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Inside

www.warestaurant.org

Features 7

Greetings, WRA members!

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New governor and unprecedented caucus set tone for 2013 session

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Government Affairs team

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WRA GA team tackles marathon legislative season, emerges with industry wins

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WRA honors legislative heroes and friends of the industry

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WRA VOTING RECORD Did your legislators show their support with the right votes?

Other stories

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Health care reform: Waiver of the Employer Penalty

On the cover

Washington’s 2013 legislative session proved to be long and challenging, but the WRA government affairs team was up to the task. This issue of Washington Restaurant Magazine will walk you through their work, the key outcomes in Olympia and how your business will benefit in the coming years.

8/22/2013 5:13:20 PM

September 2013 | 5

EDITORIAL STAFF Anthony Anton, Publisher Lex Nepomuceno, Executive Editor Heather Donahoe, Managing Editor David Faro, Contributing Editor Sheryl Jackson, Research Editor Lisa Ellefson, Art Director WRA EXECUTIVE COMMITTEE Jim Rowe, Chair Consolidated Restaurants, Inc. Phil Costello, Vice Chair Stop n’ Go Family Drive In Mark Chriest, Secretary/Treasurer Oki Developments, Inc. Bret Stewart, Immediate Past Chair CenterTwist, Inc. Gary Sutter, WRAEF President Northern Quest Resort & Casino WRA EXECUTIVE TEAM Anthony Anton President and CEO Teran Petrina Vice President Bruce Beckett Director of Government Affairs Lex Nepomuceno Director of Communications & Technology Lyle Hildahl Director of Education Victoria Olson Director of Business Development Susan Howe Director of Internal Operations 510 Plum St. SE, Ste. 200 Olympia, WA 98501-1587 T 360.956.7279 | F 360.357.9232 www.warestaurant.org

Letters are welcomed, but must be signed to be considered for publication. Please include contact information for verification.

Reproduction of articles appearing in Washington Restaurant Magazine are authorized for personal use only, with credit given to Washington Restaurant Magazine and/or the Washington Restaurant Association.

Articles written by outside authors do not necessarily reflect the views or positions of the Washington Restaurant Association, its Board of Directors, staff or members.

Products and services advertised in Washington Restaurant Magazine are not necessarily endorsed by the WRA, and do not necessarily reflect the opinions of the WRA, its Board of Directors, staff or members.

ADVERTISING INQUIRIES MAY BE DIRECTED TO: Ken Wells Allied Relations Manager 425.457.1458 kenw@warestaurant.org Washington Restaurant Magazine is published monthly for Association members. We welcome your comments and suggestions. email: news@warestaurant.org, phone: 800.225.7166. Circulation: 6,310.

6 | |www.warestaurant.org warestaurant.org

News Briefs ACA requires employers to notify employees about exchanges As federal and state governments scramble to get new health insurance marketplaces off the ground, employers face a new federal mandate under the Affordable Care Act to notify employees about these marketplaces, also known as exchanges. As a result, employers must provide notice to existing employees by Oct. 1, 2013, the Department of Labor said this spring. The employee-notice requirement applies to all employers covered by the federal Fair Labor Standards Act. This provision of the ACA creates a new section 18B of the FLSA that requires employers to notify employees in writing about exchanges and federal subsidies to buy private health plans through exchanges. The notices also must inform employees who opt to buy coverage through exchanges (instead of employersponsored plans) that they could lose their employer’s contribution (if any) to employer-sponsored coverage. Finally, the notice must explain that health plans bought on exchanges don’t have the same tax benefits as employer-sponsored coverage. For more information, go to www.wra.cc/aca1001.  Get your health care reform questions answered live!

Each month, the WRA conducts a conference call where members can get answers to their health care questions from issue expert, Donna Steward.

The sessions take place once per month through the end of November and begin at 9 a.m. and will end at 10 a.m. The next conference call/Q&A session will be Wednesday, Sept. 25 at 9 a.m. The call-in number is 1-800-309-2350, conference ID is 6328387. The topic at that time will be, “Understanding the New ‘Nondiscrimination’ Rules from the US Department of Labor.” For more information, go to warestaurant.org/healthcare.  DOR issues notice on new cost-saving laws resulting from WRA efforts The State Department of Revenue released special notices in August, regarding the implementation of laws that resulted from the WRA’s lobbying work this past legislative session. One of these bills creates a tax exemption for restaurants purchasing charcoal, wood, cedar planking and grape vines that are used in the preparation of certain menu items. Go to http://wra.cc/dor070113 to read more about how this new law could save your restaurant money. Another tax bill, which removes the “opportunity to dance tax” from many WRA members, also passed as a part of the same bill package.  New website explains tax provisions of the health care law The IRS has launched a new Affordable Care Act Tax Provisions website at IRS.gov/aca to educate individuals and businesses on how the health care law may affect them. The new home page has three sections, which explain the tax benefits and responsibilities for individuals and families, employers, and other organizations, with links and information for each group. The site provides information about tax provisions that are in effect now and those that will go into effect in 2014 and beyond. Topics include premium tax credits for individuals, new benefits and responsibilities for employers, and tax provisions for insurers, tax-exempt organizations and certain other business types.  Winner drawn in Education Foundation Mustang raffle A big congratulations to Bargreen Ellingson’s Allie Kirby, who won the Washington Restaurant Association’s raffle for a 2008 Ford Mustang Shelby 500 Cobra Coupe! The year-long raffle raised more than $60,000 for ProStart and the WRA’s Education Foundation, which helps culinary school students, recent graduates and industry professionals pursue their professional goals.

Greetings, WRA members!

Wow… 155 days of legislative session in six months… or, stated another way, nearly two years of legislative time compressed into just six months.

As co-chairs of Washington Restaurant Association’s Government Affairs Committee, we want to express our appreciation for the hard work, diligence and strategic approach taken by WRA’s Government Affairs Team during these marathon sessions. The results speak loudly:

A state budget that does not rely on new taxes from the hospitality industry.

Expiration of temporary taxes on beer and the protection of favorable tax treatment of pop syrup and for unemployment insurance.

No new regulations on packaging or paid sick leave, despite strong efforts to pass such legislation.

New business opportunities for theaters to sell beer, wine and/or spirits Passage of legislation clarifying that wood, charcoal, cedar planks, grape vines, etc. used in the cooking process is exempt from taxation.

Passage of legislation eliminating the “opportunity to dance” tax important to WRA nightclub and entertainment venues.

Passage of legislation eliminating the 17 percent fee on liquor sales to restaurants, from contract and former state

liquor stores. While the WRA sought to eliminate this fee across all retailers, this bill’s passage during the final hours of the session is an important step.

This edition of Washington Restaurant Magazine provides an in-depth look at these and many of the WRA’s major accomplishments during the 2013 legislative sessions.

We must note, though, that these outcomes would not have been possible without WRA members’ support and engagement.

More than 140 WRA members ventured to Olympia for Hill Climb in January, participating in more than 130 individual meetings with legislators. The perspective, view and commitment of these members made a huge difference. Lawmakers respond to business owners from their districts – and as difficult as it is to leave your business for the day, we can tell you – it was worth it. Thank you for assisting the GA team in their efforts, and please mark your calendars for 2014!

Additionally, scores of WRA members responded to action alerts on the liquor fee issue. A number of operators even took time from their hectic schedules to travel to Olympia and testify at hearings and meet with lawmakers individually. Those efforts were crucial to overcoming the well-organized opposition to making any changes to the liquor fee structure.

Thank you, WRA members, for your commitment and efforts on behalf of the industry.

Finally, as co-chairs, we want to thank each and every member of the WRA team. The entire WRA staff supports the GA team’s work with the Legislature, with local governments and with regulatory agencies. Without the entire team, none of the successes we are seeing would be possible.

Sincerely, Phil Costello and Randy Thurman, WRA Government Affairs Committee co-chairs

September 2013 | 7

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New governor and unprecedented caucus set tone for 2013 session

By Bruce Beckett, WRA director of government affairs Bruce Beckett, Director of Government Affairs

After compressing nearly two years of session time into just six months, the Legislature finally concluded its business with just hours to spare from a possible state government shutdown. While every legislative session includes hundreds of public hearings, countless witness testimony and thousands of procedural and substantive votes, the 2013 Legislature had one unique and defining element. The tone, tenor and substance that developed over the 155 days of work, was defined by the first vote taken in the State Senate on the first day of the regular session.

