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Hello Readers,
The Hong Kong Trade Development Council is doing its annual "road show" of events in various cities highlighting the business opportunities in China. Of course the HKTDC promotes Hong Kong as "the" place from which to enter China. This year they are teaming up with the Zhuhai region, which is west of Hong Kong, at the southern tip of the Pearl River Delta.
Certainly China cannot be ignored as a vast and emerging market for all kinds of products and services. Hong Kong can indeed be a smart way to establish a China presence with its reliable legal system and mature network of professional and business services.
Zhuhai, like many other regions of China is a "Special Economic Zone" that can confer certain economic benefits for those entering that market and working with a Chinese partner.
The July 15 event will focus on the advantages of Hong Kong and Zhuhai as a region to open an office, manufacture products or otherwise establish a China market.
A solid line up of speakers is set for you to learn from. You can find out more and register for this events here: http://www.nushkba.org/Events/Seattle15Jul08.htm.
The event is free if you register by Thursday.
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Hello Readers,
I wanted to pass on some interesting information about Washington state as it compares to the rest of the nation. Every two years the Milken Institute puts out a "State Science and Technology Index". John Cook recently featured the report in his Seattle P-I blog. You can find the report here: http://blog.seattlepi.nwsource.com/venture/library/StateTechScienceIndex1.pdf
There are several indices that are used in the report to determine the rankings. Washington moved up one spot to fifth from sixth compared to the 2004 report. Massachusetts ranked first followed by Maryland, Colorado and California. After WA, Virginia came in sixth and Connecticut, Utah, New Hampshire and Rhode Island follow in order to round out the top ten. Our neighbor to the south, Oregon, came in at 23, a drop of four spots compared to 2004.
The report is very meaty but worth reading if you are into economic development, science and technology indicators and things like that. The Milken Institute uses five indicators to build its index. Those indicators are listed, followed by Washington's 2008 ranking: Research and Development Inputs (8), Risk Capital and Entrepreneurial Infrastructure (4), Human Capital Investment (16), Technology and Science Workforce (4) and, Technology Concentration and Dynamism (8).
Interestingly, the areas in which our state scores the lowest, Human Capital Investment, is where there is most involvement from government in terms of bachelor degree or better production. Washington dropped eight places to 16th, due in part to other states stepping up their investment in state R&D and in bachelor degree or higher production, demonstrating that Washington is still way behind where we need to be in STEM degree production. This is further demonstrated by WA's high ranking, fourth, in Science and Technology Workforce showing that we still "import" well educated workers to our state.
It is certainly gratifying and worth a little preening over Washington's fifth place ranking in this rather prestigious report but we cannot rest on our laurels. Other states, like Maryland, Virginia, Colorado and others are aggressively building their intellectual and technology capacities. It definitely points out the need for the state to continue to invest in and improve both K-12 and higher education as well as technology transfer and commercialization.
In doing some additional research I came across another very interesting list of economic facts put out by the New York Public Policy Institute. The purpose seems to be to show how bad a place New York state is to do business and many of indicators support that. But it ranks all the states on various factors, such as educational attainment, tax burden per capita, per pupil spending, job growth/job loss, etc. There are a number of categories where Washington ranks quite low and several where we rank quite high. Sadly, those areas where state government is involved, our state's ranking leaves a lot to be desired. You can check this report out here: http://www.ppinys.org/reports/JustTheFacts.html.
Much of our advocacy and lobbying activity is done to ensure that our state remains in the top tier of states in the "good" rankings and we have had a solid long-term record of doing so. We also work hard to try to reduce the burdens that state government places on you and your business, while promoting the areas of government that matter most, primarily education.
Please contact me if you have any questions or wish to get involved in our advocacy and government affairs activities. We need more WTIA members to help us weigh in with policymakers at the local, state and federal level to ensure that our state remains a leader in the global economy.
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Good morning Readers,
The Executive Summit of the Internet Strategy Forum is back again this year with a great program. Steve Gehlen, ISF's founder and Executive Director, has done a great job lining up some great topics and speakers for this year's event to be held at the Governor Hotel in Portland, OR Thursday, July 17. The cost is a very reasonable $229 per person.
You can read more about it here: http://www.internetstrategyforum.org/events/summitwest2008.html
Anyone who has a role in Internet marketing should attend this event.
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Good afternoon Readers,
I wanted to alert you to a recent U.S. Supreme Court decision in the case of Quanta Computer v. LG Electronics. This decision revolves around "the ability of a patent owner to collect royalties from customers downstream of the patent owner’s licensee" as quoted in the recent K&L Gates Intellectual Property Alert that came out regarding this decision.
