the Senate is trying to force through, see Phantom workers’ comp tax hikes threaten state government shutdown.

OLYMPIA (June 10, 2013) — Over the weekend, Republicans in the State Senate made clear that they are willing to force a second special session and they are not willing to compromise on the state budget, unless the House approves “reforms” that include expanding the lump-sum buyouts in workers’ compensation. They also stepped up their rhetoric on that front, claiming that unless they get their way, there will be a “guaranteed” tax increases on businesses.

Given the facts about the workers’ compensation system’s quickly improving financial condition and the effectiveness of 2011 legislative changes — at least those supported by both business and labor — in reining in costs, the guarantee of tax increases is difficult to defend.

A week ago, Gov. Jay Inslee called on lawmakers to work harder to compromise and finish their work before the first special session ends tomorrow (Tuesday, June 11). The House immediately responded by introducing and passing a new biennial operating budget proposal, on a 53-35 vote, that compromised with the Senate by more than splitting the $1.2 billion difference between the two bodies’ previously approved budgets. But rather than declare victory, Senate leaders rejected the compromise and passed an all-cuts budget Saturday that is nearly identical to its original one. It was a strictly partisan 25-23 vote with all 23 Republicans and Sens. Rodney Tom and Tim Sheldon, who have left the Democratic caucus to accept leadership roles in the Republican caucus, voting “yes” and all 23 Democrats voting “no.”

Meanwhile, Senate Republicans also demanded five contentious policy bills, including one that cuts injured workers’ benefits, before they would agree to resolve budget differences. Sen. Janéa Holmquist Newbry (R-Moses Lake) claimed that, without further “reforms,” the state’s workers’ comp reserve funds won’t have enough money to avoid hundreds of millions of dollars in premium-rate hikes on businesses as the system rebuilds its reserves after the Great Recession.

“If we see inaction by the Legislature this year, it is a guaranteed tax on employers,” Holmquist Newbry told The Olympian. It was clearly an attempt to create a sense of urgency that would justify the Senate’s stance on holding the budget hostage, a stance now likely to force the second special session.

But by any objective measure, the workers’ compensation system’s financial situation is far from urgent and simply does not support the dire warnings of tax increases, much less a continuing political standoff that threatens a Washington, D.C.-style government shutdown in Washington State.

Here are the facts:

As the economy has recovered, the workers’ comp system is now running a surplus — Washington’s state-run industrial insurance system had a net operations income — a surplus — of $250 million in the second half of 2012, the Department of Labor and Industries (L&I) just reported. The state credits higher investment income and cost savings resulting from the continuing implementation of 2011 legislative changes for the strong financial performance.

Workers’ comp reserve funds have already increased dramatically — Since the Senate first passed its workers’ comp “reform” legislation this session in February, lawmakers have learned that the system’s Contingency Reserve funds increased 64% from $580 million in June 2012 to $953 million at the end of 2012. That strong performance, announced at the April 30 quarterly Workers’ Compensation Advisory Committee (WCAC) meeting received no press coverage, other than right here at The Stand.

Cost savings from 2011 workers’ comp changes have exceeded projections — Senate Republican leaders claim expanding the most controversial of the 2011 changes, the labor-opposed lump-sum buyouts, is needed because fewer injured workers than originally projected have accepted the buyouts that would save the system money. It’s true that fewer workers are taking the buyouts than supporters had hoped. But taken in their entirety, the 2011 Legislature’s changes to the system, those supported by both business and labor, have saved more money than originally projected. When L&I announced last year that rates would not increase in 2013, the agency credited those cost savings, which it projected will save $1.5 billion over four years, and that’s $300 million higher than originally estimated.

There is no reason to believe — and certainly no “guarantee” — that workers’ comp rates will increase in 2014. There was no increase in either 2012 or 2013, when the system was in far worse financial shape than it is today. As the economy has recovered, the reserves are quickly rebuilding without additional cost-cutting measures.

