The good folks of our legislative district are engaged, educated and passionate about our state’s quality of life. We have a 90% voter registration rate and, in a presidential year, a 90% voter turnout–consistently more than any other legislative district in Washington. In fact, given our district’s civic engagement, it’s hard not to enjoy the trivial and irrelevant point that in both 2014 and 2012 I received more votes than anyone else running for the Legislature in any seat statewide. In appreciating our district, this year I’ve once again reached out with a comprehensive constituent survey to ask how folks are feeling about issues and ideas that matter on the front lines of life. And this year once again I am deeply humbled by the profound sense of commitment to building us up as a community together.
As chair of the Finance committee, much of my work is focused around taxes and spending.
Here are the results of this year’s survey.
I also received literally more than 500 private comments about important issues, ideas and concerns impacting people in their lives today, and perspectives on how state government can more effectively serve our community. I am choosing not to share those individual comments since many have personal concerns, but I will share with you how impactful the comments are about tough issues. There is a genuine sense in our district that we can be so much more as a state than what we’ve become, and we can invest more effectively in public education and infrastructure to enable our children to enjoy a quality of life we’ve enjoyed. Those blessings are under threat as we as a state fail to spend the public’s hard-earned tax dollars as effectively as possible but also express a lack of willingness statewide to invest sufficiently in public services.
We are all the government. It is not some distant entity, it is all of us. Our representative democracy is under threat, however, by the influence of money. We must make government more responsible, more connected to real people living real lives and more engaged in solving the right issues. I am torn in that on some days I am angry at the bureaucracy for losing site of how hard the public works to earn tax dollars, and other times when I feel the public has lost site of the need to engage in civic issues in constructive ways that benefit all of us. The juxtaposition of these views is probably inevitable and healthy, but they also point to the need for active civic engagement at all times. Vigilance is the price of liberty!
I am so deeply honored to represent the people of our district and our state. Serving as a part-time citizen legislator is not easy or for the faint of heart, but it is rewarding.
Please share your thoughts and insights as we move forward during the 2015 legislative session. Comment here, email me at firstname.lastname@example.org, follow me on @reuvencarlyle or ask to connect on Facebook.
Your partner in service,
There is a public narrative that is so accepted it floats along unmolested by facts on the ground. It has become almost religious in its conviction and unquestioned among elected officials attuned to the public’s frequency: Washington is a high-tax state.
The evidence is overwhelmingly clear that this was the case…in 1995.
Today, we are on the march toward being a low tax, low service state. Of course the public feels as if Washington is a high-tax environment because we are irrationally nickeled and dimed in a fashion that doesn’t track with how people live their lives.
The real measure of whether a state’s revenue is too high, low or just right is whether it meets the needs of its residents. The people, through their voices in government and votes, determine the answer to that statement.
On the revenue side of the ledger, however, it’s useful to unwrap the neatly crafted political rhetoric and look at the data. Not that the data can survive the campaign season’s flamboyance, but it is worth examining if for no other reason than esoteric truth let loose in the world.
The General Accountability Office (GAO) recently released a jolting bit of news, well presented in the Washington Post’s GovBeat, suggesting that tax revenues as a percentage of gross domestic product will not return to the historical high reached in 2007, just before the recession hit, until 2058. Few states show the dramatic change of the “systems issues” identified by the GAO more than Washington.
In 1995, Washington state ranked 11th in the nation in the combined level of all state and local taxes based on personal income, the most commonly used metric by economists to measure tax burden, according to the U.S. Bureau of Economic Analysis, U.S. Census and the state Department of Revenue. State and local taxes include state property, sales, vehicle, liquor and other excise taxes as well as taxes imposed by cities, counties, and special purpose districts and every other category combined.
In 2011, the most recent year that data is available and released in 2014, Washington ranked 35th in the nation in the combined level of all state and local taxes, according to the bureau.
