Washington Restaurant Magazine July 2014

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REVIEW INSIDE: THE 2014 SESSION IN REVIEW WRA VOTING RECORD

LEGISLATIVE HEROES AND FRIENDS TO RESTAURANTS WRA

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Inside

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Features

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Letter from WRA Government Affairs Director 2014 session ends on time and with successes for the WRA

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The Government Affairs team’s 2014 success is restaurants’ success!

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Seattle Restaurant Alliance makes your voice heard in $15 minimum wage fight

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The 2014 session in review

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The Details Bills in the voting record—a summary

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WRA legislative heroes and friends to restaurants

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WRA lobbyists’ experience and relationships deliver results for restaurants

Other stories 18

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July 2014

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Compete for financial success

On the cover

Washington’s 2014 legislative session was a success and the Legislature adjourned on schedule for the first time in recent years. The WRA Government Affairs team ensured local restaurants were given a voice in state level negotiations, led the charge against a 17 percent fee on sales of spirits, and was successful in stopping tax increases, preventing new paid leave mandates and more. In this issue of Washington Restaurant Magazine, we will walk you through the key outcomes in Olympia and Seattle, and detail all the work your GA team did to fight for restaurants during the legislative session.

Photos throughout this publication courtesy of Washington State Legislative Support Services.

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EDITORIAL STAFF Publisher, Anthony Anton Executive Editor, Lex Nepomuceno Managing Editor, Heather Donahoe Contributing Editor, David Faro Contributing Editor, Paul Schlienz Contributing Editor, Stephanie Davenport Research Editor, Sheryl Jackson Art Director, Lisa Ellefson WRA EXECUTIVE COMMITTEE Chair, Jim Rowe Consolidated Restaurants, Inc. Vice Chair, Phil Costello Stop n’ Go Family Drive In Secretary/Treasurer, Mark Chriest Oki Developments, Inc. Immediate Past Chair, Bret Stewart CenterTwist, Inc. WRAEF President, Gary Sutter Northern Quest Resort & Casino WRA EXECUTIVE TEAM President and CEO, Anthony Anton Vice President, Teran Petrina Director of Government Affairs, Bruce Beckett Director of Communications & Technology, Lex Nepomuceno Director of Education, Lyle Hildahl Director of Internal Operations, Bekah Cardwell 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

2014 session ends on time and with successes for the WRA

By Bruce Beckett, WRA Director of Government Affairs

This year, the legislative session was scheduled to run 60 days. This is considered a short session and is predominantly meant for making “mid-course” course corrections to the two-year spending plans that are adopted in oddnumbered years.

However, since 2007, legislators have entered the 60-day sessions with the daunting task of rewriting the two-year budgets because of the dramatic downturn in the state’s economy.

Fortunately, the 2014 session opened with a much different scenario. After debating the budget through three special sessions that finally ended on June 30, 2013, lawmakers entered the 2014 session with a functioning budget.

Revenues and costs were very close, meaning that no major rewrite was necessary.

The session also opened with significant change in the make-up of the State Senate. In 2013, two Democrats joined with 23 Republicans to form the Majority Coalition Caucus (MCC). The MCC then took control of the Senate by a one vote margin. In 2013, appointed Sen. Nathan Schlicher, D–Gig Harbor, was defeated by long-time Rep. Jan Angel, R–Port Orchard. This change now gave the MCC a two-vote margin. While that number seems small, it makes a huge difference when the Senate is considering controversial legislation. This balance of the powers between the conservative-run Senate and the liberal-run House makes it more likely that good legislation passes and bad policies don’t progress.

A forward glance As we look toward next session, it is likely that longterm funding for education will be the top issue for the Legislature. Prior to the 2013 session, the State Supreme Court ruled that the state is not adequately funding K-12 education and spelled out what was an “acceptable” level to

sales to restaurants was caught in this agreement, because it was predicted to lower state revenues by about $600,000.

Despite the neutral budget outcome, it is likely that the 2015 Legislature will face an even greater demand to fund education, and the pressure to raise revenues will continue to grow.

Wage and benefits debated again In his state-of-the-state address, Gov. Jay Inslee called for an increase in the state’s minimum wage but did not offer details. Rep. Jessyn Farrell, D–Seattle, introduced legislation to increase the minimum wage to $12.50/hour over a three-year period. Rep Farrell’s bill was heard and passed out of the House Commerce and Labor Committee but was not considered by the full House.

Additionally, the House resurrected a bill to require all employers to provide paid sick and family leave, modeled after an ordinance passed in Seattle two years ago.

Although the bill passed in the House on a largely partisan vote, it died in the Senate.

reach by 2018. The 2014 supplemental budget added about $100 million for education on top of the nearly $1 billion added in 2013.

In order to meet the requirements set by the court, the Democratic controlled House and the governor both proposed large tax increases. Their proposals included the elimination of a number of tax “preferences.” These included taxes for recycled fuel and bottled water; added taxes on services and interstate commerce; the elimination of out-of-state sales tax breaks; and additional public utility taxes. The plans ranged from $900 million to $1.3 billion in new taxes.

In the end, budget negotiators agreed on a neutral budget – no bills were passed that would decrease revenues, and no bills would pass that would increase taxes. The WRA’s priority legislation to eliminate the 17 percent fee on liquor

Achieving our priorities The WRA successfully achieved a number of important priorities: Defended against increases in taxes or fees on the hospitality industry Joined with other business sectors to defeat legislation that would require employers with employees on public assistance to pay those costs Defended against increases in workers’ compensation and unemployment insurance costs Passed legislation authorizing state agencies to work with business stakeholders on options to fund a privately led tourism promotion program for Washington Passed legislation allowing catering businesses to seek a liquor license Passed legislation allowing business with a license to sell growlers of beer to-go and to also offer growlers of hard cider to-go The WRA GA team is grateful for the support and guidance it receives from the Government Affairs Committee during the session. We depend on our members to guide our work and cannot adequately represent your interests without the GAC involvement. Additionally, we want to thank everyone who took time out their busy schedule to join us for Hill Climb & Taste Our Best. There were more than 120 individual meetings with legislators, and each and every one of those meetings had an impact on those lawmakers.

Thank you! ■

July 2014 | 7

The Government Affairs team’s 2014 success is restaurants’ success!

It’s been quite a ride for the Government Affairs team for the past two years. After enduring four special sessions, the Legislature returned, in January 2014, and was able to complete its work on time. We are proud of some notable successes. Your team helped pass three important bills that will:

Authorize tourism funding research with state agencies; Allow catering businesses to obtain a liquor license; and Allow licensees to offer growlers of cider to go.

The team also defended restaurants against taxes and fee increases despite enormous pressure to raise money to escalate education funding. And last but not least, they successfully fought against increases in workers’ compensation and unemployment insurance costs.

The WRA also joined with the entire business community to defeat legislative proposals that would have raised the minimum wage statewide to $12.50/hour and imposed additional fees on restaurants. Additionally, when this issue continued at a local level in Seattle, the WRA assigned two full-time staff to ensure restaurants had a voice with the City Council and mayor.

The WRA did sustain one loss when legislation to eliminate the 17 percent fee imposed on the sale of liquor from retailers to restaurants failed to pass. The bill was killed on the final day of the session, on account of a budget arrangement between Republicans and Democratic Party leaders. The parties agreed that no legislation would be passed that would either increase or decrease state revenues. On a positive note, a coalition of grocers, retailers and restaurateurs who worked on the issue this year remain committed to pursuing it again next year.

A sincere thank you to all who joined us As your Government Affairs co-chairs, we want to thank all of the WRA members who traveled to Olympia for Hill Climb & Taste Our Best, and participated in more than 120 meetings with legislators. Your willingness to take the time makes a huge difference. Even better, the Taste Our Best reception was our most successful event to-date in its new venue at the Olympia Children’s Museum. Hundreds of lawmakers, staff, restaurateurs and agency leaders enjoyed local restaurant cuisine, Washington wines and locally craft beers.

Finally, thank you to all WRA members who participate in the Government Affairs Committee. The input and guidance of our members is vital to the success of WRA’s Government Affairs program, and we cannot express our appreciation enough for your time and effort. We encourage all of our members to participate; if you are interested, just contact Shannon Garland at shannong@warestaurant.org.

