“Levy swap” proposals surface

The Seattle Times has a story about three legislative proposals to reduce reliance on local school property tax levies that emerged on Wednesday:

State lawmakers Wednesday put forth three competing proposals to address part of a court mandate for K-12 education that would reduce schools’ reliance on local tax levies.

The three tax-levy proposals introduced Wednesday … differ, ranging from a new capital-gains tax, to a levy swap between local and state property taxes, and a plan to do more research and determine a way forward next year.

Introduced by Sen. Bruce Dammeier, R-Puyallup, the GOP plan would use a state task force’s recommendations on teacher compensation to set salary levels. It would lower local property-tax levies going to schools while raising the state’s property-tax share devoted to schools by the same dollar amount.

Democratic senators proposed a version of a tax on capital gains that would raise $1.7 billion through 2019 for K-12 basic education. That money would go toward a plan sponsored by Sen. Christine Rolfes, D-Bainbridge Island, to increase teacher compensation — which, like the GOP proposal, comes from task-force recommendations. Those proposals combined would allow for a plan sponsored by Sen. Jim Hargrove, D-Hoquiam, to lower local property-tax levies for most districts.

A third proposal came Wednesday from House Democrats in the form of House Bill 2239, which would create a council to recommend to lawmakers how to implement teacher compensation and funding reforms. The council would issue a report to lawmakers and the governor by Dec. 1, studying how the state’s 295 school districts now use local bargaining agreements and levies to fund teachers.

The proposal, from Rep. Ross Hunter, D-Medina, sets 2016 and 2017 deadlines for lawmakers to implement changes to the levy system and teacher compensation.

On his blog, Rep. Hunter describes how a property tax levy swap might work.

 

February 11–March 10 state revenue collections were $16.7 million greater than forecast

This afternoon the Economic and Revenue Forecast Council issued its monthly Economic and Revenue Update. Here are the key bullets on revenue from the summary:

  • Major General Fund-State revenue collections for the February 11 – March 10, 2015 collection period were $16.7 million (1.6%) higher than the February forecast.
  • Revenue Act collections came in $21.6 million (2.3%) less than forecasted while non-Revenue Act collections came in $38.3 million (38.9%) higher than forecasted.
  • The forecast included a $13.3 million audit payment that did not occur during the collection period but is still expected to occur. Had the payment occurred as expected, collections would have been $30.0 million (2.8%) higher than forecasted.

Here is a chart snipped from the Update showing monthly seasonally-adjusted Revenue Act collections since 2004.

Revenue-Act-Receipts March 15This is the first collections report since the revenue forecast was revised in February.

In the update, it was reported that migration into the state set an all-time high during the March 2014 – February 2015 period, at least as measured by the number of out-of-state licenses turned in by people applying for Washington drivers licenses at the Department of Licensing. During the last 12 months 180,700 out-of-state licenses were turned in to DOL. Here is a chart showing licenses surrendered to DOL since 1983.

Drivers Licenses March 15 This is a clear sign that the economy is returning to normal.

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January employment report shows state gained 18,300 jobs from December to January

The state Employment Security Department issued its employment report for January this morning. There was a lot of good news in this report.

The preliminary estimate is that seasonally adjusted employment in Washington increased by 18,300 from December to January. The estimate of November to December job growth was revised up to a gain 8,900, from the preliminary gain of 7,600 jobs announced in last month’s report. The estimate of October to November job growth was revised up to a gain 8,400 from the previously estimated gain of 5,800 jobs. On top of this, benchmarking to unemployment insurance tax records added 10,000 to the estimate of the September level of employment.

The preliminary estimate of January’s seasonally adjusted unemployment rate for the state is 6.4 percent. The estimate of November’s unemployment rate is unchanged from the initial figure of 6.3 percent.

The January employment report is available here.

The February employment report is scheduled to be released next Wednesday (March 18).

 

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The impacts of a bad reputation

U.S. Labor Secretary Tom Perez talked recently about how a good reputation can trump a good location when it comes to trade. Washington’s ports had enjoyed an advantage due to their location as a good access point to and from Asia, but the result of the West Coast ports work slowdown may be that that they are seen as unreliable.

Indeed, the Puget Sound Business Journal writes that

The biggest East Coast ports had 10.2 percent more growth than the biggest West Coast ports in the fourth quarter of 2014, compared to a 1.6 percent difference from the year before. . . .

Some of that diverted cargo will never come back.

“With each labor event, some diverted cargo has not returned, and this seems to be the case for some West Coast ports coming out of this most recent contract negotiation,” according to Fitch [Ratings].

Additionally, the story notes,

The Port of Seattle is mostly just a pit stop as goods make their way around the country.

While the Port of Seattle doesn’t track exactly how much cargo shipped through the harbor moves outside the state, most of it is shipped elsewhere, said spokesman Perry Cooper.

When cargo isn’t staying in Washington state, shippers have less incentive to use Washington state ports when others are more reliable.

In a 2013 report, we looked at the competition faced by our ports and noted that

31 percent by value and 13 percent by weight of all goods exported through Washington ports originated outside of the state of Washington.

