Business Pulse January | February 2023

Modern leadership cultivates modern culture

IKO plant in Sumas produces roofing materials to be used around the globe

Whatcom County Council to hear recommendations for long-delayed jail

Canature Kitchen Lynden touted to be one of the largest freeze-dried pet food production facilities in North America

Are Washington’s

President and Owner Greg Knutson

Drew Wilkens

Senior Vice President

Strategic Projects for SaviBank

NMLS #2117896 P 360.739.5967 dwilkens@savibank.com

Christian Christensen

Vice President Branch Manager

NMLS #1082785 P 360.685.0080 cchristensen@savibank.com

Scott Louia

Vice President

Commercial Lending Officer P 360.404.5042 slouia@savibank.com

Wade Stringfield

Vice President

SBA Sales Manager P 360.820.0955 wstringfield@savibank.com

Seana Olberg

Vice President

SBA/USDA Business Development Officer P 360.820.8375 solberg@savibank.com

Trevis Seimears

Assistant Vice President Loan Officer

NMLS #745555 P 360.685.0080 tseimears@savibank.com

Ashley Walker

Senior Mortgage Banker

NMLS #934856 P 360.404.5040 awalker@savibank.com

Savi Loan Team

Darrell Elke

Senior Mortgage Banker

NMLS #422230

C 360.922.8919 P 360.404.5044 delke@savibank.com

Meet the Bellingham Loan Team. Our mission is to bring long-term success to our clients and this community. It’s who we are, down to the core. And it’s why we are proud of our Bellingham loan team with in-depth experience and passion for this community. The perfect group to walk you through the often-confusing world of lending. Like a good trail guide. Or an indispensable Sherpa. Using knowledge and expertise, they’ll take you where you want to go, financially speaking. That’s why our loan officers strive to put you in the right loan for your needs and your budget. And because we’re a locally-based bank, we know the importance of strong communities that we all help create. Which makes it easier to serve all of your lending needs

When you need a trusted advisor that believes in doing what’s right, team up with the loan officers at SaviBank. Together, we’ll make our communities even stronger.

SaviBank.com

VOL. 48 | NO. 1

PUBLISHER Whatcom Business Alliance

EDITOR Matthew Anderson Bellingham PR & Communications

CONTRIBUTING Elisa Claassen

WRITERS Cheryl Stritzel McCarthy Lorraine Wilde Mary Louise Van Dyke

GUEST COLUMNISTS Nicole Burdick

ART DIRECTOR PHOTOGRAPHY EXECUTIVE DIRECTOR

Cover Photo by Sattva Photo

WBA BOARD OF DIRECTORS:

BOARD CHAIR: Pam Brady Public Affairs, bp Cherry Point

EXECUTIVE COMMITTEE:

CEO, Mills Electric Inc.; Doug Thomas Bellingham Cold Storage; Gross PLLC; Josh Wright Insurance

BOARD OF DIRECTORS:

Interactive; Jane Carten, President, Saturna Capital; Andy Enfield, Vice President, Enfield Farms; Engebretson, Managing Principal, Tradewinds Capital; Jon Ensch, Commercial Banking Officer, Peoples Bank; Mitch Faber, Partner, Adelstein Sharpe & Serka; Keathley, Former Owner, K & K Industries; President, Barlean’s; Becky Raney Print & Copy Factory; Sarah Rothenbuhler

CEO, Birch Equipment; Patrick Schuppert Banking Relationship Manager, Wells Fargo; Smith, Operations Manager/Owner, Coldstream Farms; Carryn Vande Griend Representative, PSE; Billy VanZanten Refinery Services

For editorial comments and suggestions, write info@whatcombusinessalliance.com. The magazine is published bimonthly at 3111 Newmarket St., Ste. 106, Bellingham WA 98226. (360) 746.0418. Yearly subscription rate is $25 (US). For digital subscription, visit businesspulse.com. Entire contents copyrighted ©2021 Business Pulse. All rights reserved.

POSTMASTER: Send address changes to Business Pulse, 3111 Newmarket St. Ste. 106, Bellingham WA 98226

When we speak as one, we can make a difference

Over the past year, we’ve talked about the frustrations of business leaders in Whatcom County — broken supply chains, inflation, rising crime and a host of other issues facing local businesses. If we want to see change in our county and our state, we must approach our work with a focus on making sure our elected leaders — regardless of whether those leaders are the leaders we voted for — truly understand the impact their decisions have on local business. We need to make sure they understand that allowing businesses to become regular targets of systematic theft will damage businesses and communities.

Why is it that business leaders trying to create economic opportunity have been made out to be the bad guys? Leaders who create good jobs and a vibrant local business sector know that

success requires confronting and overcoming setback after setback. Please remember that no matter the challenges we face, our voice is essential to making elected leaders understand just how broken their approach to the private sector really is.

Policy choices — regarding employment growth, rising inflation, food insecurity, climate change and a qualified workforce, among other issues — have become more difficult and challenging, especially because the decisions made now will affect our local businesses for many years to come!

When the business community gets involved in advocacy — especially when it makes a clear, compelling and

nonpartisan argument — we can make a difference. As the county’s economic recovery continues, we at Business Pulse strongly encourage local businesses and our readers to make their voices heard. When we speak as one, we can make a very compelling case for Whatcom County, our business community and the citizens and families who need a stronger economy. Whatcom County is still one of the most desirable, best places to live in the entire country. One big reason our fundamentals are so strong is that we are home to the talented leaders and dynamic businesses covered in this edition of Business Pulse.

In addition to our advocacy articles, this edition features several inspiring stories about Whatcom County businesses thriving despite the economic headwinds we are facing. Columnist Cheryl Stritzel McCarthy covers IKO’s Pacific Rim network in her ar-

“The business community needs to stand up and be heard.”

ticle “Got a roof overhead?” On Page 15, Lorraine Wilde writes about how GK Knutson, a local specialty contractor, focuses on work-life balance for local families. Mary Louise Van Dyke gives us an inside look at the struggles Whatcom County is facing in planning for a new jail on Page 21. We are excited to welcome a large new freezedried food company to Lynden, and on Page 27, Elisa Claassen covers the new state-of-the-art pet food facility. We conclude the issue with articles on the Snake River proposal, insight on strategic money moves for women in the new year, by guest writer Nicole Burdick, and an update on the capital gains tax, now in the hands of the Supreme Court.

In 2023, it is time for action. The business community needs to stand up and be heard. Our community needs our leadership now more than ever. We hope you enjoy this first issue of 2023, and we thank you for your support!

SUBSCRIBE TODAY!

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Barbara Chase, Executive Director Whatcom Business Alliance

Barron Heating AC Electrical & Plumbing names Brad Barron CEO

Brad Barron, the family’s fourth generation at Ferndale-based Barron Heating AC Electrical & Plumbing, became its CEO on Jan. 1.

John Barron, CEO and principal owner since 1998, will continue with the company as executive chair and coach. He’s led steady growth of the company, which is celebrating its 50th anniversary with projected 2022 revenues of $40 million and more than 200 employees.

“Brad has an engineering mind combined with a deeply people-centric view of the world,” John Barron said of his son, “and I’m excited that he can bring an outside perspective to an already intimate understanding of our business. Many people may not know that before Brad joined Barron six years ago, he spent almost a decade working as an engineer, both in the field and leading teams. Mixing this external experience with a hands-on knowledge having grown up around Barron gives him a unique ability to see the big picture.”

Brad Barron took his engineering background to the family company in 2017, starting as the business development manager. He became director of operations in 2018 and chief operating officer in 2020. The new CEO is credited by his father with launching Barron Technician School and expanding the company’s electrical and plumbing capabilities.

“The reason I went to engineering school at the University of Washington is I like to solve problems and make things more efficient,” Brad Barron said. “Now our challenges are finding and retaining top-notch team members in a slowing economy, but our company can thrive in those conditions.”

The changes will enable John Barron to focus on what he loves the most: coaching other team members and helping them reach their goals.

Barron Heating AC Electrical & Plumbing has become one of Northwest Washington’s largest and most respected home performance experts, with showroom locations in Ferndale and Burlington. Service providers are trained at the Barron Technician School in Ferndale. Approximately 200 local employees serve customers along the I-5 corridor, from Blaine to Marysville and Oak Harbor to Concrete. The company also serves the San Juan Islands.