In closing, we’d like to announce that Chad MacKay, owner of El Gaucho, will be the new chair of the GAC, and Shannon Boldizsar from Starbucks will be the co-chair beginning in July. We are happy to have Chad and Shannon’s insight and experience on the team. Thank you for the opportunity to serve as your co-chairs of the Government Affairs Committee – it’s been quite a journey these last two years, and we look forward to what the future holds.

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

8 | warestaurant.org

Seattle Restaurant Alliance makes your voice heard in $15 minimum wage fight

By Paul Schlienz

One of the most significant issues facing Washington’s restaurants, in 2014, is the pressure to increase the minimum wage to as much as $15 per hour.

A minimum wage hike was debated during the 2014 legislative session without action, but Seattle and SeaTac have both acted to increase minimum wages to $15. There are already indications from activists that they may campaign for minimum wage hikes in cities such as Tacoma and Bellevue. Undoubtedly, the Legislature will revisit the issue again in 2015.

Intense negotiation The minimum wage activists scored their greatest victory in Seattle when, on June 2, the City Council passed an ordinance that will give employees, over several years, a 61 percent wage increase beyond what already is the country’s highest state minimum wage. Seattle Mayor Ed Murray signed the ordinance into law the next day.

The final minimum wage ordinance came after four months of intense negotiations with Murray, his staff and the Income Inequality Advisory Committee (IIAC), which consisted of labor leaders, non-profits and business owners, including members of the Seattle Restaurant Alliance (SRA), a chapter of the WRA. In the statement and comments to the media, local restaurateurs acknowledged the hard work of the mayor’s IIAC while also expressing frustration that the final ordinance did not include more components to help narrow income inequality in Seattle.

As a whole, the restaurant industry has been committed to discussions about changes to the minimum wage in Seattle. Seattle restaurants were a participant in the IIAC process and negotiated with the City Council from the beginning to the end, pushing hard for a solution that would work for both employers and employees.

Could have been better, could have been worse While it is not the ordinance this industry would have liked, it is far better than what could have happened if many of the minimum wage activists, as represented by the special interest group $15/Now, had their way. The ordinance that passed did not fully ignore the needs of local restaurants, in that:

Some restaurants are allowed to include tips, and all may include health care accepted by employees in their wage calculations; The wage increase is a phased-in model so restaurants don’t immediately have to implement the pay hike, thereby giving restaurants time to work through how best to adjust their business to meet the new financial burden; There is no private-right-of-action; and Implementation begins on April 1, 2015, rather than Jan. 1, giving businesses, including restaurants, more time to figure out how to comply with the new law.

Unfortunately, the current ordinance will still be an undue hardship on local restaurants. The ordinance:

Does not treat all restaurants the same;

July 2014 | 9

Does not permanently recognize all real income that restaurant employees receive; Does not put in place a six-month training wage restaurants can offer to youth, the disadvantaged and others in the community who need a second chance; and Does not begin implementation on July 1, 2015 (the date agreed to by the IIAC).

Implementation and results from the passage of this ordinance will be ongoing. The WRA will keep you informed of how these changes are impacting our industry and continue with discussions in Seattle to voice the needs of local restaurants.

It started in SeaTac The movement to boost the minimum wage gathered steam last year when SeaTac voters narrowly approved an initiative, supported by the Service Employees International Union, to raise the minimum wage to $15 per hour.

Meanwhile, Seattle voters elected Kshama Sawant, a Socialist who campaigned on raising the minimum wage to $15 per hour, to the City Council. When she took office, in January, the minimum wage fight shifted to the City Council, ultimately leading to the ordinance Mayor Murray signed into law in June.

Throughout this process, the SRA worked hard on behalf of the hospitality industry to promote its interests and develop a smart, reasonable solution to the Seattle minimum wage issue. The SRA was one of the first industry groups to begin organizing and coalition-building– starting in October 2013 – on this issue when it became clear Seattle was going to formally enter into the debate.

OneSeattle In January 2013, the WRA and SRA unified with the Washington Lodging Association (WLA) and Seattle Hotel Association (SHA) under a core set of principles and agreed to work together as one hospitality group on all efforts around the Seattle minimum wage discussions. With the help of the lodging industry, the WRA was able to grow its Local Government Program by hiring Morgan Hickel as 10 | warestaurant.org

coordinator. The WRA now has two full-time employees working on local issues every day in Seattle.

The WRA also helped pull the Seattle Metropolitan Chamber of Commerce and other Seattle industries together to form the OneSeattle Coalition. OneSeattle is the voice of concerned Seattle employers and community members committed to broadening the circle of prosperity for all Seattleites by promoting sensible, sustainable solutions to address income inequality in a way that creates the greatest good with the least amount of harm. Members are from every sector of Seattle’s diverse community, including minority and neighborhood chambers, non-profit, human services, the Greater Seattle Business Association, manufacturing/industrial, grocery, retail and, of course, restaurants and hotels.

The sheer number and diversity of the employers and community members that joined OneSeattle is impressive and unprecedented, showing the enormity of the Seattle minimum wage issue.

What’s next?

Although the $15 minimum wage is now law in Seattle, the battle is far from over. Franchise owners, who are treated as large employers under the new ordinance, are suing to overturn the law. Meanwhile, $15/Now, unhappy that all of its demands were not met in the final ordinance, filed a charter amendment to overturn the ordinance and enshrine its agenda in law.

Additionally, Forward Seattle, a grassroots organization representing small businesses, filed a charter amendment to overturn $15 minimum wage law. Forward Seattle’s amendment would get wages to $12.50 an hour by 2020.

The Seattle City Attorney’s Office, however, ruled that charter amendments can only go to the voters in oddnumbered years, making November 2015 the earliest date these ballot measures could reach voters.

The SRA will continue to voice the needs of the restaurant industry. If you have any questions please contact Local Government Coordinator Morgan Hickel at morganh@warestaurant.org. ■

The 2014 session in review This year, the WRA Government Affairs team worked hard to ensure that local restaurants were given a voice in state level negotiations. WRA led the charge against a 17 percent fee on sales of spirits to restaurants and through the lengthiest floor debate in recent history. Your GA team was successful in stopping tax increases, allowing new licenses, preventing new paid leave mandates and more.

LIQUOR ISSUES

WIN

Growler sales (Senate Bill 6442) SB 6442, sponsored by Sen. Sharon Brown, R–Kennewick, is a simple, common sense bill. Liquor licensees who have the privilege to sell growlers of beer to-go (tavern licensees, restaurant licensees, hotel licensees, microbrewery licensees and specialty beer and wine licensees) now will gain the privilege to sell growlers of hard cider.

This bill was a technical addition to the privilege of selling beer in growlers to-go, and necessary because hard cider has a different federal classification. SB 6442 allows for another revenue stream for licensees selling beer to-go in growlers.

Liquor Control Board tries extend authority (SB 6130/HB 2394) DEFEATED This year, the Liquor Control Board (LCB) introduced their agency request legislation, a repeat from the previous year, that expanded their authority to “general law enforcement” powers, which are reserved for police, state patrol, and fish and wildlife officers.

If enacted, the bill would have changed the LCB to a general law enforcement agency, which is described in statute as “having as its primary function the detection and apprehension of persons committing infractions or violating the traffic or criminal laws”.

The LCB claimed they needed additional authority with the passage of the recreational marijuana initiative. The WRA initially was very concerned with the board’s intent to make its primary function the “apprehension” of criminals. Since consumption of alcohol by adults has been legal in this state for nearly 80 years, the WRA feels a more appropriate role for LCB enforcement officers is education and enforcement

of liquor laws, and that police should rightly be the entity that apprehends criminals.

The WRA worked with the LCB to allow for expanded authority, but only when in licensed establishments, to help regulate unauthorized consumption of marijuana or other situations when temporary assistance is needed, and to provide enforcement officers with additional training opportunities.

Despite the agreed compromise, the organization representing the police and sheriffs across the state continued to voice concerns, and the legislation failed to pass.