As House Finance chair, I am in no way arguing that any one ranking is perfect–neither 11 nor 35–but rather to make the policy and political case that our 19th Century tax structure is so economically inefficient and unfair that it does not map to our modern economy. The goal is not to be an outlier state at the high or low ends–this is one area where average is a smart target–but rather to be more intelligent by designing a modern system that grows and breathes with the taxpayer’s reality and our economy’s structure.
I maintain my personal philosophical conviction that the best state tax structure is low rates, broadly and fairly applied to everyone with few special breaks. We have the diametric opposite with high rates, narrowly and unfairly applied with hundreds of special tax breaks. It’s unfair to those without lobbyists and campaign cash. Washington’s reliance on a high sales tax, state property tax and gross-receipts business tax is, without qualification, unique in the nation and not in a handsome way.
How did Washington migrate from 11th in the nation to 35th in less than 20 years?
While many anti-tax crusaders argue that government spending is wildly out of control–and there is much legitimate criticism of how tax dollars are spent–the real issue behind the rhetoric is that four structural factors united in the past two decades to erode the state’s main tax base.
First, the sales tax has been carved out by the economy itself. This means, simply, that in today’s service-based economy about 66% of what consumers purchase is not touched by the sales tax, while only about 33% is directly taxed. In 1950, those numbers were reversed and around 1970 it was 50% to 50% (services to goods). And there is the small problem of on-line shopping, where many a sales tax bills are avoided.
Second, the people as the final arbiters of democracy have limited property tax growth to 1% by initiative. Property taxes–initially designed to fund public education–are tactically off the table as a source of revenue growth without genuine structural reform, and each year continue to be a smaller and smaller portion of overall state taxes as larger economic growth occurs in other areas.
Third, the Legislature has essentially carved out and shifted the state’s main business tax, the gross receipts-based business and occupation tax (B&O), by creating hundreds of tax breaks for influential corporations, organizations, industries and economic sectors. In 2013 the state collected a total of $3.0954 billion in B&O taxes. Of this amount, the aerospace sector paid a total aggregate amount of B&O taxes of $71.8 million after all of the credits. The technology sector paid a total aggregate of $28.2 million in state B&O taxes after credits. The entire agriculture, timber and mining sectors in Washington–combined–paid $14.6 million in state B&O taxes after credits, according to the state Department of Revenue.
To be clear: These sectors and industries–and the companies they comprise–also pay various sales, excise, property, unemployment insurance, worker’s compensation and other taxes and fees so calculating their true effective tax rate requires integrating all of the data. Still, the B&O remains our state’s primary business tax and for many of the most profitable global companies the combined state effective tax rate is generally in the very low single digits or even negative range.
To put the corporate taxes in perspective on the spending side, five of the major industries listed–aerospace, information technology, agriculture, timber and mining– in the state paid a total of $114.6 million in state B&O taxes while the base budget from taxpayers to fund the University of Washington alone is $270.9 million. The state general fund budget is $16.9 billion a year or $33.8 billion on a biennial basis.
When a tax break (i.e. tax preference, tax exemption or tax incentive) is adopted by the Legislature for a given company or industry, it is essentially a “tax shift” more than an actual reduction and in most cases the real philosophical losers are at least small businesses–the vast majority of our state’s 345,961 total registered businesses that earn $250,000 per year or less in revenues that don’t receive the preferential treatment.
The cost of granting the tax breaks also disappears into the political mist. In the decade of the 1990s, for example, the Legislature created 103 new tax preferences of the combined 655 total we see today. The total fiscal impact today in foregone revenues is $1.5 billion from those preferences alone. Nowhere does that cost show up on the books. We have created a system where tax breaks are “off-budget” until and unless they are set to expire, and only during the political process of renewing the tax break does the “opportunity cost” of how those dollars are spent surface in the budget process.
Fourth, the Legislature has directed increasing state tax dollars to local governments during this period using a variety of tax instruments that have the net effect of shifting dollars to the local level. Also, nearly 1,800 special purpose taxing districts, such as fire, library, cemetery, flood control, hospital and transit districts, have been created at the local level, so local governments in aggregate now account for a larger portion of revenue growth than the state general fund. This is the policy equivalent of a tax preference for local governments when those dollars would previously have been dedicated to the state’s general fund budget. In many cases, city and county governments are acting as agents of the state, so the transfer of taxing authority is naturally commensurate to the new service obligations. Irrespective of the degree of merit, however, it has taken a major toll on general state revenues.
