|Former Gov. Dan Evans|
|Former Gov. Dan Evans|
One of the most noteworthy accomplishments of Gonzaga coach Mark Few in his team's inexorable march toward the NCAA National Championship game, despite falling short in the finale, may have been the destruction of the oft-quoted axiom that "nice guys finish last."
That "nice guys" comment obviously isn't a reference to the angry Bulldog mascot, Spike. But it is the agreed-on description of Few, who grew up in a small Oregon town, the son of a Presbyterian minister, and who didn't leave behind the lessons of his youth.
Despite the fierce competitiveness of his players that has been on display for the nation to see during the past few weeks, they are described by a GU trustee who has spent an extensive amount of time with them as "selfless, disciplined, family."
Gonzaga and Few fell short of their quest for college basketball's pinnacle in their Mondaynight loss to North Carolina in the NCAA championship game and the pain will burn for a time for the coach, his players and fans.
But his nice-guy trait was on display, despite the pain of the loss, in the post-game nationally televised interview when Few declined the opportunity to blame the referees for the loss with a couple of calls generally viewed as in error, saying instead "the referees were excellent."
And as Jack McCann, a longtime GU trustee who offered me the above characteristics of the team, said to me in a phone conversation before the final game, "nothing should diminish the joy of the journey that this season represented." He meant not just for Few and his team but also for the family of supporters, fans and boosters.
Indeed McCann, a GU trustee since 1997 and founder of the prominent South King County land-development firm, the Jack McCann Co, and other trustees and close supporters have proven themselves part of the GU family over the years.
That includes hosting the coaches and players at their vacation homes, including getaways to Cabo to McCann's beach home and the neighboring Cabo home of Mike Patterson, prominent Seattle attorney and also a trustee. But Few doesn't use Cabo trips as a recruiting tool!
And McCann was quick to sign off in the early 2000s on the idea the players should travel on charter rather than commercial flights before that idea was on the radar screen of most schools.
As John Stone, a successful Spokane developer who came up with the idea of offering his private plane and convinced two others to offer theirs on away-game trips, explained to me in our phone conversation "it became a way to make sure the players were back home in their beds that night and in their classrooms the next day. They are student athletes of course, not just athletes."
McCann was among the trustees and friends who over the years that followed that first private-plane travel year put up the $100,000 apiece to both pay for the flights and allow the supporters to travel on the plane with the team and have seats near the bench for those away games. By the mid-2000s, that was the routine for travel.
And it was Stone who pointed out the importance of the "family" role played by the Greater Spokane community in chipping in $6 million of the $26 million it took to build McCarthey Athletic Center, the 6,000-seat facility on the campus, competed in 2004, that opposing teams dread visiting.
The community involvement was in the form of a "seat license" plan where members of the Spokane community committed to $4,000 to $5,000 a year to license certain seats in "the kennel" where the seats come right down to the floor.
Few's Oregon upbringing in Creswell a stone's throw from Eugene and the fact he graduated from the University of Oregon created one of the untold human-interest stories that media usually thrive on but someone missed this time.
With Gonzaga and Oregon in the Final Four, I was surprised there wasn't a lot of focus, at least some focus, on the possibility that if the Bulldogs and Ducks each won the first game, Few would have been trying to beat his alma mater.
In fact, another story is the possibility that Few might have been coaching Oregon rather than Gonzaga in this Final Four, but that story is known only in a close circle.
The conversation in basketball circles, and among Gonzaga supporters, over the years of NCAA tournament appearances, has been when would Few be attracted to a bigger opportunity.
After all, having been at Gonzaga since joining the coaching staff as a graduate assistant in 1989, becoming full-time assistant a year later and becoming head coach after the school's Cinderella 1999 drive to the Elite Eight, Few's tenure has been an unprecedented loyalty to what has been viewed as a mid-level program.
The fact is that McCann, sharing the story with surprising candor, was personally aware of a full-court press Oregon's athletic director and famous alum Phil Knight put on Few several years ago to return to his alma mater. But the effort was unsuccessful in attracting him away from Gonzaga.
Supporters are aware the time may come when Few is attracted to a new challenge at another university, but everyone now knows it won't be the lure of a more respected basketball program.
