Twenty-five years ago, business took a beating in Olympia. The swing to the left in the 1992 general election was swift and potent. It drove higher costs to employers and more government regulations.
Warning: Today’s political winds are blowing in that same direction.
In the 1992 election, Democrats across America scored big wins promising a new health care system and bigger government. Bill Clinton upset George H.W. Bush for president and Congressman Mike Lowry knocked off Republican Attorney General Ken Eikenberry for governor.
Republicans, who had been the road block for Democrats, lost their slim, 25-24, majority in the state Senate and saw their numbers in the House shrink to 33.
Between Lowry and Democrat legislators, employers got $1.3 billion in new taxes and fees, a hefty set of more costly government regulations and a whole new government mandated health plan which was to be the model for Hillary Clinton’s nationwide program funded by employers.
The onslaught prompted the Association of Washington Business (AWB) to hang a banner on the side of its building near the capitol reading: “It’s the Economy, Don’t Kill It!”
Fast forward to 2018.
Next legislative session the “majority caucus” consisting of 24 Republicans plus Democrat Tim Sheldon will be gone, thanks to a special election earlier this month.
Democrat prosecutor Manka Dhingra won the race in the 45th district over Republican Jinyoung Lee Englund, a former Capitol Hill staffer. Dhingra’s victory puts Democrats firmly in command of a state that, according to the Washington Post “had been trending bluer, and will allow the party to pursue a progressive agenda that had been bottled up by Republicans.”
Washington’s Republican Senate Majority Leader, Mark Schoesler, believes our state’s voters benefited from having “checks and balances” enheret in a split legislature and warned that “fiscal responsibility is in jeopardy” with Democrats in full control.
Since becoming governor, Jay Inslee has unveiled plans to raise $5.5 billion in higher taxes. That scheme includes imposing a new tax on investor’s income, a new carbon emissions charge, and increases existing business and occupation (B&O) tax rates on services.
Higher taxes are troublesome for Washington businesses which already pay 58 percent of state and local taxes. According to the Council on State Taxation (COST), business owners paid $7,600 per employee in state and local taxes in 2015 – the sixth highest per employee tax burden in the country. The national average is $5,800.
In 1993 what hurt was the huge B&O tax increase, additional fees for state permits, and additional costs of higher workers comp and unemployment insurance benefits – all of which impacted our same checking accounts at a time when families and businesses were struggling to make ends meet.
For those in the service sector, the choice was either put a sales tax on services or watch your B&O tax go from 1.5 to 2.5 percent. That was like being asked if you wanted to be hanged or shot by a firing squad. The result was still the same.
But Democrat leaders say a major tax plan, such as a new capital gains tax, is unlikely in the near future, but despite some of those same assurances, things moved fast in the 1993 legislative session, resulting in higher taxes and fees.
The bottom line is Washington can’t afford another 1993. Costs actually matter more today than they did 25 years ago.
Don Brunell, retired as president of the Association of Washington Business, is a business analyst, writer, and columnist. He lives in Vancouver and can be contacted at TheBrunells@ msn.com.