Log in
updated 2:54 PM CDT, Jul 28, 2018

FlynnsHarp logo 042016

Oregon ballot measure would dramatically boost business taxes

Just as the races for state and national offices in the November General Election may demonstrate that anger can trump reason, voters in Oregon will be faced with deciding a ballot measure that will test whether anger at big business over things like soaring executive compensation exceeds logic.

At issue is IP28 (Initiative Petition), which targets Oregon's biggest corporations — roughly 1,000 by the state's estimates, or about 4 percent of businesses. Those with $25 million in Oregon sales would pay a minimum $30,000 tax, plus 2.5 percent on anything above that threshold.

In essence, it would be a tax on gross receipts, like Washington’s business & occupation tax, generating an estimated $6 billion in new revenue. Except in Oregon it would be in addition to the tax on personal and corporate income and would boost corporate tax collections more than five-fold.

As my friend Don Brunell put it in his latest column, which alerted me to the fact the measure had been cleared for the November ballot by collecting the required 130,000 signatures, “Washington’s next economic development plan may be written by Oregon voters next November.”

His point was that “Oregon voters need to remember that Washington and California have heavy concentrations of large businesses and stand to benefit from passage of IP28 and that while all parts of Washington would gain, the corridor between Vancouver and Longview could be the biggest winner.”

Brunell, retired president of Association of Washington Business, in his more than a quarter century at the helm of the state’s largest business association saw all the off-the-wall ideas for taxing business. But it’s as a longtime observer that he shakes his head at this proposal, noting the tax scheme “would transform Oregon from one of the nation’s lowest business-tax-burden states to one of the nation’s highest.”

Organizations that purchase products and services from those major businesses would undoubtedly see their costs increase and thus would need to increase their price for items resold to Oregon consumers. In response to this, businesses purchasing goods in Oregon may opt to leave the state or relocate some or all of their facilities to avoid the increased cost of doing business in that state.

IP28 is sponsored by Better Oregon, a labor union coalition led by the Oregon Education Association, and targets “big business”.  Proponents claim it would tap a tiny portion of Oregon businesses while bringing a huge revenue boost to cash-strapped public education, health care and senior services.

The non-partisan Legislative Revenue Office, in evaluating similar proposals to IP28, has forecast job losses should a gross receipt tax pass.

Former Washington Gov. Mike Lowry, who despite being perhaps Washington’s most liberal governor carried an understanding of the importance of nurturing big businesses as the creators of better-paying jobs, offered his classic belly laugh when I called him for his thoughts on the initiative.

“We always looked to Oregon for progressive ideas but this would represent the total opposite,” Lowry said. “The gross-receipts tax is about the worst tax there is.”

Amusingly, Lowry understood how to use the tax as a whip. In his first year in office he sought to have the Democrat-controlled legislature extend Washington’s sales tax to service businesses like law and accounting firms, which used their lobbying clout to beat back the effort.

But they paid a price by having the lawmakers impose the highest b&o tax rate on services, a payback in the form of a 2.5 percent rate, which though now reduced to 1.5 percent remains the state’s highest rate, reserved for service businesses and professional gambling.

Most gross receipts tax rates around the country are relatively low when compared with the Oregon proposal’s 2.5 percent rate. In Washington, it ranges from 0.138 percent to the aforementioned 1.5 percent. Thus if the measure were to pass, the tax burden of operating in Oregon would increase dramatically when compared with other states.

Proponents argue that “IP28 would modestly raise the effective tax rate of large corporations and use the added revenue to fund Oregon's crippled public school system, provide services to seniors, and extend health care coverage to 18,000-plus children.”

Problem is if it comes to be marketed to voters as “the big-business tax,” the result could be that anger overrides common sense for voters, among whom would be many that would face loss of their jobs if the analysis of business reaction proves true.

The ballot proposal comes as raising taxes on wealthy individuals and large corporations is at the forefront of a national debate — especially among Democratic progressives, including much of Oregon's electorate— about how to close the gap of economic disparities between rich and poor in the post-Great Recession era.

And if there is a doubt that anger at big business underlies the measure, and leaves concern about the logic voters will bring when they mark their ballots, supporters point to the current difference between growth in corporate profits vs. growth in family income in Oregon. They say it’s time big business takes on its fair share of the tax burden to help pay for education and social services.

Business people in Southwest Washington are not only looking to gain business if the measure is approved, they are having some amusement thinking about it.

When I talked with longtime Vancouver businessman Michael Worthy about it, he chuckled and offered that the two-state effort to agree on financing a new I-5 bridge across the Columbia could be solved by letting firms that would want to move operations out of Oregon might want to pay for improved transportation they’d need.

And when I asked Brunell why he thinks intelligent voters would go for a tax that would likely impact them, and perhaps their jobs, he replied: “I suspect, knowing Oregon a little better by living down here in Vancouver, there is a reason for the bumper sticker: ‘Keep Portland Weird.’” 

Continue reading
  1759 Hits
  0 Comments
1759 Hits
0 Comments

McKibbon's plane-crash death left hole for Vancouver community he focused on


The divisiveness that seems to be the legacy these days of any discussion of issues, local or national, was something that longtime Vancouver community leader John McKibbin had a way of averting as he steered discussions toward productive dialogue, even in the face of some significant opposition.

Thus when McKibbin, 69, a Clark County elected official turned civic leader, died last week in the crash of his World War II-era single-engine plane near the mouth of the Columbia River, the loss was not just a personal tragedy for his family and friends. It was also a loss for the city and region he constantly strived to enhance.

The complexity of the issues on which McKibbin was working to create positive outcomes indicates the depth of the hole he left for Vancouver, Clark County and the state to find a way to fill.

Two issues stood out, and were to have been the focus of a breakfast meeting I had scheduled this past Monday with McKibbin and Don Brunell, the retired president of Association of Washington Business, who was McKibbin's longtime friend and associate.

Instead the breakfast became Brunell's sad opportunity to reflect for me on the man who had been elected to the Washington State Legislature in 1974, when he was not yet 30 years old, was elected a Clark County commissioner four years later and served three terms before he turned his focus to business.

"He brought people from opposite poles together, not always achieving agreement but to at least having an understanding of the other side's position," said Brunell, who had been McKibbin's friend since he joined Crown Zellerbach in 1979 as McKibbin was preparing to leave the legislature and run for county commissioner.

"He has been a good friend since then," Brunell said. "He was a problem solver who was gracious to his opponents as well as supporters. He had great political instincts. He worked issue by issue and had the ability to scope out an issue and try to reach resolution."

"When it came down to a divisive issue, he never personalized differences," added Brunell, who since retiring from AWB has been a Vancouver resident and writes a regular column on business and government, with the likelihood he will devote a column to McKibbin once he works through the loss of his friend and associate.

McKibbin was president of Identity Clark County at the time of his death, ironically while returning on a flight out past the mouth of the Columbia with the wife of a deceased friend who wished to scatter her husband's ashes at sea. He had headed that business advocacy and economic-development organization for the past two years after having been the founding chair 20 years ago.

One of the major issues that had McKibbin's focus was the struggle to resurrect the Columbia River Crossing Project, an effort to build a new bridge to connect Portland and Vancouver, replacing the 99-year-old span and extending Portland light rail to Vancouver.

The project died two years ago after more than a decade of negotiations between the two states broke down over the issue of light rail for the new span. McKibbin was quietly working leaders in both states to get discussions going again.

But the issue perhaps closest to McKibbin's heart was the initiative to create a Pearson Field Aviation Education Complex at the oldest continuously active airport in the United States, where his hanger in which he kept the classic plane he and a friend had refurbished was a regular gathering place.

That education project was the topic for an earlier Vancouver breakfast meeting with McKibbin and Brunell.