On the question of how long it will take for port activity to get back to normal, the PSBJ story says, “it will take no more than three weeks to clear backlog at the ports of Seattle and Tacoma.”

The Wall Street Journal writes about one way to get freight moving:

Port terminals are developing new ways to organize cargo at the docks and systems for getting that cargo moving off the docks as quickly as possible. Software developed by a local technology startup called Cargomatic, a sort of Uber for moving cargo around the Los Angeles region, serves as one creative solution.

A chart showing initial unemployment claims in Washington

So far this year, weekly claims for unemployment insurance are running well below last year’s pace.

Initial Claims

The value for the most recent four-week moving average, 7,667, is 1,460 less than the value for the comparable period last year.  The data are available here. (Note that these numbers are not seasonally adjusted.)

Privatization and comparative advantage

This is a great story on a part of Washington’s economy: The boutique booze boom in Washington. It begins by talking about Westland Distillery’s Emerson Lamb:

“It has been our stated goal to put Washington state on the map as the world class place to make single malt whiskey alongside Scotland,” said the 25-year-old Lamb.

Lamb’s declaration, which would have drawn fall-off-your-barstool-laughter a decade ago, is not only gaining traction among distillers but has also set off a race to deliver the first great single malt in Washington state — and to grow the barley to make that happen.

Indeed, researchers from Oregon State University to Washington State University have confirmed what Lamb and farmers have long suspected: that the maritime climate here mirrors that of Scotland, where some of the world’s best single malts are made.

According to the article, Washington has the most micro distilleries in the country — a situation that was brought about thanks to the Legislature getting the state out of the way in 2008 by making it easier to open a distillery.

The story notes that liquor privatization brought craft distillers new challenges because they no longer have the ease of dealing with the state monopoly rather than various individual stores. One would think that the competition required by privatization has helped to strengthen the distillers in the business. Separated the wheat from the chaff, if you will.

Even better, it seems that privatization has made distillers focus on what might be Washington’s comparative advantage:

Many believe single malt, uncommon in America, is one way to get onto those shelves.

Many Northwest distilleries believe they can dominate the single malt category much like Kentucky has dominated the bourbon market. The Northwest has better growing and aging climate to make single malt than other regions, they say.

In June 2010, after planting more than 1,000 different types of barley and wheat around Western Washington and other areas, WSU’s Jones concluded that the maritime climate from Vancouver, Wash., to Vancouver, B.C., is ideal for growing the barley strains that have low protein and high starch, the same types that produce a “complex flavor — sweet, but not white-sugar sweet,” he said. “You can compare it to a maple syrup … It has a very natural sweetness.”

This means new opportunities for farmers as well:

There are only a handful of regions around the world that have the right climate to grow this type of barley, Jones said. . . .

“There was zero winter barley planted in Skagit County five years ago. Today, there’s at least 5,000 acres,” Jones said. Nearby counties are also starting to grow barley.

(On that point, per USDA, Washington ranked 4th in the nation in barley production in 2013.)

Reputational damage at the ports

As an addendum to my earlier post on the deal at the ports, NPR has a good interview with U.S. Labor Secretary Tom Perez. On the impacts of the slowdown, he says,

There is so much collateral damage occurring. . . . You are playing with fire because, yes, the West Coast ports have the advantage of location, location, location. But you know what — location, location, location is not enough if you have a bad reputation, reputation, reputation. . . . In 2015 businesses have options.

Deal reached at the ports, but normalcy may be a long way off

On Friday, the Pacific Maritime Association and the International Longshore and Warehouse Union came to an agreement on a new contract, averting a full shutdown of West Coast ports. A major slowdown had been ongoing for the past several months, which we have written about previously. According to the Los Angeles Times,

The agreement, which still needs approval from union members and individual employers, should start easing severe congestion that’s been building for months at the nation’s busiest ports, in Los Angeles and Long Beach, along with other major gateways.

Details of the proposed five-year contract for about 20,000 West Coast dockworkers were not released. The dockworkers have been without a contract since July. The two sides had been negotiating since May.

The dispute caused businesses across the nation to lose money because imports were trapped on boats and exports trapped on land.

“We heard from small-business owners, large-business owners, farmers who couldn’t get their produce or their meat to market,” U.S. Labor Secretary Thomas Perez told reporters in San Francisco, where he joined contract talks this week to push for a settlement.

“This is now in the rear-view mirror,” Perez said. “A significant potential head wind for this economic recovery has been removed.”

When will things be back to normal? According to the Ports of Seattle and Tacoma,

Operations at our terminals resumed Saturday evening. We are uncertain how long it will take to move the remaining cargo on our docks and awaiting vessels, and to assess the effects this has had on our gateway.

The Seattle Times notes that

It will take six to eight weeks for West Coast ports to recover from the cargo backlog, according to the Port of Oakland and the National Retail Federation, which represents stores that resorted to stockpiling seasonal merchandise in warehouses and shifting to East and Gulf Coast ports. The backlog swelled as the two sides quarreled over a new deal.

KUOW has a good interview on the impacts of the slowdown, including the importance of the ports to keeping Seattle and Tacoma competitive.

Latest In Focus episode

 

Above is the latest episode of our In Focus podcast. Lew and Kriss talk about: