Michelle Rhee and Merit Pay in DC
This week Time Magazine featured Michelle Rhee, Chancellor of the Washington, D.C. public schools, as its cover story. If you haven't read about Rhee and the reforms she is driving in DC public schools, you should check out this article.
Rhee, a daughter of Korean immigrants and an alumni of the Teach for American program, has shaken things up in our nation's capitol. Since taking over as the city's public school boss roughly 18 months ago she has shut 21 schools, cut 100 employees at the school's central office, and fired 270 teachers and 36 principals. According to Time:
"Rhee is convinced that the answer to the U.S.'s education catastrophe is talent, in the form of outstanding teachers and principals. She wants to make Washington teachers the highest paid in the country, and in exchange she wants to get rid of the weakest teachers."
Rhee is a proponent of merit pay system and an opponent of tenure. She is battling some teachers, the teacher's union and some parents the whole way on both fronts. To read the full article, click HERE.
Salt Lake Chamber's Guest Worker Proposal
With all eyes focused on the economy you may have forgotten about immigration. Remember immigration? It was one of the top policy issues on every American's radar just last year. Well if you have forgotten don't worry, you haven't missed much.
There is still no leadership from Washington on this issue that most believe falls squarely in the federales' domain. In response to vocal anti-immigration voters, state legislators are still proposing bills (a la 2007's Oklahoma HB 1804, currently under injunction in federal court) that crack down on immigrants and put the onus on business to verify legal status.
Utah is one state with an Oklahoma-esque immigration bill pending enforcement. Utah SB 81 passed during the 2008 legislative session and was signed by Governor Huntsman. It is set to go into effect on July 1, 2009. Amid ongoing discussion about the impact of SB 81, the Salt Lake Chamber has proposed a guest worker program.
The chamber's proposed program would create a two-year, renewable guest worker authorization for illegal immigrants currently working in the state of Utah."The idea behind the guest worker program is, in most if not all respects, to take the (financial) burden from the public and put it in the private sector," says Wesley Smith, the chamber's Public Policy Director and Executive Director of the Immigration Policy Coalition.
Provisions of the Salt Lake Chamber's Guest Worker Proposal are:
Register as Worker
Applicants must register all relevant contact data including name, address, telephone number, etc. to the state. Data must be updated if any changes are made. Failure to update is grounds for revocation of worker status.
Each applicant is fingerprinted and their name run through Interagency Border Inspection System. A criminal history that includes any felony or serious offense results in ineligibility. Further review, if necessary, conducted by FBI.
Medical Exam/Health Check
Each applicant required to undergo same examination currently required for federal residence status. Utah will apply same health-related ground for inadmissibility.
Employer can only sponsor an applicant if the position to be filled has been subject to appropriate notice and no eligible domestic workers have been identified for the position. Applicants who are not Utah residents must apply from their country of origin. Applicant must be sponsored within 90 days of registering as a worker.
Applicant must provide a minimum security bond with the intent of covering any cost of future enforcement if applicant does not honor terms of guest worker program.
FICA and Medicare Equivalent Withholding
State of Utah will require employers to withhold an amount equivalent to typical FICA and Medicare withholdings (currently, about 15 percent.) Money will pay for health care and administrative costs of program.
10% Additional Withholding
This withholding will be taken out by the state and held in trust until the successful completion of the applicants guest worker status. Applicant is eligible for principle, while interest goes toward administrative costs.
All guest workers must be enrolled in a health insurance program. Employers may facilitate this requirement by providing employee insurance
Proof of valid auto insurance will be submitted to Department of Workforce Services. Expired insurance grounds for revocation of guest worker status. Waiver provided for non-drivers.
For more information click HERE to visit the Salt Lake Chamber's webpage.
Card Check Debate
Tony Iannelli, President of the Greater Lehigh Valley Chamber of Commerce, hosts a weekly business issues TV show that airs in eastern Pennsylvania and western New Jersey. Michelle Young, VP of Public Policy at the chamber and the producer of the show, sent me a link to a video clip of this weekâ€™s show when the discussion topic was Card Check.
