Hello Board and Gov't Affairs Group,

 

Wednesday at 5 p.m. is the deadline for House bills to be voted out of the House and Senate bills to be voted out of the Senate (except budget related bills).  Otherwise they are dead for the session. 

 

The state budgets won't be released until March 20 or thereabouts, after the next revenue forecast.  The word is that while state tax revenue is increasing, so are demands on state resources, such as schools, medicaid and other government services.  This puts more pressure on legislators to look for new sources of revenue or to lessen the amounts available for tax incentives.

 

We can be pretty much assured that the tech industry will be a target for those looking for revenue.  Because the tech industry uses the R&D incentives extensively, those tax credits and deferrals could be targeted for an early expiration, with the money going toward K-12 and/or higher education.  If the R&D incentives were to expire with no replacement, the increase in taxes is about $50 mil to $60 mil per year (approximate).  What is not known is the potential detrimental impact on jobs or on tech companies if the B&O credit and the sales tax deferral for R&D is allowed to expire.

 

We anticipate that Gov. Inslee will introduce a proposal that will make substantial changes to the R&D incentives and possibly replace them with something similar but limit those eligible to only smaller companies.  WTIA will oppose measures that eliminate substantial numbers of companies from being eligible for tax incentives.

 

Attached is my bill tracking report with comments on some of the bills we are following. 

 

Our AP computer science bill, HB 1472, passed the House last Friday with a solid 95-3 vote.  It now goes to the Senate.

 

SB 5605, the bill that helps association health plans, is on the Senate floor, ready for a vote by the full Senate. Those of us with AHPs are working to get a strong bipartisan vote.  No telling when or if this bill will come up for consideration.

 

I am following a number of various bills in K-12, higher education, taxes, technology and general business.  There are some proposals that are onerous, such as HB 1313 relating to paid sick leave and HB 1440 relating to indpendent contractors.  Other than those, there is not much that would be detrimental to tech company operations. 

 

There are bills dealing with battery recycling, energy efficiency standards for battery charging systems and state licensing/portals.

 

If you have any questions regarding any proposed or pending legislation, please let me know.

 

I also want to clarify on the various tax issues that WTIA has never been against compromise or willingness to discuss taxes or tax increases.  However, in the last 3 years, WTIA members got a general B&O increase, many WTIA members have to collect sales tax as digital automated sellers, have to pay sales tax on cloud computing and now face the possibility of losing tax incentives for R&D.

 

Additionally, the ICT industries grew 25,000 jobs between 2005 - 2011, during a time when the state was in deep reession.  The tech industry pays substantial B&O, sales, property and other taxes that dwarf the $55 million or so that is taken in R&D incentives by all industries annually.

 

So the bottom line we are happy to have discussions with elected officials about taxes and revenue, as long as they are balanced and the tech industry is not unduly targeted for tax increases.  Thanks, Lew

 

Lewis A. McMurran
Vice President, Government and External Affairs
WTIA
206-448-3033 x101 office
253-653-5331 mobile
www.washingtontechnology.org
www.twitter.com/lewismcmurran

Please see below legislative update from Lew McMurran, Vice President of Government & External Affairs at the Washington Technology Industry Association (WTIA). 

 

The first legislative cutoff has passed, which means many bills have died in their policy committee.  Many bills are still alive, including 3 WTIA likes.

1. HB 1472, the AP computer science bill.  See details in report.
2. HB 1693, the B&O exemption for startups.  Hearing in Rep. Carlyle's Finance Committe Tuesday at 8 a.m.  Need someone or two to testify or show up to support.
3. SB 5605, the bill to help AHPs.  Passed out of Senate Health Care.

Per Lew, more threats are coming to the R&D credits.  We don't know all the details yet but we will have to weigh in with legislators this session to hold on to these.  More details are in the report.  No doubt more pressure will come to allow the R&D incentives to expire to “fund education”.  The IT Industry grew 25,000 jobs from 2005-2011, even during the recession.  We have done our part to keep the state economy going.  Not renewing tax incentives for R&D, even if less inclusive as before, is not good tax policy.  Washington has to compete and let its tech sector compete as well.

 

Lew and WTIA will continue to fight against efforts to limit or allow the R&D incentives to expire.  We will need the help of the WTIA/TAG Board and members to keep this economic development tool. 

Thank you for your support.