In all four of these categories there are frequently rational policy reasons for the actions taken. This is art not science and there is no one mystical answer. The challenge arises with the convergence of the four long-term, structural problems when we face a perfect storm of nearly 20 years of tax erosion of the state’s main budget.
The result? A court order to increase funding for public education; a court order to increase funding for mental health services; disastrous cuts to foster youth and children’s services; the doubling of tuition for college students; poorly paid teachers; insufficient investments in Puget Sound cleanup and so much more.
All of these dense policy issues fail to capture the human impact of morally bankrupt tax system. By any standard our tax system has become the most unfair to the middle class and low income in the nation. According to the Institute of Taxation and Economic Policy, the lowest 20% of income earners in Washington–making an average income of $11,500 per year–pay 16.9% of their income in state and local taxes. The national average for this group is 11.1%. The top end–the proverbial one percent earning average income of $1.1 million per year–pay 2.8% of their income in combined taxes in Washington, dramatically less than the 5.6% national average.
We can no longer continue down the same path of tinkering with a broken, unfair and economically inefficient tax system that is divorced from our economy and fails to serve our communities. The 20-year trend shows absolutely no signs of relenting. In a handful of years we are likely to be 40th in the nation in the combined level of state and local taxes based on personal income. And a few years beyond that we can expect to reach 45th. Is that our vision for ourselves? Are we so caustically anti-tax that we would close the doors of our colleges to our own children? Would we close foster homes for our most vulnerable? Would we allow traffic to suffocate our industrial economy and our quality of life?
In an era of divided government, let’s put labels aside and design a modern tax structure that drives us into the future. When it comes to taxes, let’s move toward the national average by building a healthy system that grows with our real economy not our tainted politics.
It’s time for tax reset of our antiquated, outlier system that is responsive to our community needs and built for a 21st Century economy. That’s not a veiled euphemism for an income tax or a shallow retreat into old rhetorical battles. It’s a call for courageous honesty both to raise sufficient revenues and to demand rigorous, authentic and fierce accountability for how those hard-earned tax dollars are invested.
We are an educated, entrepreneurial, innovative state. We are also coasting on fumes from a time when our tax system mapped more intelligently and capably to our role in the global community.
We are so much more than what we’ve become.
Your partner in service,
“Pay as you go” is a budgeting principal that has been tried in Congress and in many states and failed in almost as many places. It’s popular on the left and right during good times but understandably struggles during difficult economic times. It was seen as important to balancing the budget in the 1990s under divided government, and the concept has had starts and stalls since, mostly when political pressure forces tough decisions “off budget.” The concept is simple: Force a legislator to formally identify a source of funding (revenue increase, spending decrease or combination thereof) for her or his new spending idea whether a tax expenditure or appropriated spending. The real reason for the failure, of course, is that publicly identifying a way to pay for a tax expenditure or spending increase is hard work and makes double the enemies one often needs to get a deal done quietly.
A strong case can be made that pay as you go makes the most sense at the state level where we don’t print money and must balance a budget each biennium.
Ultimately budget writers are forced to institute a pay as you go plan behind the scenes and in the back rooms of state government. We line up the list of spending proposals (good, bad and ugly) from the base level budget and our colleagues and juxtapose it against available or new revenues. And we try and make the two sides of the ledger match by moving the lego pieces around until a package balances financially and politically.
Four years ago I posted a blog entry about the importance of a “pay as you go” approach in the Legislature. As a back bencher the idea was naturally unceremoniously ignored. Now, as chair of the Finance Committee, I have slightly more institutional authority and credibility to implement elements of such a policy, and I intend to do just that because it brings actual sunlight into the budgeting process.