Check out K&L Gates' IP alert here: http://www.klgates.com/newsstand/Detail.aspx?publication=4617 to find out more about this decision and the implications it could have for you. K&L Gates attorney Mark Wittow, mark.wittow@klgates.com is the person who can tell you more about this. The case deals with "patent exhaustion" doctrine and enforcement of patent claims with downstream users.
Suffice it to say that this is a complicated but important issue that most technology companies should be aware of and protect itself against, as either patent owner or as one who is putting patents into practice.
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Hello Readers,
I wanted to touch on the topic of cybercrime today. As you know just by reading the news today, cyberthreats and cyberattacks are all too common today. These criminal activities require a lot of time, expense and effort to detect and thwart. Anyone with a website, database or "always on" Internet connection is a potential target for organized crime and foreign government attacks on computers and networks.
Just this past week, it was revealed that the Chinese government likely hacked into US government computers looking for names of dissidents. Here is a link to one of several articles on this topic. http://seattletimes.nwsource.com/html/politics/2004470526_apchinahacking.html
This is just one of hundreds or thousands of attacks that occur daily against various institutions, both public and private. Financial institutions and retailers are another big target because of the vast amounts of personal and financial information that these companies collect and maintain.
Then you have all the issues around the issues of youth Internet safety. WTIA has been a member of the Attorney General's Youth Internet Safety task force, which I have reported on in previous posts. The goal of this group is to increase awareness of youth Internet safety, improve the education of kids, parents, teachers and the public on Internet safety and develop new resources for law enforcement to help combat the online predators, bullies and scam artists.
One of law enforcement's bigget challenges is finding computer forensic experts with the skills necessary to investigate cybrcrimes of all types. In fact, one of the top ten jobs in the next few years paying over $50K per year will be computer forensic professional.
I am always hearing from WTIA members and others in the tech industry about how difficult it is to find people with the right technical and business skills for key jobs. WTIA lobbies hard for increases in STEM degree production from the state's colleges and universities and for improvements in K-12 math and science requirements. Now we have the law enforcement angle to add to that. The opportunity is that if we can get young people aware of this issue and the future employment that computer forensics presents, it might get students interested in math and science.
Washington State University and Bellevue Community are stepping up to the challenge. WSU is developing a degree program in cybercriminology. BCC is forming an Institute for the Study of Cybercriminology. BCC hosted a meeting yesterday on it campus to discuss. It was a very knowledgeable group across business, academia, local and state law enforcement agencies and other experts in Internet safety.
There are wide gaps in awareness of the cybercrime/Internet safety problems, limited edcuation in this field, lack of knowledge of what cybercriminals and online predators are doing and inadequate supply of professionals in this field along with a paucity of research.
Dr. Gita Bangera, a BCC faculty member is heading up this new Institute. It is just getting off the ground but shows great promise as a center for dealing with cybercrime. If you are inteested in learning more or getting involved, please contact Dr. Bangera at gbangera@bcc.ctc.edu or myself at Lmcmurran@washingtontechnology.org. WTIA will also stay involved in the youth internet safety aspect of this issue. We are encouraged with the progress being made, particularly in the K-12 system. Although currently fragmented, the awareness and desire for good information is getting into the schools.
A step forward is OSPI's development of technology "Essential Academic Learning Requirements" or EALRs. The requirements for student learning are under delevelopment and will include internet safety. This means that our students will start to get age and grade appropriate material taught in the next few years.
Computer and information security is critical for business, education and government. The explosion of personal and financial data that exists on networks and the Internet is simply too tempting a target for cybercriminals. Security cannot be something that is done after the fact or in response to a threat. It has to be part and parcel of any entity's business planning. The risks are simply too great not to.
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Good afternoon Readers,
One of the bright spots in K-12 education is the work the State Board of Education, http://www.sbe.wa.gov/default.htm, is doing to make a high school diploma meaningful. They are taking a comprehensive look at graduation requirements so that tomorrow's students will have a solid education coming out of high school so that they can get into and succeed in college or go into an apprenticeship program to learn a valuable trade.
Today a student can graduate high school with the required credits but it is not enough to get into a Washington state university. Most school districts have added their own local requirements that would require enough credits to match college entrance requirements but it makes no sense for the state requirement not to match up with college entrance requirements.
SBE's "Core 24" proposal is geared toward ensuring that all students will get enough credits to qualify for entrance into Washington state colleges and universities. You can get more specific information about "Core 24" and the "meaningful high school diploma" here: http://www.sbe.wa.gov/mhsd.htm.
On the math front, a third year of math is most likely to be adopted at the SBE's July meeting. That third year of math is also likely to be Algebra II. WTIA, as a member of the College and Work Ready Agenda, http://www.collegeworkready.org/, is advocating for a graduation requirement of 4 years of math, but requiring a third year is certainly a step in the right direction. Considering the opposition to just going to a third year of math from such groups as the WEA and others, SBE is showing real leadership in taking on the entrenched education interests who believe that more money with no accountability is the only solution to improving education.
