Commentary on Today's economy...

Q. Do you have any idea how cheap stocks are?
A. Stocks are so cheap right now that Wall Street is now being called Wal-Mart Street.


Q. What is the difference between a pigeon and an investment banker?
A. The pigeon can still make a deposit on a BMW.


Q. What's the difference between a guy who lost everything in Las Vegas and an investment banker?
A. The tie.


What puzzles me most about the credit crunch is when one of my checks is returned stamped "insufficient funds," I don't know whether that refers to mine or the bank's :)

Ten Republicans To Watch in 2012

Interesting article from the Washington Post of all places about the cult of personality at the national level in the Republican Party. It's not necessarily an insight into the 2012 campaign as it's way too early for that. Yet, those seriously contemplating either spot on the ticket in the next presidential election will most likely come from this list.

Find the article here.

—LFC

Question: So What Have We Learned In Two Millennia???

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."

— Cicero - 55 BC

Answer: Evidently nothing...

—LFC

Getting The State Out Of The Liquor Business

Governor Christine Gregoire has said she would like to open more state-run liquor stores as a way to stimulate the economy. Really? Am I missing something here?

Anyone who knows me, knows I'm not squeamish about alcohol, but Gregoire's proposal makes absolutely no sense. It seems to me that a new bill introduced by Sen. Tim Sheldon (D-Potlatch), that would allow the privatization of the 161 state-run liquor stores, would create hundreds of private-sector jobs, and help the state reduce its massive deficit — which is now approaching $7 billion.

“Privatizing liquor just makes sense in today’s economic times,” Sheldon said. “People are used to shopping in other states and going into a regular retail store for their alcohol. It doesn’t cause any more consumption or abuse of alcohol.”

Senate Bill 5729 would shift control of liquor stores to private industry, instead of the current system where the state Liquor Control Board manages liquor sales in 161 stores across Washington. With 173 private stores already operating under contracts with the state, privatizing the entire liquor industry would put Washington in line with 32 other states in which the private sector handles liquor sales.

“Right now we bring our liquor in from out of state; we mark it up 45 percent, and add the taxes. That’s a tremendous profit center for the state of Washington. But why shouldn’t it be a job opportunity for the private sector for the private sector as well?” asked Sheldon.

This makes way too much sense for the Washington State Legislature to even consider, so don't look for anything to happen on it.

Think about it... The state gets out from under 161 commercial real estate leases, that must average at least couple thousand a month, and it gets rid of a boatload of state employees as well, reducing the state's payroll by a few million a year. What is Sheldon thinking here?

SB 5729 currently awaits action in the Senate Labor, Commerce & Consumer Protection Committee.

—LFC

This Past Week in Olympia

It's been a busy week in Olympia. Here's a smattering of what went on.

Hearing Held on Climate Change Bill
A hearing was held on HB 1490, sponsored by Representative Sharon Nelson (D-Seattle). HB 1490 seeks to address climate change by “strengthening” land use restrictions. The bill amends the environment goal of the Growth Management Act (GMA) to include transit-oriented development, adds multi-model transportation to concurrency requirements, and requires countywide planning policies address emissions reduction rules.

HB 1490 will be an unmitigated disaster if passed, adding thousands of dollars to the cost of a home, and it will undoubtedly lead to more litigation from environmental groups like Futurewise, that regularly sue local jurisdictions over Comprehensive Plans, as well as our local groups, such as Kitsap Citizens for Responsible Planning (KCRP), and of course, those ever-vigilant stewards of our environment, the tribes.

Retired Thurston County Commissioner Diane Oberquell (Democrat) testified against the bill. A few years ago environmentalists sued Thurston County over adoption of the county’s comprehensive plan. Thurston County taxpayers spent $1.6 million in defending the case. Just this past week or so, KCRP and the Suquamish Tribe lost a Superior Court case against Kitsap County, when they sued over the county's Comp Plan. No word yet on just how much it has cost us taxpayers to "win" what amounted to a frivolous lawsuit.

Local governments simply can't afford for this bill to become law — especially in this economic climate.

“Green” Bills on the Move
Despite the all the public relations hullabaloo pushing for “green jobs” to save the state's economy, the Gregoire administration is actually pushing a set of job-killing bills that are being considered in both the House and Senate.

First, HB 1718, a bill that implements Gregoire’s Climate Action Team recommendations, was introduced this week by Representative Dave Upthegrove (D-King County). Numerous groups testified in opposition to the bill’s sweeping provisions, which include drastic energy code changes, energy performance monitoring, new land use restrictions and Growth Management Act amendments.