For tax incentives, exemptions and preferences that come before the committee in 2015, I intend to respectfully ask proponents to publicly make specific recommendations for how to fund their individual proposals. I do not mean this to put unnecessary or inappropriate pressure on guests or to make individuals uncomfortable, but I do intend to make it clear that each request for tax expenditures does require a source of financing. The pipeline of tax expenditures is not innoccuous from a fiscal perspective and it shouldn’t be assumed that it is simply a matter of priorities. Tax expenditures are appropriations just as much as appropriated budget items when they literally reduce revenues. That is not a value judgement but a fact of budgeting life.
Recently, Governor Inslee outlined his vision for extending the sales tax on electric vehicles. This is a legitimate public policy issue and warrants a thoughtful public discussion about the economic, environmental and transportation policy implications. While I strongly support the importance of migrating to a non-fossil fuel based transportation system, we do have a difficult position in our obligations to secure adequate funding for the 2015-2017 operating budget. The total fiscal cost over the coming four years of the plan stretches to $60 million in out-of-pocket costs. There was media coverage of the discussion of Inslee’s plan and my thoughts on the issue here and here.
The cost of tax expenditures has reached a tipping point of pressure especially in light of the Supreme Court’s ruling holding the Legislature in contempt for failing to amply fund public education. It’s critical that proponents from the Governor to legislative colleagues to lobbyists to CEOs appreciate the importance of the opportunity cost of a tax policy decision. I said of the Governor, “If he wants this tax break I respectfully invite him, like all others in Olympia, to propose a specific, off-setting revenue source or spending cuts to pay for it.” If it’s good enough for the Governor and budget writers behind the scenes, then it’s good enough for the public, by the public, in the public arena.
Your partner in service,
Before the campaign season fades and the governing noise of the 2015 Legislature begins, it’s valuable to use this brief window of time to reflect on the flow of the political year.
In public life one quickly realizes that there is an inside game to government and an outside game. In the inside game, there are rules of engagement, codes of behavior and expectations. A central challenge and decision facing most legislators is whether you have the disposition and orientation to play the inside game well enough to deliver for your constituents, community and state without losing a sense of self. Or whether you will find yourself at odds with the general way of getting thing done and, most likely, discover a lack of success at passing substantial legislation. There is no one pathway but playing only the inside game, or only the outside game, seems to rarely work.
One of the central tenants of the inside game is to pay close attention to the intangible, insider-driven flow of the political year.
The Legislature meets for 60 days sessions in even numbered years and for 105 days in odd numbered years. One major reason is that legislators want to head home quickly by mid March during election years, and leave the complexity of budgets for the marathon 105 day sessions during non election years.
Going into an election year, there are many incumbents running for reelection as well as many open seats. Most of the 49 legislative district seats are, as in Congress, relatively ‘safe’ for one side or another and only a handful are truly ‘swing seats’ that could go either way depending candidates, turnout and campaign strength.
First time candidates of both parties begin to engage in a dance of political intimacy for voter support and campaign dollars. It begins in earnest by April, May or June of each election year when candidates start answering requests from interest groups to fill out dozens and dozens of questionnaires that attempt to assess their views on the organizations’ priority issues. The Seattle Times editorial board picked up the cause of asking candidates to make their special interest questionnairs publicly available for all to see. I assume everything I say and write while in public office is public, so it certainly doesn’t bother me, but there are many who disagree.
For those endorsed by an interest group, the fundraising success begins to increase. After you have finished with friends and family, the calls begin to lobbyists, advocates, donors and coordinating fundraising from among like-minded supporters.
In the inside game, lobbyists–business, labor, environmental, social services, health care, civil rights and much more–are extremely influential in the determination of who will be endorsed by whom. A candidate meets with lobbyists over coffee and auditions their story, pitch, public policy knowledge and political acumen. Lobbyists look for clues to who will win a race, such as whether a candidate has lost weight or sports a tan–signaling many hours spent doorbelling in the summer sun. Campaign contributions are often given in person over coffee, so the lobbyist can strengthen the relationship with the candidate further. Public Disclosure Reports track money raised, which is scrutinized by insiders. Who gave how much to whom?