Speaking of accountability, the SBE is also considering options to measure progress that will help schools improve. This will be a difficult task. See what they are considering here: http://www.sbe.wa.gov/spa.htm.
Of course, there are costs to improve education and WTIA is not against the state spending more to do so. However, there have to be priorities. Our governor and legislature have shown little ability to restrain spending and with economic growth slowing, they will have to make some tough decisions next year. Undoubtedly an increase in taxes will be looked at but a better idea is for the state to repeal the paid family leave insurance program before it sucks more resources away from education. The legislature and governor must reduce overall state health care spending as well, as that is becoming out of control.
The Basic Education Finance Task Force has been meeting for the last 9 months discussing how to fund K-12 effectively. The next meeting is Monday and Tuesday, June 9 and 10 (next week). WTIA will be there to monitor the proceedings. A wide range of proposals will be put forth by a number of different groups. You can check out the BEF Task Force activities here: http://www.leg.wa.gov/Joint/Committees/BEF/
This is really important stuff for our state. WTIA is involved because you have told us K-12 and higher education are important, especially around improving math and science. Washington state has made improvements in graduation rates, WASL pass rates and other areas but there is still a long way to go before we can call our education system one of the best in the nation, which it should be.
Please do not hesitate to contact me at Lmcmurran@washingtontechnology.org if I can answer any questions or if you would like get involved in these issues.
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Good Morning Readers,
This is another effort to provide some perspective on various political races that are upon us in an important election year. This year the office of State Treasurer is wide open as incumbent Mike Murphy is retiring after three terms.
You do not hear much about the State Treasurer, and that is probably a good thing. The office is essentially the state's CFO. Its duties are spelled out on its website, http://tre.wa.gov/. "As the state’s chief fiscal officer, the Treasurer provides banking, cash management, investment, and accounting services for state government." Pretty humdrum, eh? What is needed then is a steady hand who understands good financial principles, practices sound management and ensures that the state's bond rating stays high.
Voters are actually blessed this year with three solid candidates for this office, two Democrats and one Republican. The Republican is Allan Martin, who currently works in the Treasurer's office. The Democrats are Chang Mook Sohn, the state's chief economist and State Representative Jim McIntire.
The WTIA is supporting Jim McIntire for several reasons. The first being that Rep. McIntire was instrumental in extending the R&D tax incentives in 2004 until 2015. He knows full well that incentivizing R&D is good for the economy, helps create jobs and brings in more tax revenue as R&D leads to additional economic activity that helps our state stay competitive globally. While the other two gentlemen are certainly qualified, McIntire has shown true leadership as he had to advocate for the R&D extension in a caucus that has too many members who say "how high" when the unions say "jump". Many of his fellow House Democrats are loathe to support anything that helps business succeed. And yet, McIntire got the Labor Council's endorsement for this office.
Secondly, McIntire has a broad range of professional experience in both the public and private sectors that makes him the right choice for State Treasurer. You can learn more about him here: http://jimmcintire.com/default.aspx?ID=15.
McIntire's solid King County base should put him in good stead for the August 19 primary, where he needs to finish among the top two vote getters statewide to contest in the November general election. He is an excellent choice for this low profile but important statewide office.
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Good afternoon Readers,
Part of the government affairs and advocacy services we offer you here at the WTIA is monitoring the activities of state agencies. Although we are deeply involved with the legislature when it is in session in Olympia, the state agencies are there full time administering and interpreting the laws the legislature passes. Sometimes, especially with taxes, there are differing views between taxpayers and the government over the meaning and application of laws. However, most of the state agencies cooperate with their stakeholders and the Dept. of Revenue does reach out to business groups, such as WTIA, when big issues come to the forefront.
Such is the case with the taxation of digital goods, aka "electronically delivered products". The rise of e-commerce as a mainstay of the global economy has created a number of problems for state tax administrators, especially those with sales taxes, such as Washington.
In the past, tax treatment of physical goods and most services was pretty straighforward, in that it was obvious what was being sold, to whom it was being sold, where it was sold from to where the item or service was being delivered.
As more and more people and businesses started buying over the Internet and companies like Amazon became major retailers, many of these questions became muddled, in addition to the fact that most consumers were forgoing the paying of sales tax on retail items they were buying over the Internet. Traditional retailers, along with state and local tax collectors began to complain about how "unfair" this situation was, and to some extent had a point.
The Streamlined Sales Tax Project (SSTP) was formed out of this situation. This group of state tax administrators came together, along with traditional and electronic retailers, to figure out a way to capture sales tax that was legitimately owed to the states, how to design a "uniform" sales tax system nationwide and to look at how to tax all these new electronic products, some of which had real world equivalents while some do not.