Upon the opening of a session, the House and Senate take a number of (usually) non-controversial, procedural votes to organize the committees, leadership and business affairs of their respective chambers. These votes typically ratify decisions made by the majority party, prior to the start of the session. In this case, however, two Democrats, Sen. Rodney Tom and Sen. Tim Sheldon, opted to caucus and join with 23 Republican senators to form the “Majority Coalition Caucus.” The Senate’s normal perfunctory procedural vote to organize itself ultimately became a closely watched floor drama. The outcome led to a unique coalition of Democrats and Republicans leading the affairs of the Senate, and it set the direction of the Legislature’s proceedings for the following five months.

For example: Gov. Inslee and the House emerged with proposals to add $1.3 billion in new revenues, largely by eliminating a number of “tax preferences” and extending taxes scheduled to sunset. The Senate Majority Caucus refused, and the standoff led to two special sessions and a final budget that only included agreed-upon revenue streams from telecommunications and technical corrections to the estate tax. It’s fair to say that the Majority Coalition Caucus achieved its goal of developing a budget that “lives within our current means”.

Despite widespread support from business, labor, Democrats, Republicans and the governor, the Senate Majority Coalition refused to take up proposals to increase funding for transportation infrastructure. Although there are rumblings about revisiting the topic later in the year, the Senate’s decision appears to scuttle the long-planned new Columbia River Crossing project along with many other high-priority projects around the state.

The other “unknown” at the outset of the session was how newly elected Gov. Inslee would approach his work with the

Legislature. Like all new governors, Inslee had to assemble his team during the session, making it difficult to engage deeply on many issues. But the governor was a strong advocate for $1.3 billion in new revenues, for increasing penalties for repeat DUI offenders, on climate change and for increasing resources for education. Unlike his recent predecessors, Gov. Inslee had no qualms about openly criticizing Republicans for their “ideology” on a number of issues.

Finally, the House Democrats, under the leadership of long time Speaker Frank Chopp, remained disciplined in their approach to fiscal and budget issues. House Democrats, however, had a difficult time gaining support within their caucus for key tax votes, for legislation strengthening background checks for gun purchases, and on new taxes to support transportation projects. Despite these difficulties, the caucus achieved a number of their key objectives, including increased funding for education, establishing sunset dates on new tax preferences, and maintaining most state services.

The WRA and its members can be proud of a number of key outcomes:

The Legislature passed a $33.5 billion budget with NO new taxes that impact the hospitality industry.

The temporary beer tax was not extended, despite support from Democrats and Gov. Inslee. The tax expired on July 1.

The industry’s pop syrup tax credit and significant savings in UI costs were preserved Proposals were defeated that would have added new B&O surcharges on services, new taxes on bottled water and increasing taxes on tourism sectors.

No new regulations, such as a state-wide sick leave mandate, packaging costs, etc. were assessed on the industry.

The WRA’s legislation to exempt charcoal, wood, cedar planks and grape vines from taxation, when purchased by a licensed restaurant for use in the cooking process, was passed and signed into law.

WRA nightlife members will benefit from removal of the “opportunity to dance tax”.

New authority for theaters to serve wine, beer and/or spirits was passed. The WRA worked on these proposals to provide new business opportunities under a fee structure that is equitable to all licensees.

September 2013 | 9

WRA members’ interests were protected in legislation

designed to lower the incidence of repeat DUI offenses.

On the final day of the second special session, legislation passed that eliminates the 17% fee on sales of liquor from former state and contract liquor stores to restaurants, bars and taverns. While the bill did not achieve all of the WRA’s objectives for eliminating the fee across all retailers, it is a significant outcome that we believe will provide some cost relief for WRA members.

What’s next?

Despite its length, the Legislature set in motion several followup items on which the WRA’s GA team will focus.. These

GA TEAM

include: A review of liquor taxes in Washington state The Employment Security Department must write a number of new rules related to administration of the unemployment insurance tax and benefit system A number of Retrospective Rating programs continue to seek changes in both rules and legislation to ease administration and claims management Finally, the WRA GA team, along with its I-1183 coalition partners, will continue educating lawmakers on the impact of the 17% fee issue in preparation for the 2014 session of the Legislature. 

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operators. Over the past two years, Julia has emerged as the WRA’s leading advocate on liquor-related issues, working closely with the Liquor Control Board and communicating the WRA’s position throughout the I-1183 liquor privatization transition.

Bruce Beckett, Government Affairs Director With three decades of public affairs experience, Bruce is well-positioned to direct the memberdriven objectives of the WRA’s political advocacy efforts. Prior to arriving at the WRA in 2009, he spent 17 years leading Weyerhaeuser Company’s Western Region and Washington State public affairs teams. Additionally, he served as director of public affairs for the Cascade Land Conservancy’s $20 million Cascade Agenda campaign. Bruce is accountable for overall leadership of the WRA government affairs team, provides strategic direction to the lobby team, and ensures WRA members are informed and engaged.

Contract lobbyists

Josh McDonald, State and Local Government Affairs Prior to joining the WRA in 2007, Josh spent three years working on state, congressional and local campaigns, and worked alongside the WRA’s contract lobbyists Denny Eliason and Kim Clauson. Josh works at the state level on such issues as nutrition/obesity, food safety, tourism and the environment. Earlier this year, Josh took the helm of the WRA’s new local government program in King County.

Julia Clark, Government Affairs Manager Julia Clark joined the WRA’s government affairs team since 2007. During her early years with the Association, she grew and strengthened the WRA’s grassroots network, shaping it into a powerful collective voice of restaurant 10 | warestaurant.org

Denny Eliason Denny Eliason is regarded by much of Washington’s legislative community as one the most accomplished lobbyists on the hill in Olympia. Among other significant wins, Denny’s hard work yielded the B&O tax credit on pop syrup taxes that saves restaurants across the state an average of $3,000 annually. Denny is the founder of Alliances Northwest, a business-oriented government relations firm emphasizing representation before the Washington State Legislature and local governments in Washington state. Some of Alliances Northwest’s other clients include Puget Sound Energy, Nintendo and Amazon.com.

Kim Clauson Kim Clauson is a partner with Denny Eliason at Alliances Northwest. Kim’s primary focus is workplace and labor issues. She is also a strong force on the front lines for the Washington Restaurant Association on some of the industry’s toughest issues. She routinely delivers results on issues that affect restaurateurs’ bottom lines. Kim has landed the state’s restaurateurs their biggest proactive wins in the past five years, which include tackling issues such as workers’ comp, gift certificates and pushing the obesity lawsuit prevention bill past the governor’s desk.

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WRA GA team tackles marathon legislative season, emerges with industry wins With an additional 50 days appended onto what was intended to be a 105-day session, 2013’s legislative proceedings were extraordinary in many respects. Overall, the restaurant industry fared quite well this session, and the WRA is proud of its government affairs team’s efforts in shielding the restaurant industry from harmful legislation and successfully advocating for measures that ultimately make it easier for restaurateurs to operate profitably and efficiently.

With Democrats calling for more than $1 billion in new taxes, the threat of increased taxes and regulations loomed large for the restaurant industry. On the following pages is an in-depth overview of the bills the WRA worked on this session, along with the outcomes for each.

LABOR ISSUES Workers’ compensation In 2011, the Legislature made some significant reforms to the state’s workers’ compensation system that were projected to bring in more than a billion dollars’ worth of savings and efficiencies. One of the significant policy changes in the reform legislation was, in narrow circumstances, to allow for structured settlements to injured workers older than 55. The state expected that 12 | warestaurant.org

more than 1,000 settlement cases would be approved by the department of Labor & Industries and the Board of Industrial Insurance Appeals in 2012. However, there were fewer than 60 settlement cases considered with 27 finalized and 30 rejected. Clearly, the state is not receiving the reform and savings expected when the legislation passed, which may result in significant rate increases on employers.

Consequently, the Senate introduced several pieces of reform legislation, none of which passed this year.

Wage simplification (HB 1464/SB 5124) HB 1464/SB 5124 was prime sponsored by Rep. Matt Manweller (R-Ellensburg) and Sen. Janéa Holmquist Newbry (R-Moses Lake) and provided a simplified process of wage calculation for employers when an employee is injured on the job.

Employee time loss benefit, or wage replacement, is a percentage of an employee’s earnings. The percentage the employee is eligible for is then determined upon marital status and number of dependent children. The bill would have made a flat rate for all injured workers receiving a time-loss benefit. In the Senate, the bill was heard in committee and passed out, but was never scheduled for a House hearing, thus never debated on the Senate floor.

Fixing the Tobin Decision (HB 1465/SB 5126) Under the state’s current system, an employee who is injured on the job can receive benefits, even if the employer is not at fault. If a third party is involved, the injured worker or the Department of L&I can sue the liable third party, a portion of the award can go to recover the costs to the state.

In a recent state Supreme Court decision, Tobin v. The Department of Labor and Industries, an injured worker (Tobin) was injured on the job, and a third party was found liable. The state sought to recover their costs of the claim but the Supreme Court decided they did not have the right in this instance, because the injured worker was awarded benefits for “pain and suffering,” and L&I does not provide benefits for “pain and suffering”.