Business oriented lobbyists will select the more ‘pro business’ candidate in a race and campaign dollars will follow if it is a priority race in a priority district. Labor-friendly legislators will focus on labor endorsements and resources. It quickly becomes clear who is on what side of most issues. Newspaper endorsements, Municipal League ratings, hard work and other factors will come into play as the primary comes and goes and the political establishment reassesses who is expected to win in November.
After the long campaign season comes victory or defeat.
This year the obscene amount of money spent by insiders and outsiders resulted in virtually the lowest turnout in decades, a GOP sweep by those who did bother to vote, and a question of how divided government will work on a board level in our state.
Still, this year as after every election day, victors have about two months to prepare for the legislative session. During that time dozens of additional meetings over coffee will occur with those same lobbyists who weeks before handed over a campaign contribution in the same coffee shop, to present the agenda for the next legislative session on behalf of a client or interest group or simply to strengthen the relationship further. Legislator-elect members are, of course, grateful for the support received. Often interest groups who backed the losing candidate will also seek meetings to build a new relationship. Sometimes they, too, have a change of heart with the newly elected candidate and make substantial campaign contributions after the election to help pay off any campaign debt the victor may still have. Those who lost often struggle to pay off campaign debts. Meanwhile, seasoned incumbents are busy at work drafting bills in preparation for the session and meeting with interest groups with proposals in hand.
In politics as in life, it’s about relationships and this time is important to strengthening ties in preparation for the difficult policy work ahead.
The legislative session begins the second week of January. Since it’s always an odd-numbered year following election season, lobbyists, activists, staff and legislators prepare for a 105-day-session at best.
Within days of the new session and throughout the session, as new legislators learn how to sign and introduce legislation, lobbyists often circulate legislation for support, asking legislators to assist with their priority bills. As the session continues, tensions inevitable rise as controversial votes inch forward and decision time looms. Vote counts of who stands where on important bills–formal and informal–occur as the dance of the legislative process flows through the session. Those legislators who remained quiet or sent mixed signals often finally need to take a stand.
Major and minor bills pass through House or Senate committees, floor votes and on to the governor for signature, or they die somewhere along the process. The overlay of politics encircles it all.
Relationships grow, fray and mend, as legislators, staff, lobbyists, activists learn how each other dances. The uncomfortable side is that the dance changes depending upon whether it is campaign season, interim policy season, or the legislative session.
After the legislative session comes to an end, and everyone rests briefly, the lobbyists and interest groups begin their “legislative session report” of the year. A ‘scorecard’ is developed for organizations from business and labor to social services and more. Virtually every major group develops a scorecard of how legislators voted on the issues important to that group. Most Republicans get strong scores on most business group scorecards, and most Democrats get respectable scores on labor-oriented scorecards. There are exceptions, of course, but fewer than might be expected.
In the interim between the long legislative session and the next year, committees work hard to develop new agendas, often in partnership with those same interest groups. Sometimes the agenda is set from the inside and sometimes from the outside.
The inside game is, by its very nature, interested in the status quo and preserving the institutional grip of current interests. It is often the outside game–from initiative pressure from stakeholders to media, normal public pressure and particularly motivated interest groups–that pushes for change.
As long as we may serve in our part time citizen legislature our job as legislators is, in my view, to come to work with the urgency of citizen activists and oversee the people’s interests and not become reticent to speak out, engage, challenge and push for the public good. Advocates and interest groups are good people doing their jobs, but the more they are allowed to set the political and financial agenda the more the inside calendar ultimately dominates the policy agenda.
The two worlds–inside and outside– exist in a vibrant, interactive, nuanced, evolving tension that is democracy itself. No bill is certain if its genesis is inside pressure or outside pressure, but it does shed a bit more light on the journey.
It is also the reason I feel more strongly than ever that citizen legislators must not defer to the institutional grip of the professional establishment–staff, lobbyists, agency officials and others–but take our role as independent arbiters of policy decisions seriously. Stronger disclosure rules, more transparency and more public linkages between the money flow and legislation is critical to educating the public about the implications of the inside and outside games.