WRA supports caterers licensees (House Bill 2680) This year, the Legislature approved legislation that created a liquor license for caterers. Until now, only businesses licensed as a restaurant, with a catering endorsement, were able to serve and sell liquor at off-site events. The Washington Restaurant Association worked with Rep. Larry Springer, D–Kirkland, the sponsor of the bill, to draft legislation that would allow for businesses that do not operate a restaurant the opportunity to serve and sell liquor, while maintaining the same requirements restaurants are held to.

WIN

For WRA members who operate only as caterers, this now presents an additional business opportunity and revenue stream.

Restaurant’s fight to correct a 17 percent fee (Senate Bill 6220) This year, the WRA government affairs team returned for round two of what was one of the biggest policy battles of the year.

July 2014 | 11

Meanwhile in the Senate, the coalition to appeal the 17 percent fee started strong.

Sen. John Braun, R–Centralia, agreed to sponsor SB 6220, a Senate bill addressing the problem. The bill quickly gained a strong bipartisan list of support including Sen. Hobbs, Sen. Kohl-Welles, and Sen. Billig from the Democratic Caucus.

However, after significant pressure from the Teamsters Union, Sens. Kohl-Welles and Billig withdrew their support of the legislation.

In 2011, voters approved a private system for spirits and wine sales by initiative. Since then the Liquor Control Board (LCB) has made consistent regulatory decisions that have harmed the restaurant industry and conflict with the purpose of the initiative, which was to allow for a private competitive market. Two LCB decisions which overstepped were: To impose an unauthorized 17 percent fee on sales of spirits to restaurants from retailers; and To impose a 24-liter per day cap on the amount a restaurant could purchase from a retailer.

The WRA appealed the 24 liter decision in Thurston County Superior Court and prevailed. The WRA then asked the Legislature to correct the 17 percent fee in 2013, and asked again in 2014, joining a coalition to support the fight.

Last year, the WRA legislation faced opposition from distributors and the Teamsters Union. However, the most significant challenge was a change to the language of the initiative which would require a two-thirds majority to pass it.

At the last minute, the House and Senate were only able to get a two-thirds agreement to remove the 17 percent fee for former state and contract stores alone.

This year in the House, HB 1161, the WRA-backed bill from the 2013 was resurrected. Rep. Chris Hurst, D–Greenwater, chair of the Government Accountability and Oversight Committee, held a hearing on the very first day the committee met. The House bill was passed out of the policy committee and sent to the Fiscal Committee, where it stalled.

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The Senate Committee, Commerce and Labor, moved SB 6220 out of the policy committee and into the Ways and Means committee since the policy had already been debated the year before. In Ways and Means, the debate focused on the financial impact of the bill.

As the bill moved forward in the Senate, opposition from organized labor, who claimed that allowing restaurants to purchase from grocers would cost union jobs, continued to grow. Despite the fact that many in the Senate Democratic Caucus disagreed with the Teamsters argument, the issue became highly partisan.

However, with the help of Sens. Kevin Ranker, D–Orcas Island, and David Frockt, D–Seattle, and the WRA’s commitment to work on a compromise to address the Teamsters concerns, the bill gained enough support to emerge from the Ways and Means Committee.

The WRA and the coalition began working with Sen. Ranker to develop a compromise that would be acceptable to the Teamsters. Several rounds of negotiations were held. But, every idea and proposal offered was roundly rejected without rationalization. With 10 days left of the 60-day session, and with the conclusion that a compromise was not a genuine desire of the opposition, Sen. Braun made the call that it was time to end discussions and send the bill over to the House.

Sen. Braun directed the coalition to begin counting the votes to ensure the bill would receive the support necessary to pass. After a grueling few days, the count was very narrow – 26 yeas, 23 nays. The vote count weighed heavily on the vote of Sens. Mark Mullet, D–Issaquah, and Steve Hobbs, D–Lake Stevens, who were the only members of their caucus who pledged support.

As the bill awaited a floor vote, the opposition began their strategy to “kill” the bill – by piling on dozens of amendments, each needing to be debated individually. At this stage in the session, this strategy is highly effective. The more amendments and the more time debate took, the less likely it became that the Senate would choose to bring the bill up for a vote when other legislation was also under the 60-day session deadline.

Sen. Braun and the Majority Coalition Caucus’ commitment to our industry did not waiver. Floor debate on the bill began on Tuesday, March 4, and ended on Thursday, March 6. In the end, 18 amendments were proposed, 15 amendments were debated, but only one amendment (supported by Sen. Braun and the coalition) was adopted. Sen. Braun led the Majority Coalition Caucus and Sen. Mullet and Sen. Hobbs through the lengthiest floor debate in recent history, never once vacillating in their support of the restaurant industry.

With a week to go, the bill was sent over to the House for consideration. In the House, the opposition from the Teamsters Union was insurmountable. Despite earlier commitment from House Democratic Leadership that they would act on the bill once the Senate passed the bill over, Speaker Chopp declared they would not act on the bill.

TOURISM

process that ultimately will lead to that outcome. The bill, sponsored by Rep. Jeff Morris, D–Mount Vernon, creates a study group made up of five tourism related industries (hotels, foodservice, transportation, attractions and retail) and directs several state agencies to work with the WTA on a plan that would authorize the state to collect private funds for tourism.

The study group will report back to the Legislature on Dec. 1, 2014.

The Washington Restaurant Association will be participating in the process over the summer and fall to help decide how the restaurant industry will raise $2.1 million of the $7.5 million total tourism budget.

GENERAL FUND BUDGET ISSUES Tax increases proposed Gov. Jay Inslee was the first to announce a tax package for K-12 education that was estimated to raise $200 million in the 2013-15 biennium and $414 million in the 2015-17 biennium. The tax package

DEFEATED

Help to fund tourism (House Bill 2229) In 2011, Washington state eliminated its office of tourism and all funding for statewide tourism marketing and promotion.

Washington is now the only state in the country that does not invest in statewide tourism funding.

WIN

Since then, the Washington Restaurant Association has worked with a number of impacted tourismrelated industries to help form the Washington Tourism Alliance (WTA). The goal of the group, is to create a plan to restore a privately funded, run and governed tourism program. HB 2229 begins the

July 2014 | 13

called for the elimination of seven tax preferences:

Repealed the sales tax exemption for trade-ins valued at more than $10,000

Repealed the public utility tax deduction for in-state portion of interstate transportation

Repealed the use tax exemption for extracted fuel Ended the refund of the state portion of sales tax to

nonresidents Repealed the sales tax exemption on bottled water Repealed the sales tax exemption for janitorial services Repealed the preferential business and occupation tax for resellers of prescription drugs The bulk of the $200 million was earmarked for classroom materials and instruction and roughly $74 million was to go toward a COLA increase for teachers.

House Democrats were quick to praise the governor for moving forward on funding for the McCleary decision, a State Supreme Court decision that most believe calls for a $5-6 billion infusion into K-12 by 2018. The Senate Majority Coalition Caucus quickly dismissed the tax package, noting that last year’s budget increased K-12 spending by $1 billion, and that supplemental budget years are meant only to make minor modifications to spending levels.

Shortly thereafter, House and Senate Democrats unveiled their tax package (HB 2795 and HB 2796), which called for the elimination of four tax preferences and was estimated to raise roughly $100 million in the 2013-15 biennium and $200 million in the 2015-17 biennium: Repealed the use tax exemption for extracted fuel Repealed the non-resident sales tax exemption Repealed the sales tax exemption on bottled water Repealed the preferential business and occupation tax for resellers of prescription drugs Supermajority for tax increases (Senate Joint Resolution 8213) In contrast, the Senate Majority Coalition Caucus pushed for a vote on Senate Joint Resolution 8213, a measure to send voters a constitutional amendment requiring a two-thirds vote in the Legislature to increase taxes. It takes a supermajority vote of the Legislature to propose to voters a constitutional amendment so the measure failed, having received only a simple majority of 25 votes. Voters overwhelmingly approved a number of initiatives over the past 10 years to require a two-

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thirds vote; however, the State Supreme Court ruled that it violated Washington’s Constitution.