The show featured a debate between Bill Georgeof the PA AFL-CIO's and UFCW Local 1776's Wendell Young on the pro-card check side and attorneys George Hlavac (Tallman Hudders & Sorrentino's Chairman of Labor and Employment Law Department) and Bill Adams of Adams, Nash, Haskell & Sheridan representing the business community. This is the first true debate Iâ€™ve seen about this topic, I think you all will enjoy.
Follow this link to watch video of the debate: http://www.wfmz.com/businessmatters/
The Greater Lehigh Valley Chamber also has a grea policy blog. Check it out at: http://lehighvalleychamber.blogspot.com/
Insolvent Unemployment Insurance
A looming issue for many states is the solvency of unemployment insurance trust funds. In Ohio, claims are running 40% above last year's levels and the state's trust fund is running an uncomfortably low balance. Missouri is looking at a â€™09 unemployment fund deficit of just over $100 million. California is projecting a staggering $2.4 billion shortfall next year if no action is taken.
Those states are not alone. According to the National Employment Law Project, 19 states had insolvent or nearly insolvent unemployment trust funds as of Sept 30, 2008. Their study finds that Michigan, New York, Ohio, Indiana and South Carolina are at risk of totally depleting their unemployment insurance trust funds before the end of this year.
What does this mean for business? Perhaps higher taxes.
Gov. Schwarzenegger has called a special legislative session in California to address the budget deficit in the current fiscal year and consider an economic stimulus plan. Suring up the unemployment fund is a top priority and the Governor is calling for a reduction in unemployment benefits and a tax increase on business to help stave off insolvency.
Michigan, a state that has already borrowed substantially from the federal government to maintain unemployment insurance, will implement a solvency tax starting in January. The tax will apply to all negative balance employers at a cost of up to $67.50 per employee per year. If the state hasn't paid back its federal loans in 2 years, all employers may see their unemployment tax rate increase to approximately $22 per employee per quarter. According to the Michigan Chamber's Wendy Block, "The only way around tax increases is to pass and implement cost-saving reforms like a waiting week, tightened qualification requirements, and better overpayment collection. Download Unemployment Insurance Tax - Michigan 08 to read a detailed announcement from the Michigan Chamber.
While not in the clear regarding unemployment solvency, Wisconsin has recently passed a reform bill that should help. 2007's Act 59 - Unemployment Insurance Reforms was signed into lay by Gov. Doyle this spring. The bill increases the amount of an employee's wages subject to the payroll tax, starting in January 2009, from $10,500 to $12,000â€” the first increase in since 1986. That wage base will increase to $13,000 in 2011 and $14,000 in 2013. The bill also increases the amount of time that claimants must have worked in order to qualify for unemployment insurance benefits, and freezes benefit levels through 2009.
Is your state facing an unemployment solvency crisis? Is there a potential solution? Please leave a comment and share your thoughts.
Milwaukee Mandated Sick Leave
This month Milwaukee became only the third city in the country to require employers to provide paid sick days for workers. On Nov. 4 voters in the city passed a mandatory sick leave ballot referendum with a 68% margin.
The ordinance demands that all private employers in the city to provide paid sick days for full-time, part-time and temporary employees. A worker would earn a minimum of one hour of paid sick time for every 30 hours worked. Employers with 10 or fewer workers have to provide five paid sick days.
The Milwaukee Metropolitan Association of Commerce (MMAC) plans to issue a legal challenge to the ordinance. Only San Francisco and Washington, D.C. have approved similar ordinances, and those laws are also being challenged.
See what MMAC president Tim Sheehy has to say about the initiative in a recent BizTimes.com article:
"I've never seen a single issue like this in the city of Milwaukee have such a chilling response on the business climate of the city," said MMAC president Tim Sheehy. Sheehy said he talked to one business owner that was considering a 40,000-square-foot expansion in the city but was "stopped cold" by the sick leave law.