 

Robin Halliday

TAG, President

This message comes to us from Lew McMurran, Vice President of Government & External Affairs at the Washington Technology Industry Association (WTIA):

 

Legislative Session Update for Week Ending Feb. 23, 2013

 

Week 6 of the 105 day legislative session finished with a flurry of activity as yesterday was the deadline for bills to be voted out of policy committees.  Next Friday, March 1 is the deadline for bills to be voted out of fiscal committees.

 

I am following 86 bills total, some of which are “companion” bills, i.e. the same bill but two versionsundefinedone in the House and one in the Senate.  While I am following a large number of bills, we are actively working only a few.

 

Priority Bills
HB 1472  makes AP computer science the equivalent of a third credit of math for high school graduation, instead of an elective, and sets up a Computer Science professionals task force.  This bill passed out of House Education Committee Feb.21 and now moves to the House Education Appropriations Committee.  WTIA supports this bill.

 

HB 1693 provides a B&O deduction for some types of new manufacturing and tech businesses for the first three years of their existence.  These businesses can deduct up to $1 million in revenue before their B&O liability kicks in, which can be a huge help to young companies.  This bill passed out of the House Technology and Economic Development Committee and is scheduled for a hearing in the House Finance Committee next Tuesday, Feb. 26 at 8 a.m.  HB 1693 also has extensive reporting requirements.  WTIA supports this bill.

 

SB 5605 relates to Association Health Plans.  This bill attempts to codify in state law the conditions that the federal Dept. of Labor sets out for member-governed groups to be considered bona fide employers for the purposes of selling health insurance under the Affordable Care Act.  Passage of this bill would be helpful to WTIA in guaranteeing that we can continue to offer a large group health plan to our members.  This bill passed out of the Senate Health Care Committee.  WTIA supports this bill.

 

K-12
As is customary, the K-12 arena is very active with all kinds of legislation being proposed and discussed.  The McCleary decision is the overriding concern of the legislature this session.  The state Supreme Court said in essence that the state needs to spend a lot more money to provide a “basic education” to all the state’s students.  The assumption is that at least $2 billion more needs to be spent on K-12 education over the next 5 years to comply with the McCleary decision.  Some estimate put compliance with McCleary at $6 billion in new spending.  With a slowly recovering economy, tax revenues are growing but not at the pace of the legislature’s desire to spend it on K-12.

 

Below is a short list of K-12 bills that I am watching that are moving.

 

HB 1177 is a bill dealing with persistently failing schools.  Current law identifies them but does not allow any intervention.  Federal grants are available for failing schools and a number of schools have received these grants in the past.  HB 1177 makes changes to the conditions and action plans for failing schools.  State funds may be used if appropriated.  OSPI needs to develop more robust plans for helping failing schools but intervention by the state is still prohibited.

 

HB 1252 sets up an online professional development system for teachers.  The idea is for OSPI to find and collect various online resources that can be used for teacher professional development at low or no cost to teachers.

 

HB1692 implements the 24 credit graduation requirement and the allocation formulas for schools to increase their teaching time to have a 6 period day, up from 5 currently.  This new allocation drives cost up dramatically but is what is required under the education reform proposals from 2009-10.  There are a number of other provisions dealing with various K-12 programs.

 

SB 5587 adjusts the various student assessments required for graduation.  Students have to pass a reading, writing and one math assessment currently.  By 2015, an additional math and a new science assessment are required to graduate.  With adoption of the common core standards, assessments will change.  The reading and writing assessment will be combined into one test.  Students will still have to pass two end of course math tests and one test in biology as the science requirement.

 

SB 5755 is Gov. Inslee’s STEM bill.  This bill attempts to coordinate all the various STEM related activities going on in education around the state, find best practices, use student data more effectively to improve STEM teaching and learning and to increase the pipeline of students pursuing STEM degrees.

 

Higher Education
As has become customary, the higher education budget is the area where the legislature, particularly the House, uses to cut or balance the budget.  With K-12 a “must” increase and with Medicaid expansion and a health benefit exchange, higher education will be lucky to stave off cuts and just keep even.  Plus the legislature is in a mood to limit tuition increases but knows there is no other way to see students get served.  Demand for higher education at all levels remains high.

 

HB 1043 deals with differential tuition.  The legislature had allowed the state’s colleges and universities the authority not only to set their own tuition for resident undergraduates but to allow for “differential” tuition.  The idea being that schools to charge more for the more expensive degreesundefinedsuch as engineering or computer science or other majors that require labs or equipment.  However, due the negative effect this arrangement could have done to the GET program, differential tuition will be disallowed.