Supplemental Budget Shortly before the House and Senate unveiled their budget proposals, the state received a bit of good news from the State Economic and Revenue Forecast Council.

The February forecast showed that revenues would increase over projections by roughly $30 million in the 2013-15 biennium and by $82 million in the 2015-17 biennium. This, on top of earlier collections, added about $258 million to 2013-15 collections.

Also for the first time, the Forecast Council predicted state revenues from marijuana legalization, estimating that the state could receive roughly $51 million in 2015-17 and $138.5 million in 2017-19.

WIN

In the end, the Legislature agreed to a $33.6 billion supplemental operating budget (contained in SB 6002) that increased spending by roughly $155 million. Roughly $89 million addressed various caseload adjustments;close to $58 million was dedicated to K-12 education materials and supplies; and $23 million was designated for early learning.

The Legislature also authorized roughly $20 million more for mental health services. The Legislature left an unrestricted ending fund balance in the 2013-15 biennium of $315 million and roughly $583 million in the Budget Stabilization Account. The 2015-17 balance sheet reflects roughly $32 million as an ending fund balance and $942 million in the Budget Stabilization Account. Access to the Budget Stabilization Account requires a 60 percent vote of the Legislature.

Importantly, the budget agreement did not contain any tax increases nor did it authorize any meaningful tax incentives.

There were two policy changes to the taxation of marijuana (SB 6505 and SB 5887) that were approved. Despite considerable pressure by House Democrats, a 95 percent tax on all electronic cigarettes and other tobacco substitutes (HB 2795) was not part of the final budget agreement.

Tax incentives rejected One of the major casualties of this legislative session and the battle for a balanced budget is that no meaningful extension or approval of tax incentives were authorized.

House Democrats demanded that no new tax incentives

be authorized and pushed for existing tax incentives to expire. The Senate Majority Coalition Caucus refused to entertain any tax increases, so the stalemate resulted in the elimination or non-creation/extension of numerous tax incentives, most notably:

Research and Development B&O Credit (SB 6430) Research and Development Sales Tax Deferral (SB 6430)

Sales Tax Exemption for Server Equipment (SB 6550) B&O Credit for Businesses Hiring Veterans (SB 6049) B&O Credit for Businesses Hiring Disabled (SB 6057) One incentive was approved. Tucked away in the supplemental transportation budget was a one-year extension of the commute trip reduction tax incentive.

Employers are eligible to take a credit against B&O or public utility tax for costs associated with employee ride share and transit services. This credit now expires in July 2015 unless it’s reauthorized next legislative session.

Final Operating Budget, but no Capital After a highly politicized session, the Legislature passed its final supplemental operating budget with strong bipartisan votes of 48–1 in the Senate, and 85–13 in the House. But, for the first time in nearly 20 years, the Legislature failed to come to agreement on a supplemental Capital budget.

Here are the highlights of the four-year balanced budget: Major Budget/ Spending Category

2013-15

2015-17

TOTAL GF-S SPENDING

$33.657 Billion

$36.442B

TOTAL COMBINED RESERVES

$897M

$974M

$203M TOTAL SPENDING $89M INCREASE (FROM 2013-15 Maintenance Level $66M Policy Level BIENNIUM) FUND TRANSFERS

$27M

BUDGET DRIVEN REVENUE $9M

$52M --

Tax incentive transparency (House Bill 2201) Rep. Reuven Carlyle, D– DEFEATED Seattle, Chair of the House Finance Committee, introduced HB 2201 -- legislation to add additional transparency, accountability and public disclosure

requirements for taxpayers. The bill passed the House on a 52-45 vote. The WRA joined with other business interests to vehemently oppose the disclosure of sensitive and confidential taxpayer information. Rep. Carlyle reportedly tied this bill to the extension of any tax incentives. The Senate Majority Coalition Caucus remained firm in their opposition to this legislation, and the bill was never considered in the Senate.

Rep. Carlyle also introduced legislation (SHB 2202) to “establish an open data policy to facilitate the sharing and publishing of government data.” The legislation, as written, would have posed significant problems for the business community because it would have made a range of confidential or proprietary information open to public.

July 2014 | 15

Many agencies had concerns with this legislation because the fiscal note exceeded $15 million. The legislation failed to pass the House.

HEALTH CARE Pay or Play (House Bill 2588) Rep. Eileen Cody, D–Seattle, DEFEATED chair of the House Health Care Committee, introduced legislation in 2014 aimed at requiring “large” employers to reimburse the state for any employee who was on public assistance. The bill would have applied to employers with more than 500 employees in Washington state. It was unclear whether small franchisee restaurateurs would be subject to this legislation by virtue of their association with a parent company. The WRA worked to bring a significant business coalition together in opposition to this legislation. In the end, Rep. Cody did not move the bill out of her committee, but she did say in public hearing that this bill was meant to be a “start” of a much broader discussion of the business community’s responsibility for their employees who are on public assistance.

Health Care Purchasing and Delivery (House Bill 2572) This legislation was sponsored at the request of Gov. Inslee and was supported by many in the business community.

The bill seeks to establish a State Health Care Innovation Plan aimed at coordinating the delivery of health care on a regional basis. It also seeks to gather significant amounts of data aimed at helping the state and the business community to more efficiently pay for health care services. The WRA monitored this bill very closely as it worked its way through the Legislature. It was ultimately passed by the Legislature and signed by the governor. The WRA will continue to engage as this bill is implemented to ensure the programs established will be to the benefit of the business community.

LABOR ISSUES Paid Sick and Safe Leave (House Bill 1313) Thanks in part to the work of the WRA Government Affairs (GA) team this burdensome legislation did not pass this year.

DEFEATED

The House of Representatives passed the bill however the measure was rejected in the Senate. This legislation was promoted by labor unions in order to mandate a statewide

16 | warestaurant.org

sick and safe leave policy. This policy is similar to what has been enacted in Seattle and SeaTac. The bill would have required all employers with more than four FTEs provide mandatory paid sick and safe leave.

Employees, including temporary and part-time workers, could accrue and use leave if they worked 240 hours or more in the state in a calendar year. Employers were required to provide leave based on the number of FTEs, with large employers required to provide more leave than small employers. Similar to the SeaTac ordinance, collective bargaining agreements were exempt from the requirement.

This issue along with other mandated leave requirements will continue to be a focus for labor unions and the GA team will continue to work on the measure in the upcoming session.

Paid Vacation Leave (House Bill 2238) Rep. Gael Tarelton, D– Seattle, introduced HB 2238, which would have required accrual of up to three weeks of paid vacation time for employees with five years of service. Under the bill, employers with more than 25 employees were required to provide paid vacation time for all employees that work more than 20 hours per week on average.

DEFEATED

After the first six months, employees would begin accruing paid vacation time, at 40 hours per year worked. After five years worked employees were entitled to 120 hours of paid vacation time per year, every year. Employers who did not comply were subject to a $500 civil penalty for the first offense, and $1,000 civil penalty for subsequent offenses.

The bill was not considered on the House floor but will likely resurface next session. ■

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July 2014 | 17

WRA VOTING RECORD

The Details Bills in the voting record—a summary HB 2334 – Final Passage, Wage Violations, The following voting record shows Damages – Oppose the votes by each member of the WRA joined with the entire business community opposing HB 2334 because the bill completely Legislature, on selected issues of redefined the employer-employee relationship, would redefine most independent contractors as importance to the WRA and/or the employees, and added new causes of action against entire business community. The employers. voting record should be viewed as an HB 2680, Final Passage, Liquor Catering License indicator of how strongly individual – Support Sponsored by Rep. Larry Springer, D–Kirkland, HB legislators supported the position 2680 creates a liquor license for businesses that only operate as caterers, without a restaurant. (For more of small businesses, specifically the see the 2014 Session Review) restaurant industry, on a few key SB 6002 – As amended by House, Operating and issues. A voting record, however, Supplemental Budget – Oppose should never be viewed as a “final The WRA opposed the House’s original budget in this vote) because it was dependent analysis.” It does not capture working (reflected on raising about $1 billion in new taxes. The taxes contemplated by the House included B&O taxes on relationships and/or interest by services and elimination of targeted tax preferences legislators in our sector; nor does it on business. (For more see the 2014 Session Review) reveal work by individual legislators HB 1313 – Final Passage, Sick and Safe to support or defeat specific issues Employment Leave – Oppose HB 1313 would have enacted a statewide mandatory (or amendments). Accordingly, paid sick leave policy similar to the cities of Seattle and SeaTac. (For more see the 2014 Session Review) if you have questions about how to interpret results for individual, Senate please contact a GA team member.