"It's having a very negative impact," Sheehy said. "The biggest problem we are having is articulating the unseen impact of this, which is the potential jobs that would have come to the city."
Click HERE to read the full article.
Regular Clearinghouse Blog readers will probably remember that a similar mandatory sick leave initiative nearly made the statewide ballot in Ohio this year. This is certainly an emerging issue to watch carefully.
Workforce is a major issue for every community and chambers leaders exhaust countless time and effort addressing the need for talent. Here are some workforce related headlines that may interest you:
- Long known as one of our nation's most-skilled workforce hub, Boston is concerned about the region's workforce talent base. The Greater Boston Chamber of Commerce released a report last month that finds demand for skilled workers exceeds supply. The report outlines five recommendations, including internships and H1-B Visa reform, to help address the talent shortage. Click HERE for more information on their policy proposals to address workforce concerns.
- Every community wants to keep young talent, but the Mercer (NJ) Regional Chamber of Commerce is going straight to the source. They have partnered with campus groups to support the Collegiate Chamber of Commerce on campus at Rider University. Rider finance major Matt Cardia, a founding member of the Collegiate Chamber, says, "We want to build a network, like a link, between us current students and the business people in the greater community of Mercer County." Click HERE for more information.
- Communities are not alone in their talent search, the entire energy industry is building a pipeline of future talent. And they are starting early. An October Financial Times article highlights oil company efforts to bring math and science programs to children's museums and local schools across the country. Not only do they hope to groom the next generation of American engineers, they hope to sway student's opinions about pursuing a career with an energy company. Click HERE for the full story.
More State Budget Woes
State governments are facing unprecedented budget shortfalls as revenue from capital gains tax and sales tax collections has taken a major hit during the past month. Falling collections come as funding demands for unemployment insurance, Medicaid and other services are likely to increase sharply.
37 states now face a serious budget gap with California's $26 billion leading the way. Other states with budget gaps measured in the billions of dollars include Florida, Nevada, New York, Georgia and Virginia. Click HERE for an interactive state budget map from the New York Times.
For states this means serious spending cuts. The New York Times reports:
In Michigan, to reduce overtime costs, fewer streets will be salted this winter. In Ohio, where the unemployment rate is above 7 percent, the state may need a federal loan for the first time in 26 years to cover unemployment costs. In Nevada, which is almost totally dependent on sales taxes and gambling revenues, a health administrator said the state may be unable to pay claims in a few months.
In California, Mr. Schwarzenegger, a Republican, and state legislators are preparing to do battle over a proposed 1.5-cent sales tax increase, while in New York, Mr. Paterson, a Democrat, has proposed $5.2 billion worth of savings, principally cuts to Medicaid and education.
K-12 education and other important workforce development programs may not be immune to serious cuts:
“Most states have tried to protect K-12 and even higher ed,” said Raymond Scheppach, the executive director of the National Governors Association, “but I think they are both going to be on the block.”
“We’ve cut universities, we’ve cut our infrastructure spending, we’ve prorated schools and asked employees for concessions twice,” said Leslee Fritz, the spokeswoman for the Michigan State Budget Office."
One bright spot for your community may be infrastructure project funding as state's look for ways to stimulate the local economy.
Ohio officials have already passed a stimulus package of $1.5 billion in bonds, to be used largely for public works, advanced and renewable energy projects, and the biomedical industry.
“States don’t have a lot of economic stimulus tools,” said Mr. Pattison of the budget officers’ association, “but they have infrastructure.”
Click HERE for the full article.
Auto Rescue Possible in Lame Duck Session, Stimulus Package Unlikely
Barack Obama will be sworn into office on Jan 20th, the 111th Congress will take their seats on Jan 6th, but that doesn't mean policymaking in Washington in on hiatus until the new year. Congress has entered a lame duck session this week and they have big issues on the agenda, two of which chambers of commerce will watch carefully: an auto industry rescue plan and an economic stimulus plan.