Only nine schools have matched Gonzaga's 2017 record of 37 victories in a season. And Few is one of a handful of coaches to achieve 500 victories, all at the once lightly regarded Spokane school.
Few and his wife, Marcy, have three boys and a girl and in perhaps the most significant example of the importance of family to him is the story of when Few was once asked by a sports writer if the start and end of each basketball season represented the most exciting and most downer times each year.
He replied that the most exciting time each year was when his kids got out of school and he had a whole summer to spend with them and the most disappointing time was when they returned to school in the fall. So much for the appeal of fame and glory.
Gonzaga's desire for sports recognition actually dates back almost a century to 1920 when the Spokane school, with fewer than 200 students, embarked on a quixotic quest for football fame by hiring a big-time coach, Gus Dorais, who had teamed with Knute Rockne at Notre Dame to perfect the forward pass.
It was a quest, I once referred to it in a Harp some years ago, as an "Ozymandian delusion," that brought Gonzaga an improbable post-season appearance two years later against West Virginia in a 21-13 Christmas Day 1922 loss that earned Gonzaga top visibility in the next day's New York Times sports section.
That was the only moment of national football glory for Gonzaga, though the program continued until the outbreak of World War II in 1941 when it was discontinued and never brought back. During its 20-year run, Gonzaga football produced some players who became nationally prominent and one, Ray Flaherty, went on to become, for a time, the most successful coach in the National Football League in the late '30s with the Washington Redskins.
Gonzaga basketball, however, is secure now as a program nationally respected. And the "Nice Guy" and "family" characteristics engendered by Few, the school and the supporters may well become the most envied part of what Gonzaga has brought to college basketball.
McCann refers to it as "a magic carpet ride" for all the segments of the "family."
(The above column is a personal column since my wife and I are graduates of Gonzaga and some of those I quote, Stone and Patterson, are not only friends but attended the same high school, Gonzaga Prep, and same grade school, St. Aloysius, where Few's sister is law is now principal. It doesn't get any more incestuous than that!)
Unaccountability on the part of a public entity, no matter how well cloaked in good intentions or alleged importance of mission, inevitably leads to arrogance when there is no requirement to answer directly to anyone for decisions.
That, not surprisingly, leads to the kind of decisions that create a demand for accountability. Thus hangs the tale of Sound Transit, in the view a growing chorus of critics.
The sense is that the transportation agency officially known as the Central Puget Sound Regional Transit Authority may suddenly be caught with its arrogance on display and feeling the pushback from a public and from lawmakers who are coming to sense a possible need to recast the organization.
The goal of legislation that has now passed the Republican-controlled state Senate and is awaiting action in House would replace the 18 Sound Transit board members, now local elected officials from one of the three Sound Transit counties with 11 directors directly elected by voters in districts that would be created by the legislature.
The first broad perception of Sound Transit arrogance surfaced with the outcry from motor vehicle owners about the leap in the cost to renew their vehicle license after the excise tax this year had climbed dramatically, due in part to the vehicle valuation chart used by Sound Transit.
Geoff Patrick, who handles media relations and public information for Sound Transit, explained that part of the reason for the large jump in MVET fees was that, in approving ST-3, the $54 billion long-term transit package in November, voters said ok to a major increase in vehicle excise tax.
The outcry would suggest that many voters weren't really aware of that.
Patrick was quoted earlier, as the MVET flap emerged, to the extent that Sound Transit could have used a vehicle depreciation schedule that would have meant a less expensive renewal fee but chose not to "for simplicity sake," to bring transportation relief quicker.
Then came the visibility surrounding Sound Transit's legal battle with Mercer Island over its effort to end the ability of solo drivers from the island to access I-90 high-occupancy-vehicle lanes when the existing HOV lanes are closed this summer for construction of light rail. That solo-driver access was part of an arrangement that amounted to a pledge from state transportation officials to Mercer Island residents in exchange for letting the state cut the trench for I90 across the island.