House HB 2201 – Final Passage, State Tax Preferences, – Oppose HB 2201 would have required certain companies to publically disclose confidential tax information. (For more see the 2014 Session Review) HB 2229, Final Passage, State Tourism and Marketing Program – Support The WRA worked with the Washington Tourism Alliance (WTA) to start a process that would lead to a privately funded program for statewide tourism promotion. (For more see the 2014 Session Review)

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HB 2229, Final Passage, State Tourism and Marketing Program – Support The WRA worked with the Washington Tourism Alliance (WTA) to start a process that would lead to a privately funded program for statewide tourism promotion. (For more see the 2014 Session Review)

HB 2680, Final Passage, Liquor Catering License – Support Sponsored by Rep. Larry Springer, D–Kirkland, HB 2680 creates a liquor license for businesses that only operate as caterers, without a restaurant. (For more see the 2014 Session Review)

SB 5127, Final Passage, Structured Settlements for Workers’ Compensation – Support SB 5127 was also included in 2013’s voting record, and was debated again this year. In 2012, the Legislature passed major reforms of the workers’ compensation system that allow for older workers to enter into settlement agreements for pension-type claims under specific circumstances. These reforms, which estimates show will result in considerable savings to the state’s workers’ compensation system, only apply to workers who are 55 years of age, or older. SB 5127 would expand the eligibility for workers 40 years of age or older. The WRA supports workers having more choices to pick the best option for their individual situation.

SB 5158, Final Passage, Minimum Wage and Overtime – Support SB 5158 also was included in 2013’s voting record and debated this year. 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 (L&I) could not be held liable, nor 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 L&I errors in providing guidance or interpretation.

SB 6002 – Final Passage, Operating and Supplemental Budget – Support WRA supported the Senate’s version of the operating budget, which balanced spending needs and grew funding for education without raising taxes or fees. (For more see the 2014 Session Review) SJR 8213 – Senate Joint Resolution Requiring 2/3 Majority for Tax Increases – Support Washington voters have repeatedly adopted the mandate that a two-thirds vote be required to raise new taxes; however, the State Supreme Court recently ruled that the requirement is unconstitutional. Senate Joint Resolution 8213 would amend the Constitution to adhere to the court’s decision, and send the amendment to the voters for their approval. (For more see the 2014 Session Review) SB 6220 – Final Passage, Retailers Selling for Resale – Support The WRA’s priority legislation this year was SB 6220, which would have removed the 17 percent fee on restaurants when purchasing spirits from a retailer. (For more see the 2014 Session Review) July 2014 | 19

House of Representatives Voting Records

Representative Rep. Appleton Rep. Bergquist Rep. Blake Rep. Buys Rep. Carlyle Rep. Chandler Rep. Chopp Rep. Christian Rep. Clibborn Rep. Cody Rep. Condotta Rep. Dahlquist Rep. DeBolt Rep. Dunshee Rep. Fagan Rep. Farrell Rep. Fey Rep. Fitzgibbon Rep. Freeman Rep. Goodman Rep. Green Rep. Gregerson Rep. Habib Rep. Haigh Rep. Haler Rep. Hansen Rep. Hargrove Rep. Harris Rep. Hawkins Rep. Hayes Rep. Holy Rep. Hope Rep. Hudgins Rep. Graham Hunt Rep. Sam Hunt Rep. Hunter Rep. Hurst Rep. Jinkins Rep. Johnson Rep. Kagi Rep. Kirby Rep. Klippert Rep. Kochmar Rep. Kretz Rep. Kristiansen Rep. Lytton Rep. MacEwen Rep. Magendanz Rep. Manweller

Bill Number WRA’s position Party District

2201 2229 O S

2334 2680 O S Votes

6002 O

1313 0

%

D 23 Y Y Y Y Y Y 33% D 11 Y Y Y Y Y Y 33% D 19 Y Y Y Y Y Y 33% R 42 N N N Y N N 83% D 36 Y Y Y Y Y Y 33% R 15 N Y N Y N N 100% D 43 Y Y Y Y Y Y 33% R 4 N N N Y N N 83% D 41 Y Y Y Y Y Y 33% D 34 Y Y Y Y Y Y 33% R 12 N N E Y N N 80% R 31 N E N Y N N 100% R 20 N E N Y N E 100% D 44 Y Y Y Y Y Y 33% R 9 N Y N Y N N 100% D 46 Y Y Y Y Y Y 33% D 27 Y Y Y Y Y Y 33% D 34 Y Y Y Y Y Y 33% D 30 Y Y Y Y Y Y 33% D 45 Y Y Y Y Y Y 33% D 28 Y Y Y Y Y Y 33% D 33 Y Y Y Y Y Y 33% D 48 Y Y E Y Y Y 40% D 35 N Y N Y Y N 83% R 8 N Y N Y N N 100% D 23 Y Y Y Y Y Y 33% R 47 N Y N Y N N 100% R 17 N Y N Y N N 100% R 12 N Y N Y N N 100% R 10 N Y N Y N N 100% R 6 N Y N Y N N 100% R 44 N Y N Y N N 100% D 11 Y Y Y Y Y Y 33% R 2 N Y N Y N N 100% D 22 Y Y Y Y E Y 40% D 48 Y Y Y Y Y Y 33% D 31 N Y N Y Y N 83% D 27 Y Y Y Y Y Y 33% R 14 N Y N Y N N 100% D 32 Y Y Y Y Y Y 33% D 29 Y Y Y Y Y Y 33% R 8 N Y N Y N N 100% R 30 N Y N Y N N 100% R 7 N Y N Y N N 100% R 39 N Y N Y N N 100% D 40 Y Y Y Y Y Y 33% R 35 N Y N Y N N 100% R 5 N Y N Y N N 100% R 13 N Y N Y N N 100%

= Supports WRA’s position E = Excused

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Fina l Sta Passa te t ax p ge refe renc es Fina l Pa Sta te t ssage our ism mar keti ng p Fina rog l Pa ram Emp ssa loye ge e st atus Fina l Liqu Passa g or c ater e ing lice nse Fina l Ope Passa ratin ge a s g su p bu Amend e dge t 20 d by th eH 14 Fina ous l Pa e Sick ss & s age afe emp loym ent leav e

WRA VOTING RECORD

Representative Rep. Moeller Rep. Morrell Rep. Morris Rep. Moscoso Rep. Muri Rep. Nealey Rep. Orcutt Rep. Ormsby Rep. Ortiz-Self Rep. Orwall Rep. Overstreet Rep. Parker Rep. Pettigrew Rep. Pike Rep. Pollet Rep. Reykdal Rep. Riccelli Rep. Roberts Rep. Robinson Rep. Rodne Rep. Ross Rep. Ryu Rep. Santos Rep. Sawyer Rep. Schmick Rep. Scott Rep. Seaquist Rep. Sells Rep. Senn Rep. Shea Rep. Short Rep. Smith Rep. Springer Rep. Stanford Rep. Stonier Rep. Sullivan Rep. Takko Rep. Tarleton Rep. Taylor Rep. Tharinger Rep. Van De Wege Rep. Vick Rep. Walkinshaw Rep. Walsh Rep. Warnick Rep. Wilcox Rep. Wylie Rep. Young Rep. Zeiger

Bill Number WRA’s position Party District

Fina l Sta Passa te t ax p ge refe renc es Fina l Pa Sta te t ssage our ism mar keti ng p Fina l Pa rog Emp ssa ram loye ge e st atus Fina l Liqu Passa g or c ater e ing lice nse Fina l Pa Ope ssa ratin ge a s g su pple Amend e men tal b d by th Fina e l udg Sick Passa et 2 House g 014 &s afe e emp loym ent leav e