Visit www.barronheating.com.

Kena Brashear and Peter Ahn become owners of The Muljat Group

Kena Brashear and Peter Ahn, who have a combined 27 years of experience at The Muljat Group, recently acquired the Bellingham residential real-estate brokerage.

Brashear and Ahn bought the firm from Troy Muljat, owner since 2017. Muljat’s father, Frank Muljat, founded The Muljat Group in 1988. Troy Muljat will continue to be a broker at the

firm and run his separate commercial real estate sales/leasing team as well as co-own Landmark Real Estate Management.

Brashear was hired by Frank Muljat 20 years ago and was promoted to designated broker in 2017. Ahn, who joined The Muljat Group seven years ago, retired from the U.S. Air Force earlier this year.

“It was a natural fit for both of us,” Brashear said. “We truly are a family at The Muljat Group. We are so grateful for all of our brokers, managers and support staff, and Peter and I love helping Muljat brokers develop their businesses. Frank Muljat had a vision in the late 1980s, and it is our goal to carry on the Muljat Group family legacy.”

Ahn said operations wouldn’t change much at The Muljat Group, which has approximately 100 brokers in six offices in Whatcom and Skagit counties. The company represented buyers or sellers in nearly 900 transactions totaling approximately $500 million in 2021.

“We are fiercely determined to continue the culture created by the Muljat family,” Ahn said.

Visit www.muljatgroup.com.

New specialty dentistry office partners with non-profit to help refugees

Dr. Chaz Vittitow recently opened The Local Dentist in Barkley Village, specializing in a “systemic and whole body” approach to dentistry. In addition to basic dental services, Vittitow

Brad Barron Kena Brashear

Dr. Chaz Vittitow

Peter Ahn

Laura DeWitt Bobbie Briscoe

will be the first doctor in Whatcom County certified through the American Academy of Dental Sleep Medicine, so he is able to treat the symptoms of sleep disorders. Symptoms could include snoring, teeth grinding and daytime sleepiness.

The Local Dentist is excited to make a difference in the community and has partnered with World Relief Western Washington, a nonprofit agency based in Bellingham that supports local refugee families, helping get them on their feet and become contributing members of society. The agency also can call him any time to address emergency dental needs.

Serving refugees has been a consistent theme in Vittitow’s family. He and his wife worked with international students and refugees through programs at the University of Kentucky, where they both attended school. While they were living in Sicily, Italy, Vittitow, his wife and their four children joined local missionaries in supporting African refugee camps by growing gardens and teaching them football.

For every 30 new patients seen, The Local Dentist will be making a donation to help stock a refugee family’s pantry, buy them a bike or support them in other ways.

“I am humbled and grateful to serve these people who are fleeing a home they probably don’t want to,” Vittitow said.

Visit www.localdentistbellingham. com

Bellingham mastectomy boutique earns prestigious board accreditation

Allies, A Specialty Boutique, has successfully completed a rigorous process to earn facility accreditation from the Board of Certification/ Accreditation. The only dedicated provider of mastectomy products

north of Everett, Bellingham-based Allies serves Whatcom, Skagit, Island and San Juan counties.

The BOC awards accreditation when a supplier demonstrates compliance to blue-ribbon standards set by BOC and recognized by the federal Centers for Medicare & Medicaid Services.

“We are thrilled to have earned BOC facility accreditation in recognition of our dedication to customer service and ongoing training,” said founder Laura DeWitt. “Facilities are required to go through this process every three years, and it is a rigorous process designed to ensure that companies like Allies operate with the highest levels of integrity and quality.”

This accreditation is specific to companies that provide patients with external breast prostheses, mastecto -

my garments, lymphedema garments and other breast care products that address and treat physical asymmetries.

Laura DeWitt, a certified mastectomy fitter since 2014, is also a breast cancer survivor. DeWitt is one of 13 providers to earn BOC mastectomy fitter certification in Washington state, and she is the only certified provider north of Everett, according to BOC records.

Through her specialty boutique, DeWitt provides women with nonsurgical products — breast forms and pocket bras — that return symmetry after mastectomy, lumpectomy and reconstruction procedures, and she does so in a setting that ensures privacy and dignity and provides a sense of belonging.

Visit www.alliesretail.com.

Southwest Airlines announces new destination to Denver from Bellingham International Airport

Southwest Airlines will begin nonstop Saturday-only flights from Bellingham International Airport to Denver International Airport on a seasonal basis beginning in April 2023.

“There is strong demand for eastbound flights from travelers who like to avoid the traffic and crowds at major airports in Seattle and Vancouver, British Columbia,” said Port Commission President Bobby Briscoe. “BLI offers one of the best travel experiences in the nation, and we are thrilled Southwest is expanding its service destinations.”

In addition to the new Saturday flights, Southwest offers daily service throughout the year from BLI to Oakland and Las Vegas, with easy connections to more than 100 destinations throughout North America, Central America and the Caribbean, including Hawaii. Southwest operates the largest fleet in the world of Washington-built Boeing 737 jets.

“Since starting service in 2021, Southwest Airlines has been a tremendous addition to Bellingham International Airport,” said Port Executive Director Rob Fix. “Southwest consistently ranks as one of the most popular airlines in America, with two free checked bags, legendary customer service and flexible travel policies, including no change or cancellation fees. As passenger traffic returns to pre-pandemic levels, the Port will continue working with Southwest to increase service to Denver and connect passengers to new destinations.” With the addition of Denver, Bellingham International Airport offers travelers nonstop service to eight destinations via three major airlines. Southwest, Alaska Airlines and Allegiant Airlines will now serve Denver, Seattle/Tacoma, Las Vegas, Los Angeles, Oakland, Palm Springs, Phoenix (Mesa) and San Diego.

Visit www.southwest.com.

Roofs shelter and protect what we love: our families at home, our children at school, ourselves at work and play. We don’t think about where roofs come from; we’re just glad they’re there.

Many of our roofs, on residences and commercial buildings from Whatcom County throughout the West Coast to Pacific Rim countries and beyond, are made in Sumas at an IKO Industries manufacturing plant. About 150 employees here make asphalt residential roofing shingles, commercial roofing membranes, and products used underneath roofs to protect from ice and water. The Sumas plant primarily serves the Pacific Northwest and British Columbia for residential products, said Derek Fee, corporate communi-

cations manager, and serves western states for commercial products as well as allied products, such as synthetic underlayment.

“(Sumas) is also the principal manufacturing hub for the export market in the Pacific Rim,” Fee said. “It is the principal supplier to one of our important customers in Japan, for instance.”

By volume, the Sumas plant manufactures shingles primarily, and commercial roofing secondarily, Fee said.

“It’s important to remember that there are a lot more shingle roofs than commercial flat roofs, so that’s not surprising,” Fee said.

Cheryl Stritzel McCarthy

PHOTO: Sattva Photo

Justin Todahl, production superintendent; Andrew St. Lawerence, plant manager; Derek Fee, manager, corporate communications.

The big picture

The Sumas plant and employees are part of a much larger IKO picture. The privately held company has more than 35 manufacturing sites and 4,000 employees globally, and it ships product to 96 countries. IKO was founded in 1951 in Calgary, Alberta, by a Polish immigrant to Canada, and the company is still owned by that family. After Calgary, IKO opened a plant near Toronto in 1958, in Belgium in 1972, and in Ontario in 1976. In 1981, IKO opened plants in Chicago; Franklin, Ohio; and Wilmington, Delaware.

IKO built its Sumas facility in the late 1990s and opened it in 1999. The facility’s manufacturing and storage buildings are 280,000 square feet on a 20-acre site, and it is one of eight IKO

shingle plants in North America. The company’s manufacturing sites include commercial roofing plants, insulation plants and affiliated businesses throughout North America and Europe. North American headquarters are in Toronto, with an administrative office in Wilmington, Delaware. European headquarters are in Belgium.

IKO is vertically integrated, meaning it makes almost every component that goes into its products and manages operations from raw materials to sales, allowing the company to control quality. For example, the Sumas plant includes a crusher that crushes limestone into a substance as fine as baby powder. That filler is added to asphalt, which topcoats the shingles. The filler increases the shingles’ surface tacki-

ness and provides a broader tolerance to temperature. The original crusher at Sumas was replaced with a new one in 2019.