“These latest numbers are good news for our workers’ compensation system and they strengthen the case for allowing the 2011 changes to be fully implemented before rushing through more legislation that put injured workers and their families at risk,” said WSLC President Jeff Johnson. “Although we’d like to see those reserve funds even higher, the latest numbers have decreased the pressure to raise rates for employers and workers.”

When Senate Republicans claim that tax increases of hundreds of millions of dollars will be needed to rebuild reserves, they are referring to old numbers presented a year ago by L&I based on 2011 financial figures, when business and labor stakeholders asked the agency to present possible scenarios for rebuilding reserves. The “worst-case” of those scenarios, one that assumed virtually no economic recovery but aimed to build reserves to a level so high they couldn’t possibly run out, envisioned 19% rate increases for 10 consecutive years in order to raise $3.1 billion. Although L&I publicly assured that this $3.1 billion figure was not the agency’s goal, the scenario sent business lobbyists into a tizzy, predicting the “mother of all rate increases” in 2013 and that the system’s “long term financial problems” would be a major issue in the Inslee-McKenna gubernatorial race that fall.

That panic turned out to be overblown when L&I announced a few months later that, for the second straight year, there would be no average rate increase at all in 2013.

After the April 30 WCAC report, business lobbyists dismissed the significance of the system’s quickly improving financial condition. In order to justify continued pursuit of benefit cuts in the 2013 legislative session, they simply subtracted the hundreds of millions of dollars in newly announced surplus funds and built-up reserves from that year-old $3.1 billion worst-case scenario that was never the agency’s goal in the first place. And now, Republicans in the Senate are publicly “guaranteeing” tax increases on employers to reach that target, if they don’t get their way on more benefit cuts.

The bottom line: There is no guaranteed tax on employers. In fact, in a few months when L&I announces how much more reserves have continued to build in the first half of 2013, employers could even wind up demanding a rate decrease.

None if the above is intended to explain labor’s opposition to Senate Republicans’ workers’ compensation legislation. Advocates for injured workers oppose it because financial desperation — families who’ve lost their income are likely to be facing sudden, extreme hardship — can lead people into agreeing to lump-sum payments that aren’t in their best interests, or the state government’s. Expanding lump-sum buyouts, particularly for younger workers who can’t anticipate their long-term expenses, will simply shift the cost of debilitating work injuries from businesses to the state government.

See this guest column that recently appeared in The (Everett) Herald, Lump-sum not in interest of injured workers, for a good explanation.

TAKE A STAND – Enough is enough! Click here to send your legislators a message that it’s time to set aside contentious policy bills that didn’t have enough support to pass during the regular session. It’s time to pass the three budgets needed maintain our public and transportation infrastructure. Don’t hold these budgets hostage for contentious policy bills and force yet another special session!

During the regular session, the House and Senate approved 2013-15 biennial budget plans that were roughly $1.2 billion apart in spending. The new House budget proposal is a $790 million reduction from its earlier version and includes no new taxes, according its authors. In fact, as sought by Senate Republicans, it allows businesses taxes to drop for service-sector employers and breweries. And yet, it adds a minimum of $704 million to the state’s K-12 schools and $93 million for higher education. It also closes the estate-tax loophole opened up by a recent Supreme Court decision that will otherwise cost the education system about $160 million.

House and Senate Democrats unveil a their compromise budget proposal on June 5.

“We’ve been meeting every day and working hard, in good faith,” said House Majority Leader Pat Sullivan (D-Covington). “To finish our work and avoid a Washington D.C.-style shutdown of state government, it’s time to start voting. This proposal is a significant compromise.”

“The House has responded dramatically in trying to move toward the Senate’s position,” said Sen. Jim Hargrove (D-Hoquiam), the ranking member of the Senate Ways and Means Committee.