And finally, and perhaps defining for any battle to avoid accountability, came the flap over a political fundraiser for King County Executive Dow Constantine at the home of Sound Transit CEO Peter Rogoff for his boss and benefactor. As the flap unfolded, it became known that the planned event hosted at Rogoff's home for his boss might breach two clauses in the transit agency's own code of ethics, though it wouldn't violate any state fundraising laws, so it was moved elsewhere. But Rogoff made it clear he would still be one of the sponsors.
It might seem strange to many political observers that Constantine, who holds the most powerful position on the Sound Transit board and is seeking reelection, would stand silently in the wings, awaiting the outcome of a key fundraiser flap rather then step forward and say, "This is an inappropriate issue. I am cancelling this fundraiser."
Attendees for the party at its new location, it turns out, had to first RSVP online to learn the address.
The disappointing thing about that is I was beginning to hope some newspaper photographer or television camera team would be on hand to document how many representatives of companies with multi-million-dollar contracts with Sound Transit would be on hand to pass some of the dollars back to the leader of the team.
A focus on those companies with multi-million contracts may soon provide more negative publicity for Sound Transit when all the details of documents detailing the breadth and depth of the value of contacts Sound Transit has signed with nearly 550 companies to provide a wide array of services begins getting close media scrutiny.
The documents were received by former King County Council member Maggie Fimia from Sound Transit in 2015 and detail all payments over $100,000 made to all entities, public and private, from 2007.
When I talked with Fimia to get copies of the array of contract documents and inquired of her thoughts upon digesting them, she said of the array of contracts: "The breadth of the take was unbelievable."
Touching on only one of the contract categories, Fimia offered "why do you need to spend $37 million on marketing and advertising if you have such a tremendous product?" And that didn't include any marketing costs for ST3.
Sound Transit's Patrick told me that a rigorous competitive-bidding process is in place for contracts with the agency, other than services like legal, accounting, marketing and others where expertise and reputation come into play, since you don't low-bid legal services, but may negotiate with the selected supplier for best price.
Fimia's 2001 defeat was allegedly aided by Sound Transit officials upset at her constant questioning of the agency's manner of operating and its dealing with the communities, questioning that clearly didn't end with her departure from the council.
Charles Collins, whose impeccable credentials as a critic of Sound Transit are even grudgingly acknowledged by the agency's board, told me Sound Transit went after Fimia because "she was a continuing thorn in their side."
"They are the 500-gorilla that no one wants to mess with and she kept messing with them, so they helped oust her," he said. She lost her reelection bid in 2001.
Collins has been a constant critic of Sound Transit's focus on high-cost rail service because all statistics, including the agency's own environmental impact statement, indicate trains won't come close to attracting enough riders to relieve congestion. More like attracting maybe 2 percent of riders.
Collins once told me that he and two former governors, Republican John Spellman and a Democrat, the late Booth Gardner, went to Sound Transit in the late '90s before the first vote embarking on rail as the key transportation underpinning with a novel new plan to provide a vehicles alternative that would carry far more passengers at far less cost.
"But they didn't even want to hear our idea because they were about building a train, not focusing on easing congestion," he said, except for Rob McKenna, then King County councilman and later the two-term Republican attorney general and unsuccessful gubernatorial candidate.
McKenna, incidentally, also lost his role on the Sound Transit board, bounced by then-King County Executive Ron Sims for his routine questioning of board decisions and priorities.
Collins, Fimia and McKenna are among those, a list which now obviously includes some legislators, who have urged that spending and policy decisions in the future should relate to relieving congestion rather than focusing only on building a rail network.
"Nothing has changed," said Collins, whose credentials include having been Spellman's Chief King County Adminstrator, Director of Metro Transit and chair of the Northwest Power Planning Council, the State Higher Education Coordinating Board and the State Commission on Student Learning.
Indeed while Sound Transit operates some of the nation's most successful express bus services in addition to rail and light rail service to the region, there has been little doubt in the community that members of the board view themselves as creators of the region's light rail system.
And the fact that the mode of transportation in the region's future has unfortunately become ideological, or maybe was from the start, is the reaction of a liberal commentator on Senate passage of SB5001 and that four Democrats joined the Republican majority in passing the measure to the House.
The columnist said the four Democrats" betrayed Sound Transit and the progressive movement," and urged that "every activist and every organization who was involved in helping to pass Sound Transit 3 last year needs to pitch in to ensure that this bill gets a burial in the House of Representatives."