Sumas was a first

When the Sumas plant was built, it was a first for IKO in that it had a residential shingle manufacturing line and a commercial ice-and-water protection production line in the same facility. It was also the first “greenfield” U.S. site in the company’s history, meaning the land had not been built on before.

IKO’s other U.S. plants at the time (Wilmington, Chicago, Franklin) had been acquired out of receivership from other manufacturers. “Sumas was the first build-to-suit site of its kind in the U.S. and is the forerunner of all of the

It’s fast!

Four and a half minutes. That’s all it takes for the folks at IKO’s Sumas plant to turn raw materials into a wrapped package of shingles ready for shipping.

What’s striking about the huge production line is its speed and precision. It starts off with a giant roll of fiber-

glass that feeds in, forming what will become the base of the shingle. That enormous sheet of fiberglass is coated with asphalt, then topped with granules of rock. At one point, the sheet hangs accordion-style high overhead, resembling rough, stiff fabric.

The sheet is cut into strips and then shingles, packaged, stacked and whisked onto pallets. Those are speed-ferried to storage, where they await shipping throughout Whatcom County, the West Coast and points beyond.

PHOTOS: Sattva Photo

modern plants we have built since,” Fee said.

“Really, the Sumas facility came into existence because of the growth of IKO’s markets in the United States,” Fee said. “Up until the early 1980s, IKO did not have any U.S. manufacturing facilities, and the U.S. remains a growth market to this day.”

Projections from the market research company Technavio, reported on prnewswire.com, forecast in early autumn 2022 that the roofing market in North America was expected to grow by $4.28 billion between 2021 and 2026, with rapid urbanization contributing to that growth. Indeed, Whatcom County has seen growth, with the county increasing from 201,000 people in 2010 to 232,000

now, and Bellingham going from 80,000 people in 2010 to 93,910 now.

The expectation was that the roofing market would grow due to strengthening consumer finances, lower interest rates and decreasing unemployment, thereby supporting new construction in general across the country.

That outlook, and the entire construction industry, has been tempered by a whiplash surge in mortgage rates.

The news organization Reuters reported that U.S. homebuilding fell sharply in October, with housing starts decreasing 4.2% that month and single-family projects dropping to their lowest level nationally in 2 1/2 years.

What’s ahead for Sumas?

“The Sumas facility remains an im-

portant location for IKO because it houses both residential and commercial manufacturing lines in the same location, one of a very few sites of its kind in our manufacturing chain,” Fee said. He added that the Sumas plant, like employers everywhere, is encountering pandemic-related challenges in recruitment and staffing.

“Additionally, the market as a whole has seen a slowdown with the current economic conditions, so the longer-term view has shorter-term demands at the moment.”

Luckily for us in Whatcom County and for people across the globe, employees at IKO’s Sumas plant will keep producing roofing products to shelter people at home, school, work and play.

People needed

IKO’s plant in Sumas is singing a refrain familiar to employers throughout Whatcom County and beyond: We are hiring.

The IKO plant in Sumas is seeking production operators, millwrights, engineers and more. “Skilled millwrights are a hot commodity that everybody needs,” said Caitlin McDavid, human

resources generalist at Sumas.

“Traditionally, IKO has built its facilities in smaller communities,” said Derek Fee, corporate communications manager. Smaller towns must compete with large metropolitan areas for the same types of skilled workers. During and after the pandemic, the candidate pool showed a shift toward those who

hadn’t worked in manufacturing before, Fee said.

Andrew St. Lawrence, plant manager, said the facility is making progress on its hiring effort, led by McDavid. “The culture of quality is very strong,” St. Lawrence said. “We are expanding. We have great opportunities here, whether entry level or engineers.”

Role models for a modern work culture

GK Knutson aims to help employees thrive at work, home

Lorraine Wilde

With worker shortages, turnover, union tensions and ongoing supply chain challenges, American workers are switching to — or holding out for — jobs with companies that walk the talk when it comes to a positive work culture. They want companies that acknowledge the whole employee, including their need — or demand — for a quality life outside the office.

Javier Sampedro, director of operations for the past two years at GK Knutson Metal Framing & Drywall, nominat-

ed his boss, Greg Knutson, as an example and role model for modern leadership. “This family-owned, local company has run for many years from Ferndale, and Greg’s vision, values and goal are to find work for families at Whatcom County, not to just be the rich guy around town,” said Sampedro in an email to the magazine in November. “I have had the pleasure of working with him daily, and he is a role model for every leader in the company. He cares so much about employees that we should all learn from Greg

PHOTO: Sattva Photo

Greg Knutson, GK Knutson president and owner.

to treat workers well.”

GK Knutson, a subcontractor specializing in metal frame construction, drywall, insulation and acoustical ceilings for more than 25 years, works on construction sites from Olympia to Blaine.

The second sentence of the company’s mission statement speaks volumes about the company’s focus: “Our business is based on strong family values and the desire to provide a safe, satisfying and supportive work environment, where every member of our team is valued and appreciated.”

From humble beginnings

“One of the things that shocked me about this company is that they began as a small, family-owned company,” Sampedro explained, “and even though they’ve grown to an average of around 100 employees, they still have the values of a family environment in the office. We have titles, but there is no barrier or wall between workers and management. Everyone is nice, and they try to help each other.”

Knutson asserts that the company was born not in the pursuit of profit, but in his roots working for other small, family-owned businesses.

Knutson, born and raised in Ferndale, had parents who were an active part of the community. Knutson’s father, Tony Knutson, worked for the Ferndale School District. His mother,

Virginia Knutson, ran a small construction business, with help from her sons, under the name Knutson Drywall. Knutson first moved with a friend from high school to Arizona to learn the drywall trade. After three years, he moved back to Washington, where a couple of his brothers also were learning the family trade.

In 1997, Knutson and his wife, Kristi, went out on their own to found their own drywall business, GK Knutson, where Greg serves as president and Kristi as vice president. The company, which originally worked in residential single-family homes and some commercial buildings, was housed on Pacific Street in Bellingham for about 14 years.

“We flew under the radar for many years,” Knutson said, “but over time we transitioned into a lot of commercial work, apartments and mixed-use residential work. We’ve grown pretty conservatively over the last 25 years, with a conscious effort to avoid the problems that come with growing too fast.”

That growth was never driven by sales and revenue, Knutson said.

“We aren’t just a bunch of drywallers. We are leaders, providing a vision and presenting ourselves as the professionals we are, working with general contractors managing

$10 million projects.”

Greg Knutson, GK Knutson president

“It came from working alongside my workers,” he said. “We started off with 10 people showing themselves as leaders out in the field, building the projects. So, our business focused on keeping those people busy leading. Then they trained someone to run projects, so we wanted to keep them and their crew busy, too. That drove us to find more and more business. And here we are.”

Shelly Brockett, GK Knutson general manager, has been with the company for more than 24 years.

“Part of the culture here has been that there have always been opportunities for growth and to move into leadership,” she said. “We do a lot of promoting from within, so our leaders started by working shoulder to shoulder as just one of the guys before they rose into roles of responsibility. It was about six years ago that Greg started to look at and talk to them differently as he started to depend on them to carry his values and vision into the field and convey that to all the work crews. It’s who we are as a culture and a team that makes us special.”

Helping the employees see themselves as leaders has been an important component of the process, Knutson said.

“We’ve really encouraged our employees to view themselves as confident professionals,” he said. “I’ve been that guy spreading mud for a living, thinking it’s just work. But I still remind myself that we aren’t just a bunch of drywallers. We are leaders, providing a vision and presenting ourselves as the professionals we are, working with general contractors managing $10 million projects.”

A human-centered management approach

Many businesses felt a slowdown in the third quarter of 2022 in conjunction with the economic climate.

“I definitely think we are still coming out of COVID,” Knutson said. “Projects have gotten delayed, start dates have been pushed, budgets need to be revisited because of rising costs and inflation. The cost of construction went way up, and now we’re dealing with rising interest rates.”

But GK Knutson’s commitment to keeping workers employed is about much more than their bottom line.

“One of Greg’s main goals is to keep employees busy with work so they can support their families,” Sampedro wrote. “From personal experience, I can tell you that I saw him losing money in order to keep families working during COVID. I don’t know that a larger company would do that for their employees. It is very brave to do that. He lost money keeping these families safe. His choices were good for everyone.”