HB 1465/SB 5126, again sponsored by Rep. Manweller and Sen. Holmquist Newbry, would have corrected this decision, and allowed the state to recover their costs when

a third party is found liable. The Senate version of the bill was passed out of committee, but never debated on the floor of the Senate. The bill did not receive a hearing in the House.

Structured settlements (HB 1097/SB 5127) HB 1097/SB 5127 were sponsored by Rep. Chris Hurst (D-Enumclaw) and Sen. Janéa Holmquist Newbry, and extended the narrow allowance for structured settlements if employees are injured on the job. Under the current system, workers are eligible for a structured settlement if they are 55 years of age or older (will shift to age 50 by 2016), and if other circumstances are met, including approval of the Board of Industrial Insurance Appeals.

The bill would have extended the ability for structured settlements to adults 40 years of age, and also made clarifications to when the Board of Industrial Insurance Appeals can approve a structured settlement. In the Senate, the bill passed on a bipartisan vote of 30-19. In the House, the bill never had a hearing. Debate on SB 5127 carried into both special sessions, but ultimately a compromise was not reached and the bill did not pass.

Unemployment Insurance (SB 5355) Two years ago, the Legislature adopted a new social tax structure that resulted in considerable UI tax savings for the vast majority of restaurants in Washington state. The state, however, had not finalized policies to bring its UI tax and benefit system into conformity with federal laws passed in 2010. If the state did not amend its UI program, there was some risk to the tax structure adopted in 2011, and a risk that Washington employers who receive federal UI tax credits would not receive those credits in 2013. SB 5355 brings Washington’s UI program into conformity with federal law, eliminating any risk to the tax changes adopted in 2011, and the concern over whether employers will receive federal tax credits. The labor community attempted unsuccessfully to leverage this bill for more UI benefits late in the session, thereby requiring a short, but intense lobbying effort. Fortunately, the bill passed with overwhelming support at the end of the regular session.

Independent contractor status (HB 1440) HB 1440 would have dramatically changed the nature of the employee/employer relationship by (1) re-defining when an independent contractor is actually an employee, and, (2) changing the fundamental obligations of wages and benefits between an employer and an independent contractor. The WRA worked with the general business community to oppose HB 1440. The bill was a high priority for organized labor. Fortunately, the business community was successful in defeating the bill in the House.

DEFEATED

Mandatory paid sick leave (HB 1313/SB5728/SB5726) There were multiple bills introduced and heard this session dealing with mandatory paid sick leave in some form. HB 1313, sponsored by Rep. Laurie Jinkins (D-Tacoma), would have required all employers in the state to offer paid sick leave in a very similar fashion to what is happening in Seattle now. HB 1313 did pass through a committee but did not have the support to come up for a full House of Representatives vote. On the Senate side, the exact opposite approach was taken with SB 5728, sponsored by Sen. John Braun (R-Centralia), that would have preempted all local governments from implementing a sick leave ordinance and given this power only to the state Legislature. SB 5728 passed through committee but did not get voted on by the full Senate. Finally, SB 5726, also sponsored by Sen. Braun, would have put geographical limits around any sick leave ordinance adopted by a local government. This proposal was in response to the significant amount of confusion Seattle’s law has created for businesses/vendors/service providers traveling in and out of the city on a regular basis doing business. SB 5726 was passed by the full Senate with bipartisan support, 30-19, but did not receive a hearing in the House due to the objection of organized labor.

MINIMUM WAGE & TIP CREDIT WRA members continue to raise serious concern over the escalating minimum wage in Washington state (currently $9.19/hour), which is the highest statewide wage in the country (some municipalities have adopted higher minimum wages). The wage climbs annually based on the CPI-W index of major U.S. cities. The problem for restaurant owners is compounded by the fact that Washington is one of only seven states that does not allow a business to credit some portion of tip income against the state’s minimum wage. Consequently, restaurant owners in Washington state employ fewer people than their counterparts around the country, and are increasingly challenged by how to more equitably compensate nontipped employees.

Washington citizens remain widely supportive of the state’s minimum wage laws, and lawmakers are reluctant to change the current policies. Additionally, Gov. Inslee has expressed his opposition to any changes that would reduce or alter the current law. Accordingly, the WRA’s GA team continues to educate lawmakers and administration officials on the challenges small businesses encounter from the combination of minimum wage and tip credit laws. During the 2013 session, the House held a hearing on both the minimum wage issue and tip credit issue.

Training wage (SB 5275/HB 1150) The Senate Labor and Commerce Committee had a healthy debate on establishing a training wage for new workers. The idea, championed by Sen. Janéa Holmquist Newbry (R-Moses Lake) and Sen. John Braun (R-Centralia) was well received by members on both sides of the aisle, September 2013 | 13

and likely would have passed the Senate with strong bipartisan support. The bill would have authorized small employers (under 50) to pay up to 10% of their workforce (or 4 employees) a wage of 75% of Washington state’s minimum wage or the federal minimum wage, whichever was higher. Employers could only pay the training wage for a period of 680 hours and if the employee was discharged, the employer could not hire an employee to replace the discharged employee at a training wage for at least one year. The bill was written to address employment data that clearly shows that younger workers, students and first-time workers have the most difficulty finding work; and that minority populations have the most challenges among all sectors. Nonetheless, the bill was vigorously opposed by organized labor, and the chair of the House Labor Committee signaled that it would not be taken up by his committee. Accordingly, the Senate opted to refrain from passing the bill to the House at this time. Nonetheless, the WRA is pleased with the level of bi-partisan support emerging for a training wage concept and expects that further work will continue during the interim.

Regulating wages of tipped employees (HB 1346) HB 1346 would allow for a modest credit for income from tips against the minimum wage requirements. This bill was heard in committee during 2012, and the Chair opted to not hold another hearing this year. The bill is opposed by organized labor and, during his campaign, Gov. Inslee stated that he would veto any legislation authorizing a tip credit. Accordingly, the bill received no action.

Nonetheless, the WRA is grateful to Rep. Matt Manweller (R-Ellensburg) who prime sponsored this important bill, in order to keep the issue in the forefront.

LIQUOR ISSUES 17% retail liquor license fee/ 24-liter limit (SB 5644/ HB 1161) The WRA, along with a coalition consisting of Costco, large and small grocers, retailers, former contract liquor stores and state liquor store auction winners brought a bill forward that corrected errors made by the Washington State Liquor Control Board (LCB) while implementing Initiative 1183 – the liquor privatization initiative.

The bill focused on correcting two features of the LCB’s implemention. The first was a 17% surcharge on sales from retailers to restaurants – a surcharge that was not imposed on wholesalers and that made purchasing from retailers financially impractical. The second feature was a 24-liter per day limitation on the amount of spirits and wine that could be purchased from retailers. This limit made it operationally impractical for bars and restaurants to purchase from retailers.

The coalition that authored the bill represented the 14 | warestaurant.org

interests of more than 6,500 businesses across the state that were harmed by the decisions of the LCB to severely limit transactions between restaurants and bars and retailers. The opponents of the legislation represented the businesses that ultimately benefited from the LCB’s decision: the spirit wholesalers – a market dominated by two companies that distribute approximately 96% of spirits in the state.

House Bill 1161 was sponsored by Rep. Ross Hunter (D-Medina) and Rep. Gary Alexander (R-Olympia), the Chair and Ranking member of the House Fiscal Committee, as well as Rep. Chris Hurst (D-Enumclaw) and Rep. Cary Condotta (R-Wenatchee), Chair and Ranking member of the Policy Committee.

In the Senate, an identical bill was introduced by Sen. Mark Schoesler (R-Ritzville) and Sen. Ed Murray (D-Seattle), the Republican and Democrat leaders in the Senate.

As the bills made their way through the process, opposition mounted from the wholesalers as well as the Teamsters, the union representing the employees of the two largest distributors. With support in the grocery industry split around the 24 liter limitation removal, that section of the bill was removed (ultimately, a judge ruled the LCB did not have the authority to restrict sales to 24 liters per day, and the rule was struck). The bill then moved forward only addressing the 17% surcharge.

The House version of the bill was altered to allow for phased-in implementation, allowing for immediate relief for the former contract and state stores auction winners and a delayed implementation for all other retailers, while extending the 10% distributor fee to cover the fiscal impact. In the Senate, there was not agreement in the Commerce and Labor Committee, so the bill was amended to only address removal of the 17% surcharge for former contract and state stores auction winners, with no phased-in approach for other retailers.