During the 2007 legislative session, state lawmakers created a narrow exemption from sales tax for certain types of financial information. At the same time, the legislature realized it needed to take a comprehensive look at this issue. The result is the "Study of Electronically Delivered Products". A link to the study is here: http://dor.wa.gov/content/aboutus/statisticsandreports/digitalgoods/default.aspx.
WTIA is closely monitoring this group and weighing in as necessary. The committee members of the study include a representative of WTIA member Microsoft and Amazon, along with elected officials, Dept. of Revenue, academics and representatives of other industries. It is quite likely that the study will yield a call for legislative changes that will specifically target the taxation of certain digital goods, such as downloaded music, video games, ringtones and other items.
Another wrinkle to this question is what will be considered a "retail sale" and thereby subject to sales tax versus a "service" that is taxed differently. The reason this is important is the cost differential to the buyer of such a good or service. If you buy something that is considered a "retail sale", such as prewritten software, you owe sales tax on that purchase, which is about 9% in King County and slightly less most other places. The seller then has to collect the sales tax, remit it to the state and pay B&O tax on that sale at the retailing B&O rate.
If, on the other hand, you are buying an electronic item that is not considered a retail sale, the seller is taxed at the "services" B&O rate, which is 1.5% of gross receipts, as opposed to the lower retailing B&O rate. So, for a buyer of digital goods, it is in their interest to see those classified as something other than retail sales, which helps lower the cost of doing business. If you are a seller, your B&O tax rate is lower if you have retail sales but you have to collect the sales tax and send it to the state. Otherwise your B&O tax rate is 1.5%, which can be tough on young, growing companies that are not yet profitable.
Simple, right? Now throw in the how electronically delivered products differ materially from physical goods or services. When you are buying software, web services or certain kinds of music, are you buying the item outright or are you paying a licensing fee to use that item? Are you paying a royalty for the right to use certain patented or copyrighted inventions or works? Do you have unlimited rights of use? In many cases, the answers to these questions are difficult to decipher. Does the transaction happen where the servers reside or where the purchaser is? What if the purchaser is a business with multiple locations around the world?
As you can see how to tax digital goods is not easy nor simple. What is certain is that there will be taxes on some kinds of digital goods; we just do not know which ones yet. Since this issue hits WTIA members as both sellers and buyers, we sent a letter to the study committee, in conjunction with AeA, laying out some concerns and suggesting that items that businesses buy be exempt from sales tax. That letter is attached.
Destination Sourcing Starts July 1
Another related development is the implementaiton of legislation generated by the SSTP. The next phase of sales tax streamlining goes into effect July 1, 2008. This is "destination sourcing". This means that the buyer's location determines to which jurisdiction the sales tax ends up. This was resisted heavily by certain cities that had large warehouse operations such as Auburn, Kent and Fife. Until now, the sales tax flowed to the city where the purchase was made or to where the item was being delivered from. The cities that have big warehouses stood to see a big chunk of sales taxes disappear but the legislature budgeted money for "mitigation" for these cities.
This also means changes for retailers who have to be able to source the sales taxes to the buyer's location. It is likely that there will be a great deal of confusion at first. Part of the SSTP legislation calls for "certified service providers", which are entities that are licensed to manage the flow of sales taxes and the proper rates by jurisdiction. One such company is WTIA member, Avalara, http://www.avalara.com/
To learn more about destination sourcing, check out this Dept. of Revenue page: http://dor.wa.gov/Content/FindTaxesAndRates/RetailSalesTax/DestinationBased/default.aspx
Please contact me by phone or e-mail if you have questions about sales taxes, SSTP or the Study of Electronically Delivered Products. For WTIA members, we also have a Tax Committee that you are welcome to join where we e-mail you tax related information, meetings, rulemakings, etc. Contact information is Lmcmurran@washingtontechnology.org or 206-448-3033 x101.
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Hello Readers,
As you are aware, maybe too much so by now, there is a big election in November. Obviously the campaign for President is the biggest office up for grabs but there are many other offices where candidates are running but are not quite as intense or given as much notoriety as President of the United States of America.
In Washington state, all nine statewide offices are open, including Governor, half of the state Senate and all 98 members of the state House of Representatives. In some case, the statewide and legislative races are more important as the decisions these folks make have to do with local schools, state colleges and universities, state parks and resources and state roads, bridges and highways, not to mention taxes and regulations.
One of the longest serving and most influential state legislators is retiring this year -- Rep. Helen Sommers, who represents the 36th legislative district in Seattle (see map here: http://apps.leg.wa.gov/DistrictFinder/results.aspx?District=36)
Her replacement will be a key race. It is essentially a foregone conclusion that the district will be represented by a Democrat. The question is which one. There are two who have announced their intentions to run and are out campaigning. One is Reuven Carlyle and the other is John Burbank.