Knutson was humble about that sacrifice.

“I really feel like our people have my back,” Knutson said, “and so that’s how I can give back to them, always trying to have work out in front of them.”

“We are union,” Sampedro wrote. “We pay people really well, by the law and the rules, very open book. Greg is a safety leader. And when we don’t have work for our guys, we try to find them temporary work with other companies. Not many companies do that. We care that they can continue

Ferndale High School campus scheduled for completion Fall of 2023.

PHOTOS: Sattva Photo

to pay their bills and have work and hopefully come back to us when we do have work for them. That is not the same at other places I’ve worked.”

Brockett emphasized that the major goal for 2023 is to have enough work to hire back all of the team members the company had at its peak in early 2022.

Acknowledging that workers have lives outside the office

GK Knutson didn’t deliberately set out to create a positive work-life balance within the company. It just happened.

“When I was raising my kids,” Knutson said, “in the thick of all that, my kid was sick, and I needed to be home, or I needed to leave early on Friday to go see them play in a basketball tournament in Port Angeles. I know I am going to go do that, and I encourage our people to go, too.”

Knutson believes workers should enjoy the same privilege of being there for those important moments that he enjoys.

“I want them to be treated the way I expect to be treated,” he said.

But Knutson also acknowledges that not all workers in the construction or other industries get that privilege.

When asked if the company had noticed an increase in demands from employees for more flexibility post-pandemic, the answer was clear from Brockett: “No, because we were already so flexible to start with,” she said. “I worked a few other places before I started here, and I know that what we have here is exceptional. Our culture is not the norm, and I hope no-

body ever takes it for granted. We’ve had a few new teammates who have had a little struggle adapting, because they came from places that were very restrictive and micromanaged. It takes them a bit to step into the ease and the comfort and the trust that is automatically granted here.”

Brockett said she thinks this approach is important for employee satisfaction.

“We give them the flexibility to come and go and live their life,” she said, “and not have this job be all that there is to them. They have a whole life outside this business that we try really hard to support. While Greg and Kristi were raising their kids alongside this business, so was I, and I was able to have a great job and still have the flexibility to be at every game and school play when my kids were growing up. That was a huge blessing and a huge gift.”

On diversity, equity and inclusion and giving back

“In the office staff, we have at least as many women and there are men, which in construction is saying some-

thing,” Brockett said. “In the field, we have more Spanish-speaking and bilingual workers than those that speak only English. It has been such a gift to have Javier be able to go out with them and speak with them in Spanish, because it affords them a greater level of comfort and understanding. That means they’ve sometimes been able to share things with him that they otherwise might not have been comfortable sharing with someone only in English. Misunderstandings can be avoided, and everyone is safer.”

Employees have the opportunity to learn from each other.

“We also try to offer a safe environment where native Spanish speakers can learn and practice their English to better communicate with our English-speaking general contractors,” Knutson said.

The company also prides itself on giving back to the community.

“We have donated quite a bit of money to the Lighthouse Mission and labor to Habitat for Humanity,” Brockett said. “On a smaller scale, we monetarily support small local charities and nonprofits, like Ferndale High School, The Sofia Milstead Foundation and Encompass Northwest.”

When asked what his favorite thing about working at GK Knutson was, Sampedro replied: “I especially appreciate the freedom here to learn and ask questions. Greg Knutson is a leader from the office to the field. It’s pretty common for the owner to sign the check but people don’t know him. Here, people know him and love to see him. He connects with them, and not everyone will make it a priority to do that.”

“We have titles, but there is no barrier or wall between workers and management. Everyone is nice, and they try to help each other.”

Javier Sampedro, GK Knutson director of operations

We choose to work with

are part of a solution we need.

Whatcom County Council to hear recommendations for long-delayed jail

Several locations considered for new criminal justice facility

fenders who are either too vulnerable or violent to have a roommate.

The last difficulty is staff shortages. We are currently down eight deputies.

What alternatives is Whatcom County using to deal with the current

The jail is currently on booking restrictions as the first step to control the population. These restrict the types of crimes people can be booked for to crimes that are considered “crimes against person.” Most often, these will be offenses involving things such as assault, robbery and residential burglary.

We are working with the rest of the criminal justice system to try and shorten the amount of time people are in jail. Due to the high number of people being held on pretrial felony charges, offenders are staying in jail longer, waiting for their cases to be

We are also in the process of ne-

One of the current cells that was originally built for one individual. A secondary bunk was added on top of the original bunk, and when needed, a third bed is brought in. Photo courtesy of Whatcom County Sheriff’s Office.

gotiating a contract with one of the other jails along the I-5 corridor for additional beds. That presents its own challenges with transporting the offenders to court.

BP: We’ve heard that the county has had difficulty filling vacant corrections positions. Do you think that the conditions in the jail are a factor here?

WJ: We have had some difficulty in filling positions, and the conditions in the jail have not helped. The staff shortages have added another layer of difficulty to deputies. They are working significant amounts of mandatory overtime, which cuts into time with family and the ability to decompress.

BP: How does the limited capacity in the current jail impact our community?

Satpal Sidhu: We built this jail in the early 1980s, and our population was about 110,000. Now we are close to 230,000.There was an effort to build a low-security facility — the (interim) work center on Division Street, which we did, opening in 2006. Whatcom County also has an electronic home detention program as an alternative to jail.

So, this is really a huge issue, with the population almost doubled, and we still have facilities with marginal improvements.

BP: How much is the county spending on jail upkeep and maintenance?

SS: In 2004, the public voted a 0.1% sales tax and that has been collected since then. We have spent $4-6

million in just basic improvements, the locks, the doors, some mechanisms (for the 1984 facility).

BP: Voters approved a criminal justice facility tax in 2004, and many believed that money would be spent on a new jail. Where has that money gone?

SS: I think this question is lingering in people’s memory that the jail tax was misused, or it was diverted to the general fund, and questions are being asked. I think that it’s fair for the public to ask what happened to that money.

I think we have an account of all, every penny of that money and where that money was spent. I ask people to make their judgement and then, based on that, we can have a discussion on whether it was diverted or abused. But it was money for public safety, and it was only used for public safety.

BP: Why do you think that the 2015 and 2017 jail funding ballot measures for a 0.2% sales tax increase to fund a new jail failed? What is different now?

Barry Buchanan: I think in 2015, people just didn’t understand the proposal well. But 2017 was an attempt to try to get the same issue back on the ballot. I think that was a failure just to get out to the public what the issues were, what the needs were.

I think the difference today is that we have implemented a lot of diversion programs. We have the Law Enforcement Assisted Diversion and the Ground-level Response and Coordinated Engagement programs, and now the Alternate Response Team for

PHOTO:

situations involving people with complex needs, including mental health or substance use issues.

SS: Several reasons. One of the main reasons is the voters felt that it was not a coherent plan.

People worried about the size of the jail, the location of the jail, the amount of construction. The messaging to the community to justify how the money would be spent was not clearly defined.

BP: The Stakeholder Advisory Committee has been conducting a needs assessment. How has this process been different from past efforts to define the community’s needs?

SS: We built a new crisis stabilization center with 32 beds for mental health support and substance use detoxification. People with behavioral health or drug problems, they don’t need to be in jail. People who are poor don’t need to be in jail just because they are poor. People need treatment. People need rehabilitation.

BB: The difference was that the efforts that were done before this were

by a contractor interviewing a few people who would come up with their take on what they thought the community needs were.

The big difference is we (the Stakeholder Advisory Committee) are trying to make sure the public is educated and not operating in a vacuum like they were before.

We’re making a really concerted effort to get a sense of what the public needs are. The needs assessment process included meetings involving the Incarceration Prevention and Reduction Task Force and its subcommittees.

The committee had a public town meeting in November. This was part of a community survey with listening sessions, targeted outreach and interviews.

About 100 people attended the meeting, both on Zoom and in person, at the Whatcom County Council chambers. We didn’t hear anyone saying we don’t need a new jail.

BP: What parameters are being defined through the needs assessment?

BB: I think we’re doing a good job of honing the message through the needs assessment, honing it into needs and gaps that exist. It looks at the health and public safety needs and mental health needs and makes recommendations to improve community public safety concerns.