Both versions of the bill remained in their respective chambers through the end of the regular and first special session, and a work group to achieve a solution was assembled lead by Reps. Hurst and Condotta in the House and by Sen. Holmquist Newbry (R – Moses Lake) and Sen. Nick Harper (D – Everett).

Ultimately, leadership in the House was unwilling to move HB 1161, so the Senate passed over their version of the bill that only addressed the issue for former contract and state store auction winners. On the very last day of the second special session, the Legislature passed ESSB 5644. It was the last policy bill considered by the Legislature this year.

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Liquor license renewals (HB 1503/SB 5285) HB 1503/SB 5285 were sponsored by Rep. Reuven Carlyle (D-Seattle) and Sen. Andy Hill (R-Kirkland) and were an extension of last year’s bill, which granted authority to the Department of Revenue to stop a liquor license from being renewed if spirits taxes were not paid.

The WRA was neutral on the bill the year before for two reasons: 1) When the state was the only supplier of spirits, this mechanism was already in place. Businesses could not escape paying spirit taxes because they were imbedded in the total cost of the product collected by the state. 2) Restaurant licensees do not collect the tax, we are payers of the tax. Therefore, unless licensees were knowingly avoiding taxes, the bill did not apply to the industry.

HB 1503/SB 5285, as originally written, allowed the Department of Revenue to request that a license not be renewed for failure to pay any state taxes—not just spirit taxes. The WRA engaged on this issue to ensure that restaurant licensees were allowed due process – meaning the recommendation would only come after licensees were given the notice of late payment, allowed the opportunity to pay and allowed the opportunity to appeal a decision should a notice be made in error. The final draft of the bill allowed liquor license revocation, only as a step before revoking the business license. However, the bill did not pass despite the Government Affairs team working to protect member interests.

Theater liquor licenses (SHB 1001/SB 5607) This year, the Legislature considered two WIN bills that created two separate theater licenses. SHB 1001, prime sponsored by Rep. Jim Moeller (D-Vancouver) creates a beer and wine theater license. After receiving public input, and hearing concerns about increased availability of alcohol the bill was amended to narrow the allowance of a theater beer and wine license to smaller theaters, with no more than four screens.

Additionally, ESB 5607 created a new license for theaters wishing to serve spirits, beer and wine. Initially, the bill included a small drafting error that mirrored SHB 1001, but did not take into account the fee for serving spirits.

Prime sponsor, Sen. Nick Harper, worked diligently with Rep. Cary Condotta and Rep. Chris Hurst to correct the bill so that it would not put restaurants serving spirits at a significant disadvantage.

Both bills include a provision that requires “alcohol control plans” to ensure public safety. The Washington Restaurant Association was supportive of both bills in final form, and these new allowances will provide more flexibility for businesses in the hospitality sector in Washington.

Spirits distribution (HB 2019) In response to the WRA’s legislation to remove the 17% surcharge on sales of spirits from retailers to restaurants, spirits wholesalers introduced a bill to bolster their dominant market position. The bill, sponsored by Rep. Tharinger (D-Sequim) and Rep. Larry Haler (R-Richland), attempted to gain support from the restaurant industry by including a reduction in spirit taxes, from $2.44 liter to $1.22 per liter. However, the bill also included a provision that extended distributors 10% licensing fee (a fee that is scheduled to drop to 5% starting April 1, 2014) indefinitely, and protected current distributors market share by charging any future distributors who wished to enter the market 100% of all sales for the first two years of licensure. The bill also included a provision that removed the 17% for former state and contract liquor stores.

DEFEATED

The bill was actively opposed by the WRA, small and large grocers, retailers, and spirits manufacturers. HB 2019 received a hearing, but did not move forward.

Spirit tax collection (HB 1124) HB 1124, requested by the grocery and retail industry, requires the Liquor Control Board and Department of Revenue to develop recommendations to the legislature on how to streamline spirit tax collection. Currently, spirits retailers are required to pay spirits retail tax and spirits liter tax to the Department of Revenue, in addition to paying their license fee (17% on spirit sales) to the Liquor Control Board.

The WRA was neutral on the bill, considering restaurant licensees are payers of the taxes, rather than the collectors.

The bill passed the Legislature.

WIN

Identification of wineries, breweries and microbreweries on private labels (HB 1351) One of the many outdated tied house laws remaining in Washington was the prohibition of “co-branding” for manufacturers and retailers. This meant that if a restaurant or retailer partnered with a winery or brewery to have a custom wine or beer produced, the winery or brewery could not be identified.

HB 1351 corrected this issue, allowing for the winery or brewery to be identified (if desired). The bill was sponsored by Rep. Hurst and Rep. Condotta.

Driving under the influence (SB 5912) With only three weeks remaining in the regular session, the governor and a bi-partisan group of House and Senate

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leaders announced their intent to develop and pass a new set of laws designed to prevent and punish repeat drunk driving. Lawmakers’ were energized to take action because of a number of recent high profile, tragic fatalities caused by drunken drivers. When the first proposals emerged from the work groups, they included several difficult features that directly impacted businesses that serve beer, wine and/ or spirits. These included:

A requirement that repeat DUl offenders be issued a specially marked driver’s license or I.D.

A prohibition on the purchase and consumption of

alcohol for repeat DUI offenders.. To achieve this goal, the bill imposed criminal penalties against individuals and businesses that sold or served alcohol to someone with a marked license or ID. Additionally, it would impose penalties against businesses that allowed consumption of alcohol by someone with a marked license or ID on their premises.

Authorization of Liquor Control Board to rescind a liquor license if a repeat offender was served by the licensee.

After four public hearings and countless work sessions, these features of the bill were removed. The WRA noted that (1) other forms of ID are acceptable for purchase of alcohol, (2) that under the proposed law, businesses would have to check each and every ID of patrons and (3) (the law) would fail to accommodate foreign visitors and tourists from outside Washington state. More importantly, the WRA felt that it was not appropriate for businesses (and their employees) to be held accountable for enforcing courtordered penalties against DUI offenders.

The final bill strengthened penalties against repeat offenders, added new requirements for installing ignition interlock devices and bolstered treatment programs.

A work group will examine additional options for consideration in the next session of the Legislature. The WRA will continue to monitor and engage on this issue as many stakeholders will continue to seek new taxes on liquor, beer or wine to pay for enhanced enforcement programs, and some continue to advocate for sanctions against servers and business owners.

Beer tax (HB 2038) An extension and modification of the state’s beer tax was contained in both the governor’s budget proposal, as well as the House budget proposal in HB 2038.

DEFEATED

In 2010, the Legislature, faced with serious budget deficits, passed into law a temporary tax on beer, but allowed for an exemption for the first 60,000 barrels. This exemption

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applied to Washington’s many microbreweries, while hitting mainly Anheuser Busch, Miller-Coors and other macro-produced beers. However, Gov. Inslee and several House Democrats made this temporary plan permanent in their initial budget proposal, as well as extended the tax to all beer producers.

The WRA partnered with a coalition of retailers, wholesalers and beer producers to ensure this tax remained temporary. The bill and the proposal failed to pass, and the tax sunset on July 1, 2013.

TAX AND FISCAL ISSUES Tax increases (ESHB 2038/ESHB 2034) The governor and the House brought forward a number of proposals that, collectively, would increase taxes by $900 million to $1.3 billion (depending on the specific proposal), largely by eliminating a number of tax “preferences” and by continuing a number of temporary taxes scheduled to sunset in the upcoming year.

The taxes included: Continuation of the surcharge tax on beer, and extending the tax to craft breweries Continuation of a B&O tax surcharge on services Adding new sales taxes on bottled water Adding new sales taxes on prescription drugs Adding new taxes on imports Repealing non-resident sales tax exemptions Repealing interstate hauling tax incentives Repealing R&D tax credits Increasing taxes on travel agents

DEFEATED

The WRA’s GA team educated members early in the session on the importance of the B&O tax credit for pop syrup, and it was not included in the proposals that were ultimately debated in the House. The WRA joined with the entire business community in opposing these bills. In particular, the beer tax, the B&O surcharge on services, bottled water tax and the interstate hauling tax would add unique costs to WRA member businesses. The other taxes simply increased the cost of doing business in Washington state.

The Senate Majority Coalition refused to take up any of these proposals. Indeed, the disagreement over these taxes resulted in the need for two special sessions. In the end, the only increases in revenue that passed included a technical correction to the state’s estate tax and a telecommunications tax supported by that business sector.

Exempting cover charges from the opportunity-to-dance tax (SB 5613) In recent tax audits, several WRA members WIN were finding that an old tax law could cost them thousands of dollars – or even result in the closure of their business altogether.