Reuven is the type of person we need in Olympia. He is an entrepreneur so he understands how the economy works and he has created jobs and opportunity for others. He sits on the Board of the Community and Technical Colleges so he understands how the education system works (or doesn't). Plus, he has been active in foster care issues so he has a heart for people and wants to help others. You can read more about him at his website: http://www.reuvencarlyle.com/default.asp?ID=1
John has been a labor activist for many years and comes from the "old school" of Democratic politics that is tired, has no new ideas and relies heavily on overtaxing and regulating business and government run health care as "solutions" to today's problems. The unions will not have to worry about him--he will be a reliable ally who will never say no to whatever they want--no matter what it does to the state budget or business. You can read more about John here: http://www.johnburbank.com/
The twist in this year's elections will be how the "top two" primary plays out. Earlier this year the Supreme Court ruled that Washington's top two primary is legal and constitutional. This means that the two candidates who receive the most votes in the August primary, party notwithstanding, will advance to the general election. So, in heavily Democratic districts in Seattle, Tacoma and a few other places, the top two vote getters will most likely be Democrats. They will have to keep campaigning right on through November when in past years, the race would essentially be wrapped up in the primary race. The same is true in districts where Republicans dominate, mostly Central and Eastern Washington.
Please support Reuven Carlyle. He will do a great job for the 36th district and bring both smarts and compassion to Olympia. Check out his website and volunteer and/or contribute.
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Dear Readers,
Gov. Gregoire's Office of Regulatory Assistance is tasked with helping startups and very small businesses wind their way through the regulatory and tax maze that can frustrate even the most determined entrepreneur.
Have you had a problem with a state agency, like Labor and Industries or Dept. of Revenue? Have you had a good experience with a state agency? These Small Business Roundtables are for you to air your complaints and praise.
While Washington state government can easily get in the way of business growth, Gov. Gregoire is committed to making the bureaucracy more accountable to citizens and taxpayers.
Here is a link to the schedule of meetings that are occurring around the state: http://www.ora.wa.gov/roundtables/default.asp
Don't hesitate to attend. You might find a new customer there as well.
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Good afternoon Readers,
I want to inform you about an annual event hosted by Congressman Adam Smith, who represents the 9th district of Washington state. The 9th district covers the area south of Seattle all the way down through Pierce County and into Thurston County, including the communities of Kent, Federal Way, Des Moines, Normandy Park, Burien, Puyallup, Milton, Edgewood and some unincorporated areas of King, Pierce and Thurston counties.
Congressman Smith holds his "Ninth District Day" each year in May and this year it is Thursday, May 15 from 8:30 a.m. to 2 p.m., which includes a no-host lunch. It is structured as a half day seminar. Congressman Smith invites interesting speakers from various federal agencies, other elected officials and well known media personalities.
This link, http://www.house.gov/adamsmith/NDD2008registration.shtml, will give you more information where you can register for the event. If you are going to be in the nation's capital that day and are a resident of the district, this is definitely worth your while.
Congressman Smith is a solid supporter of the tech industry and a great advocate for the state's tech sector. Rep. Smith also convenes a Technology Advisory Council quarterly that WTIA is a member of. If you have some specific concerns about federal legislation or want to know what is going in Congress, please contact me and I will pass your question/concern on to Rep. Smith and his able staff.
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Lobbying on behalf of Washington’s Technology Industry is one of the many valuable services we provide our members. For over two decades the Washington Technology Industry Association has been the key voice on a wide range of public policy issues including K-12 and higher education, taxes, health care, economic development and technology regulation. With the close of the recent legislative session we wanted to give a quick snapshot of legislation we worked on behalf of your company and the industry -- and to encourage you to join us if you are not already a WTIA member. We depend upon the support of our members to run the association and on the contributions of individuals and companies to fund our Political Action Committee.
We consider the 2008 session a successful one for the industry. We were able to prevent some very punitive bills from passing while helping to strengthen math standards, support efforts for an e-Science institute at the University of Washington, pilot a telework project in Kitsap County, and support technology literacy programs.
We remain concerned about the continuing lack of supply of technology professionals needed by the industry and are working to protect association health plans from being eliminated. We are also concerned that current R&D tax incentives that the industry uses extensively will be targeted for repeal or severe cutbacks next year to fund overspending this biennium. We will remain vigilant on these and other issues going into the next legislative session.
Below is a snapshot of our efforts in the recent legislative session. To find the details of any specific bill, click here: http://apps.leg.wa.gov/billinfo/ and enter the bill number.