House of Representatives Voting Records

2201 2229 O S

2334 2680 O S Votes

6002 O

1313 0

%

D 49 Y Y Y Y Y Y 33% D 25 Y Y Y Y Y Y 33% D 40 Y Y Y Y Y Y 33% D 1 Y Y Y Y Y Y 33% R 28 N Y N Y N N 100% R 16 N Y N Y N N 100% R 20 N Y N Y N N 100% D 3 Y Y Y Y Y Y 33% D 21 Y Y Y Y Y Y 33% D 33 Y Y Y Y Y Y 33% R 42 N N N Y N N 83% R 6 E Y N Y N N 100% D 37 Y Y Y Y Y Y 33% R 18 N N N Y N N 83% D 46 Y Y Y Y Y Y 33% D 22 Y Y Y Y Y Y 33% D 3 Y Y Y N Y Y 17% D 21 Y Y Y Y Y Y 33% D 38 Y Y Y Y Y Y 33% R 5 N Y N Y N N 100% R 14 N Y N Y N N 100% D 32 Y Y Y Y Y Y 33% D 37 Y Y Y Y Y Y 33% D 29 Y Y Y Y Y Y 33% R 9 N Y N Y N N 100% R 39 N N N Y N N 83% D 26 Y Y Y E N N 60% D 38 Y Y Y Y Y Y 33% D 41 Y Y Y Y Y Y 33% R 4 N N N Y N N 83% R 7 N Y N Y N N 100% R 10 N Y N Y N N 100% D 45 Y Y N Y Y Y 50% D 1 Y Y Y N Y Y 17% D 17 N Y Y Y Y Y 50% D 47 Y Y Y Y Y Y 33% D 19 Y Y Y Y Y Y 33% D 36 Y Y Y Y Y Y 33% R 15 N N N Y N N 83% D 24 Y Y Y Y Y Y 33% D 24 Y Y Y Y Y Y 33% R 18 N Y N Y N N 100% D 43 Y Y Y Y Y Y 33% R 16 N Y N Y N N 100% R 13 N Y N Y N N 100% R 2 N Y N Y N N 100% D 49 Y Y Y Y Y Y 33% R 26 N Y N Y N N 100% R 25 N Y N Y N N 100%

= Supports WRA’s position E = Excused

July 2014 | 21

3rd Sta Readin te t our g & Fin ism a mar l Pass a keti 3rd ng p ge rog Liqu Readin ram g or c ater & Fina l Pa ing s lice nse sage 3rd Stru Readin g ct . sett & Fina lem ents l Passa g /wo 3rd rker e s Min Readin imu g m w & Fin al age and Passa g ove 3rd rtim e e Ope Readin ratin g & g su Fina pple l Pas men sage tal b Sen udg a tax te Join et 2 incr 014 eas t Reso lutio es n 2/ 3 vo 3rd te f or Ret Readin aile g rs s & Fin ellin al P a g fo r re ssage sale

WRA VOTING RECORD

Senate Voting Records Bill Number WRA’s position Representative Party District Sen. Angel Sen. Bailey Sen. Baumgartner Sen. Becker Sen. Benton Sen. Billig Sen. Braun Sen. Brown Sen. Chase Sen. Cleveland Sen. Conway Sen. Dammeier Sen. Dansel Sen. Darneille Sen. Eide Sen. Ericksen Sen. Fain Sen. Fraser Sen. Frockt Sen. Hargrove Sen. Hasegawa Sen. Hatfield Sen. Hewitt Sen. Hill Sen. Hobbs Sen. Holmquist Newbry Sen. Honeyford Sen. Keiser Sen. King Sen. Kline Sen. Kohl-Welles Sen. Liias Sen. Litzow Sen. McAuliffe Sen. McCoy Sen. Mullet Sen. Nelson Sen. O’Ban Sen. Padden Sen. Parlette Sen. Pearson Sen. Pedersen Sen. Ranker Sen. Rivers Sen. Roach Sen. Rolfes Sen. Schoesler Sen. Sheldon Sen. Tom

2680 S

5127 S

5158 S

Votes

6002 S

8213 S

6220 S

%

R 26 Y Y Y Y Y Y Y 100% R 10 Y Y Y Y Y Y Y 100% R 6 Y Y Y E Y E Y 100% R 2 Y Y Y Y Y Y Y 100% R 17 Y Y Y Y Y Y Y 100% D 3 E Y N N Y N N 33% R 20 Y Y Y Y Y Y Y 100% R 8 Y Y Y Y Y Y Y 100% D 32 Y Y N N Y N N 43% D 49 Y Y N N Y N N 43% D 29 Y Y N N N N N 29% R 25 Y Y Y Y Y Y Y 100% R 7 Y Y Y Y Y Y Y 100% D 27 Y N N N Y N N 29% D 30 Y Y N N Y N N 43% R 42 Y Y Y Y Y Y Y 100% R 47 Y Y Y Y Y Y Y 100% D 22 Y Y N N Y N N 43% D 46 Y Y N N Y E N 50% D 24 Y N Y N Y N N 43% D 11 Y Y N N N N N 29% D 19 Y Y N N Y N N 43% R 16 Y Y Y Y Y Y N 86% R 45 Y Y Y Y Y Y Y 100% D 44 Y Y N N Y E Y 67% R 13 Y N Y Y Y Y Y 86% R 15 Y Y Y Y Y Y N 86% D 33 Y Y N N Y N N 43% R 14 Y Y Y Y Y Y Y 100% D 37 Y E N N N N N 17% D 36 Y Y N N N N N 29% D 21 Y Y N N Y N N 43% R 41 Y Y Y Y Y Y Y 100% D 1 Y Y N N N N N 29% D 38 Y Y N N N N N 29% D 5 Y Y N N Y N Y 57% D 34 E Y N N Y N N 33% R 28 Y Y Y Y Y Y Y 100% R 4 Y Y Y Y Y Y Y 100% R 12 Y Y Y Y Y Y Y 100% R 39 Y N Y Y Y Y Y 86% D 43 Y Y N N N N N 29% D 40 Y Y N N Y N N 43% R 18 Y Y Y Y Y Y Y 100% R 31 Y Y Y Y Y Y Y 100% D 23 Y Y N N N N N 29% R 9 Y Y Y Y Y Y Y 100% D 35 Y Y Y Y Y Y Y 100% D 48 Y Y Y Y Y Y Y 100%

= Supports WRA’s position E = Excused

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WRA legislative heroes and friends to restaurants At the end of each legislative session, the WRA recognizes those lawmakers who stood arm-in-arm with the restaurant industry. This year yielded a slate of standout legislators, committed to advocating on behalf of restaurants in 2014.

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Sen. Mark Mullet, D–Issaquah Sen. Mullet knows firsthand what issues impact our industry, because he is a WRA member and restaurateur.

His business in Issaquah was uniquely affected by the Liquor Control Board’s decision to impose an extra fee on restaurant purchases of spirits from retailers. That’s why he volunteered, with Sen. Braun, to sponsor SB 6220, which would have removed the fee.

While no one expected the issue would become one of the most contentious issues of the year, the WRA was well-prepared with the support of Sen. Mullet. Despite significant pressure from opponents, and his own caucus, Sen. Mullet refused to reverse his position because he believed it was the correct policy.

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Sen. John Braun, R–Centralia When Sen. Braun agreed to sponsor the WRA’s priority legislation, he probably wasn’t aware it would end up being one of the most controversial bills of the session, or that he was signing up for a three-day floor debate. Nevertheless, Sen. Braun committed to helping our industry, because SB 6220 would have restored tax fairness by removing a 17 percent fee to restaurants, and restored competition to the private market for spirits.

Sen. Braun never wavered from his commitment and never backed down from a challenge, demonstrating integrity and courage. Restaurants and small businesses across the state are well-served with Sen. Braun in the Washington state senate.