The state’s tax code applied sales tax to businesses that were charging a fee for providing the “opportunity to dance” – a requirement aimed at ballet studios and Jazzercise facilities. Fast forward several decades, and operators were finding it very difficult when a cover charge was assessed for the “listening and enjoyment” of music – which is not subject to sales tax – or when it was being charged for “providing the opportunity to dance” – which is subject to sales tax.

The vague definition left the Department of Revenue trying to fill in the blanks, and the result yielded no clear way for businesses to know when sales tax was expected to be collected or not. The WRA initiated meetings with nightlife operators and the Department of Revenue, and eventually drafted the language for SB 5613. The nightlife community, steered by the Seattle Nightlife and Music Association, led the legislative effort with a bill sponsored

by Sen. Ed Murray (D – Seattle).

SB 5613 was eventually rolled into SB 5882, Sponsored by Sen. Andy Hill (R- Kirkland) along with a number of other taxation issues, including the restaurant exemption for charcoal and wood.

Charcoal/wood tax clarification (HB 1358/SB 5342/SB 5882) WIN The WRA began receiving inquiries about a year ago from several restaurants reporting that Department of Revenue auditors were assessing taxes owed on purchases of charcoal and wood used in their commercial kitchens. This was a change in auditing practices from previous years and was being done using a very vague tax code that was inconsistently applied during audits. Consistency in tax assessment and general operating practices are extremely important for restaurants, so the WRA worked with the DOR to come up with the best approach to fix this problem. After researching various approaches, a legislative fix was developed in the form of HB 1358/SB 5342, which created the necessary tax clarification. As a result of the fix, these products (charcoal, wood, cedar planking, and grape vines) are now viewed as “ inputs” into a restaurant’s final product sold to the customer, therefore are not taxable, in the same way other ingredients in a recipe are not taxable.

The WRA is thrilled to have excellent sponsors for this priority legislation. Rep. Larry Springer (D-Kirkland)

and Sen. Bruce Dammeier (R-Puyallup) agreed to be our prime sponsors in the House and Senate respectively. In the final budget agreements, the wording of this legislation was placed into a larger bill (SB 5882) that was passed and signed by the governor during the second special session.

The effective date of our portion of SB 5882 is October 1st, 2013.

Credit card surcharges – HB 1807 Rep. Cyrus Habib (D-Redmond), introduced HB 1807 that, as originally written, would have prohibited any retailer from requiring a surcharge on credit card transactions. The WRA, grocers and retailers all testified in opposition to the bill, primarily because these industries are in negotiations at the federal level on how credit and debit transactions are regulated. The impacted industries would prefer a federal resolution rather than a state-by-state approach. Even though Rep. Habib modified his bill to allow surcharges, the WRA’s stance on the need for a federal solution remained. HB 1807 passed the House chamber but did not see a final vote by the Senate.

DEFEATED

SUSTAINABILITY/ENVIRONMENT Seafood mislabeling – HB 1200 Over the past several years, the Department of Fish and Wildlife (DFW) has struggled with identifying and catching the “bad actors” in the seafood distribution and retail industries.

HB 1200, drafted by DFW and sponsored by Rep. Brian Blake (D-Aberdeen), is an attempt to give some teeth to the laws around mislabeling and misrepresenting seafood at the time of purchase by either the retailer or the consumer.

The WRA worked with DFW to make sure HB 1200 was written and would be implemented in a way that truly did go after just those who misrepresent their product. The WRA accomplished this goal and in the end was neutral on the bill as it went through the House and Senate and was signed by the governor with little to no opposition.

Plastic bags/ packaging legislation A handful of bills dealing with plastic bags, to-go packaging, and other sustainability/waste reduction movements were once again introduced this session. None of the bills in these areas saw any level of serious movement this year, but we suspect to see them come up again in 2014. Specifically, the ban on plastic bags is becoming a very real issue as eight cities in Washington state have now adopted plastic bag bans with more considering a ban in the coming year. At some point, this issue will need to be dealt with at the state level to avoid a multitude of different ordinances existing across Washington state, creating inconsistency for restaurants operating in multiple locations. 

DEFEATED

September 2013 | 19

WRA honors legislative heroes and friends of the industry By the time the legislative session ends each year, a handful of legislators have emerged as true champions of the restaurant industry’s priorities. These legislators work hard to understand the unique challenges of the food service sector, while educating their caucuses on these issues and advocating for bills of particular significance to the industry. The WRA applauds each of these legislators for their leadership and tireless work this year on behalf of Washington’s more than 13,500 restaurants.

2013 Legislative Heroes Sen. Ed Murray (D-Seattle) Senator Ed Murray proved once again this session that he is an unwavering advocate for the restaurant industry. Sen. Murray did not hesitate to co-sponsor our top legislative priorities, removing the 17% fee on retailto-on premise sales of spirits, removal of a vague tax code that was inconsistently being applied regarding sales tax owed on commercially purchased charcoal, wood, cedar planks and grape vines, as well as removal of a vague and inconsistently applied tax owed on cover charges or admissions on our nightlife businesses when an “opportunity to dance” was taking place in their establishment. His leadership for our industry in his caucus and willingness to meet and work with us on any issue undoubtedly makes him a 2013 Legislative Hero.

RO

HE

Sen. Andy Hill (R-Redmond) Sen. Hill had one of the most difficult jobs of any legislator in Olympia this session; he was tasked with writing a state operating budget that would be acceptable to his caucus, but that also would be a budget that could pass the intense scrutiny of the media, the state Supreme Court and most importantly, leadership from both parties in the Senate and House. To make matters even more challenging, Sen. Hill’s budget required at least $1 billion in new monies for K-12 education. Sen. Hill proved he was up to the challenge. He wrote a budget that did all of these things without raising taxes not already agreedupon. In addition to the budget, Sen. Hill was instrumental in helping make sure we were able to get both the charcoal and dance tax removed from the state tax codes, giving restaurants and nightlife much needed tax audit consistency.

RO

HE

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Rep. Chris Hurst (D-Sumner) Rep. Hurst, who has a long record of support for restaurant and hospitality issues, took on the task of chairman for the newly formed Government Accountability and Oversight Committee. The Committee was charged with all of the issues related to liquor privatization, legalization of recreational marijuana and gambling.

Before the formation of the committee, however, Rep. Hurst had taken an interest in the issues related to implementation of I-1183, and held numerous stakeholder meetings with all interested parties. Hurst joined with Rep. Ross Hunter, Chair of the Appropriations Committee, and two Republican leaders in sponsoring HB 1161 to correct the errors made by the Liquor Control Board—limiting sales from retailers to restaurants to 24 liters per day and imposing the 17% license fee on those sales. Hurst worked across the aisle, and with all stakeholders, to negotiate compromise approaches that ultimately failed to pass.

However, his efforts were crucial to gaining overwhelming support for the limited 17% fee relief for contract and former state liquor stores. That work solidified the policy position that the 17% fee is inappropriate, and sets the stage for the issue to be revisited during the 2014 session.

RO

HE

Rep. Cary Condotta (R-Wenatchee) Rep. Condotta (R-Wenatchee) has been a long-time champion in the Legislature for the state’s small businesses. Condotta served as the minority leader on the important House Labor and Commerce Committee for many years before moving to a similar role this year on the newly formed House Government Accountability and Oversight Committee. In this new role, Condotta worked with Rep. Chris Hurst (D-Sumner), the committee’s chairman, to introduce legislation eliminating the 17% fee on liquor sales from retailers to restaurants, and to eliminate the 24 liter per day limit on sales from retailers to restaurants. WRA appreciates Rep. Condotta’s dedication and commitment to working these policies through the legislative process and for his ability to work with members across the aisle. Additionally, Rep. Condotta spent an extraordinary amount of time working with members of the Senate, on both sides of the aisle, to gain support for these important changes. Although the final bill did not accomplish everything originally envisioned, the work of Rep. Condotta and Rep. Hurst will set the stage for more debate in 2014.

RO

HE

Special Recognition Sen. Janéa Holmquist Newbry (R-Moses Lake) Sen. Holmquist Newbry (R-Moses Lake) has been a friend to the industry over the years, and again earns special recognition for her tireless support of small business in Washington.

Before this year, when the majority coalition was formed, Sen. Holmquist Newbry was accustomed to representing the minority opinion of the Commerce and Labor Committee, but now has excelled as a respected leader. As chairwoman of the committee this year, Sen. Holmquist Newbry worked to reform the state’s workers’ compensation system, held work sessions to investigate potential solutions to the high teen unemployment rate in Washington and ensures her committee members are consistently thinking about the impact their policy decisions have on small businesses in Washington. Sen. Holmquist Newbry also played a significant role in ESSB 5644, the WRA’s priority liquor legislation, and surely will continue that work next year.