Washington State Labor Council President Jeff Johnson had this to say about the new House proposal:

I want to compliment the House Democrats for finding another creative solution for funding a responsible operating budget that invests in our children and protects the most vulnerable amongst us. I know that this compromise was not and is not easy for many members. And while we would have preferred that the Public Works Trust Fund had not been swept into the operating budget, at least the sweep is temporary and not permanent. Our hope is that the Majority Coalition Caucus in the Senate will recognize this movement towards their position and will muster the will to pass a significant Capital Budget and the Transportation Funding package. With great infrastructure needs, historically low interest rates and high unemployment it is the perfect time to invest in our state’s economy and put tens of thousands of people back to work. It is time to put controversial policy bills down, and pass three responsible budgets with bipartisan support.

Sen. Rodney Tom of Medina

But while Democratic leaders from both houses were focusing on budget agreements that would allow legislators to end the session, leaders in the Republican-controlled Senate were responding to Gov. Inslee’s call for action by repeating that they won’t agree to a budget unless they get some of the 33 policy bills they are demanding.

“We need to make some fundamental changes,” said Senate Majority Leader Rodney Tom of Medina at a news conference, specifically mentioning a controversial workers’ compensation bill that would expand lump-sum buyouts of injured workers. “There are a lot of those things that we need to do, that (the House) seems reluctant to do, if we’re going to move forward… with budget negotiations.”

Senate Republican leaders are also attempting to leverage a new estate tax break that will benefit a few hundred of Washington’s richest families.

Labor unions from across Washington wrote state lawmakers this week urging swift action on the operating, capital and transportation budgets, and for them to set aside the Senate’s list of 33 contentious policy bills left over from the regular session. None of these controversial bills were included in the new House-proposed compromise budget. Among the bills said to be on that list are:

ESSB 5127: Structured Settlements/Workers’ Comp — Further erodes the workers’ comp system by reducing the age restriction on settlements, and removing the ability for the board to look out for the best interest for workers with attorneys. Learn more.

SSB 5851 and 5856: Defined Contribution Plan — Creates a 401(k)-type savings plan to replace the defined benefit pensions for new state employees. The Senate hopes putting more financial risk on workers will save the government money. Learn more.

ESB 5726: Prohibiting/Restricting on Local Paid Sick and Safe Leave — Puts restrictions on the right of local jurisdictions to implement family and medical leave insurance. Learn more.

SSB 5905: Part-Time State Employee Health Benefits — Eliminates health care for part-time public employees without a guarantee for alternative coverage options. Learn more.

See the letter co-signed from Washington State Labor Council President Jeff Johnson and dozens of labor organizations throughout the state for a list of other bills unrelated to the budget that the Senate is demanding action on before allowing a budget to pass.

TAKE A STAND — Click here to contact your legislators telling them NOT to hold budgets hostage for contentious policy bills and force yet another taxpayer-funded special session!

An Open Letter to the Washington State Legislature

Re: Raise Revenue and Protect Workers and Families

Well into the Special Legislative Session it is clear to us that it is time to sweep aside policy bills that have become an obstacle to ending the Special Session and passing responsible budgets. Washingtonians need an operating budget with sufficient revenue to make a real down payment on education funding, a capital budget that will help our state’s infrastructure needs and create thousands of needed family wage jobs, and a transportation revenue package that will invest in maintaining and preserving our existing transportation system and invest in critical economic corridors to make us competitive in the 21st century.

Over a week ago, leaders in the Republican-controlled Senate demanded that 33 policy bills be considered as part of the budget negotiating process. If the Legislature only has to complete three budget-related items this Special Session, why is the Republican-controlled Senate demanding 33 policy bills be considered part of the negotiation process? These bills have become a distraction from reaching agreements on the operating and capital budgets and a revenue package for financing transportation. This is wrong, and a waste of taxpayer money.

Not only is the process of dumping 33 policy bills into the budget process a distraction, but the bills themselves would hurt Washington workers, families, seniors and our education system. The time to argue over these bills is during the 2014 legislative session, not as part of 2013 Special Session.

Please reject the following bills that harm middle class workers and families:

ESSB 5127: Structured Settlements/Workers’ Comp — Further erodes the workers’ comp system by reducing the age restriction on settlements, and removing the ability for the board to look out for the best interest for workers with attorneys.