To join WTIA: http://www.washingtontechnology.org/pages/about/about_membership_member_application.asp
To contribute to the WTIA Political Action Committee: http://www.washingtontechnology.org/pages/advocacy/advocacy_wsa_pac.asp
2008 Legislative Wrap-up
Health Care – Helped defeat legislation that gave overly broad power to the Office of the Insurance Commissioner to regulate association health plans (Senate Bill 6365). Worked in coalition with other business associations to improve legislation expanding the Health Insurance Partnership and related bills (House Bill 2537 and Senate Bill 6333). Urged Gov.Gregoire to veto Senate Bill 6333.
K-12 Education – Supported legislation to strengthen math standards (Senate Bill 6534) and recruit math and science teachers (House Bill 2809). Closely monitored proposals for any further delays or hedging on WASL as a graduation requirement.
Technology/Privacy/IP – Worked to ameliorate very punitive bills aimed at the use of Radio Frequency Identification technologies (RFID) (House Bill 1031) and wireless number directories (House Bill 2479). Successfully lobbied for clarifications to the Personality Rights Act (House Bill 2727) and helped defeat unworkable bill on encryption (House Bill 2574). Supported improvements to spyware laws (House Bill 2879).
Broadband/Telecomm/Economic Development – Supported legislation to map our state’s broadband resources, plan for greater broadband access and adoption, and to expand and fund technology literacy/digital inclusion programs for underserved populations (SB 6438). Supported $150K in supplemental transportation budget for Kitsap County telework pilot project.
Higher Education – Supported the University of Washington request for the creation of an eScience Institute. $1M of funding was included in the final budget. Monitored other legislation related to e-Learning and applied baccalaureate pilot program.
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Hello Readers,
Last week Governor Christine Gregoire finished signing bills that passed the legislature, includig the supplemental operating budget. Through targeted vetoes, Gov. Gregoire added an additional $15 million to reserves, now totaling $850 million. This is a fairly sizable surplus but the question is if it will be enough to plug the next budget hole when the legislaure reconvenes in January 2009.
With the growth of state revenues slowing, elected officials are going to have to be more circumspect about state spending. You will hear whines and moans from various interest groups that receive your money about "cuts", which means "the legislature is giving us less than we asked for" but the reality is that the state budget will just grow at a slower pace; it has not actually been "cut" in almost 30 years.
Here is a link to the partial veto letter that the governor wrote discussing why she deleted certain sections of the budget: http://www.governor.wa.gov/billaction/2008/veto/2687.pdf
Although overall spending can certainly be questioned, there are key areas of state government that do require increased funding. As the software and technology industry's voice in Olympia, WTIA advocates for things that help the growth and success of the tech indsutry and the state as a whole. The number one priority is education. This means a K-12 system that provides a solid and rigrorous curriculum that is based on high standards where testing is based upon the curriculum taught. It means that students need to show better results in math and science.
In higher education, it means increasing capacity in STEM (science, technology, engineering and math) degrees, primarily at the four year institutions so that our state produces more qualified people for the technology sector.
Lastly, it means supporting economic and job growth by limiting regulations, keeping tax rates down and maintaining tax incentives for R&D and other activities that help companies grow.
Here are some highlights from the supplemental operating budget:
$56.8 million for increases in teachers' salaries, per Initiative 732. $17.7 million is "catch up" money from when the legislature held off on granting the I-732 mandated increase the last time the budget was tight back in 2001-03.
$3.2 million to develop math "end of course" exams, which will replace the math WASL in 2014.
$142,000 for studying the supply and demand of math teachers. Part of this study will look at differential pay for high demand teachers, such as those in math and science.
$300,000 for review and adoption of new math standards and curriculum. Hopefully this will result in better curriculum and teacher training leading to better student achievement in math.
$1 million for UW's e-Science Institute. Although UW requested $2 million for this exciting project, the legislature provided half that amount. This will enhance UW research and allow for a much higher level of computational analysis for massive data sets and could leverage over $100 million in federal money for more advanced research.
$195,000 in the Dept. of Information Services budget for a broadband deployment initiative coordinated with the WUTC and CTED. This is an effort to "map" the state's broadband resources, both public and private, perform "gap" analyses and spur high speed internet in areas that are currently lacking.
$500,000 in the WSU budget for community technology grants. This will help community based technology literacy programs around the state improve computer and Internet skills for low income individuals across Washington.
In the state transportation budget, $150,000 has been appropriated for a Kitsap County telework/telecommuting project. The aim is to reduce commute trips by at least 10% by having certain types of employees work from home on a regular basis.
Here are a couple appropriations in the budget that I came across that seem somewhat questionable:
$400,000 to the Pacific Science Center for hosting the "Lucy" exhibit. While this is obviously a major cultural attraction that will not come around very often, if ever, should the taxpayers pick up this large of a tab? The Science Center is obviously going to charge a fee for seeing it and also be recruiting sponsors to help pay for it so one has to wonder why it is in the state budget. Luckily it is a one time expenditure that will not create an ongoing appropriation. Maybe the Science Center should build up its own reserves for things like this.