Second, Gregoire’s Cap-and-Trade program appeared this week in the form of two companion bills — HB 1819 by Upthegrove and SB 5735 by Kitsap's own Senator Phil Rockefeller (D-Bainbridge Island). Gregoire’s
proposal would cap air emissions and charge those exceeding the caps, adding a complicated and expensive new regulatory scheme on businesses in Washington — not to mention adding more state employees to the payroll which will expand the existing deficit, which is quickly approaching $7 billion.

The Cap-and-Trade proposals will be heard on Tuesday, Feb. 3, at 10 a.m. in the House and 11 a.m. in the Senate.

Underground Economy Bill Has Hearing
Wednesday, the House Commerce & Labor Committee held a hearing on HB 1555, sponsored by Representative Steve Conway (D-Tacoma). HB 1555 implements a number of recommendations from the Underground Economy Task Force, such as increasing penalties for unregistered contractors and for failing to keep adequate records, requiring cities and counties to verify registration before issuing business licenses, requiring photo ID for all contractors at registration, and mandating contractors maintain a list of all subcontractors available for inspection by the state Department of Labor & Industries (L&I).

L&I needs to do a better job of enforcing the existing laws against illegal contractors rather than passing new laws it may never enforce. While there are some positive provisions in the bill, the business community's frustration with L&I over the issue of enforcement is certainly valid.

What’s Happening Next Week

Bad Warranty Bills to Have Hearing
On Wednesday, the House Judiciary Committee will hold hearings on HB 1045, sponsored by Representative Brendan Williams (D-Olympia), and HB 1393, sponsored by Representative Larry Springer (D-Kirkland). Williams' bill will make it much easier to sue builders for almost anything for years to come.

Williams has taken up the "hate all builders and sue their asses off" cause of former Senator Brian Wienstien. Williams once said if Weinstien's so-called warranty bill didn't pass, he would resign from the House. Of course he didn't keep his word. Go figure...

Among the more onerous provisions in HB 1045 is a mandated four year warranty with water penetration problems covered up to ten years. The bill creates untenable uncertainty by extending the statute of limitations. If a house is not perfect (free from defective materials and in compliance with all laws), there’s a breach of the warranty and invitation for a lawsuit. If this becomes law, obtaining liability insurance will become all but impossible for builders, and ones that build without it will be left with the necks hanging out a mile, just waiting for some unscruplous lawyer to sue them.

The other bill dealing with consumer protection and warranties is Representative Springer’s HB 1393, whcih creates a consumer ombudsman in the Attorney General’s Office, an idea which has merit, but unfortunately also mandates warranties on all new homes and directs the state Department of Labor & Industries (L&I) to create a licensing/certification program for construction workers (read: more state employees and increased cost of government, larger deficit, and questionable return for the consumer).

There are more balanced options for better protecting consumers. 2007 BIAW President, and poster here, Daimon Doyle will testify in opposition to both HB 1045 and HB 1393.

There is a misconception by some that existing builder warranties or third party warranties, such as 2–10, would meet the requirements as currently spelled out in the warranty bills. That is incorrect. Here’s a snap shot of HB 1393.

• The warranty dramatically expands liability by creating a cause of action for anything less than a perfect house or remodel. ANY defect is a breach of warranty and creates an opportunity for a lawsuit. The damages are the cost to fix or the loss in market value — whichever is less.
• There is no reasonableness standard to determine if the warranty has been breached. ANY “defect,” no matter how trivial or unreasonable, triggers the warranty and a lawsuit.
• The warranty also: (1) cannot be waived, and (2) extends to subsequent purchasers, taking away the ability to negotiate and bargain a contract with the initial purchaser.
• The warranty applies to not only builders, but also to architects, engineers, vendors, subcontractors and designers.
In short, the legislatively mandated warranties will go far beyond the warranties builders currently voluntarily offer homeowners. If passed, these warranties will ultimately become a cash cow for trial attorneys.

Association Health Plan Bills to Be Considered
Thursday, the House Health Care Committee will hear HB 1712 and HB 1714, bills which propose to regulate Association Health Plans. The bills, introduced by Representative Eileen Cody (D-Seattle), would eliminate the advantage of AHPs by requiring more community rating, instead of allowing rates to be set based on the actual risk. The business community strongly opposes these bills, which would inhibit any given association's ability to provide affordable health insurance to members.