SSB 5851: Defined Contribution Plan — Creates a 401(k)-type savings plan to replace the defined benefit pensions for new state employees. The Senate hopes putting more financial risk on workers will save the government money.

SB 5856: Defined Contribution Plan — Creates a 401(k)-type savings plan to replace the defined benefit pensions for state employees. Again, another bill to make government more “efficient” by betting on the pensions of state employees.

ESSB 5811: Employee Wellness Programs — Restricts state employee collective bargaining rights over health care issues so the state can impose employee “wellness” programs.

SB 5159: Repeals Family and Medical Leave Insurance Act — Seeks to repeal the Family and Medical Leave Insurance Act of 2007.

ESB 5726: Geographical Restrictions on Local Paid Sick and Safe Leave — Puts restrictions on the right of local jurisdictions to implement family and medical leave insurance.

ESB 5728: Local Paid Sick and Safe Leave — Prohibits enactment of local laws and ordinances that require or regulate paid sick leave or paid safe leave in excess of standards adopted by the state.

SB 5903: Family and Medical Leave Insurance — Sets up a task force to recommend funding and repealing the Family and Medical Leave Insurance Act if not funded by 2015.

SSB 5905: Part-Time State Employee Health Benefits — Eliminates health care for part-time public employees without a guarantee for alternative coverage options.

ESSB 5328: Grading and Labeling Schools — This would grade schools and result in labeling schools as “failing” to push a charter agenda.

SB 5898:  Education Funding — Cuts local levy and levy equalization funding before the state fully meets its obligation to fund basic education.

SB 5883/5936/5937 – Tuition Rates and Higher Education Appropriations — Reduces tuition and caps state appropriations for higher education at historically low levels.

SB 5893: International Students — Imposes an unfair tuition surcharge on international students.

SB 5901: Education Reforms — Freezes the ability to bargain at a local level and mandates merit pay.

SB 5916: Attack on Pensions — The bill goes way beyond trying to fix “pension spiking” by attacking legitimate use of overtime, especially at state institutions and in public safety in all pension plans.

SSB 5242: Mutual Consent/Certified Instructional Staff — Eliminates collective bargaining concerning transfer procedures for teachers.

ESSB 5312: Payday Lending — Undermines the protections gained in the 2009 Payday Lending Reform Act by reclassifying payday lending as ‘installment loans’ and allows lenders to offer loans with interest rates up to 218% APR.

E2SSB 5688: State and Local Tax Systems — Takes the first steps to make some significant changes to the B&O taxing structure, including the elimination of B&O without sufficient thought to how state services will be funded.

ESSB 5895: Arbitrary Spending Limit — Imposes an arbitrary cap on spending for health and human services, and would force cuts to important services, including programs for children, families, seniors and people with disabilities.

We urge members of the House and Senate to oppose these detrimental bills that impose harmful cuts and unnecessary, irresponsible changes that harm middle class workers and families. Instead, we ask members to focus on the purpose of this Special Session – passing budgets that increase funding to protect the safety net for workers and families, and help secure the middle class by protecting working families and investing in jobs.

We the undersigned organizations stand united in our request to members of the Legislature to focus on the budgets that matter most to Washington citizens, not 33 bills that hurt workers, families and the most vulnerable in Washington State.

Sincerely,
Jeffrey G. Johnson, President
Washington State Labor Council, AFL-CIO

 Open Letter Signatories:

American Federation of Teachers/Washington

Association of Western Pulp and Paper Workers Union

Certified Electrical Workers of Washington

International Brotherhood of Electrical Workers Local 77

International Union of Painters and Allied Trades, District Council 5

Martin Luther King, Jr. County Labor Council, AFL-CIO

Professional and Technical Employees Local 17

Service Employees International Union Healthcare Local 775NW

Service Employees International Union Local 925

Service Employees International Union Local 1199NW

Teamsters Joint Council 28

Teamsters Local 117

United Auto Workers Local 4121

United Faculty of Washington State

United Food and Commercial Workers Union Local 21

United Transportation Union Washington State Legislative Board

Washington State Association of the United Association of the Plumbing and Pipefitting Industry of the United States and Canada