$100,000 grant to the local organizing committee of Skate America to support the International Skating Union Grand Prix Series at the Everett Events Center in October, 2008. Again, why are the taxpayers picking up the tab for this event? Sure, it will be neat to have this event in our state but it seems like this money should be saved. Maybe I am missing something here.
Here are a couple appropriations that are outright useless and should have been vetoed:
$1.276 million for a "health care work group". This is a union backed effort to campaign for a government run health care system. WTIA fought against the misguided bill that this money funds, SB 6333, which you can learn more about here: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6333 This bill will do nothing to address health care costs or availability. The WTIA wrote a letter asking for a veto of SB 6333 to no avail.
$6.2 million for implementation of paid family leave insurance. Here is a completely misguided social program that has no funding source but promises $250 a week for 5 weeks for the birth or adoption of a child. Benefits are to begin October 2009. You can bet that taxes will be raised to fund this, either an employee payroll tax or a tax on business. The $6+ million is just to build the system to take your money and give it away--not for any benefits. Just imagine when benefits do begin and cost more than anticipated. Not only will taxes have to be raised to pay for it but the benefits will compete in the budget against K-12 and higher education.
Supposedly efforts were made to create "efficiencies" to keep implementation costs down. What actually occurred is that the requirement to verify birth or adoption of a child was eliminated as well as the ability for an employer to recover attorney costs or fees when the inevitable abuse of the program occurs.
Governor Gregoire has now begun campaigning in earnest for a second term. Her only announced opponent is former Senator Dino Rossi, who barely lost in 2004 after two recounts. I am sure you will recall how badly King County botched the vote counting.
You will decide by your vote if she gets another term or if Senator Rossi gets a chance to run the state for four years. On the key issues that affect the technology industry, her record is mixed. She has pushed for improvements to K-12, esepcially in math and science and has supported increased capacity in STEM degrees, along with other programs that help educate and train a high quality workforce.
However, on "business" issues her record is weak at best. She has kowtowed to the unions on health care and other issues and allowed poorly thought out programs, like paid family leave, to become law without proper planning or funding. It is very doubtful that she would stand up for business if taxes get raised by the legislature. The tech industry should be very concerned about the loss or reduction of tax incentives for R&D in the next legislative session.
If you would like to know more about what happened in Olympia this past session, details on the state budget or getting involved in our government affairs activities, please contact me at Lmcmurran@washingtontechnology.org.
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Hello Readers,
It is with great pleasure that I can report that the state Legislature finished its 60 day session on time yesterday evening, March 13. Our elected officials accomplished their main goal of passing the supplemental operating, capital and transportation budgets. The capital and transportation budgets are generally agreed to as these budgets are for schools, state agency buildings, roads, ferries, higher education and things that are less policy oriented.
The operating budget, though, is a different story. Both parties have different priorities and this means some contentious debate over how our money is spent. Since the Democrats have control of the House, Senate and Governor's office, they rule the day and do not have to compromise very much. This can result in overspending, as we saw the Republicans do in Congress when they had full control.
The final operating budget can be found here: http://apps.leg.wa.gov/documents/billdocs/2007-08/Pdf/Bills/House%20Passed%20Legislature/2687-S.PL.pdf.
A lot of very interesting state budget information put out by the Legislative Evaluation and Accountability Program (LEAP) can be found here: http://www.leg.wa.gov/Senate/Committees/WM/ at the Senate Ways and Means Committee website.
You can pore over the details of all 3 supplemental budgets. In the current biennium that runs from July 1, 2007 through June 30, 2009, the state will spend $29.853 billion and will keep just under $836 million in reserve. (This is just in operating funds--it does not include the capital and transportation budgets.) The question is will that be enough to weather the inevitable economic downturn that is apparently already upon us, as evidenced by the slowing of revenue growth.
Each biennium the state spends more than the previous one. It has not been since the severe recession of the early 80's that the state has ever spent less than the previous biennium. In fact, state spending has increased approximately 33% in the last 4 years. Some of this spending, of course, was necessary and prudent as it has gone into K-12 education, teacher raises, expansion of college and university enrollments, improvements in math and science and other areas that can be viewed as "investments".
However, the state is also throwing more money at health care, giving public employee unions and the SEIU more and more and asking for nothing in return, allowing huge expansions in collective bargaining that drives up costs and regulations on business that do not necessarily result in better outcomes. Along with increasing state agency fees, it is not surprising that Tim Eyman's initiatives, as flawed as they are, continue to pass.
There were some bright spots that did occur during the short session of 2008. A broadband deployment project along with expansion of community technology programs, supported by WTIA, passed the legislature. The transportation budget included a $150K pilot project for Kitsap County to expand teleworking and telecommuting, which WTIA also lobbied for.