SS: About the location, I think the committee has two or three locations in mind. The Ferndale one is still being considered. We are waiting for what the committee’s thoughts are.

BP: There has been talk of a vote in 2023 on funding for a new criminal justice facility. When will we know more about this and what exactly is being proposed?

BB: The hope is that in February the Stakeholder Advisory Committee will get to Whatcom County Council to give the report and recommendations. After that, we would try to get everything honed down to what we think a ballot measure might look like.

This video of the downtown jail was created for the Stakeholder Advisory Committee for the Whatcom County Justice Project. For more information, please visit www.whatcomcounty.us/justice.

Clips from “Tour of the Whatcom County Jail Video” https://youtu.be/HOVtzutn2zU

SS: We believe public input is vital. This will be one of the largest capital undertakings in the county. We would like to have a robust public conversation in Council chambers. All eight mayors in Whatcom County, including the city of Bellingham, have written a letter that they unanimously support the work of the Stakeholder Advisory Committee, and they unanimously support that we do need a new justice and safety facility.

BP: What do you think are the key challenges to gaining public support for a new criminal justice facility?

SS: There are many challenges. There are two separate issues: what happens inside the jail and what happens outside the jail. People expect, and rightly so, that we should have outside facilities, outside services, readily available for people with drug or behavioral health issues.

All the people in jail are not just there for behavioral health, mental health or drugs. There are genuine criminals; there are hardened people

who are a threat to society and must be taken care of.

Regarding the cost of construction: A report in 2020 from the Whatcom County Comprehensive Law & Justice Planning Project projected a need for more than 700 adult beds, based on incarceration rates, population growth and other factors.

This is not a partisan issue. This is a community issue. I think we can come up with a compromise that meets most of the needs of our community. Not all the needs, but, working together, we can solve a lot of problems. ■

Answers have been edited.

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Massive pet food production facility going up in Lynden

Alliance Freeze Dry Group expands to the U.S. with 220,000-square-foot building

Elisa Claassen

A business leader in the pet food sector in Canada will add a state-of-the-art manufacturing facility in the United States — specifically, in north Whatcom County — by 2024. While construction is just underway, it takes time to build what the company claims will be among the largest freeze-dried pet food production facilities in North America, at 220,000 square feet.

Alliance Freeze Dry Group also operates a facility in Langley, British Columbia.

Just about 13 1/2 miles — oh, and an international border — lie between the two facilities, which are located in sister cities. While the Langley facility is considered cutting edge for it use of automation, the new Lynden plant will take that automation to the next level, said company repre-

sentative Dennis Wu, the senior executive assistant to the president of Alliance Freeze Dry, Gary Xu.

Originally, the Lynden site was slated for a different use — as a satellite PeaceHealth medical facility to provide coverage in north Whatcom County. When the medical group selected a 5-acre site farther north, on Benson Road, an opportunity was opened.

Alliance Freeze Dry (USA) Inc., the American aspect of the business operations, purchased the land from PeaceHealth for $2.2 million. The site, nearly 10 acres in size, is just down the street from Lynden Door, Lineage Logistics and Lynden Sheet Metal, at the corner of West Main Street and Berthusen Road. The campus, named Canature Kitchen Lynden, will include a freezer, pre-processing

Photo courtesy of Canature Kitchen

Groundbreaking ceremony of AFD Group's third freeze-dried pet food factory in Lynden. Participating in the ceremony were officials from the City of Lynden and the port of Bellingham, as well as Washington state, AFD Group's major client representatives, local business leaders, engineering professionals, and the general contractor.

area, freeze-drying section, packaging area and automated storage and retrieval system warehouse.

Ground broken

On Oct. 21, 2022, representatives of the City of Lynden, the Port of Bellingham, Washington state, AFD Group’s major clients, local businesses, engineering firms and the general contractor, Fisher Construction Group, met with shovels in hand to break ground.

A few decades ago, this was farming land. Soon, it will involve a different form of food production — inside a plant.

Food Facility Engineering is the architectural and engineering firm leading the design of the new Canature Kitchen facility.

Construction will be handled by the Fisher Construction Group of Burlington. Another key contractor, Freeland & Associates of Bellingham, provided engineering support for Alliance’s crucial conditional-use permit application to initiate the process.

This large an operation has required additional infrastructure growth, too. Many meetings were held to discuss stormwater and road upgrades.

In late 2022, Lynden was given a $4.5 million loan by the state Community Economic Revitalization Board for a roundabout at the intersection of West Main and Berthusen Road. In addition to the construction of the roundabout, the project includes street improvements, stormwater facilities and LED street lighting in the area. CERB funds, matched by $1.125 million in local resources, leveraged $40 million in private investment by Canature USA Freeze Dry.

Lynden’s growth geared with industrial

Every city plans for its future — and growth is part of the plan for Lynden.

“Along with a growing population,” states the city’s master plan, “opportunities for work and business also need to grow. Lynden is heavily dependent on the agricultural industry and needs to maintain and build that connection. It also needs to diversify its economic drivers, decrease retail competition with other regional municipalities, and expand the service economy for its residents.”

Founded in 1871 when Holden and Phoebe Judson settled there, Lynden incorporated in 1891, several years after Washington achieved statehood, with a population of more than 500, per the city’s records. At present, the population is 16,048, and annexations have brought the size to 3,375 acres.

While the downtown core of Lynden does contain primarily retail, it also has the Darigold powdered milk plant, the Vander Griend Lumber yard, and the Americold Logistics freezer facility. The City of Lynden has been promoting economic development by zoning land suitable for commercial and industrial development west of Guide Meridian, where this new plant is being built.

One key component for the city’s planners was, and is, according to the master plan, to have “livable-wage” jobs for residents of the city and its surrounding area. Company materials indicate a need for 74 employees, but a wage structure has not been given at this time.

“The City of Lynden is proud to welcome another state-of-the-art in-

dustrial facility,” said Scott Korthuis, Lynden’s mayor, in an AFD news release. “We appreciate the investment that the Alliance Freeze Dry Group is making in our city, knowing that it represents both job opportunities and regional economic benefit. Lynden has found a supportive partner in the Alliance Group. They have contributed to public infrastructure improvements and designed a striking Canature Kitchen facility that we can all be proud of. It’s clear that Alliance doesn’t simply want to conduct business in the city, but that they are a stakeholder, keen to become an integral part of the Lynden business community.”

Why freeze-dried pet food?

Wu emphasized the words “natural,” “fresh,” “healthy” and “convenient.”

The company does not use additives, and the food is not heated, as that could destroy the health value, Wu added. Thanks to the freeze-drying process, the food is also easier to carry than its wet counterparts.

“Freeze-dried meals and treats preserve the natural flavor and form, as well as the nutrition, of the raw materials, and are easily rehydrated and absorbed,” said Gary Xu, the founder and president of AFD, in a press release. “Hence, freeze-dried products have become more and more popular and are increasingly acclaimed as superstars in the natural and healthy pet food sector. With our strong technological advantage, AFD Group will continually innovate its products, processes and equipment to satisfy changing market demands. At the same time, while we are growing rapidly, we emphasize environmental protection

on page 31)

built a reputation for responsiveness, professionalism, and quality service for business and government clients throughout Washington.

The firm looks back with great pride at the team of skilled lawyers who decided to call Bellingham home and the technological innovations it embraced to support a statewide practice.

The firm looks forward with confidence as we transition to the next generation of principal attorneys and we continue to add talented lawyers to meet the needs of our clients now and into the future.

Facilitating

The Whatcom Business Alliance is the ears, eyes, and voice for the Whatcom County business community. We believe success is the single largest driver of community prosperity, which is why we focus our efforts on facilitating that success through advocacy, research and education and job opportunities. We bring business leaders together to encourage, acknowledge and share the best and most ethical business practices. Our members improve their respective businesses and work closely with community leaders to promote public policy that supports a healthy business climate and a vibrant economy. To learn more and become a member, visit whatcombusinessalliance.com/joinus or call Barbara Chase at 360.543.5637. or call Randi Axelsson at 360.746.0410.

and sustainability, for we only have one shared Earth.”

One thing AFD is especially proud of, Wu said, is quality — evidenced by the company’s commitment to the hazard analysis and critical control points approach to food safety and its certification by the Safe Quality Food Institute. AFD Group’s factories are certified SQF Level 3, the highest distinction in the well-known food safety standard.