Sen. Nick Harper (D-Everett) Sen. Nick Harper is serving his first term as a state senator, but has quickly proven himself a leader in his own caucus and a friend to the restaurant industry. Over the past three years, the WRA has had the pleasure of working with Sen. Harper on a number of different liquor issues and this year was no different. During the 2013 session, Sen. Harper was the sponsor of SB 5607, creating a spirits, beer and wine theater license. In its original form, the bill would have allowed for a significantly unfair competitive advantage by permitting a fee for this license, far below what restaurant licensees pay for the same privilege. Sen. Harper worked tirelessly to ensure equity was restored to the licensing fees. Along with Rep. Cary Condotta, Rep. Chris Hurst and Sen. Holmquist Newbry, Sen. Harper was a leader for his caucus on the WRA’s legislation to remove the 17% surcharge on liquor. While the WRA was unable to achieve full relief from the Liquor Control Board’s rulemaking, we look forward to working with Sen. Harper to extend relief to all spirits retailers.

Rep. Ross Hunter (D-Bellevue) Out of the thousands of bills introduced over the three legislative sessions this year, only a small fraction survived until June 29 – the last day of legislative session this year. House Bill 1161 and its Senate companion bill, 5644, made the list in large part to the effort of Rep. Ross Hunter (D-Bellevue).

As chair of the House Appropriations Committee, his support is critical to getting the necessary approval on any bill with fiscal impact. The WRA was not only lucky to have Rep. Hunter’s support of HB 1161, but his sponsorship of the bill and unending work to keep the bill alive and moving through the process. In fact, it was Rep. Hunter

who reached out to the WRA government affairs team after learning of the Liquor Control Board’s rulemaking to correct the situation. Representative Hunter’s ability to work across the aisle in a way that sets him apart, and he is worthy of special recognition this year.

Rep. Gary Alexander (R-Olympia) Rep. Alexander is the long-time leader for the Republicans on the House Appropriations Committee. He is respected by colleagues on both sides of the aisle, from stakeholder groups and other state leaders for his expertise on the state’s budget and tax policies. During 2013, Rep. Alexander joined with his Democratic counterpart, Rep. Ross Hunter (D-Bellevue; and Chair of Appropriations) in co-sponsoring HB 1161 which would eliminate the 17% fee imposed by the Liquor Control Board on sales by retailers to restaurants. Additionally, Rep. Alexander played a key role in negotiating the final budget agreement between the House and Senate. That final agreement included the important changes to eliminate the taxation of wood and charcoal when used in the cooking process, as well as elimination of the “opportunity to dance” tax. Rep. Alexander has a long history of working in support of small businesses, and the WRA is grateful for his outstanding support during 2013.

Sen. Bruce Dammeier (R-Puyallup) When approached to be the WRA’s lead sponsor on SB 5342, our charcoal and wood sales tax clarification bill, Sen. Bruce Dammeier did not hesitate, and enthusiastically agreed. Sen. Dammeier was instrumental in guiding the WRA’s priority legislation through the many levels of process and making sure the legislation stayed alive as it went through intense negotiations with budget writers in both chambers. For his efforts in making this much needed tax clarification a reality, Sen. Dammeier deserves special recognition and heartfelt gratitude from our industry.

Rep. Larry Springer (D-Kirkland) To be successful getting legislation to the governor’s desk and signed into law, it is crucial that we have champions in both chambers of the Legislature. When we brought forward our proposal to fix the tax law around charcoal and wood purchased for commercial use, we were fortunate to have Rep. Larry Springer step up, without hesitation, to be our leader in the House. As a small business owner himself, Rep. Springer understands firsthand how important consistency in auditing and annual tax obligations is for employers, and can speak credibly to these issue within his caucus and with leadership on all sides. For his willingness to be the WRA’s House leader, and within his caucus, on fixing the charcoal/wood tax auditing issue this legislative session, the WRA is proud to honor Rep. Larry Springer as a legislator worthy of special recognition.  September 2013 | 21

WRA VOTING RECORD

Did your legislators show their support with the right votes?

The following voting record shows the votes by each member of the Legislature on selected issues of importance to WRA and/or the entire business community. The voting record should be viewed as an indicator of how strongly individual legislators supported the position on WRA and/or general business issues on a few key issues. A voting record, however, should never be viewed as a “final analysis.” It does not capture working relationships and/or interest by legislators in our sector; nor does it reveal work by individual legislators to support or defeat specific issues (or amendments). Accordingly, if you have questions about how to interpret results for individuals, please contact a GA team member.

After many years of service in the House and Senate, Senator Mike Carrell (R-Lakewood) passed away during the regular session following a short illness. Accordingly, some members vote records appear incomplete. Rep. Steve O’Ban (R-Lakewood) was appointed to fill Senator Carrell’s seat towards the end of the regular session; and Dick Muri(R-Steilacoom) was appointed to fill Rep. O’Ban’s seat after the conclusion of the second special session. Hence, Senator O’ Ban’s voting record consists only of votes while in the House; Rep. Muri’s does not have any recorded votes for this session.

Senate HB 1947 – Final Passage, Funding for the Washington Health Benefit Exchange – SUPPORT With the passage of the Affordable Care Act, Washington state opted to establish its own Health Benefit Exchange program for use by residents. Entering into the 2013 session, the Legislature needed to decide on how the operating expenses of the exchange would be covered.

Early versions of this bills emerged to tax only employers to cover the cost of the exchange. The WRA worked with the rest of the business community to propose the agreed upon final version which covered those costs through the benefit programs offered in the exchange, and by those who benefit from the state making products more readily available. WRA, along with the general business community, supported this outcome. For the WRA and the rest of the business community, it was important that a funding mechanism be adopted that would not encumber business with the costs or the exchange.

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SB 5034 – Regular Session, Operating Budget – SUPPORT This was the first floor vote on a proposed operating budget taken by either the House or Senate. Significantly, this budget did not rely on any new tax revenues, added more than $ 1 billion in new spending for basic and higher education and allowed temporary taxes to sunset as scheduled. The WRA joined with the general business community in supporting the spending plan.

SB 5034 – Amendment 343 (striking amendment) – OPPOSE Amendment 343, offered by Sen. Jim Hargrove (D-Port Angeles) would have added the new taxes embodied in HB 2038 to the spending plan, increasing state spending by approximately $900 million.

SB 5034 – Final Passage, 2nd Special Session, Operating Budget– SUPPORT After 155 days of regular and special sessions, the House and Senate ultimately agreed on a budget that (1) does not rely on new taxes and (2) adds more than $1 billion in new funding for education. Forecasts also show that this budget moves in the important direction of being sustainable. The budget “lives within its means” and even with the ongoing stagnant level of recovery, appears to finally move beyond the large fiscal deficits of recent years.

SB 5127 – Workers’ Compensation, Structured Settlements – SUPPORT In 2012, the Legislature passed major reforms of the workers’ compensation system that allows for older workers to enter into settlement agreements for pension type claims under certain circumstances. These reforms, which estimates show will result in considerable savings to the state’s workers’ compensation system, only apply to workers that are 55 years of age, or older. SB 5127 would expand the eligibility for workers 40 years of age, or older. WRA supports workers having more choices to pick the best option for their individual situation.

SB 5158 – Minimum Wage and Overtime – SUPPORT SB 5158 would clarify that an employer who can establish that they relied, in good faith, on an agency regulation, order, advice or interpretation from the Department of Labor and Industries could not be held liable, nor

WRA VOTING RECORD

assessed a penalty, for failure to meet minimum wage or overtime wage requirements. The WRA supported SB 5158 because businesses should not be held accountable for the Department of Labor & Industries errors in providing guidance or interpretation.

SB 5726 – Local Paid Sick and Safe Leave – SUPPORT In 2012, Seattle adopted a paid sick leave ordinance that applies to businesses that are based in Seattle, as well as those that are based outside Seattle but have employees who perform work in Seattle. SB 5726 would narrow the requirements for when an employer could be subject to a local paid leave ordinance. Under the bill, a local jurisdiction such as a city, town, or county cannot require an employer to provide paid sick or safe leave to employees unless the employer is physically located within the jurisdiction and only applies to an employee who works at a physical location of the employer within the jurisdiction for at least 85 percent of time.

SB 5882 – Final Passage Tax Preferences – SUPPORT SB 5882 is the omnibus tax bill that incorporates a number of important changes to the current tax laws. Notably, included in SB 5882 is the WRA’s priority bill creates a sales tax exemption for charcoal, wood and similar input products into the cooking process. Additionally, the WRA worked with the nightlife community to include an important clarification that providing the “opportunity to dance” is not a taxable event.