The issue, which many see as a bizarre example of government overreach, is National Park Service pushback on the effort to use part of a 22-acre parcel once owned by the city of Vancouver but sold in 1971 to the NPS as the permanent location for the Pearson Air Museum.

The Air Museum had been housed on the property, which the agency had leased back to the city, and it had become a community events center and was intended to house the development of a STEM learning center as the focal point of an aviation education complex.

After an acceleration of disagreement with the NPS over the agency's sudden concern about non-park use of parks property, the federal agency took possession four years ago of the facility, and most of the exhibits and other assets and forced the move of a half dozen vintage airplanes, one of which was McKibbin's, to other locations.

The effort to develop a STEM-focused education center led to research that determined that some 40 aerospace-related firms were located in Clark County and that has led to an effort to create an aviation high school, following the model of Raisbeck Aviation High School in the Highline School District. That aviation- and aerospace-themed STEM school is one of the South Seattle district's small high schools.

The flap over what was basically the takeover of the facility by the local Park Service official turned political when GOP Congresswoman Jamie Herrera Butler took up the cause and introduced legislation to resolve the dispute, but nothing has so far come of that effort.

Creation of the Aviation Education Complex, a STEM education center and likely including an aviation high school to help serve the current and future needs of a growing aerospace cluster in Clark County, seems destined to eventually come about, either at Pearson Field or elsewhere, and will be a testament to McKibbin's leadership.

Continue reading
  1271 Hits
  0 Comments
1271 Hits
0 Comments

LSDF's comparatively tiny budget should be easy to fund, given its role in the state's future

Don Brunell, retired president of the Association of Washington Business, summed it up best as we were discussing the perilous state of the fund whose purpose has for a decade been to promote the state's life sciences competitiveness.

"A $19 million expenditure in a $40 billion biennial budget is too small a percentage to even try to calculate," said Brunell, who as longtime president of the state's largest business association guided business's side of negotiations through four governors and two dozen legislatures.

"If it's a really important issue, as it seems the Life Sciences Discovery Fund (LSDF) should be viewed, you just take the $20 million out of a major-funded item," Brunell said, "particularly at a time when the state is experiencing an unexpected surge in revenue. It's not that difficult."

Brunell's comment, borne of years of playing the game of helping lawmakers reach budget goals while finding a way to save the most important business items in the final budget, is an important comment, since it's a thought that may still occur to the small group of legislators deliberating the final form of the state budget for the coming biennium.  

To be sure, there are a lot of smaller programs whose supporters are seeking to pressure lawmakers to safeguard in the final budget."Molehills vs. the 'mountain' of holding off new taxes," as one prominent business friend of mine, whom I respect but disagree with on this, put it in referring to those various programs.

That current LSDF funding of $19 million a biennium is the small remainder of the $400 million tobacco-settlement money from which LSDF was established in 2005 by the Governor and Washington's Legislature. The goal of the fund was to support innovative research in this state to promote life sciences competitiveness, enhance economic vitality, and improve health and health care.

The challenge for LSDF at this point is that while the money to sustain its funding for another biennium is in the House (Democrat) budget, and strongly supported by the governor, there is nothing for the agency in the Senate (GOP) budget, and there apparently is even Senate talk of taking back some of the money already granted.

Word leaked out earlier this week that the four budget negotiators (a Democrat and a Republican from each house) had reached a tentative deal on the total size of the budget. That's the first step before lawmakers begin tinkering with details, hammering out individual items (like the funding for LSDF's survival) and, of course, reaching some compromises before the hard deadline at the end this month when the biennium itself ends.

There is some belated talk, but probably not nearly enough of it, from business leaders about hammering the Senate with the reality that Republicans can't abdicate the image of supporters of entrepreneurs and innovation to a Democratic governor and Democratic House members.

Brunell was one of a half dozen major business-community figures I had talked within the past week to get a sense of the depth of understanding of and interest in the LSDF and its purpose. And Brunell admitted, as others have, that he was only vaguely aware of LSDF's role (which is visible mainly to the biotech industry and its supporters) or that it was in danger of disappearing, assuming that if it was an important business issue, Republicans would be watching out for it.