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Rep. Cary Condotta, R–East Wenatchee Rep. Condotta, who was honored by WRA last year, continues to be a stalwart champion for the restaurant industry and all of small businesses. Rep. Condotta knows the challenges of running a restaurant – his family owns a restaurant in Wenatchee. He is the Republican leader on the House Government Operations Committee, which has authority over liquor related issues. He has been a co-sponsor and active champion for the legislation

to eliminate the 17 percent fee on sales of liquor from retailers to restaurants, and has worked closely with the WRA on all of the issues involved in implementing I-1183. Rep. Condotta also serves on the House Labor and Workforce Development Committee, where his keen understanding of the challenges facing small businesses is invaluable.

Rep. Chris Hurst, D– Greenwater Rep. Hurst took on the challenge of chairman of the newly formed House Government Operations Committee in 2013. The Committee oversees implementation of I-1183, all liquor and marijuana issues, and gaming. Rep. Hurst took the lead in sponsoring the legislation to eliminate the 17 percent fee on liquor sales by retailers to restaurants and helped build strong bipartisan support for the measure. He scheduled the bill for a public hearing on the first day of his committee, and actively worked with members across the aisle to keep momentum growing until the budget agreement prevented the bill from passing. The WRA looks forward to working with Rep. Hurst in 2015 to again champion this and other liquor related issues.

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Special Recognition Sen. Rodney Tom, D– Bellevue Sen. Tom was one of the driving forces behind bringing together the Majority Coalition Caucus. He ultimately served as the MCC Leader, the top position in the Senate. Sen. Tom was a significant supporter of the business community in 2014. This year he again supported this industry on an array of issues, including our liquor legislation.

Regrettably, Sen. Tom has announced that he will not be running for reelection. He will be missed.

Sen. Marc Schoesler, R– Ritzville Sen. Schoesler has a long history of supporting this industry and the business community. As the Senate Republican Leader he serves in an important role as a leader in the Majority Coalition Caucus. Sen. Schoesler’s steady hand kept the MCC together, which helped to protect and support the business community and this industry. More specifically, Sen. Schoesler kept his word regarding the WRA’s liquor legislation and brought it to the Senate floor for a vote. Under extreme pressure, he remained unwavering in his support for the measure.

Rep. Larry Springer, D– Kirkland Sen. Springer is a former restaurateur and owns a wine shop in Kirkland.

He understands this industry very well, and is an important voice within the House Democratic Caucus.

As Deputy Majority Leader, Rep. Springer is the Caucus liaison to the business community. He was once again particularly helpful on liquor issues, and was the prime sponsor of the WRA’s liquor bill in the House.

Sen. Steve Hobbs, D– Lake Stevens Sen. Hobbs yet again displayed his ardent commitment to supporting small business and the restaurant industry. In 2014, he remained a steadfast supporter of the WRA’s liquor legislation, even in the face of extreme pressure from the labor community and nearly all of his caucus. ■

July 2014 | 27

WRA lobbyists’ experience and relationships deliver results for restaurants Each legislative session brings regulatory victories that can translate to cost savings, broadened opportunities and an improved business climate for Washington state.

Those wins don’t happen by accident, though. The legislative outcomes profiled in this issue of Washington Restaurant Magazine are attributable largely to the best lobbying team on the hill in Olympia.

Bruce Beckett Government Affairs Director Bruce Beckett is the head of the WRA government affairs team. He is accountable for overall leadership, strategic direction to the lobby team and ensuring WRA members are fully informed and engaged in the development of WRA positions and tactics. Bruce has been with the WRA since 2009. He brought with him more than 27 years of public affairs experience, including 17 years leading Weyerhaeuser Company’s Western Region and Washington State public affairs teams. Bruce also served as the director of public affairs for the Cascade Land Conservancy’s $20 million Cascade Agenda campaign.

He has served on the boards of numerous business organizations, including the Association of Washington Business, as a deputy to the Washington Roundtable, TVW, the Washington Forest Protection Association, Northwest River Partners and the Washington Research Council.

Josh McDonald State and Local Government Affairs Josh McDonald is the “boots on the ground” representative in local municipalities for the WRA team. Recently, he led the charge in Seattle, dealing with every aspect of the minimum wage issue, from conferences with the mayor and City Council, to one-on-one meetings with individual members. Because of his continued efforts, hundreds of local restaurants are communicating with city government regarding the right set of solutions for business owners, operators and employees. Josh is focused on building and maintaining a strong industry presence at the city and county level; he has made inroads with local governments on paid sick leave and various sustainabilityrelated issues. Josh has been with the WRA government affairs team since 2007. Previously, he has worked as a contract lobbyists and on numerous political campaigns.

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Julia Gorton Government Affairs Manager Julia Gorton is the point-person on several issues including tourism, the Retrospective Rating program (Retro) and the continued debate surrounding the state’s evolving liquor privatization issue. She is the numberone resource for the WRA’s ongoing discussion with the Liquor Control Board on liquor pricing for restaurants.

Julia has been a member of the Washington Restaurant Association’s Government Affairs team since 2007. Julia grew and strengthened the WRA’s Grassroots Network, which was directly responsible for the WRA’s protection of the pop syrup tax credit and Retro. Additionally, Julia was responsible for establishing the WRA’s Ambassador training program, which gives restaurateurs tools to communicate with their elected representatives.

Stephanie Davenport Communications Advocacy Manager Stephanie Davenport is responsible for marketing and communications programs on behalf of the GA team to external media and also to WRA members, informing them of GA activity on their behalf. She is also responsible for research and acts as a liaison between the communications department, government affairs and President/CEO. Stephanie is a new addition to the WRA, having rejoined the team in April 2014, after a previous stint at the WRA from 2004 to 2005. Prior to returning to the WRA, Stephanie was a public information officer in the Washington State House of Representatives, communications coordinator for the American Institute of Architects and a legislative liaison for the Washington Retail Association.

Morgan Hickel Local Government Coordinator Morgan Hickel joined the WRA team in January 2014, and already has already cemented herself as a key asset in the WRA’s work on minimum wage in Seattle. In just a few months, she has built the most organized and effective grassroots program of any industry in Seattle to ensure our restaurants’ voices are heard at City Hall. Morgan also works directly with the Seattle Restaurant Alliance, helping keep our Seattle members informed and pushing them to stay an active part of city politics. Prior to joining the WRA, Morgan was the campaign manager for the Stop Higher Utility Taxes Campaign Committee, worked in government affairs on behalf of the American Frozen Food Institute and held successful internships for the Tacoma-Pierce County Chamber of Commerce and the Federal Way Chamber of Commerce.

Contract lobbyists 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. Denny has experience working on a number of issues, including banking, energy, employment, environment, finance, growth management, health care, insurance, pharmaceuticals, retail, securities, taxes and transportation. 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. Kim has defended WRA members against a series of bills that, if enacted, would have increased the overall costs of benefits for UI, thereby leading to higher UI taxes for employers.

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INDUSTRY CALENDAR July/August 2014 Training Aug. 5

ServSafe® Manager, Seattle

Aug. 11 ServSafe® Manager, Everett Aug. 12 ServSafe® Manager, Kent Aug. 28 ServSafe® Manager, Olympia

Meetings July 15

MSC Meeting - Webinar

July 22

Finance Committee Meeting

July 28

WRA Education Foundation Summer Board Meeting

July 2930

WRA Summer Board of Director’s Meeting

Aug. 6

Retro Board of Trustees Meeting

Aug. 6

Retro Investment Meeting

Aug. 12

Spokane Chapter Board Meeting

Aug. 12

Executive Committee Meeting

Aug. 19

MSC Meeting

Events Aug. 5

Golf FORE! Education

NEW ALLIED MEMBERS ChefTec/Culinary Software Services Zoe McGill 2930 Center Green Court Boulder, CO 80301 303.447.3334 marketing@culinarysoftware.com www.cheftec.com Software for the food service industry.