New Energy Code Mandates — Hold on to Your Wallets
Monday, the House Technology & Energy Committee will hold a hearing on HB 1747, sponsored by our own Representative Christine Rolfes (D-Bainbridge Island). HB 1747 is part of the environmentalists’ plan to “reduce” climate pollution. The Legislature and the Governor this year are focusing on major changes to the Washington State Energy Code as a means to addressing climate change. HB 1747 sets aggressive new energy efficiency standards that will require a 40 percent energy use reduction in all new buildings by 2013. The ultimate goal is “building zero fossil-fuel greenhouse gas emission homes and buildings by the year 2031.” The bill also contemplates the development of an “energy performance score for all residential buildings.” In addition, all of this is on top of the Governor’s push to increase the existing 2006 energy code by 30 percent.

Energy conservation requirements that are economically justifiable and do not adversely compromise the health of the occupants, are easy to support. However, these provisions are way over the top and will drastically increase the cost of a new home or commercial building.

—LFC

Inspire, don't Require

As a home builder, I get “green”. I have been intentionally doing green things for more than a decade; minimizing waste, avoiding toxic materials, and trying to make the homes I build as energy efficient as possible. I was “green” before “green” was cool. These practices saved me money, made my homes more attractive to buyers and in the long run, saved my homeowners money by reducing their utility bills. It simply made sense.

Today, not only are my clients getting it too, new green products are popping up every day, from local home improvement stores to the grocery stores. The Built Green guidelines that many of use to measure our success are a flexible tool that allows builders and clients to choose from a variety of products and techniques, each with a point value and subsequent returns. I find a lot of my clients achieving a certain level and then asking what more they can do to get to the next level. Suddenly they are weighing the various options against their budget and lifestyle and trying to achieve all they can.

But that may soon change.

A few years back, the Legislature wisely decided to help promote things like Solar Energy. They did so by offering incentives including no sales tax on solar equipment and added incentives for equipment manufactured here in Washington. This year several bills were introduced to offer similar sales tax exemptions and utility rebates for solar hot water heaters along with other solar incentives. Unfortunately, in typical bait and switch fashion, legislation has been introduced to require solar water heaters in all newly constructed homes beginning in January of 2012 (HB 1187). Additionally, there are rumors that due to our budget deficit, many of the current tax incentives may go away. Why offer up incentives for these things when they can simply be mandated? Our lawmakers get to keep their cake and eat it too, while home buyers find themselves going hungry.

Once you start piling on these requirements and further drive up the cost of housing at a time when the market can least bear it (much bigger topic for a future post) the consumer’s focus changes. Rather than asking, “What can I do to be greener?” they begin to ask, “What is the minimum we can get away with?”

I have a saying I like to use both at home and at work: “Inspire, don’t require.” In this case, maybe a more appropriate phrase could be, "Rebate, don't mandate". You want to kill the momentum behind the green movement? Make it mandatory.

- Daimon Doyle

Some Thoughts On The Demise of the P.I.

The fact the Seattle P.I. is facing almost certain closure after such a long and rich history, should come as no surprise. A newspaper has to reflect the values of the community it serves if it is to be successful — especially in this economy. In what's become a rapidly shifting landscape in the newspaper business, that fact is more critical now than it's ever been.

Seattle is a very liberal city, so the knee-jerk reaction is that the P.I. reflects the values of its community. In truth, it reflects the values of its core readers — the ultra-liberal Seattle establishment — but not those of the communities it serves.

The P.I.'s service area encompasses a lot more than the Seattle urban core. It includes the blue-collar working-class suburbs where families live — places like Kent, Renton, Auburn, Burien, Federal Way, North Bend, Everett, Arlington, etc. It also includes us here on the Kitsap Peninsula, as well as Pierce County. Both are dominated by the military, blue collar military support workers and their families, and except for a highly vocal minority — and Bainbridge Island — these folks are decidedly more conservative than downtown Seattle. The extremist liberal views espoused by the P.I. don't even begin to reflect the thinking of these folks. So while the P.I. may reflect the urban liberal viewpoint, it doesn't reflect the thinking of the majority of people in the area it must serve to survive as a business. Currently, the P.I. readers account for slightly more than 11 percent of its total service area population. That's extremely poor market penetration for a daily newspaper, which explains why the Joint Operating Agreement between it and the Seattle Times, became necessary almost 25 years ago.

This is the problem a lot of leftist-leaning newspapers (and liberal talk radio as well) are facing, and why some of the conservative-leaning dailies, as well as community weeklies, are still weathering the economic assualt on the newspaper business while they gear up their online offerings to accomodate the upcoming generation of readers raised on the computer. The survivors reflect not only the thinking of the majority of their readers, but of their advertisers as well. And while the product of newspapers is supposedly unbiased information, the true bottom line is ad revenue. And when your editorial bias runs off not only your readers, but your advertisers too, that's a business model that isn't sustainable in these economic times.