Rogoff is an intriguing case, having been a strong supporter of bus rapid transit and critic of the "enormous expense to build and maintain rail" while head of the Federal Transit Administration. "Busways are cheap."
Almost amusingly, now that he heads an agency dedicated to rail, he said in a speech back in 2010 that riders often want rails, "but you can entice diehard rail riders onto a 'special' bus sometimes by just painting the bus a different color than the rest of the fleet."
He hasn't yet explained at what point between then and his joining Sound Transit that he changed his position of bus over rail, which he viewed as enormously expensive to build and maintain.
If the idea of an elected board to replace the current appointed board is approved by the legislature, a new board might find it could dramatically reduce current and future expenditures by focusing on bus rapid transit and a much more zealous process of contract oversight for other than actual infrastructure expenses.
Only contracts specifically relating to construction bond covenants have been held by the court as illegal to change. That doesn't likely apply to things like contracts with law and accounting firms and advertising and marketing agencies. or construction contracts that won't have been signed when an elected board might replace the current board.
Brian Baird spent half of his 12 years in Congress in a frustrated, and futile, effort to gather support for his legislation to make it illegal for lawmakers to engage in the kind of financial transactions that those in the real world know as Insider Trading and for which they can be sent to jail. He and one or two supporters offered it each session but couldn’t even get a committee hearing.
But Baird was able to look on with satisfaction when, a year after he decided to focus on family and not run for re-election, a late-2011 program on CBS' "60 Minutes" brought national attention to his idea and coined the phrase "Honest graft," meaning it was graft but it wasn't illegal. The program exposed how members of Congress and their staff traded stocks based on nonpublic information to which they had exclusive access.
Lawmakers by the dozens scurried like frightened rats to get aboard as supporters amid the public outcry the news program sparked and so in April of 2012, the measure titled the STOCK Act (Stop Trading on Congressional Knowledge) was passed to finally bar members of Congress from doing stock transactions in areas they regulate.
Now Baird is watching with some amusement because, since Republican congressional leaders went out of their way in 2012 to quickly pass legislation extending the law to the president and vice president and those who worked for them, President-elect Donald Trump would be covered by the law. So he and his minions are seeking to exempt him from the law.
Newt Gingrich, explaining why ethics laws shouldn’t apply to Trump, even offered the view: "We've never seen this kind of wealth in the White House, and so traditional rules don't work…We're going to have to think up a whole new approach." He suggested that Congress change ethics laws so Trump can avoid any conflicts of interest that his global business empire may pose.
And Trump himself has said he is not subject to laws relating to conflict of interest.
Maybe so. But maybe not, since the Republicans who now control both houses of Congress may not wish to take early action on something that would allow critics the opportunity to point to the GOP lawmakers as being the lap dogs of the President. In other words, if they rolled over on command on the issue of ethics, what commands could they object to?
And Walter Shaub, director of the federal Office of Government Ethics (OGE), has issued a memo providing official guidance to Congress on the issue. His letter explained: “The Stock Act bars the President, the Vice President, and all executive branch employees from: using nonpublic information for private profit; engaging in insider trading; or intentionally influencing an employment decision or practice of a private entity solely on the basis of partisan political affiliation.”
But the President names the OGE director so once Trump moves into the Oval Office, it might be a good bet that Shaub will be replaced and that his successor will offer a quite different view.
Baird served six terms from Washington’s Third Congressional District before deciding in 2010 that his young family (he and his wife, Rachel Nugent’s, twin boys were 4 years old at the time), was more important than his battles in Congress. There was talk of his being targeted by the GOP if he had sought re-election, even though in his last four re-elections, none of his opponents could muster even 40 percent of the vote.
He says that while his family was the key reason he decided not to run again in 2010, other reasons included frustration over “the growing extremism and intransigence of many in the Republican party” and the “Democratic leadership showing little if any understanding of the concerns for centrist members from swing districts.”
Baird, who gained a doctorate in clinical psychology at the University of Wyoming after graduating from the University of Utah, says of the emerging focus on the STOCK Act and its relevance to Trump: “I'm just glad people are standing up for the bill now and trying to make sure it has the desired impact.”