The pet food production process involves sourcing top ingredients and then taking the frozen raw fruits, vegetables and meats along fully automated conveyor belts to be mixed. From there, the food moves into the freezers to dry on trays and then onward to bins and into boxes. Finally, the products are carried on to market. When it goes into the bags, it is a freeze-dried product and has a longer life span.

While owner Xu has utilized Wu as his agent to oversee this project, including meetings with local and state officials during the past year, Wu said Xu has created the innovation behind the processes the company uses — both in business and in production. Xu established the Langley operation in 2011. This is now the company’s third facility, with another in a renovated building in the Los Angeles area. The three factories’ combined efforts will set them apart from the competition, Wu said.

AFD Group, with its subsidiary Canature Processing Ltd., pursues its mission to ensure “Healthier Pets and Happier Lives” through its natural, fresh, healthy and convenient freeze-dried pet foods and treats. AFD Group and Canature manufacture under major private-label brands, which have a large distribution, and

under company-owned brands.

AFD Group and Canature’s products have been sold globally and are popular among pet owners — and their pets.

NutriBites brand freeze-dried pet products — diced, extruded, formed and powdered treats, toppers and meals — have been sold throughout the U.S. and Canada through Costco and other major channels.

“Our company is special,” Wu said. The company has found ways to use innovation in each component of the business, Wu said, from engineering to sales to adherence to quality.

The way the facility is being planned allows for future intellectual growth, not just adding an addition to a building. The company considers it a “flexible digital plant” in which leaders can consider additional types of products. ■

Architectural rendering of the new Canature Kitchen Lynden plant, which will be one of the largest freeze-dried pet food factories in North America.

Photo courtesy of Canature Kitchen

HOLIDAY WEEKEND

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Washington state has low electricity prices. Will it stay that way?

Dam breaching on the Snake River could have an impact

Brett Davis

In terms of average retail price, Washington state has the seventh-lowest electricity rate — 8.75 cents per kilowatt hour — in the nation, according to a 2021 state electricity profiles report from the U.S. Energy Information Administration. The national average is 11.10 cents per kilowatt hour.

Washington’s 2021 retail rate came in lower than neighboring Oregon, which was ranked No. 11 at 8.95 cents, but higher than Idaho’s cheapest-inthe-country 8.17 cents.

Washington’s 2021 retail rate came in lower than neighboring Oregon, which was ranked No. 11 at 8.95 cents, but higher than Idaho’s cheapestin-the-country 8.17 cents.

Todd Myers, environmental director for the Washington Policy Center, explained why electricity is less expen-

sive in the Evergreen State than in much of the rest of the nation.

“Washington has some of the lowest electricity rates due to our hydro system,” he said in an email. “Hydroelectric power is the best of both worlds — low cost and able to be ramped up or down as demand requires.”

The state Department of Commerce’s Choose Washington website says as much.

“We offer businesses the largest coordinated hydroelectric system in the world,” the website states. “Nearly 75% of our power is derived from

PHOTO: iStockphoto.com/photoman

BECU, we feel like business partners.”

Being a BECU Business member is like getting all the banking help you need, but with a relationship you actually want. Because we’re a not-for-profit credit union, so the biggest profits we care about are yours.

the many rivers that flow through the state, and the state’s Legislature has mandated that 100% of all energy be derived from clean power sources by 2045.”

According to the website, energy costs for industrial customers can run as low as 2.88 cents per kilowatt hour and average 4.13 cents per kilowatt hour statewide, among the lowest rates in the country.

Several factors will play a part in determining future electricity costs in Washington, Myers said. Among the biggest is what happens in California.

“Since we are on a grid with them, we compete to some extent for electricity,” he said. “When spot prices shot up in California this summer, our spot prices did, too.”

A spot price is the current price of a commodity at which it can be bought and sold at a particular place and time.

“Most of the electricity used by utilities comes from contracts that are purchased well in advance, so spot prices don’t tell the whole story,” Myers said, “but very high prices for even a short time can add up.”

Adding new electricity generation is another key factor in electricity costs going forward.

“Nothing is as cheap as existing hydro, so prices will go up no matter what we do,” Myers said. “Washington requires that all electricity be 100% renewable by 2030, and then that it must all be generated in-state from renewables by 2045. This second target is entirely unnecessary. We are on a grid, and it doesn’t matter where the electricity is generated. It would be better

“With

Member Nik P., Co-Owner of Phinney Ridge Painting.

simply to purchase the lowest-cost renewables rather than forcing utilities to build expensively in Washington state. These are the types of nonsensical rules that drive up electricity costs without adding any environmental benefit.”

Jim Kopriva, senior communications associate with the Governor’s Office, took exception to Myers’s observation on the 2045 clean energy due date.

“The state’s 2045 target does not limit Washington to power generated in-state,” he told The Center Square in an email. “There’s been a misunderstanding with that claim.”

The Center Square asked Myers about Kopriva’s claim.

“It was sold as all in-state and the incentives are for utilities to build instate, but he is correct that it is not required,” Myers clarified. “I would change ‘in-state’ to ‘directly’ to make it perfectly accurate.”

He concluded: “My frustration is that the 2045 requirement adds no CO2 reduction beyond the 2030 requirement but does add cost.”

Another consideration in electricity prices down the road in Washington involves the possibility of breaching four dams on the lower Snake River to save endangered salmon runs and maintain treaty obligations with Native American tribes.

Earlier this year, Gov. Jay Inslee gave his blessing to restoring the free flow of the river in a report co-signed by U.S. Sen. Patty Murray that says the benefits provided by the four giant hydroelectric dams must be replaced before the dams can be breached.

“The dams provide about 8% of what Washington state uses (people will claim that California buys the electricity, but that is a distinction without a difference since any electricity can be sold on the spot market to

anyone on the grid),” Myers said. “If we destroy them, we need to replace that electricity, and the only way to do that is by buying from sources that are much more expensive.”

Power grid workers have consistently said the backup electricity provided by the Snake River dams is essential to preventing power shortages when energy demand is high.

Kopriva is confident electricity prices in Washington will remain low.

“Hydropower is and will remain a significant source of clean, affordable power in Washington state,” he said, “and the costs of renewable sources drop every year.” ■

This report was first published by The Center Square Washington.

“Hydropower is and will remain a significant source of clean, affordable power in Washington state, and the costs of renewable sources drop every year.”

— Jim Kopriva, senior communications associate with the Governor’s Office.

Summary of capital gains income tax amicus briefs

Jason Mercier

The briefing is now complete for the capital gains income tax case. All we can do now is wait to see what nine state Supreme Court justices decide. Will Washington acknowledge what every other state, the IRS and other countries in the world know to be true (a capital gains tax is an income tax), or will our justices agree with lawmakers that Washington has discovered a brand-new way to tax capital gains income as an excise tax? While we wait for the answer, here is a summary of the amicus briefs filed in mid-December.

Briefs arguing the capital gains tax is an excise tax:

• Law professors – “Both this Court’s and U.S. Supreme Court’s older decisions have allowed opponents to characterize almost any tax levied on the use or transfer of property as a tax burdening that property itself, as respondents do here. But only occasionally and in a much different time have those arguments succeeded, as in Culliton and in Pollock. Culliton’s and Pollock’s reasoning—that a broadbased income tax is a tax on property so any tax on income is a property tax—is far from compelling in today’s transaction driven economy. And this Court has refused to blindly adhere to this syllogism in its excise tax jurisprudence. It should refuse to do so here. At a minimum, this Court should ensure

PHOTO: iStockphoto.com/William_Potter

that Culliton’s reach is limited and refrain from broadening Culliton’s dubious logic to invalidate a tax that operates only upon the transfer of a capital asset. Rather than extend case law that has never been applied to bar a tax narrowly targeted to the economic benefits attendant to the transfer of property, this Court should rely on its substantial excise tax precedent to uphold the Legislature’s decision to tax the gains realized on the transfer of a capital asset under ESSB 5096.”

NOTE – The professors’ home states all say a capital gains tax is an income tax.