 

Brunell, who in his retirement now produces a regular column that appears in several dozen newspapers, seemed struck by the lack of visibility on what he agreed seemed vital to future of an emerging industry in this state.

Noting that there are a number of issues whose backers are bombarding supporters to press their legislators, Brunell said "I am pummeled with emails and contacts from wildlife and recreation and the folks wanting a carbon tax, but besides you I am not hearing from LSDF advocates. But supporting LSDF seems like a no-brainer."

It's important to share that my belief in the importance of LSDF comes, as is usually the case, from personal involvement and commitment. I had only been generally aware, as a journalist, of LSDF and its background and role.

Then I became involved in actively supporting an emerging biopharma company named M3 Biotechnology, believing in its potential dramatic impact if it gains FDA approval for a drug that would reverse neurodegenerative diseases, and in the CEO, Leen Kawas, who has been guiding the company's successful growth.  

As one whose wife suffers from Parkinson's Disease and with a father who died of it, and relatives and friends who have Alzheimer's, the company was a natural one.

It was as a result of involvement with the company that I learned the importance of LSDF, since the then just-launching M3 received grants from LSDF that allowed it to bridge what's referred to as the funding "Valley of Death," the financially challenging period from birth of a company to the successful initial funding round.

 

I also researched what states are doing to attract biotech, which this state's sound and fund has largely substituted for commitment, and learned that others are spending millions of dollars to attract and grow what they realize will be a key economic pillar in the future.

"M3 isn't the only company that needed the LSDF funding to survive until finding conventional funding," said Chris Rivera, CEO and President of the Washington Biotechnology and biomedical Association.

"Legislators tell me 'if we give LSDF $19 million, we'll have to take it away from somewhere else," Rivera said. "And I reply, 'if LSDF goes away, and the industry begins fading and the economy is being impacted in this state a result, you'll be doing a lot more looking somewhere else to make the cuts that will be necessary.'"

Continue reading
  1141 Hits
  0 Comments
1141 Hits
0 Comments

Roots and relationships aided Brunell's 28 years steering AWB business-advocacy ship

Don Brunell's Montana upbringing in a small town near Butte, in a household where his father was both mayor and a union official and his family owned a small business, provided him a unique preparation to guide Washington's largest business advocacy organization.

 

He early came to understood business, politics and labor from the inside, allowing him to put himself in the shoes of those on the other side of issues. His first job, as a journalist, helped him develop the abilities to observe and communicate, and a stint in the early '70s as press aide to a Montana congressman added to his understanding of the inner workings of politics.

Don Brunell

 

His belief in roots and relationships comes naturally for a man who grew up in a house on the same block where his great grandparents and grandparents lived and where he and his brother went door to door collecting 75-cent monthly payments from customers of the family's Walkerville Garbage Service.

 

And the roots and the early job background were important assets for success in his role with the Association of Washington Business, helping chart the strategy for business in a state where Democrats always occupied the governor's mansion and usually controlled the legislature during his years at the helm.

 

I visited over coffee with Brunell to get his reflections on his 28-year career with AWB, which he joined as a vice president and head lobbyist in 1985 at a time when the organization was in disarray politically and at a low point in terms of support from businesses themselves. He was named president two years later.

 

He will move out of his office on December 20, the day after AWB closes for the Christmas holidays, he said, explaining "It would break me up to move out while all of those in the office, half of whom have been with me for more than 10 years, were looking on." And he learned this week that the board has decided to name the AWB building in his honor.

 

But he's been staying away from the office as much as possible in recent weeks to allow his successor, Kris Johnson, who joined AWB three years ago as vice president of operations after 15 years of leadership roles at various chambers of commerce, to settle into his new role, which was announced in early October.

 

As a member of his board from soon after he took the helm of AWB in 1987 through the 1990s, I watched him from the inside deal successfully with the often conflicting political pressures within the organization, composed mostly of small businesses but ultimately guided by the largest companies.