None of this is to remotely suggest that bills and agenda items from insiders are inherently bad and that outside agenda items are inherently good or the other way around. But it is not unimportant to look for the invisible fingerprints on a bill and ask the question, “Where did this bill come from? Really.”
Your partner in service,
In my six years of service in Olympia there is one important piece of legislation that I have actively supported that has yet to be even introduced. That bill’s time has come. I am announcing plans to introduce comprehensive legislation in 2015 to require a one year “cooling off period” for senior appointed executives, legislators, statewide elected officials and others before they can become paid lobbyists following their official government service.
Northwest Public Radio’s multiple stories about campaign finances–lobbyist roles in directing campaign money, party caucus funds and more–remind us of the direct interplay between campaign funding and governing interests.
A cooling off period is a vital element because it allows time for officials still in government to reflect more studiously on the implications of assisting former colleagues on behalf of clients. It makes them less uncomfortable to turn down a request from a former colleague that might be inappropriate. It introduces prudence and cautious reserve to help a former colleague following the reflection of time and space. And, for the government official turned lobbyist, it reminds them of the weight of their actions and the use of direct access and relationship capital.
The federal government currently requires key senior staff and legislators to wait a full year before they can become paid lobbyists. There are still a number of loopholes that allow them to privately provide advice and counsel without direct lobbying that we should be sure to better understand and potentially close. At least 32 states have some version of this bill, according to the National Conference of State Legislatures. Many focus on the ‘revolving door‘ but at the state level there is usually only a one way exit and opportunity–from government to industry.
It is time for Washington to institute a similar law.
With years of experience of the Washington, D.C. and other state histories, hopefully we can adopt a thoughtful approach to ensure that former officials are not merely hands-off advisers in name only and are, in fact, avoiding meaningful advocacy from paid clients whom they may have regulated or overseen in their official government capacity only days, weeks or months before. Disclosure alone is insufficient. There must be a stronger wall between a person’s time in government and the opportunity to leverage that role for private gain.
The New York Times expose of relationships between the former and current attorney generals and staff is simply the latest example, although the issue has surfaced numerous times in the past and I had the bill drafted prior to the story. While I do not question the intent or motives of those involved in this particular story, there is clearly a structural problem that requires rectification by the Legislature. The personal relationships and direct access exhibited in the article’s phone and email communications between former and current staff in discussing client interests can not help but suggest the need for more distance. Still, I was genuinely pleased and impressed with Attorney General Bob Ferguson’s immediate reaction to the article touch on this idea and I look forward to working with him on this issue.
There are many good, decent and honorable lobbyists with whom we work in Olympia who previously served as senior officials in government. But it is highly damaging that some concluded their government work on a Friday and started work as a private lobbyist for clients on Monday. It’s far too close to comfort and contributes to a perception of inappropriate relationships, access and behavior.
Sometimes perception is reality. To maintain public trust, we cannot allow senior government officials to immediately leverage the access of their positions for private gain as paid professional lobbyists on issues that they previously regulated or addressed. A cooling off period allows for a more thoughtful, responsible distance between public sector and private work and that, in turn, instills greater confidence by the public.
Your partner in service,
My predisposition toward supporting the University of Washington as an intimate part of Seattle’s soul is no secret. As one would expect my fierce bias toward my own Seattle district is, of course, above reproach and fully justified by any standard. The economic, social and political relationships between the world renowned institution of higher education and the City of Seattle testify to both our past and our future. At a policy level I also love the physical presence of place, time, smart growth, intelligent density and urban communities that is empowered by well-designed public space.
The combination of the two is a beautiful friendship. It would be a stretch to think of a more meaningful, constructive and appropriate use of the now-empty but stunningly world-class Amgen R&D facility– at the heart of the maritime gateway to Seattle in Interbay– than to make it a part of the University of Washington family.