Products include ChefTec and CorTech, which provides recipes and menu costing, inventory control and other functionality Food Service Equipment - FSE Sales & Service Robby Fuller 2825 Marvin Rd NE Ste T Lacey, WA 98516-3134 360.943.6479 foodserviceequipment@comcast.net www.foodsvcequipment.com

NEW RESTAURANTS Bishop’s Alehouse, Kirkland Buddy La Fleur’s, Wenatchee Burger King of Moses Lake, Moses Lake Byno’s Roadhouse, Vancouver Ellensburg WineWorks, Ellensburg Espresso Gone Crazy, Port Orchard Geraldine’s Counter, Seattle Halftime Sports Saloon, Gig Harbor Happy Donuts, Puyallup High Cedars Golf Club, Orting It’s Greek To Me, Tacoma Jersey Mike’s Subs #18013, University Place

Food Service Equipment provides new and used equipment - Bakery equipment, commercial refrigerating, freezers and refrigeration equipment, walk-in coolers and freezers, display cases, fryers, smallwares, bar supplies, kitchen wares, dining tables and chairs, stainless steel sinks and tables, scales digital and mechanical

Lynn’s Bistro Restaurant & Catering, Kirkland

Oregon Oils, Inc. Matt Burns 2515 NW 28th Ave Portland, OR 97210 503.233.0818 mattburns@oregonoils.com www.oregonoilsinc.com

Rhododendron, LLC, Bow

A recycler of used cooking oils and grease trap materials. We collect used cooking oil and clean grease traps and interceptors. Special Offer: A higher than average rebate price for used cooking oil.

Steve’s Bar & Grill, Bellevue

Maharaja Cuisine Of India, Seattle Mugshots Burger n’ Brew, Bellevue Neyens Corporation, Falls City Puerto Vallarta Restaurants, Yelm

River Ridge Golf Course & Restaurant, Selah Rookies Bar & Grill, Seattle Sam’s Sports Bar, Kent

Stone House, The, Redmond Subway - JSC Investments Inc., Seattle Ulysses Restaurant & Lounge, Tukwila Westside Pizza, Poulsbo Wok About Mongolian Grill, Wenatchee Yakima Valley Hotel & Conference Center, Yakima Yeh Yeh’s Inc., Lynnwood

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Cost Savings Program

Competitive rates. First-rate service. Cost savings. These are just a few of the benefits to you and your bottom line!

TSYS Merchant Solutions — an industry leader with more than 60 years experience — is pleased to offer you a costsavings program that includes: • Competitive rates • Free online reporting • Value-added products like gift cards and check services • Qualified service representatives available 24 hours a day

Get to know us.

888.749.7860 www.tsysmerchantsolutions.com

TSYS Merchant Solutions, LLC is a registered agent of First National Bank of Omaha

Copyright © 2012 TSYS Merchant Solutions.

Marketplace EMPLOYEE BACKGROUND CHECK

WHY DO CUSTOMERS NOT RETURN?

A reported $4 billion is lost annually to embezzlement and a violent employee incident costs employers, on average, an incredible $250,000. According to Airfactz Screening & Reporting Services,a WRA endorsed employee background screening partner, one-third of job applicants lie on their applications and another five percent falsify their social security number. In today’s economically challenging times, employers are more likely to see a rise in embezzlement and other potentially harmful behaviors. Protect yourself with an employee background screening for a mere $19 investment for peace of mind with Airfactz.

Visit warestaurant.org for more information.

Customers go to a restaurant for food, but they will return if offered great service. On an average year a restaurant will experience a 10-30% loss in customer retention. 80% of those customers leave a restaurant never to return based on a single occurrence of poor customer service. Our mystery shopping services allow you to train your staff to provide “consistency of service.” We can provide you and your staff a customized program that will help you to succeed to the next level. We are an Accredited Member of the BBB and WRA. 509-327-7373 * info@selectinfoservices.com www.selectinfoservices.com

MEDICAL AND DENTAL COVERAGE The Washington Restaurant Association designed a health care plan just for WRA members. The Hospitality Industry Health Insurance Trust (H.I.H.I.T.) enables business owners in the hospitality industry to provide affordable healthcare benefits statewide. Contact Amber Hahn at 877.892.9203 for a FREE quote.

Golf

LED LIGHTING DISCOUNTS Through a partnership with North American LED and the National Restaurant Association, WRA members receive special pricing on LED lighting. Legislation passed in 2007 phases in new energy efficient standards for lighting and phases out the traditional light bulb. To access discounts, visit: www.northamericanled.com/restaurants | User name: NRA175 | Password: NRA175

F RE!

Education

32 | EFGolfTournament_AD.indd warestaurant.org

1

6/23/2014 4:28:20 PM

Ask the Expert | Restaurant Profit Coach

Compete for financial success

By Rick Braa, CHAE

Q:

I’ve been in the restaurant business for 20+ years. Over the last several years, I’ve seen our financial margins decline year-over-year, while sales have improved slightly.

Other restaurant owners I speak with are losing margin as well.

What is happening to our margins as an industry?

A:

Not too many years ago, the profitability formula for an average restaurant was 30 percent cost of goods, 30 percent labor cost and 30 percent other costs, leaving 10 percent as the bottom line. Through the years, with a steady increase in minimum wage and a tight, competitive labor market, the most common model is now 30 percent/36 percent/30 percent. Net income of 4 percent is the average bottom-line margin. The restaurant business is difficult and a well-run, balanced business includes an intense focus on the guest, wonderful work environment, careful planning, sparkling clean facility and excellent financial results. Focus must be applied in each area with equal vigor and, most importantly, the owner must compete with him/herself to be his/her best in each area.

The journey to improving financial results begins at topline sales. Manage sales mix aggressively. Increase the sales mix percentage/number sold of starters and desserts to entrees. Entrees sell regardless; starters and desserts don’t.

Track the last several months of the percentage of total sales and the number of starters and desserts. Coach the team on the importance of offering these options with every table, and make sure the team is proud of what they offer. Run contests to reward behavior, and track and post the results daily.

Simultaneously drive incremental sales at the table with beverage sales. Evaluate the mix between food and beverage on total sales. Examine Exhibit 1: Exhibit 1 Sales

Actual

%

Target

%

Food

80,000

80%

80,000

76%

Beverage

20,000

20%

25,200

24%

Total

100,000

100%

105,200

100%

There are two big wins by driving the beverage sales higher. Food sales stay the same, yet overall sales grow incrementally—in this case by $5,200. Secondly, beverage sales are more profitable than food sales. Beverage typically has a better cost of goods than food, and it takes no more labor to produce and sell another beverage. Drinks are 34 | warestaurant.org

sales that must be offered and carefully managed with proper pace. With safety in mind, be sure to offer to “refresh or refill” glasses when the guest is about one-third from finishing the drink. That allows the bar and the server to get the drink to the table on time.

After building a solid sales strategy, move on to the most important cost equation of the P&L. Combine cost of goods and fully loaded labor to compute prime cost.

Prime cost is the most important number to manage in the restaurant. Manage it as a whole first, then break down the parts of cogs and labor. If the new “normal” is 66 percent (cogs 30 percent + labor 36 percent) set a standard of 60 percent or better (55 percent is optimal).

Upon first examination, a six-point improvement may seem impossible, but it’s entirely possible. I’ve been involved in companies dropping 12 or more points out of prime cost with focused management and strategy. It’s necessary to have a strategy for the menu and labor, both of which could fill books to adequately explain. Focus on the relationship of menu items to cost and production. Engineer menu items, driving sales and labor efficiency. Push cost-ofgoods-sold toward 25 percent through effective pricing, menu engineering and sales mix. Target labor at 30 percent or better. Target front of the house at 8-10 percent; target the kitchen for 8 percent to 10 percent; aim for 5 percent or 8 percent for management and a 15 percent load on labor for taxes and benefits. As sales grow, allow only 5 percent more labor for front of the house, 5 percent for back of the house and zero for management for each $1 of incremental sales. This way, as sales grow, labor won’t grow at the same rate. Be sure posted schedules match labor goals, provide plenty of coverage during busy times and minimize risk to the shoulders of the rush.

Competing for margin is mindset and discipline, giving up margin is voluntary. Spend time daily challenging the status quo, and focus on changing sales mix and prime cost; you’ll recover that margin to live a better life. ■ For a more information on improving profitability and driving sales, contact AMP Services at rbraa@ampservices.com. Rick Braa is the co-founder of AMP Services, an accounting and consulting firm specializing in helping companies grow profitability.

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