One area that WTIA members and the state's tech industry ought to be concerned about is the increasing amount of legislation regarding privacy and the use of personal data. Consumers and legislators are rightfully concerned about the increasing use (and misuse) of personal information by both government and business. With the high incidence of identity theft, breaches of databases, new and powerful data collection technologies, like RFID, and the ability to do extensive personal searches on the internet, many people are wary of how their personal information is being used and marketed. Plus the "over marketing" we all experience in the media, in our e-mail, etc. is creating a backlash that ends up as restrictive legislative proposals.
At the same time, all the new consumer products, social networking sites, mobile applications and other popular technologies all rely on having good information about how people shop and act in the marketplace. We all want convenience but do not always understand the link between the giving up of personal information and the conveneince we all enjoy.
WTIA will be looking at this issue closely over the next few months and want our members involvement and input. Please contact me at Lmcmurran@washingtontechnology.org if you would like to participate in our privacy task force.
If you have any questions about specific legislation, please do not hesitate to contact me as we are a resource for you, our members.
I will be blogging more about health care and the upcoming state elections in the next month. I look forward to your feedback and involvement in the WTIA--your voice with government. Thanks and have a great weekend.
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Hello Readers,
Only 15 days remain until the end of the regular legislative session in Olympia. A wide range of policy issues are being discussed and negotiated as House bills are now over in the Senate and vice versa. Much of the legislature's attention is now turned to fiscal matters.
The recent revenue forecast came in, and, as expected, was lower than previous ones. What this means is that revenue growth (and therefore economic activity) is growing more slowly than the previous quarters. This was not unexpected. This also means that what some have been saying about state spending is coming true. State spending must be reined in. However, it does not mean "cuts" to education, health care, social services and the environment. It just means that those who feed off the public trough will have to ameliorate their demands for our tax money.
The various unions, whether it is public employees, WEA, SEIU or the Washington State Labor Council, however, have no intention of doing so. Their incessant whining for more regulation, more money, more collective bargaining are pushing the state toward a crisis. More disappointing is the lack of backbone by many legislators to stand up to them. But this is an election year and the elected officials, the majority party in particular, depend on union political contributions and union members to walk precincts for them so it is doubtful that there will be any real effort to be prudent, unless citizens who are more concerned about fiscal restraint than government spending communicate to their legislators.
A prime example of this was seen in the budget that passed the House of Representatives last week. The House budget included a COLA for teachers, per I-732 that was passed a few years back. No argument there. Teachers have a tough job dealing with a myriad of student issues, school district bureaucracy, lack of parental support and in some cases aged facilities. However, the teachers' union, the WEA, has supported rolling back the WASL as a graduation requirement, fought against higher academic standards, questioned the need for a third year math credit and been lukewarm toward recruiting more math and science teachers.
Yet, their clamoring for more and more resulted in an additional salary increase over and above their COLA to the tune of $35 million, just at the time that everyone was preaching fiscal restraint. Plus, there was no accountability for this money. Nothing requiring better student performance, nothing to move ineffective teachers into different professions, nothing to get more qualified math and science teachers. Just more of your money being thrown at them to get the WEA's political support.
The lesson the legislature is basically telling everyone is that whining works (as long as you can fund their campaigns).
Another example is $1.2 million that is in both the House and Senate budget for a so-called "health care work group". This expenditure amounts to the funding of a union political campaign to push for a single payer health care system. While the idea of a single payer system, public or private, ought to be discussed, along with numerous other options for delivering health care, it is completely inappropriate for this discussion to be funded by taxpayers. The health care committees of the House and Senate can study these issues at any time, at any place around the state to engage the public on health care issues.
This also gives those who have been bashing Association Health Plans a publicly funded forum to do so. The unions and others should use their own money to promote their costly ideas, not your money. The WTIA has written Speaker Frank Chopp and other key legislators opposing this bad idea.
If you want to read the supplemental operating budget passed by the House, check here: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=2687 and then click on "Engrossed Substitute". It can be pretty dry reading but you will get a feel for how the state spends your money. The underlined language is what is being added and the crossed out language is what is being deleted.
The Senate Ways and Means Committee is voting on its version as this is being written. Check this link for details on their spending priorities: http://leap.leg.wa.gov/leap/budget/detail/2008/so2008p.asp There are several documents you can review there.
The Washington Technology Industry Assocation is your Olympia watchdog on policy and fiscal issues. We fight for you, our members, who are the ones creating family wage jobs and helping our great state remain a leader in the global economy. Please support us by joining and by making a contribution to our political action committee so we can counter the voices of those who would bankrupt our state. Please contact me at lmcmurran@washingtontechnology.org for additional information. Thank you.
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