• Unions and activists – “By passing a capital-gains excise tax, Washington has joined the vast majority of states that tax capital gains. It is

a small but important step on the path to improving Washington’s regressive tax system, so that all Washingtonians pay no more and no less than what they justifiably owe toward the State’s provision of the basic services that benefit all Washingtonians. The revenue generated by the tax will be used to improve public education, and to increase access to and affordability of child care and early learning, programs with lifelong benefits for children and parents and an extraordinary return on investment for the State and all its residents. The tax imposes a modest burden on those taxpayers who can most afford it, and it is entirely implausible that it will cause Washington’s wealthiest residents to flee to another state without income or capi-

tal-gains taxes. In short, it is a common-sense measure that benefits all Washingtonians while harming none, and the Court should uphold it as a proper excise tax under Washington law.”

NOTE – Only states with income taxes tax capital gains income. No state has a standalone capital gains tax. Washington would be the first, if affirmed.

• Educators – “At most, Plaintiffs’ attempt to distinguish the capital gains tax from other excise taxes amounts to a distinction without a difference. The Court should follow its consistent precedent in this case and hold that the capital gains tax, which is triggered by and imposed on sales of capital, is an excise tax… Extending Culliton’s ‘bewildering,’

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inconsistent income tax precedent to the capital gains tax would conflict with extensive jurisprudence classifying taxes on transfers of property as excise taxes and undermine the very purpose of stare decisis, which is consistency.”

NOTE – The state Supreme Court in 1960 said its prior rulings were sound and a constitutional amendment is necessary to impose a graduated income tax.

• Racial equity group – “As a result of this democratic and self-governed process, the Legislature enacted the capital gains excise tax to fund the state’s paramount duty to educate every resident child regardless of race or household wealth. This Court should respect and maintain this democratic power by upholding the constitutionality of the capital gains tax. Centuries of institutional and economic racism have created vast racial wealth disparities for BIPOC. Regressive tax codes further perpetuate these disparities by requiring those least able to pay (disproportionately BIPOC) to bear the brunt of the tax burden. In 2021, in response to advocacy from a broad coalition of community organizations, the Legislature enacted a capital gains excise tax as a step toward remedying Washington’s inequitable tax code and ameliorating the lasting effects of racism.”

NOTE – Washington voters have rejected 10 straight income tax ballot measures, including six constitutional amendments.

Briefs arguing the capital gains tax is an unconstitutional income tax:

• BIAW and the Washington Retail Association – “The legislation, by its own admission, is a tax on an individuals’ receipt of capital gains, not an excise tax on capital transfers, as the State contends. The State’s effort to mischaracterize the legislation as an excise tax represents a radical departure from how every other jurisdiction in our nation treats capital gains. Starting with the federal government and the Internal Revenue Code, on which Washington’s tax is entirely modeled and based, the gain on sale of long-term capital assets is indisputably treated as personal income. The forty-one states that levy a tax on capital gains also treat them as income. The only states that do not tax capital gains as income are those that levy no income taxes at all — Alaska, Florida, Nevada, South Dakota, Texas, and Wyoming — and the two states, New Hampshire and Tennessee, that tax only dividends and interest income earned by individual taxpayers. Thus, every jurisdiction in our nation that taxes capital gains treats them as income, and duly recognizes its capital gains tax as an income tax. The solitary exception is Washington, thanks to ESSB 5096. With the vote forty-nine to one, the unanimous weight of authority compels the conclusion that the capital gains tax imposed by ESSB

5096 is actually an income tax, not an excise tax.”

• Association of Washington Business, Technology Network, Citizen Action Defense Fund, and Ethnic Chamber of Commerce Coalition – “The amici are concerned about the impact this tax will have on businesses and business owners in Washington if the tax is upheld. Amici members should not be subject to a substantial disruption of the state’s tax system because the legislature decided to ignore the plain meaning of the Washington Constitution and nearly a century of judicial precedent regarding income taxes in Washington…Amici agree with the superior court that the capital gains tax imposed by ESSB 5096 is labeled an excise tax but is an income tax in all other aspects. If it is held to be an excise tax, however, it creates the risk of double taxation. This Court should not condone double taxation as a matter of law or policy.”

• National Tax Economists and Policy Analysts (WPC joined) – “For almost 100 years, income taxes have been unconstitutional in the state of Washington. Ballot measures to allow for an income tax have been rejected by voters in 1934, 1936, 1938, 1942, 1944, 1970, 1973, 1975, 1982, and 2010. To circumnavigate this constitutional command, the legislature in 2021 imposed what it calls an

excise tax on capital gains income. Respondents challenged this as an income-tax-in-disguise. The Superior Court below determined this tax to be an income tax and thus unconstitutional…Taxes on capital gains are taxes on income. Excise taxes do not have exemption levels, nor are they imposed on annual totals, nor do they track the filing deadlines and requirements of the federal income tax. Income taxes do all those things. Washington taxpayers will fill out a return due the same day as the federal income tax, and the base of the tax will be derived from capital gains taxed under the federal income tax and state income taxes. The IRS joins

every state and every tax expert in agreeing that capital gains are income … The Washington capital gains tax is not a per unit consumption tax on individual transactions but on the aggregate total income itself, measured as a percentage of income and imposed broadly on all economic gains. The tax includes exemptions and deductions to limit the scope of the tax to certain individuals, rather than applying universally to an activity. The tax is not based on a transaction, but on the net aggregate capital gains earned by a person in a year. These are all features of income taxes, not excise taxes.”

The state Supreme Court will hear

oral arguments on the capital gains income tax on January 26, 2023.

Jason Mercier is the director of the Center for Government Reform at Washington Policy Center and is based in the Tri-Cities. He has served on the boards of the Washington Coalition for Open Government and Verify More, and he was an adviser to the 2002 Washington State Tax Structure Committee. Jason is an ex-officio member for the Tri-City Regional Chamber of Commerce and serves on the chamber’s government affairs committee. He worked with lawmakers in 2008 to create the state’s renowned budget transparency website, www.fiscal.wa.gov, and has been a champion for many of the state’s important budget reform tools, including the four-year balanced budget requirement adopted in 2012. In 2010, former Gov. Gregoire appointed Jason as WPC’s representative on her Fiscal Responsibility and Reform Panel.

5 money moves for women in the new year

Stay on top of your money by starting simple

Nicole Burdick

Get organized

It’s hard to stay on top of our investments when we can’t remember where they are. It’s easy to put off dealing with an old company 401(k) because we’re busy or to avoid logging into our current plan because we’re scared of what we’ll find. The embarrassment about “not being on top of it” sends us into a perpetual cycle of procrastination.

That can end today! Block a time to make a list of all your financial accounts. Make a list of to-do’s as you go — you may want to consolidate inactive retirement plans, review how your account is invested, increase your contributions, update your beneficiaries, etc.

Get it on the calendar

The key to making meaningful progress toward your financial goals is to set aside regular time to check in on your progress. Set up a monthly recurring event for a money check-in. Skim your transactions for overspending, subscriptions you need to cancel or fraudulent transactions.

If you find it helpful to set a budget, that’s great. However, if you hate the idea of budgeting so much it makes you avoid your money altogether, simply review your spending and ask yourself what changes would serve you well. Budgeting can be similar to dieting; it is helpful for those who need the structure but triggering and joy-sucking for free spirits. If this describes you, consider practicing mindful spending — paying attention to how money flows in and out of your life without needing to control it. Money is a tool to support you, not the other way around.

PHOTO: iStockphoto.com/AndreyPopov

Put your own oxygen mask on first

As women, we often care for everyone else’s needs before our own. Unfortunately, this trend is reflected in our finances. Sometimes it looks like putting our career aside to be a caregiver for small children or aging parents. Other times it looks like reducing our retirement contributions to pay for our kids’ college tuition or help meet a family member’s financial need.

Here’s my take: Your own financial stability is one of the best gifts you could give your family. No one intends to become a burden in their old age, but that’s the risk of putting off our own financial needs, such as saving for retirement or building up our emergency reserves. Even if times are tight and you can’t invest like you

want, commit to doing what you can.

Take advantage of opportunities

The old year may be over, but the window to make retirement contribu-

tribution of up to $6,000 (or $7,000 if you’re 50 or older). If it appears you’ll be eligible to contribute in 2023, consider automating — or increasing — your monthly contributions.