 

But he handled those struggles within the business community with the same deftness with which he dealt with politicians. His philosophy on conflicts? "I try not to second guess or comment on motives; rather just deal with the issues, realizing there are differences."

 

And as the most visible face of business in a usually Democrat-controlled political environment, Brunell frequently found himself in the cross hairs when one of the governors was riled over the business stance on a particular issue.

 

"Most of the times, the calls from the governors came at night after I was home," he recalled. "One night, Booth (Gardner) was furious and I can't remember what the issue was. Our youngest son was about 6 at the time and answered the phone.  Booth introduced himself and asked Dan if he could talk to me. Dan put the phone on the table and yelled:  'Dad, some guy names BOOF wants to talk to ya!'  By the time I got the phone, Booth was laughing so hard that he asked me to stop by in the morning to talk about whatever the issue was."  

 

Brunell had special praise for Gardner's successor, Mike Lowry, with whom he had a close relationship despite the fact that many in the business community, especially small business people, viewed Lowry as the hated enemy.

 

"Lowry would call me at home madder than a wet hen about something, particularly during the 1993 session, and some nights and I just held the phone out at the end of my arm until he had finished yelling at me." Brunell recalled with a chuckle.

 

"So after he blew off steam, I'd go up to his office and we'd look at one another and then we'd figure out what to do," he said, adding"Lowry could blow his stack at you one day and be smiling the next. He never personalized anything, and if he said something, you could bank on it, and if he changed his mind, he'd tell you he had changed his mind."

 

"All of the governors are different, but they wouldcall and we always had the ability to work through things," he said. "Sometimes we'd agree to disagree and move on.  We were always able to avoid personalizing differences."   

 

Brunell, intended to be a teacher but after graduating from the University of Montana, he joined the Army Special Forces, then wound up in journalism as a reporter, first for the Montana Standard in Butte then the Daily Missoulian.

 

Thus he never made it into teaching ranks himself, but is proud that five of his six children are teachers, "and their spouses are teachers."

 

And education has remained a key involvement for Brunell. In addition to spending a week each summer as a teacher at BusinessWeek, AWB's signature summer business-education program for high school students, Brunell was instrumental in bringing the program to Poland three years ago. And each year he has personally been involved with the high school students there.

 

And with he and his wife, Jeri, who also grew up in Montana's legendary mining country, having 14 grandchildren, he's kept kids as an important focus, in addition to education.

 

He brought AWB together with unions, trial attorneys, doctors and defense attorneys in 1995 to organize Kids' Chance, a scholarship program for spouses and children of workers permanently disable or killed on the job and has served as the organization's treasurer since its founding, with a $220,000 seed grant from Walmart.

 

And 25 years ago, AWB launched the Holiday Kids' Tree Project, with a massive tree placed in the Capitol Rotunda each Christmas season where donations are taken to help needy families in rural Washington through firefighters and emergency responders "who have the best knowledge of those in need in their areas."

 

I asked Brunell for his thoughts on the political scene he leaves behind. He's optimistic about the future at the state level, suggesting he sees more movement toward the political center, "which is where you have to govern from."

 

"But Washington, DC, is real troubling for me," he added. "I was a congressional aide during Watergate, but still things got done and the parties could work together on important issues. They knew each other and spent time together."

 

"Today, everything back there is centered on fundraising. It never stops.  It is way too partisan and there is way too much money spent by wealthy groups stumping for causes," he added. "If you run for office today, count on being dragged through the mud and disgraced.  Politics has always been a contact sport, but there has to be a set of rules of civility.  

 

"Also the American people are tired of being manipulated and lied to," he concluded. 

Continue reading
  1154 Hits
  0 Comments
1154 Hits
0 Comments

52°F

Seattle

Mostly Cloudy

Humidity: 63%

Wind: 14 mph

  • 24 Mar 2016 52°F 42°F
  • 25 Mar 2016 54°F 40°F
Banner 468 x 60 px