As Amgen prepares to leave Seattle, we have the opportunity to reclaim a public space with such a voracious appetite for the common good that it’s exciting to envision. It is, simply, an amazing research facility, beautiful building and well-positioned institution. The match with the University of Washington could not be more powerful for generations to come, and would provide benefits across the board to the public.
The development of South Lake Union, lower Queen Anne, Belltown and other neighborhood resources inspire us to believe in the possibilities of smart growth and the Metropolitan Revolution. UW Medical Center, Gates Foundation, Pacific Science Center, commercialization efforts, global health, biotechnology and biomedical facilities and other public and private sector initiatives together suggest we should ensure that the University of Washington as an umbrella institution and framework owns the facility for the greater good. It is a natural fit.
This is a once-in-100-year opportunity. It is too important to the next generation of our community not to connect the various silos of our economy, society and region together in a responsible fashion. The University of Washington could, as a public institution, coordinate the opportunities for 21st Century research and development (you should see the quality of the labs) for educational and commercial partners throughout the state. And the linkage with other aspects of the waterfront work as well. The grain elevator next door, for example, is not a quaint relic but a hard-working delivery system of agricultural products from Central and Eastern Washington to the Port of Seattle to be sent to Asian markets.
Research and development is part of our city’s DNA. This R&D facility, while unfortunately ending as an Amgen presence, can continue into the next generation and play a powerful role in unleashing the city’s future.
The long history of the University of Washington metropolitan tract may cause some to question the broader financial issues of the UW’s role in city property, but the value proposition itself of this historic opportunity should not be discounted. Perhaps a new look at the broader relationship of property across the city can accompany this initiative.
I call on the leadership and board of trustees of the University of Washington to seize this extraordinary opportunity and purchase the facility within its existing, long-term capital planning for the UW Medical Center and other schools and programs within the institution.
Let’s remember that Immunex was a Seattle-based research and development firm with a wild west scientific culture of innovation that attracted the best of the best from around the world. It represented the best of inquiry and entrepreneurialism. It received FDA approval for its breakthrough autoimmune disease drug Enbrel in 1998. That product–which is the reason Amgen acquired Immunex–is now the world’s third-best selling drug in 2014 with $8 billion worldwide sales, according to Thomson Reuters. It has been a revenue work horse for Amgen and it was discovered in Seattle labs by Seattle researchers who sent their children to Seattle schools.
Now, let us call on Amgen as one of our country’s most respected firms that continues to realize billions in revenues from the Immunex-related acquisition–to acknowledge the role that public taxes of $47 million from Washington taxpayers played in supporting the company, and in turn to sell the property at a reasonable price to the publicly-owned University of Washington with some authentic and moral acknowledgement of that generous tax benefit. The employees of Immunex built an amazing company and the promises by Amgen to grow employment following the acquisition did not materialize. On some level that we all acknowledge, this is a reality of commercial life. But the tax benefits provided by Washington citizens did materialize, they were delivered on time, the social contract was signed and the company received $47 million in direct public subsidy from state and city taxpayers. Another hard lesson learned for public officials.
I call on Amgen to acknowledge that selling this facility at a modest and respectable price to our state’s premier institution of higher education–where R&D comes alive in the public sector, researchers are discovered, physicians and scientists develop skills, life-changing new products such as their own Enbrel are created–is the spirit of what the company is supposed to be about.
We are seeing the broader linkage between Seattle’s industrial and maritime waterfront, commercial sector, export facilities, tourism and smart growth and density. Our waterfront is alive, changing and growing. Let’s replace one of the world’s leading commercial research companies in this thrilling location with one of the top public institutions of higher education in the world.
Your partner in service,
Under Obamacare, the fundamental transformation of health care in America is underway, with 1.3 million more people in Washington state alone now able to secure new health care coverage. Of those, nearly 150,000 people–the vast majority low-income families who otherwise might fill expensive emergency rooms–have enrolled in the Washington State Health Exchange, our state’s health care infrastructure established by the landmark federal, state and private sector partnership. The rollout here has been more efficient and effective than in most other states. While there are many gaps in the system–namely the lack of sufficient structure to reduce the overall cost of care–it is a meaningful step toward the idea that access to health care is a moral right in a just and civilized society. While extraordinary challenges remain, we can have better health outcomes, lower costs and more humane policies by continuing down this path.