House of Representatives Seven votes are included in the House voting record: HB 1947 – Final Passage - Funding for the Washington Health Benefit Exchange – SUPPORT (see Senate summary) HB 2034 – Final Passage – Basic and Higher Education Funding – OPPOSE The Democratic Majority in the House attempted to increase taxes on business by eliminating targeted tax exemptions and allowing certain tax preferences to sunset. HB 2034 would have increased taxes on specific services, prescription drugs, bottled water and extracted fuels. Additionally, many tax credits for research and development would have no longer been allowed.

HB 2038 – Amendment 468, Basic Education and Higher Education Funding – SUPPORT HB 2038 included an emergency clause. This means that the tax increases in the bill would take effect immediately, and that there is no recourse for voters on the issue.

Amendment 468, offered by Rep. Terry Nealey (R-Walla Walla), would have eliminated the emergency clause and required the Secretary of State to put the bill before the voters on the November ballot. The WRA joined with the entire business community in support of Rep. Nealey’s amendment.

HB 2038 – Final Passage – Basic Education and Higher Education Funding – OPPOSE HB 2038 was the House Democrat’s bolder attempt to increase taxes on business by eliminating targeted tax exemptions and allowing certain tax preferences to sunset.

In addition to all of the taxes included in HB 2034, this bill would have increased B&O taxes on services, required non-residents to file for remittance for taxes paid in Washington, and added new Public Utility Taxes for certain types of transactions.

SB 5034 – Amendment 343 (Striking Amendment) – OPPOSE Amendment 343, offered by Sen. Jim Hargrove (D-Port Angeles) would have added the new taxes embodied HB 2038 to the spending plan, increasing state spending by approximately $900 million. WRA joined with the general business community in opposing amendment 343 to the budget.

SB 5034 – Final Passage, 2nd Special Session, Operating Budget – SUPPORT (See Senate summary) SB 5882 – Final Passage Tax Preferences – Support SB 5882 is the omnibus tax bill that incorporates a number of important changes to the current tax laws. Notably, included in SB 5882 is the WRA’s priority bill exempting charcoal, wood and similar input into the cooking process from sales tax. Additionally, WRA worked with the nightlife community to include important clarification that providing the “opportunity to dance” is not a taxable event.

September 2013 | 23

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WRA VOTING RECORD

Senate Voting Records Bill Number WRA’s position Representative Party District Bailey, Barbara Baumgartner, Michael Becker, Randi Benton, Don Billig, Andy Braun, John Brown, Sharon Carrell, Mike Chase, Maralyn Cleveland, Annette Conway, Steve Dammeier, Bruce Darneille, Jeannie Eide, Tracey Ericksen, Doug Fain, Joe Fraser, Karen Frockt, David Hargrove, James Harper, Nick Hasegawa, Bob Hatfield, Brian Hewitt, Mike Hill, Andy Hobbs, Steve Holmquist Newbry, Janéa Honeyford, Jim Keiser, Karen King, Curtis Kline, Adam Kohl-Welles, Jeanne Litzow, Steve McAuliffe, Rosemary Mullet, Mark Murray, Ed Nelson, Sharon Padden, Mike Parlette, Linda Evans Pearson, Kirk Ranker, Kevin Rivers, Ann Roach, Pam Rolfes, Christine Schlicher, Nathan Schoesler, Mark Sheldon, Tim Shin, Paull Smith, John Tom, Rodney

1947 S

5034 O

5034 S

5127 S

Votes

5158 S

5726 S

5882 S

%

R 10 N Y N Y Y Y Y Y 88% R 6 N Y N Y Y Y Y Y 88% R 2 Y Y N Y Y Y Y Y 100% R 17 N Y N Y Y Y Y Y 88% D 3 Y N Y Y N N N Y 38% R 20 N Y N Y Y Y Y Y 88% R 8 N Y N Y Y Y Y Y 88% R 28 * E * * Y Y Y * NA D 32 Y N Y Y N N N N 25% D 49 Y N Y Y N N N Y 38% D 29 Y N Y Y N N N Y 38% R 25 Y Y N Y Y Y Y Y 100% D 27 Y N Y Y N N N Y 38% D 30 Y Y Y Y Y N Y Y 75% R 42 N Y N Y Y Y Y Y 88% R 47 Y Y N Y Y Y Y Y 100% D 22 Y Y Y Y N N N Y 38% D 46 Y N Y Y N N N N 25% D 24 Y Y Y Y Y N Y Y 75% D 38 Y N Y Y N N N Y 38% D 11 Y N Y N N N N N 13% D 19 Y Y Y Y Y N Y Y 75% R 16 N Y N Y Y Y Y Y 88% R 45 Y Y N Y Y Y Y Y 100% D 44 Y Y E Y Y N Y Y 86% R 13 N Y N Y Y Y Y Y 88% R 15 N Y N Y Y Y Y Y 88% D 33 Y N Y Y N N N Y 38% R 14 Y Y N Y Y Y Y Y 100% D 37 E N Y E N N N E 0% D 36 Y N Y Y N N N Y 38% R 41 Y Y N Y Y Y Y Y 100% D 1 Y N Y N N N N N 13% D 5 Y Y Y Y Y N N Y 63% D 43 Y N Y Y N N N Y 38% D 34 Y Y Y Y N N N N 25% R 4 N N N N Y Y Y Y 63% R 12 Y Y N Y Y Y Y Y 100% R 39 N Y N Y Y Y Y Y 88% D 40 Y N Y Y N N N Y 38% R 18 N Y N Y Y Y Y Y 88% R 31 N Y N Y Y Y Y Y 88% D 23 Y N Y Y N N N Y 38% D 26 Y N Y Y N N N Y 38% R 9 N Y N Y Y Y Y Y 88% D 35 N Y N Y Y Y Y Y 88% D 21 A N Y Y N N N Y 29% R 7 N Y N N Y Y Y Y 75% D 48 Y Y N Y Y Y Y Y 100%

* Sadly, Senator Carrell passed away before the end of the 2nd Special Session hence the reason for no votes.

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5034 S

= Supports WRA’s position A = Absent E = Excused

= Opposes WRA’s position

House of Representatives Voting Records

Fina lP by t assag h e WA e Sena as Am hea t end lth b e ed ene Fina fit e

l Pa xch ang Bas ssag e ic a e nd h ighe r ed 468 fund ing N Bas ealey Pg ic e 39 d& high Ln 2 er e 0 Fina d fu l Pa ndin Bas ssag g ic e e Reg d & h ular ig Ses her ed Fina sion fund l Pa ing s Ope s ratin age as g om Am 2nd en Spe n cial ibus a ded by pp Ses the Fina s Hou ion rops lP se Ope assag ratin e go mni bus app Fina rop l Pa s ssa Tax g e pre fere nce s

WRA VOTING RECORD

Bill Number 1947 2034 WRA’s position S O Representative Party District

Alexander, Gary Angel, Jan Appleton, Sherry Bergquist, Steve Blake, Brian Buys, Vincent Carlyle, Reuven Chandler, Bruce Chopp, Frank Clibborn, Judy Cody, Eileen Condotta, Cary Crouse, Larry Dahlquist, Cathy DeBolt, Richard Dunshee, Hans Fagan, Susan Farrell, Jessyn Fey, Jake Fitzgibbon, Joe Freeman, Roger Goodman, Roger Green, Tami Habib, Cyrus Haigh, Kathy Haler, Larry Hansen, Drew Hargrove, Mark Harris, Paul Hawkins, Brad Hayes, Dave Holy, Jeff Hope, Mike Hudgins, Zack Hunt, Sam Hunter, Ross Hurst, Christopher Jinkins, Laurie Johnson, Norm Kagi, Ruth Kirby, Steve Klippert, Brad Kochmar, Linda Kretz, Joel Kristiansen, Dan Liias, Marko Lytton, Kristine MacEwen, Drew Magendanz, Chad = Supports WRA’s position