If your employer offers a match, don’t pass it up. These matches are probably the closest we’ll get to free money, so even if it means rearranging parts of your budget, do whatever is necessary to be eligible for the full match.

Ask for help

Honestly, money is complicated, and there’s a good reason we struggle to make progress toward our financial goals. The good news is that there are plenty of professionals who can help. Money coaches work on your money mindset, financial therapists address money baggage, insurance agents help with all sorts of insurance. Accountants help with tax planning, and financial advisers help manage your investments.

The fact that you can do it all yourself doesn’t mean you should. Cheers to a financially confident 2023!

Nicole Burdick is a Bellingham-based LPL Financial Advisor and the founder of Money Maven Financial, a female-focused financial empowerment practice where she helps her clients become financially confident. Visit www.moneymavenfiancial.com.

The opinions voiced in this content are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA (www. finra.org)/SIPC (www.sipc.org).

Your own financial stability is one of the best gifts

could give your family.

Don’t limit choices for small businesses and workers

Rules limiting the gig economy don’t serve those who need it

Dann Mead Smith

Most of us don’t even think about it when ordering groceries or restaurant food delivery, but we now have different choices on how our lunch and store purchases arrive at our home or office.

“The advent of the gig economy,” points out the Washington Policy Center, “has provided millions of Americans with some cost-effective transportation and cheap home food delivery.”

This has given us more flexibility to acquire services that fit our individual needs while at the same time providing an indispensable new tool for small businesses, which can offer this delivery service without having to invest in expensive new capital (car or van) or dedicated delivery staff. Businesses can meet the demands of consumers without sunk costs for a service when they don’t know when, exactly, it

will be needed.

Services provided by companies like DoorDash and Uber Eats have taken off over the last few years, especially during the pandemic, providing inexpensive food delivery and needed income for those who choose not to work full time and want the flexibility that this new industry provides.

But new government regulations are threatening to negatively alter this service upon which we now rely. Unnecessary and unproven changes also will negatively impact the workers who make the deliveries and the small businesses that rely on them to bring their products to customers.

The Seattle City Council passed a new law that sets the minimum wage for food delivery workers at $17 hour.

PHOTO: iStockphoto.com/Liudmila Chernetska

New government regulations are threatening to negatively alter this service upon which we now rely.

Washington Policy Center predicts that — in the same way raising the minimum wage for Uber and Lyft drivers increased prices by as much as 25% (with some estimates as high as 50%) — “a similar increase in customer prices is likely to ensue to cover the additional cost for this new minimum wage for food/grocery app delivery. Less orders will be fulfilled, and gig workers will have less work. Ironically the food being delivered will be less affordable for the very people delivering it.”

Now other cities are following in Seattle’s path to regulate this industry, without any insight on how these new regulations will impact workers and the small businesses that proponents say they are trying to help. The Spokane City Council just passed a cap on the amount that third-party delivery

companies can charge restaurants for providing services, limiting the fee to 15% of the purchase price unless the restaurant agrees to pay more for advertising and other services.

The five councilmembers who passed this new law did not take into account that DoorDash, Uber Eats and Grubhub already offer an option to local restaurants that charges no more than a 15% commission.

Councilmember Michael Cathcart was quoted in The Spokesman Review expressing concern with the city interfering with businesses. “I would never go (into a local coffee shop) and say you have to charge a certain amount for a coffee; the amount you’re charging is way too much,” Cathcart said. “For the same reason … there’s no way I can tell a delivery service how they can run their business.”

Be on the lookout for this debate

on creating an arbitrary minimum wage for non-employees who make these deliveries and mandating caps on how much these private companies can charge for their services to spread, unfortunately, to other cities.

We need to make sure that our small businesses still have this needed option when they consider the most efficient and cost-effective way to offer needed deliveries for their customers. And we need to make sure that workers still have the opportunity to provide this service when it fits their schedule, without local governments artificially limiting how many workers can benefit from this industry. ■

Dann Mead Smith, of the Mead Smith Group, works with groups such as Project 42, a new nonprofit organization created to change the course of Washington state. Dann lives part time in Birch Bay. Learn more about Project 42 at pfortytwo.com.

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Mitch Faber Partner

Patrick Schuppert Relationship Manager Vice President

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The cost of Washington’s new CO2 tax

The bad news and the less bad news

Todd Myers

There is a great deal of uncertainty about what Washington’s new carbon dioxide tax will cost, but there is an early indication the cost will be, while still expensive, less than feared.

Washington’s new tax on carbon dioxide emissions took effect Jan. 1. Companies that distribute carbon dioxide-emitting fuel sources, like gasoline or natural gas, must purchase permits to cover the emissions from those fuels. Since there are a limited number of permits, the price is determined by an auction. The first auction for permits doesn’t occur until late February. Since the impact on the cost of energy — gasoline, diesel, natural gas — is determined by the cost of the permits, we won’t know how much the tax is until that auction occurs.

The Department of Ecology recently set a minimum

price for permits of $22.20 per metric ton of carbon dioxide and a maximum price of $81.47. That translates to between 18 cents per gallon and 72 cents per gallon.

The Department of Ecology’s own estimate is the permit price would average $58.31 per metric ton of carbon dioxide.

We do, however, have an early estimate of what the prices could be. The Nodal Exchange held an auction for futures on the Washington carbon dioxide market for about 25,000 metric tons of carbon dioxide, which is a small percentage of the permits expected to be sold in February. The permits sold for $35 per metric ton, lower than the estimate from the Department of Ecology, but still about 28 cents per gallon of gasoline and 34 cents per gallon of diesel.

These calculations are based on two basic facts. First, each gallon of gasoline emits about 19 pounds of carbon

PHOTO: iStockphoto.com/Sakorn Sukkasemsakorn

dioxide, which is about 0.9% of a metric ton. Multiplying the price per metric ton by 0.9% yields the cost per gallon. Second, we assume the tax will be passed on to consumers. This is the experience in California and in Washington state with gas tax increases.

Importantly, the Department of Ecology’s own analysis of another carbon dioxide regulation — the low-carbon fuel standard — also assumes the cost of compliance will be passed on directly to consumers.

Contrary to that experience from carbon dioxide taxes elsewhere and Ecology’s own low-carbon fuel standard analysis, Ecology claims the new carbon dioxide tax will only increase gas prices by about 5 cents per gallon. Ecology came to this conclusion by running the total cost of the carbon dioxide tax though a macroeconomic model that estimated the impact on

fuel prices would be between 0.67% and 1.9%. I asked Ecology to explain how they came to this conclusion or to connect me with the company who did the modeling, and they responded only that “Our contract with Vivid (who did the analysis) is now concluded.” So, how they came to that conclusion is not clear.

They also claimed that the “most likely” scenario had a lower price of $41 per metric ton. That scenario, however, assumes Washington’s market is tied in with California’s. Currently, we are not connected to California’s market, and, in a recent hearing, Ecology indicated that while it intends to begin negotiations with California, that has not yet occurred, and any agreement would take time. In other words, Ecology’s “most likely” scenario is entirely theoretical and seems unlikely to occur until later in 2023 at the earliest.

If Ecology believes the cost of carbon dioxide permits will be low, it could ask the Legislature to move the maximum price from $81 per metric ton down to $40 per metric ton — or lower — in 2023 to prevent price shocks. The calculation to set the maximum price is written into regulation, but Ecology staff frequently ask legislators to make changes to the law and certainly could do so here. Leaving the price cap at such a high level indicates Ecology staff believe prices might indeed go higher than they let on.

The bottom line is that there is a great deal of uncertainty. But I am certain that the increased cost at the pump will be more than 5 cents per gallon.

In 2022, Washington’s regular gas prices averaged about 62 cents more per gallon than the national average, according to the U.S. Energy Information Administration. I am willing to bet that the gap between Washington’s average price and the national price will be 82 cents per gallon next year.

If Ecology staff, legislators or others think the impact of the carbon dioxide tax will be small, they should leap at the opportunity to bet on the numbers. I offer my standard bet of $50 to charity. I’ll accept the first two bets.

Either way, the speculation will soon be over, and the impact on prices will begin to appear in 2023. ■

Todd Myers is the director of the Center for the Environment at Washington Policy Center. He is one of the nation’s leading experts on free-market environmental policy. Todd is an author and researcher. He formerly served on the executive team at the Washington State Department of Natural Resources.