But he finds it humorous that the growing attention to the law has brought a number of representatives and Senators who are being quoted about the brewing controversy as Trump’s inauguration nears and describing themselves as author of the law.
“As they say, success has many parents, even if they were nowhere near the conception,” Baird mused in an email to me.
The interviews by CBS reporter Steve Croft with then-House Speaker John Boehner and former Speaker Nancy Pelosi, his unexpected questions making Boehner look like someone hiding from the truth and Pelosi like someone too incompetent to even come across as thinking, should be part of every high school government class. The topic of the lecture in which the You Tube interviews were featured could be titled: “Who elects these people?”
The interviews are now difficult to find on You Tube because you have to subscribe to “60 Minutes.” Too bad.
The controversy over the STOCK Act and the soon-to-be Trump Administration isn’t currently getting a major focus from the media.
But a budding controversy could become a political brouhaha once a new president takes an action that would be illegal under the act.
The might-have-been lament is being played again this year in the Puget Sound area, among other arguments put forth by proponents of $54 billion ST-3, a proposal that would provide a 25-year basically blank check to Sound Transit to create a system that will connect an array of communities across three counties.
As legislators and their paid consultants struggle with how to answer the State Supreme Court’s latest education-funding question about determining “competitive market rates” for educators, a couple of thoughts press themselves to the fore as the drama moves toward a final act.
First, there’s an unfortunate sense that, in the press by the justices to make it clear to legislators which branch of government is ultimately in charge, what’s emerged is an effort to ensure that financial support of educators becomes the answer to education quality woes. No consideration is given to support for education in a broader sense.
Second, the well-worn phrase “You can’t just throw money at a problem” is one that seems to have eluded the state high court in its on-going education-funding struggle with the legislature over how much is enough.
At issue is the court’s January 2012 ruling, in what is now known as the McCleary case, that the legislature violated the state constitution by failing to amply fund basic education. Since then the court has found the lawmakers in contempt for not providing sufficient funding and has even threatened to take over the budgeting process (presenting what would seem to an amazing cartoonists’ opportunity).
Now the court has told the lawmakers to determine “competitive market rates” in terms of teacher salaries across the state and a final report on that point is due from a legislative consultant in November.
After that, lawmakers will try to find common ground on the sum of money required for salaries and where it is going to come from. The Legislature is supposed to take votes in 2017, or in the view of lawmakers in 2018, to put those final pieces in place in what has come to be known as the McCleary case.
Comes now the observation of Donald Nielsen, whom I best describe as an education “change agent,” whose views are dramatically suspect and irritating to those who disagree with him because he has no hidden agenda. He’s merely a business executive who made his fortune and decided nearly a quarter century ago to spend his time and money in the next phase of life seeking to make basic education better.
Nielsen is not an educator. But he is someone who is passionate about public education and has focused much of his attention on it since the early ‘90s, first traveling the country in search of education ideas that are working, then serving eight years on the Seattle School Board and a final year as president. His book, “Every School,” has brought his thoughts on education reform to the fore over the past couple of years in radio talk shows and newspaper interviews around the country.
“Schools do not have a funding problem, they have a regulatory problem,” Nielsen suggests. “If school administrators could spend their existing money as they believe is needed, they would spend it quite differently, and we would get better results.”
His most in-your-face message is that “teachers are not underpaid, they are underemployed. This is not a compensation issue, it’s an employment issues.”
“The average teacher in Seattle, in 2013, was making $70,000 a year, employed for 1320 hours,” he said. “All normal jobs employ people for 2080 hours a year so If that same teacher were employed for a normal year, his or her compensation would $110,300 a year on that 2080 basis.”
“Even beginning teachers who start at $40,000 a year are being paid the equivalent of $63,000 year,” he added. “In both cases, the teacher gets a benefit package that no private employer could afford to replicate.”
Neither of these compensations is low,” Nielsen added. “They are very competitive, and in rural areas, teachers are already among the best paid people in the community.”
Discussion by the justices has never touched on suggesting the lawmakers focus on how the money is being spent, only how much is being spent, which makes another suggestion from Nielsen the kind of thing that at least might be in the discussion hopper.