 

HB 1624 sets a goal for affordable tuition to not exceed 10% of median family income.  It also sets a goal to have state funding be no less than 50% of the cost of tuition.  The bill sets up a task force to look at a wide range of higher education issues around funding, access, performance and other key measures.

 

SB 5624 requires alignment between K-12 STEM and career related programs with Community and Technical College applied baccalaureate programs.  This is designed to ensure better coordination between high schools and CTCs in STEM related career training.

 

Technology related
HB1017 sets efficiency standards for battery chargers and battery charger systems.  By 2014, battery chargers and battery charging systems must be compliant with the California regulations governing energy efficiency for these systems.  These systems cannot be sold in the state unless these standards are met.

 

HB 1364 is another battery related bill.  This bill sets up a battery recycling program, similar to the one for computers and TVs.  The majority of the burden falls on manufacturers to provide for collection and pay for the costs of recycling.  Retailers also have significant responsibilities in the collection process.  This is another bill to try to reduce toxics, harmful chemicals and metals from the solid waste stream.

 

SB 5211 This bill disallows employers from asking for the social networking account passwords of prospective employees in order to gain access to the prospective employee’s account.  Civil penalties are allowed for violations.  There are some exceptions for complying with other state and federal laws.

 

Government IT bills.  There are several bills related to state government IT policies and enabling “one stop” portals for businesses to do all state licensing and permitting without having to go to multiple agencies.  These ideas come up regularly. Many state agencies can be accessed online for a wide range of transactions, while others are not.  There are still various and sundry IT policies among state agencies, some are in the cloud, others are not.  Then there is how to best use the state albatross, aka the state data center.  New state CIO Mike Cockrill seems like a capable person and with a new governor, there may be an opportunity to see state IT usage and policies improve.

 

Tax and tax incentives
This is the most contentious area that we are involved in.  The tax incentives for R&D expire Jan. 1, 2015.  A Joint Legislative Committee published a report saying the B&O credit (sales tax deferral was not included) produced very few jobsundefined454 to be exact.  They used an economic model that the staff admitted was flawed.  The study did not look at a number of other factors related to the $7.7 billion of R&D that goes on in the state, or the multiplier effect of R&D spending.

 

The Washington Education Association (teachers union) opposed HB 1303, which extends the B&O credit and sales tax deferral for R&D for an additional 20 years to 2035.  There has been some negative media written by certain tech columnists about the use of tax credits.

 

These two tax incentives total about $50-$70 million annually of tax benefit.  This is based on about $22 -$23 mil in B&O credit and another $25 - $50 in sales tax deferral (DOR’s reporting requirements make it difficult to know the exact amount of sales tax deferred).

 

This dwarfs the hundreds of millions in B&O and sales tax that tech companies do pay, in addition to the $500 million in taxes employees in the tech industry pay in state and local taxes annually.

 

Nonetheless, the desire to raise taxes and raise revenue goes unabated (at least in one particular caucus).  To be fair, there is a strong case for more revenue for K-12, even as reforms need to be implemented and quality improved.  Plus higher education is under the gun so the tax/revenue picture cannot be ignored.  The spending “problem”, if you will, comes from health care and related.  State reimbursements to nursing homes, other providers, Medicaid expansion, state employee coverage, new health benefit exchange all combine to put enormous pressure on the state budget.  As previously stated, K-12 funding will have to be increased and getting higher education back to 11% of the state budget is one of our goals.

 

We ought to think about a position on taxes that puts us in a position to be helpful to the state’s coffers while still being able to take advantage of useful tax credits and deferrals.  We ought to think about allowing the B&O tax to keep going at 1.8% beyond the June 30 expiration if we could get certainty on the R&D side.

 

No doubt more pressure will come to allow the R&D incentives to expire to “fund education”.  The IT Industry grew 25,000 jobs from 2005-2011, even during the recession.  We have done our part to keep the state economy going.  Not renewing tax incentives for R&D, even if less inclusive as before, is not good tax policy.  Washington has to compete and let its tech sector compete as well.

 

We will continue to fight against efforts to limit or allow the R&D incentives to expire.  We will need the help of the WTIA Board and members to keep this economic development tool.  Thank you for your support.

 

Please contact me if you have any questions or comments.  Lmcmurran@washingtontechnology.org or 253-653-5331.

I recently received this request from Jeff Wright, the Dean of the College of Sciences and Technology at Western Washington University and hope you will take a minute to read it and support their initiatives.  Links to referenced documents are provided.