The biggest piece of legislation on the table this week is a rescue plan for US automakers. Hit by high gas prices and tight consumer credit, US automakers have seen sales fall over 50% in October alone, and total cars sales in 2008 is projected to be the lowest in decades. American automakers warn they may be out of money within months without help. The US auto industry and its suppliers employ roughly 1 million Americans and is the nation's leading customer for steel, glass, aluminum and computer chips. A Nov 4th report by the Center for Automotive Research (CAR) found that a failure by the Big 3 would cost almost 3 million jobs with impact felt far beyond Detroit.
The debate over an automotive rescue plan revolves around $25 billion in federal loans that Congress appropriated in 2007 to help the Big 3 modernize production and meet new fuel economy standards. Some lawmakers are reluctant to authorize further loans to aid Detroit automakers and prefer to see the existing $25 billion allocated quickly. Other argue that those loans were focused on long term modernization, not short term rescue and call for a rescue package like the one passed to benefit the financial industry. For an interesting discussion, see this editorial published in last Thursday's USA Today Michigan Governor Jennifer Granholm and Detroit Chamber President Dick Blouse.
Less likely to pass before 2009 is a broad economic stimulus plan. The proposal which will likely echo the House proposal from September, could include an extension of unemployment benefits, additional food stamp funding, and aid to states for Medicaid. Of particular interest to chambers, however, is the possibility of as much as $60 billion in infrastructure spending. As many as 3,000 transportation and infrastructure projects nationwide have gone through all necessary planning are are merely waiting for funding. The stimulus package could get the ball rolling on many of these projects, putting back to work millions of construction workers unemployed since the housing bust. This could be good news for the highway expansion your community has been waiting for.
The Washington Post reported this weekend that Democratic lawmakers are scaling back their stimulus proposal. Undoubtedly we will all closely watch the lame duck session.
Economic Development Agenda Wins in Local Florida Race
In this year's election it was good to be a Democrat at both the federal and state level. Besides Barack Obama's presidential victory, the Democrats expanded their majority in both the House of Representatives and the Senate (though they fell short of a filibuster proof 60 seat majority). At the state level, Democrats will now control 29 governor offices (a net gain of one) and both legislative chambers in 27 states (an increase of 4 states).
At the local level, however, the story of last week's election is not so bleak for Republicans. In Martin County Florida, for example, 3 pro-business Republicans swept the county commission race with an economic development agenda. The opposition candidates adopted a slow growth platform.
Policy Clearinghouse Blog readers may remember from past posts about the failed Hometown Democracy Amendment that anti-growth sentiment was very strong in Florida. Here is what Dave Dew, the chairman of the Martin County Democratic Party, had to say:
"Two years ago, four years ago, it was growth. I think today, it was the economy," ... "If you look like a job creator, you're going to get the votes."
Words of wisdom for upcoming local elections. Click HERE to read the full article.
How strong is anit-growth sentiment in your area? Was it ever an issue, has it evaporated with the housing market and economic slump? Leave a comment and share your perspective.
More States Consider Combined Reporting
Combined reporting is
And its catching on. Since Mississippi, Maryland and Tennessee held hearing to consider instuting combined reporting earlier this year, several other states are investigating the policy. In their November 11 Legislative Alert e-newsletter, The Council on State Taxation (COST) reported that Massachusetts and North Carolina are both looking at combined reporting. The Massachusetts Department of Revenue issues
Massachusetts: Department of Revenue Issues Combined Reporting Working Draft Regulation
On Nov. 6th, the Department of Revenue (DOR) issued a working draft regulation with respect to the mandatory unitary combined reporting legislation enacted earlier this year. Comments are due to the DOR no later than Dec. 5th, 2008.
North Carolina: Revenue Laws Study Committee Hears Combined Reporting Testimony
The Revenue Laws Study Committee, a committee that meets between legislative sessions to formulate tax policy, will be hearing testimony Nov. 19th concerning mandatory unitary combined reporting. Both proponents and opponents, including COST, will testify on the issue. Further details will be reported as they emerge.
What this means...