2038 S

2038 5034 O O Votes

5034 S

5882 S

%

R 2 Y N Y N N Y Y 100% R 26 Y N Y N N Y Y 100% D 23 Y Y N Y Y Y N 29% D 11 Y Y N Y Y Y N 29% D 19 Y Y N Y Y Y Y 43% R 42 N N Y N N Y Y 86% D 36 Y Y N Y Y Y Y 43% R 15 N N Y N N Y Y 86% D 43 Y Y N Y Y Y Y 43% D 41 Y Y N Y Y Y Y 43% D 34 Y Y N Y Y Y N 29% R 12 N N Y N N Y Y 86% R 4 E E Y N N E E 100% R 31 Y N Y N N Y Y 100% R 20 Y N E E E N E 67% D 44 Y Y N Y Y Y Y 43% R 9 Y N Y N N Y Y 100% D 46 Y Y N Y Y Y Y 43% D 27 Y Y N Y Y Y Y 43% D 34 Y Y N Y Y Y Y 43% D 30 Y Y N Y Y Y Y 43% D 45 Y Y N Y Y Y Y 43% D 28 Y Y N Y Y Y N 29% D 48 Y Y N Y Y Y Y 43% D 35 Y Y Y N Y Y Y 71% R 8 N N Y N N Y Y 86% D 23 Y Y N Y Y Y N 29% R 47 N N Y N N Y Y 86% R 17 Y N Y N N Y Y 100% R 12 N N Y N N Y N 71% R 10 Y N Y N N Y Y 100% R 6 N N Y N N N Y 71% R 44 E E Y N N E E 100% D 11 Y Y N Y Y Y N 29% D 22 Y Y N Y Y Y N 29% D 48 Y Y N Y Y Y Y 43% D 31 Y N Y N Y Y Y 86% D 27 Y Y N Y Y Y N 29% R 14 E N Y N N E E 100% D 32 Y Y N Y Y Y N 29% D 29 Y Y N Y Y Y Y 43% R 8 N N Y N N N Y 71% R 30 Y N Y N N Y Y 100% R 7 N N Y N N Y Y 86% R 39 N N Y N N Y Y 86% D 21 Y Y N Y Y Y Y 43% D 40 Y Y N Y Y Y N 29% R 35 N N Y N N Y Y 86% R 5 Y N Y N N Y N 86% = Opposes WRA’s position A = Absent

E = Excused

September 2013 | 25

House of Representatives Voting Records

Representative Manweller, Matt Maxwell, Marcie McCoy, John Moeller, Jim Morrell, Dawn Morris, Jeff Moscoso, Luis Nealey, Terry O’Ban, Steve Orcutt, Ed Ormsby, Timm Orwall, Tina Overstreet, Jason Parker, Kevin Pedersen, Jamie Pettigrew, Eric Pike, Liz Pollet, Gerry Reykdal, Chris Riccelli, Marcus Roberts, Mary Helen Rodne, Jay Ross, Charles Ryu, Cindy Santos, Sharon Tomiko Sawyer, David Schmick, Joe Scott, Elizabeth Seaquist, Larry Sells, Mike Shea, Matt Short, Shelly Smith, Norma Springer, Larry Stanford, Derek Stonier, Monica Sullivan, Pat Takko, Dean Tarleton, Gael Taylor, David Tharinger, Steve Upthegrove, Dave Van De Wege, Kevin Vick, Brandon Walsh, Maureen Warnick, Judy Wilcox, J.T. Wylie, Sharon Zeiger, Hans

26 | warestaurant.org

Bill Number WRA’s position Party District

Fina lP by t assag h e WA e Sena as Am hea t end lth b e ed ene fit e Fina

xch l Pa ang Bas ssag e ic a e nd h ighe r ed 468 fund ing N Bas ealey Pg ic e 39 d& high Ln 2 er e 0 Fina d fu l Pa ndin Bas ssag g ic e e d Reg ular & highe r Ses Fina sion ed fun lP ding Ope assag e ra 2nd ting om as Ame n Spe n cial ibus a ded by ppro Ses t Fina s ps he Hou ion lP se Ope assag ratin e go mni bus app Fina rop l Pa s s Tax sag e pre fere nce s

WRA VOTING RECORD

1947 2034 S O

2038 S

2038 5034 O O Votes

5034 S

5882 S

%

R 13 N N Y N N Y Y 86% D 41 Y Y N Y Y Y Y 43% D 38 Y Y N Y Y Y Y 43% D 49 Y Y N Y Y Y Y 43% D 25 Y Y Y N Y Y Y 71% D 40 Y E N Y Y Y Y 50% D 1 Y Y N Y Y Y N 29% R 16 Y E Y N N Y Y 100% R 28 - - Y N N - - 100% R 20 N N Y N N N Y 71% D 3 Y Y N Y Y Y N 29% D 33 Y Y N Y Y Y N 29% R 42 N N Y N N N N 57% R 6 N N Y N N N Y 71% D 43 Y Y N Y Y Y N 29% D 37 Y Y N Y Y Y Y 43% R 18 N N Y N N N Y 71% D 46 Y Y N Y Y Y N 29% D 22 Y Y N Y Y Y Y 43% D 3 Y Y N Y Y Y N 29% D 21 Y Y N Y Y Y N 29% R 5 E E Y N N E E 100% R 14 N N Y N N Y Y 86% D 32 Y Y N Y Y Y N 29% D 37 Y Y N Y Y Y Y 43% D 29 Y Y N Y Y Y Y 43% R 9 Y N Y N N Y Y 100% R 39 N N Y N N N Y 71% D 26 Y Y Y N Y Y Y 71% D 38 Y Y N Y Y Y Y 43% R 4 N N Y N N N Y 71% R 7 N N Y N N N Y 71% R 10 Y N Y N N Y Y 100% D 45 Y Y N Y Y Y Y 43% D 1 Y Y N Y Y Y N 29% D 17 Y N Y N N Y N 86% D 47 Y Y N Y Y Y Y 43% D 19 E Y N Y Y E E 0% D 36 Y Y N Y Y Y Y 43% R 15 N N Y N N N Y 71% D 24 Y Y N Y Y Y Y 43% D 33 Y Y N Y Y Y N 29% D 24 Y Y N Y Y Y Y 43% R 18 N N Y N N Y Y 86% R 16 Y N N N N Y Y 86% R 13 N N Y N N Y Y 86% R 2 Y N Y N N Y Y 100% D 49 Y Y N Y Y Y N 29% R 25 N N Y N N Y Y 86% = Supports WRA’s position

= Opposes WRA’s position A = Absent

E = Excused

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Board Development Conference Call

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HIHIT Meeting

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Executive Committee Meeting

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Seattle Restaurant Alliance Chapter Meeting (Restaurants only)

Oct. 8

Spokane Chapter Meeting

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MSC Subcommittee Meeting

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Finance Committee Meeting

Oct. 29

WRA Fall Board of Director’s Meeting

Oct. 30

EF Fall Board of Director’s Meeting

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Health care reform: Waiver of the employer penalty

By Donna Steward

A recent announcement by White House staff has many employers breathing a sigh of relief. According to the announcement, the IRS will be waiving penalties for employers who fail to provide health care coverage to their employees in 2014. The waiver of the penalty could provide a longer transition period for employers to identify eligible employees and secure a health plan, but unfortunately, it does not change the requirement that they must provide coverage in 2014. Some employers may be misinterpreting this announcement, assuming that the requirement to provide coverage is being delayed, but that is not the case.

In addition to waiver of the employer penalty, IRS officials have announced they will be developing a new annual report that will require employers to provide detailed information on their employees, including wages and hours worked, as well as details of the health plan available to employees. This report will be used to verify employer compliance with the law as well as identify whether employees are eligible for federal subsidies to purchase coverage through a state-based exchange.

By October 1, 2013, all employers must provide written notification to their employees regarding the availability of a state-based health insurance exchange in their state.

According to the temporary rule issued by the federal Department of Labor in May 2013, this notification must also be provided to all new hires within 14 days of hire.

Is it true that the requirement for employers to provide health care coverage to their employees in 2014 has been delayed?

No. The President may not change existing law through an Executive Order. The requirement for employers with 50 or more full-time equivalent employees to provide health care coverage to their full-time employees beginning in 2014 still remains. However, the President may direct agencies to adjust enforcement of a law which appears to be the approach taken at this time. The IRS will waive any penalties an employer incurs in 2014 if the employer does not comply with the law. Only Congress may officially delay or otherwise change the requirement that large employers must provide coverage to their employees beginning in 2014.

34 | warestaurant.org

Why is the IRS requiring a new report requesting detailed information on my employees?

The Affordable Care Act requires state-based exchanges to collect pertinent employment and wage information from individuals applying for federal subsidies through the exchange. As part of that process, the exchanges are also required to collect the information necessary to verify whether employer sponsored coverage is available to the applicant, and if so whether the coverage is deemed affordable for the individual employee. If the state exchange finds that an employer should have been providing coverage in accordance with the law and is not, the exchange will alert the IRS which will then investigate why the employer is not providing coverage and issue fines accordingly.

However, because fewer than 18 states will be operating state-based exchanges in 2014, the IRS is left without a nationwide means to verify whether an employer is subject to the requirement to provide coverage. To address this issue without forcing states to develop these new government programs, the IRS has determined it will expand on the existing Affordable Care Act reporting requirement in order to monitor employer compliance with the law.

You can find the full article at warestaurant.org/healthcare. ď Ž Donna Steward, President, Kiawe Public Affairs This publication is intended to inform employers about provisions of the Patient Protection and Affordable Care Act and how those provisions may affect them. This information should not be construed as legal or tax advice, and readers should not act upon the information contained therein without professional counsel.

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