“We need are variable contracts for teachers: A nine month contract, a ten month contract and an eleven month contract, meaning the latter would make the $110,000 and the former would make the $70,000,” he said. “Let the teachers decide what contract they want and let the district decide who gets each type of contract,” suggesting that approach could allow for some education options for different students.
Unfortunately, it’s still uncertain whether the final act in this drama will be played out on the judicial or legislative stages since the nine justices of the state’s highest court have pressed the lawmakers, including with a contempt funding, to spend more dollars on education. At issue is the state’s constitutional mandate for adequate funding of basic education.
The justices, as far as I can tell, have never mentioned that lawmakers should also consider how the education dollars are being spent and could better education result from more insightful use of the dollars the lawmakers appropriate.
Maybe there’s still time, as the lines for the final act are just now being written in Olympia, for the idea of quality of expenditure rather than just quantity of expenditure to be raised.
In a case replete with issues relating to powerful education forces focused only on dollars, it might be worth combatants who finally seem hopeful of averting a real constitutional crisis to be aware of an unsettling statistic that Nielsen has included in his book.
In summing up the details of the chart in his book, Nielsen notes: “We now spend three times as much per child in inflation-adjusted dollars as we did in 1970 and we also have four times as many adults in our schools with only eight percent more children. And we’ve had no measurable improvement in academic achievement.”
It was well over a year ago that my brother, a retired Spokane small-business owner, began telling me, in support of the Donald Trump phenomenon, “Mike, you don’t understand, the silent majority is roaring.” My response was always, “I hear the roar, but it’s a minority made up of those unsettled by the murky mix of terrorism and immigration policies and angered by their lack of influence, or even contact, with the establishment.”
Then came last week’s Brexit vote, where the English version of folks I described turned out to be the majority, leaving establishment leaders of both major parties in this country to ponder whether what’s at stake is a desire to throw out the system rather than merely overturn particular politicians or policies. And what that means come November.
Or for the future. Thus perhaps an appropriate time to ponder questions as Independence Day approaches
Now a week following the blow to the U.K. comes a decision by the U.S. Supreme Court almost certain to fuel anger at the established order, the court making it harder to prosecute public officials for corruption by basically saying it’s ok for “the system” to include paying elected officials to influence their decisions.
At issue was the case of former Virginia governor Bob McDonnell, who was convicted by a lower court of using his office to help a businessman who had provided McDonnell and his wife with luxury products, loans and vacations worth more than $175,000 when Mr. McDonnell was governor.
Chief Justice John G. Roberts Jr., writing for the court, narrowed the definition of what sort of conduct can serve as the basis of a corruption prosecution. He wrote that “routine political courtesies like arranging meetings or urging underlings to consider a matter generally, even when the people seeking those favors give the public officials gifts or money,” do not represent corruption.
The alternative to the new limits, Roberts wrote, would be to criminalize routine political behavior. “Conscientious public officials arrange meetings for constituents, contact other officials on their behalf and include them in events all the time,” he wrote. All the time! Isn’t that the problem?
By now readers of this column have likely concluded that the usual focus on people, companies and issues that relate the Northwest is being upstaged to Harp about some personal thoughts on an issue that impacts us in this region, but that transcends us.
Fodder for thought following Brexit, for those who care to think, is offered by The Los Angeles Times‘ Vincent Bevins: “Since the 1980s the elites in rich countries have overplayed their hand, taking all the gains for themselves and just covering their ears when anyone else talks, and now they are watching in horror as voters revolt.”
It has to be hoped that the revolt is aimed at reconstructing rather than destructing the Democratic process. But that may not be certain.
A quote from author and MSNBC commentator Chris Hayes is getting attention on social media in the wake of the Brexit vote.
“The mechanism that western citizens are expected to use to express and rectify dissatisfaction – elections – has largely ceased to serve any correction function. When Democracy is preserved only in form, structured to change little to nothing about power distribution, people naturally seek alternatives for the redress of their grievances, particularly when they suffer.”
Coincident with the post-Brexit analysis have come a couple of group emails in which I was included, both suggesting that the idea of change by the ballot isn’t being totally abandoned. Both related to a focus on the 28th amendment to the U.S. constitution and both widely popular but not yet widely promoted.