Dear Sommer,

As you know, we have submitted a proposal for consideration by the Washington legislature to create an engineering baccalaureate program at Western Washington University (WWU). If successful, we would create a program that would begin accepting students in the fall of this year, thus immediately increasing the number of engineering students studying at Washington universities by approximately 500. We seek advocacy support from the membership of the Technology Alliance Group (TAG) for this unique opportunity.

Western has, for decades, been a source for professional technical-practice graduates through our very strong Engineering Technology (ETEC) and Computer Science (CS) degree programs. Our faculty has developed a strong reputation for educating students with both the skills and intuition that enables them to be productive immediately upon graduation. Building on that model, we are proposing to add requisite analysis and design dimensions to our student’s education that will enable them to be hired by Washington industry into positions that qualify them to pursue professional engineering licensure.

The reasons that we are well positioned to make this move are several. First, the engineering program that we would create at Western would be built on the very strong foundation of mathematics and sciences that has been established at Western. Specifically, our undergraduate programs in biology, chemistry, physics, and mathematics are all among the very best found at primarily-undergraduate institutions. These programs, without substantive modification, will provide our engineering students the scientific framework that is an essential framework within which to study engineering.

Second, the laboratory facilities that we have established at Western are top quality. Though a small portion of the funds that we are requesting would be needed to extend student access to these labs, our past investment in, and robust design of, these facilities will be immediately available our engineering program.

The current faculty in our ETEC program are each well qualified to contribute directly, and immediately to this shift to engineering. The vast majority of engineering science courses - those courses that follow immediately the foundational science courses, and provide students the formative principles upon which engineering understanding relies are already in place, and being taught by these faculty at Western, including most of the necessary engineering lab experiences. The major part of our proposal to the State is to add sufficient lower division (second-year) mathematics courses that are not presently taught at Western, and which are required for engineering accreditation, and several upper division (third and fourth-year) design and analysis courses required for engineering professional specialization.

Fourth, and important for maintaining a focus on early professional engineering development, Western has a very strong, and longstanding relationship with technical industry within the State. This includes our largest employers of technical workers - Boeing, Microsoft, power utilities, etc. - as well a very large numbers of local and regional-based employers. Our students are widely recognized for having “hands-on” intuition and skills that have made them valuable to their employers, while also having technical depth in their education that enables them to advance quickly into technical leadership roles. Our move to full engineering status would provide students the additional engineering insights and credentials that will enable them to qualify for positions at a level that would make them even more valuable to Washington companies, particularly who employ licensed engineers as the core of their businesses.

In addition, Western has the leadership experience and academic connections that will insure that this transition is successful and fiscally efficient. Having 30 years of experience in engineering education at some of the top engineering programs in the country, including 10 years developing the first public engineering program in the 21st century, I have a unique perspective on what is required to establish an engineering program that is designed specifically to meet the needs of its constituents, the State and its citizens, and the industries that we will support.

I ask that you help us in a campaign for advocacy for our proposal. A letter from the leadership of those TAG member organizations articulating the value of this program for the future of their company would be extremely valuable. Attached is a reiteration of our main points that might be considered in crafting such letters. Also attached is a list of names and contact information for key individuals to whom we would like these letters addressed.

I appreciate TAG’s consideration of this request, and for your help in creating an important new career path for students while at the same time addressing a need for our state and nation: the quality preparation of our technical workforce for the future.

Sincerely,

Jeff Wright; Dean
College of Sciences and Technology
Western Washington University

As you know, TAG is supportive of education, particularly STEM programs.  We weigh in locally and at the state level regarding the importance of STEM programs and higher education for our building our industry workforce. We promote all of our regional higher educational institutions, and partner on programs where it fits our industry.

TAG is doing what we can to support the new Engineering program for Western Washington University by introducing them to other supporters and helping to educate leaders around the state. 

WWU has introduced a decision package to legislators in Olympia in hopes of creating this new Engineering program.  Their one page highlights/talking points are included here.

We hope that you will speak up as well in support of this program.  As always, we look forward to hearing from you about ways we can help further develop our industry workforce.

 

Next Tuesday, Jan. 29 at 10 a.m. in the House Technology and Economic Development Committee, HB 1303 will have a public hearing.  This bill extends the tax incentives for R&D to Jan. 1, 2035 from the current expiration date of Jan. 1, 2015.