Washington State Building and Construction Trades Council, AFL-CIO and on behalf of:

Boilermakers Locals 242, 502

Bricklayers Locals 1/OR, 1/WA, 3

Carpet Layers Local 1238

Cement Masons Locals 72, 478, 528, 555

Elevator Constructors Local 19

Glaziers Local 188

Heat & Frost Insulators Locals 7, 82

IBEW Locals 46, 48, 73, 76, 112, 191

Iron Workers Locals 14, 29, 86

IUPAT Locals 10, 300, 364, 427, 1964

Laborers Locals 238, 242, 252, 276, 292, 335, 348, 791, 901

Operating Engineers Local 302

Operating Engineers Local 370

UA Locals 26, 32, 44, 290, 598

Roofers Locals 54, 153

Sheet Metal Locals 16, 55, 66

Sign Painters Local 1094

Sprinkler Fitters Locals 669, 699

Street Pavers Local 440

Teamsters Local 174

Washington State Council of County and City Employees

Washington State Council of Fire Fighters

Washington Education Association

Washington State Labor Council, AFL-CIO

Washington State Nurses Association

OLYMPIA (May 31, 2013) — The government faces an imminent deadline to approve legislation that isn’t particularly controversial, but one political party has seized that deadline as leverage to try to force a controversial change in public policy that otherwise wouldn’t stand a chance of passage. It’s a political Game of Chicken that could have dire consequences for a basic function of government that all taxpayers rely upon.

You’d be forgiven if this sounds like more of the Congressional hijinks that has made that body less popular than cockroaches. But as it turns out, it’s happening — again — right here in Washington State.

Last year, because of what all agree was a technical glitch in the law, a State Supreme Court ruling known as the Bracken decision said the state was improperly collecting the state’s voter-approved estate tax from married households. The Legislature has just days left, hours really, to correct this loophole that could cost some $160 million in revenue dedicated to education over the next two years. At a time when another Supreme Court ruling is forcing legislators to significantly increase school funding, you’d think this legislative fix would have been accomplished by now in a bipartisan fashion.

You’d be wrong.

Although both the Democrat-controlled House and the Republican-controlled Senate have bills before them that would correct the problem and apply the tax properly, the Senate is also trying to use the deadline — when refund checks will be sent to a few hundred of Washington’s wealthiest households — to force a tax cut for the richest 1% of Washingtonians.

As the Washington State Budget and Policy Center reports, the House is advancing HB 2064, which would clarify existing law and close the loophole for wealthy couples in a way that will protect future funding of public schools. The Senate version, however, would also make estates worth up to $5 million exempt from the tax, a significant increase over the current $2 million threshold for paying the tax. SB 5939 would slash estate tax rates across the board by 25% by 2022.

Only the wealthiest families in the state would see any type of benefit under the Senate’s approach. Annually, a little over 300 households face Washington state’s estate tax. In 2010, out of the nearly 50,000 Washingtonians who passed away in 2010, only .6 percent owed any estate tax at all.

The Budget and Policy Center sums the situation up succinctly:

Washington state is under court order  to invest significant resources in fully funding education over the next few years. Proposing tax cuts for our state’s wealthiest households to the detriment of students moves us further away from meeting that obligation.

In yesterday’s editorial, “Cheapening the Estate Tax,” The (Everett) Herald echoes that sentiment:

Mending the glitch is not punitive, and it’s not new revenue. The Senate majority quickly seized on a time-sensitive dilemma to monkey an easing of the estate tax. It’s a backdoor way to make life easier for approximately 300 wealthy Washington residents. Washington needs to bolster K-12, higher-ed and a crumbling transportation system. A tax windfall for the well-to-do shouldn’t be on the agenda.

Are we still pretending that the Republican-controlled Senate, itself created by the most cynical and self-serving of political machinations, is the kind of bipartisanship that “people are crying out for?”