The first relates to ongoing discussion about an amendment to overturn Citizens United, the U.S. Supreme Court decision that held political expenditures by corporations could not be limited.
Polls show the efforts for a 28th Amendment to overturn Citizens United is supported by more than 75 percent of Republicans, Democrats, and Independents and sixteen states have enacted 28th Amendment resolutions.
The other idea gathering support as a proposed 28th amendment: "Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and/or Representatives; and, Congress shall make no law that applies to the Senators and/or Representatives that does not apply equally to the citizens of the United States."
It strikes me that this idea could generate some positive action from voters by, between now and the November General Election, insisting every member of Congress on the ballot, as well as every state legislator, commit to voting in favor of the constitutional change next year. Or bite the bullet as voters and vote for the opponent, regardless of ideological compatability.
There are examples of the manner in which a fed-up public can bring a positive focus to their anger and bring about beneficial change within the system.
One such example was actually the result of an idea of someone from inside “the system,” then-Washington congressman Brian Baird, who during the last three of his six terms as the representative from the state’s third district sought to gather support in Congress for what he called the “Stock Act.”
Baird sought to prevent members of Congress from doing stock transactions in areas they regulate, in essence, prohibiting their investing in a manner that those in the real world call Insider Trading.
I wrote about it in a November, 2011, column after a program on CBS’ “60 Minutes” brought national attention to Baird’s idea with a program titled “Honest graft.”
For ordinary citizens, reaction to Baird's proposal would be a laughable "well, of course." But in a place whose mantra is "the rules we make for you don't apply to us," seeking to force action by the lawmakers on one small, self-imposed ethical constraint could become a rallying point for a fed-up public.
The thrust of the CBS segment was that lawmakers often made stock purchases and trades in the very fields they regulate. While ordinary citizens could be jailed for engaging in the kind of investment shenanigans that those in Congress involve themselves in, there's wasn’t even an ethical concern among lawmakers.
Reporter Steve Croft questioned then-House Speaker John Boehner and former Speaker Nancy Pelosi at their respective news conferences. And the ineptitude with which both Boehner and Pelosi tried to answer Croft's questions about whether their investment practices were at least conflicts of interest, the thought that had to occur was "Who elects these people?" The answer, unfortunately, is people like us elect them. And both have continued to be elected. Shame on us. And so maybe a revolt wouldn’t be that bad.
As a result of the outcry following the program and You Tube pieces on the congressional leaders’ confused responses, the Stock Act was passed overwhelmingly in the spring of 2012 with what observers described as “vulnerable congressmen” at the forefront of supporters. So now Members of Congress and employees of Congress are prohibited from using private information derived from their official positions for personal benefit, and for other purposes.
Baird had already retired by then, having decided not to seek a seventh term, thus exemplifying one of the concerns about the future of the Democracy as currently operating: The Nancy Pelosis remain in office and the Brian Bairds decide to leave.
Just as the races for state and national offices in the November General Election may demonstrate that anger can trump reason, voters in Oregon will be faced with deciding a ballot measure that will test whether anger at big business over things like soaring executive compensation exceeds logic.
At issue is IP28 (Initiative Petition), which targets Oregon's biggest corporations — roughly 1,000 by the state's estimates, or about 4 percent of businesses. Those with $25 million in Oregon sales would pay a minimum $30,000 tax, plus 2.5 percent on anything above that threshold.
In essence, it would be a tax on gross receipts, like Washington’s business & occupation tax, generating an estimated $6 billion in new revenue. Except in Oregon it would be in addition to the tax on personal and corporate income and would boost corporate tax collections more than five-fold.
As my friend Don Brunell put it in his latest column, which alerted me to the fact the measure had been cleared for the November ballot by collecting the required 130,000 signatures, “Washington’s next economic development plan may be written by Oregon voters next November.”
His point was that “Oregon voters need to remember that Washington and California have heavy concentrations of large businesses and stand to benefit from passage of IP28 and that while all parts of Washington would gain, the corridor between Vancouver and Longview could be the biggest winner.”
