Approve governor’s multi-pronged plan
Published 12:01 am Thursday, January 6, 2011
Nothing will cure what ails the state economy, and thus state government’s revenue woes, like an infusion of new jobs.
That’s why the business community’s early reviews of proposed changes to the state’s unemployment insurance and workers’ compensation programs have been so positive. Gov. Chris Gregoire’s plan would help private employers hire more workers by significantly cutting their costs, particularly this year.
It’s a package of proposals that strike a reasonable balance between business and labor interests, both of whom could use a boost as unemployment and general economic stagnation remain stubbornly high.
Left unchanged, unemployment insurance rates employers pay are set to rise an average of 36 percent this year, a hit that would siphon off money that could be used for new hiring.
Gregoire will ask the Legislature to stop or reverse that increase for most businesses by tapping the state’s unemployment trust fund, which has 14 months of reserves, making it among the nation’s healthiest. Many businesses that haven’t laid off workers would be rewarded by actually seeing their rates go down.
This change would save Washington businesses an estimated $300 million this year — if the Legislature acts on it by Feb. 8. That’s the deadline for changing first-quarter tax rates.
Gregoire also proposes changes to the state’s training benefits program that would qualify the state for $98 million in federal funds. Given that the state probably won’t be in a position to replace such funding in the future, it would sense to put a sunset date on that change.
On workers’ comp, the program that insures workplace injuries, Gregoire proposes some fundamental changes that are long overdue.
The biggest aims to reduce lifetime pensions, which have grown at unsustainable rates. Currently, such claims represent just 8 percent of the total, but 85 percent of total workers’ comp costs.
To fix that glaring disparity, Gregoire wants to offer lump-sum payments to older workers who are unlikely to return to work. Totally disabled workers who earn income through limited work would have their pension payments reduced. Together, those changes would save a projected $560 million over four years.
Another $160 million would be saved in that timespan by requiring workers to use a network of occupational health care providers who follow best practices. And employers would have a new incentive for offering injured employees light-duty work by having part of their wages subsidized by the state — saving money for all concerned.
Taken together, the governor’s proposals are a solid prescription for growth, without negative side-effects.