As we work through the mechanics in order to ensure the public and taxpayers are well served, those of us in the Legislature who supported Obamacare as a step toward broad systems reform have an important public obligation to ensure the implementation goes well.
The problem, and the uncomfortable trend I see going into a new budget season, is that the hybrid model of a joint public and private sector operational structure risks socializing the broader cost and privatizing the profit. At a time when state agencies are being asked to model and potentially cut 15% from their budgets, the Washington Health Benefits Exchange is poised to ask the legislature to lift the cap on their budget to an astonishing $147 Million over the next biennium. That’s almost twice the capped amount the legislature authorized in the last budget cycle. Among the largest pieces of the pie? Substantial new investments in technology.
Given my active focus on the inefficiencies in our state’s technology systems, I have been particularly interested in the way we use technology to better deliver health care, more effectively service clients and protect taxpayers. The progress is troubling at best. When state and federal resources are combined, it appears on the surface that the Exchange is spending more than $60 million a biennium on IT systems. But since the Exchange isn’t a direct public agency in a traditional sense, it’s difficult to have sufficient strategic or enterprise level oversight, purchasing or accountability at the legislative level. So while the state created an Office of Chief Information Officer to take a strategic view of IT purchasing and management, we systematically cave to industry sectors and special interest pressure to carve out major areas for oversight including health care and public safety. The result is, of course, one more silo within state government.
At the peak of open enrollment this past winter, the exchange call center was only answering around 15% of the calls in a timely fashion, according to materials presented. Throughout the spring and summer, about 1 in 5 Exchange enrollees faced maddening invoice errors that have resulted in consumers getting marked as unpaid and uninsured, though that number is down to just above 1 in 10, a measurable improvement but hardly a dramatic success. A 10% failure rate is hardly worth celebrating by public or private sector standards especially when it means real people living real lives potentially being turned away from life-impacting health care. And now, it appears, 40% of the lowest income folks on state disability benefits (that translates into about 6,000 people), who should been passively renewed to keep their coverage were apparently dropped due to IT systems not being able to effectively communicate. This after tens of millions of state and federal tax dollars being spent on new, modified and redesigned systems from top name vendors. It’s not a blanket condemnation but rather an acknowledgement that gaping holes in performance continue to trouble the technology systems despite the improvements since the rushed rollout by the federal government.
Families and individuals who are directly affected have spoken up (made a lot of constituent and media calls!), carriers and consumer advocates are calling for immediate, actionable solutions.
Of course a transformation of health care is a marathon not a sprint, and each state faces different hurdles in bringing the benefits of Obamacare to the public, and good people doing good work are making progress. And each month, quarter and year the Exchange is improving its service delivery. But it’s not coming on the cheap. Great institutions, companies and governments–whether public or private, profit or not-for-profit–must have the courage to publicly and privately demand excellence in service and price and hold themselves accountable.
Too often technology is seen as a black hole where only technical experts are allowed to question, prod and push for better results. I don’t buy it for a New York minute.
We are the home of technology, innovation and entrepreneurialism but too often our performance in government service delivery and the use of technology fails to take advantage of all that we have to offer as a state. Sate government is simply not a sophisticated technology customer. We depend upon proprietary vendors too much, we fail to adequately invest in our own technology professionals through adequate pay and professional development, and we frequently fail to deploy enterprise-wide strategies from applications to utility services.
I passionately support increasing access to quality health care. I believe the Affordable Care Act is a responsible step toward improving millions of lives across the nation, and I believe we have a strong executive team and approach here in Washington. But I don’t support tens of millions more for the Exchange’s technology systems in light of the lack of meaningful or independent technology oversight from anyone other than the agency itself. Not only is it vital to hold the line on additional technology spending, it’s likely time to reconsider the governance structure of the Health Exchange itself as a quasi-independent entity.
We are so much more than what we’ve become.
Your partner in service,