 

It is very important that we have a good showing for this hearing.  There are 4 ways you can help:

 

--Show up at the hearing to testify.  We only need one or two folks to speak for 2-3 minutes as the benefit and value of the R&D incentives--whether it's the B&O credit or the sales tax deferral.

 

--Show up at the hearing and show your support.  If you can make it in person but don't want to testify, you can sign up in support of the bill.  There are sheets in the committee room to do that.  Just having a long list of supporters in the audience is helpful.

 

--Communicate with legislators/committee members by email or letter.  I have attached a letter sample that you can tailor to your company's situation.  Here is the link to legislator's email addresses and the House Tech Committee:

https://dlr.leg.wa.gov/MemberEmail/Default.aspx?Chamber=H  House email addresses

 

House Tech Committee: http://www.leg.wa.gov/House/Committees/TED/Pages/MembersStaff.aspx  Right now just emailing the committee members is enough.

 

--Call the offices of the House Tech Committee members and let them know you support HB 1303.  Here are office numbers: http://apps.leg.wa.gov/rosters/Members.aspx?Chamber=H

 

Please let me know if you can make it down to Olympia for this hearing.

 

Hearing from you about how the R&D incentives have helped your company, as specific as you can get, is critical to getting the bill passed. 

 

Let me know if you have any questions.  I look forward to hearing back from you if you can make it down.  If you do there will be a chance to talk with legislators either before or after the hearing and attend a weekly House Democrat -- business lobby meeting.

 

I will be in touch about another Olympia opportunity -- put Feb. 13 on your calendar as that will be an "Olympia Day" for the tech industry.  Details forthcoming.

 

Thanks, Lew

This message comes to us from Lew McMurran, Vice President of Government & External Affairs at the Washington Technology Industry Association (WTIA):

With less than 2 weeks left before the election, I thought it would be a good idea to weigh in with the candidates for governor one more time.

 

I have set up a call to action on our advocacy page that is simple to use.  The message is very basic and promotes our top issues of improving K-12 math and science, increasing computer science and engineering graduates, renewing the R&D incentives and supporting association health plans.  Here is the link:

 

http://www.capwiz.com/techvoice/wa/home/

 

Just follow the 3 steps it takes to send.  The text of the email is editable so you can customize it.

 

Feel free to send to colleagues and others and ask them to weigh in with the candidates.

 

Please do this today.  Let’s show that the tech industry is paying attention and cares.

 

Let me know if you have any questions.  Thanks, Lew

 

Lewis A. McMurran

Vice President, Gov’t & External Affairs

Washington Technology Industry Association

2200 Alaskan Way, Suite 390

Seattle, WA 98121

(206) 448-3033 x101 o

(253) 653-5331 m

www.washingtontechnology.org

On February 14, TAG posted a letter from Western Washington University announcing their proposal to the legislature to transition Western's Engineering Technology programs to full Engineering status.

You may be aware that business and industry leaders across the state have advocated for more college graduates with bachelor degrees in Engineering. Washington will demand 282,140 STEM jobs by 2018, requiring a 24 percent increase in training; 7 percent above the national average (and 3rd overall). Western Washington University represents the most cost‐effective way to help meet that need.  Whatcom County already has a need for more engineers, and our need is growing.

Governor Gregoire included $7.6 million in her 2012 State Supplemental Budget to be divided between the University of Washington and Washington State University to address this concern. Western Washington University was not included in the Governor’s budget, but the legislature could choose to include funding for Western in its budget.

Western would add an additional 85 to 100 Engineering graduates to the state total every year if the upgrade is made to move these three programs from Engineering Technology to industry-ready Engineering Degree status.

You can help make a difference.  Send your letter of support today and make your voice heard.  You can use the talking points that Western provided to make letter-writing easy.  Then visit their Action Page where you can enter your address and quickly email your letter to all relevant representatives in just a few clicks.

It's that easy!

But please, act quickly.  The vote could happen as soon as this weekend.  There's no time to waste, simply:

1. Visit the talking points page to craft your letter: http://tagnw.org/Resources/Documents/2012-02%20Engineering%20Letter%20Talking%20Points.pdf

2. Visit the Action Page to enter your address and send your letter to your representatives: http://wfc2.wiredforchange.com/o/8502/p/dia/action/public/?action_KEY=8413

Sincerely,


Sommer Cronck, Executive Director
Technology Alliance Group (TAG) for Northwest Washington
www.tagnw.org
360-318-7710

TAG informs, represents, and connects Whatcom area technology businesses and professionals.