We've seen a lot of left-leaning newspapers like the P.I. blaming technology, competition from the Internet, unsustainable overhead, and everything but their own nakedly partisan editorial decisions regarding product, for the state of the newspaper business today. Coverage of the most recent presidential election underlined the blatant left-wing bias of many newspapers around the country. Now that they've gotten their candidate elected, it will be interesting to see how the liberal survivors position themselves when it comes to reporting anything negative about the Obama administration. Remember, 48 percent of the country voted against Obama, and they buy — and advertise in — newspapers too. Or maybe, because they've become so disillusioned with the left-wing partisanship that passes for journalism these days, they simply don't anymore.

—LFC

Will Seattle Become a One Newspaper Town?

According to a surprise report on KING 5 TV, The Seattle P.I. could go on the sale block in the next few days.

According to a report from KING 5 news, a source close to the deal told reporter Linda Byron that the paper's owner, Hearst Corporation, will announce shortly that it's putting the P-I up for sale. Under the joint operating agreement (JOA) between the P-I and The Seattle Times, the P-I must be offered for sale for at least 30 days before it can be closed down.

The JOA was put into effect in 1983 in an effort to keep both papers financially viable. The P-I was originally granted a monopoly on morning publication, but in 1999 the agreement was modified to allow the Times to publish in the morning as well. Critics predicted that would eventually lead to the demise of the P-I.

Reportedly, Hearst doesn't expect any buyers to step forward, clearing the path for the P.I. to be shut down.

—LFC

Why Kitsap Needs To Remain In The PSRC

The value of Kitsap County’s membership in the Puget Sound Regional Council (PSRC) has been questioned at length over the past year or so — perhaps most vociferously by the Kitsap Alliance of Property Owners (KAPO) — and in this space as well. The main question has been whether Kitsap would be better off forming a similar alliance with Mason, Jefferson, and Clallam Counties for the purpose of regional transportation and growth management planning, as opposed to remaining partners with I-5-centric King, Pierce and Snohomish Counties.

After sitting through a presentation at KRCC where the five transportation alternatives for PSRC’s Vision 2040 plan were outlined, I’m convinced we need to not only remain members of PSRC, but to get our people in leadership positions so we can not only slow down, but derail what is being envisioned for our future.

Among the plans PSRC outlined is a new, 25 to 40 cent per gallon gas tax — increasing our gas tax to nearly a dollar per gallon. Very little of that money is being designated for new roads, or congestion relief — except HOV and HOT lanes primarily utilizing existing roads. Included in one version, is a HOT lane from I-5 to Poulsbo that uses one of the existing lanes of SR-16. So we’ll get to pay to use the roads we’ve already bought and paid for, while the congestion in the remaining free lanes becomes intentionally worse.

Another part of the plan calls for a Vehicle Miles Traveled (VMT) tax. How that will be implemented and monitored is still unclear. They also envision tolls on all major freeways — including I-5 — as well as state highways, and even city streets.

These folks are as serious as a heart attack about implementing their “vision” for us. They have zero compassion for non-city dwelling rural residents, or for automobile owners, and religiously believe the financial burden their plans mandate is a small price we are obligated — and should cheerfully be willing to pay — for our non-urban lifestyle. When I asked if they didn’t expect resistance from non-urban dwellers, the answer was a condescendingly smug, “So what?”

I’m not sure what planet PSRC imported these folks from, but they aren’t going away. In my view, they’re the best illustration of why we need to not only remain members, but become much more active than ever before.

—LFC

Report Your Damage Now

On December 24, 2008, Washington State Governor Christine Gregoire declared a State of Emergency for all Washington State based on the severe weather conditions we have experienced.

If you have damages from the recent winter weather, it is imperative that home and business owners file a report with the Kitsap County Department of Emergency Management immediately. The number to call is 360-307-5870. In addition to reporting damages, call your insurance agent to check on your coverage.

Information to have on hand:

• Name and address of the affected property.
• A description of damage, even if it is insured.
• A personal estimate of losses that will be uninsured.
• An estimate of the fair market value of the damaged home or business.

Also to consider for families and individuals:

• If you need housing, food and other basics, notify the American Red Cross chapter in your community (360-377-3761).
• Keep records of all clean-up and repair costs and, if possible, document with photographs.

For Business Owner only: Small business owners have two kind of damage to consider; physical and economic. The State of Washington must certify that at least five small businesses in a disaster area have suffered substantial economic injury and need financial assistance not otherwise available.

For more information call the Kitsap County Department of Emergency Management at 360-307-5870.

--Posted by Registered Voter
Information courtesy of Kitsap Peninsula Business Journal