Brunell, retired president of Association of Washington Business, in his more than a quarter century at the helm of the state’s largest business association saw all the off-the-wall ideas for taxing business. But it’s as a longtime observer that he shakes his head at this proposal, noting the tax scheme “would transform Oregon from one of the nation’s lowest business-tax-burden states to one of the nation’s highest.”
Organizations that purchase products and services from those major businesses would undoubtedly see their costs increase and thus would need to increase their price for items resold to Oregon consumers. In response to this, businesses purchasing goods in Oregon may opt to leave the state or relocate some or all of their facilities to avoid the increased cost of doing business in that state.
IP28 is sponsored by Better Oregon, a labor union coalition led by the Oregon Education Association, and targets “big business”. Proponents claim it would tap a tiny portion of Oregon businesses while bringing a huge revenue boost to cash-strapped public education, health care and senior services.
The non-partisan Legislative Revenue Office, in evaluating similar proposals to IP28, has forecast job losses should a gross receipt tax pass.
Former Washington Gov. Mike Lowry, who despite being perhaps Washington’s most liberal governor carried an understanding of the importance of nurturing big businesses as the creators of better-paying jobs, offered his classic belly laugh when I called him for his thoughts on the initiative.
“We always looked to Oregon for progressive ideas but this would represent the total opposite,” Lowry said. “The gross-receipts tax is about the worst tax there is.”
Amusingly, Lowry understood how to use the tax as a whip. In his first year in office he sought to have the Democrat-controlled legislature extend Washington’s sales tax to service businesses like law and accounting firms, which used their lobbying clout to beat back the effort.
But they paid a price by having the lawmakers impose the highest b&o tax rate on services, a payback in the form of a 2.5 percent rate, which though now reduced to 1.5 percent remains the state’s highest rate, reserved for service businesses and professional gambling.
Most gross receipts tax rates around the country are relatively low when compared with the Oregon proposal’s 2.5 percent rate. In Washington, it ranges from 0.138 percent to the aforementioned 1.5 percent. Thus if the measure were to pass, the tax burden of operating in Oregon would increase dramatically when compared with other states.
Proponents argue that “IP28 would modestly raise the effective tax rate of large corporations and use the added revenue to fund Oregon's crippled public school system, provide services to seniors, and extend health care coverage to 18,000-plus children.”
Problem is if it comes to be marketed to voters as “the big-business tax,” the result could be that anger overrides common sense for voters, among whom would be many that would face loss of their jobs if the analysis of business reaction proves true.
The ballot proposal comes as raising taxes on wealthy individuals and large corporations is at the forefront of a national debate — especially among Democratic progressives, including much of Oregon's electorate— about how to close the gap of economic disparities between rich and poor in the post-Great Recession era.
And if there is a doubt that anger at big business underlies the measure, and leaves concern about the logic voters will bring when they mark their ballots, supporters point to the current difference between growth in corporate profits vs. growth in family income in Oregon. They say it’s time big business takes on its fair share of the tax burden to help pay for education and social services.
Business people in Southwest Washington are not only looking to gain business if the measure is approved, they are having some amusement thinking about it.
When I talked with longtime Vancouver businessman Michael Worthy about it, he chuckled and offered that the two-state effort to agree on financing a new I-5 bridge across the Columbia could be solved by letting firms that would want to move operations out of Oregon might want to pay for improved transportation they’d need.
And when I asked Brunell why he thinks intelligent voters would go for a tax that would likely impact them, and perhaps their jobs, he replied: “I suspect, knowing Oregon a little better by living down here in Vancouver, there is a reason for the bumper sticker: ‘Keep Portland Weird.’”
Almost four years overdue, federal crowdfunding rules went into effect last week to fulfill a 2012 Congressional mandate to "democratize" the process by which entrepreneurs and small businesses can raise start-up capital from "the crowd" of investors of average means.
Some cynics might view as "Democracy in action" the fact that it took almost four years for the Securities and Exchange Commission to come up with the rules that Congress originally gave it 180 days to enact so the legislation known as the Jumpstarts Our Business Startups (JOBS) Act could go into effect.
But the upside of the years of delay was that almost half of the states, including Washington, were spurred to seize the opportunity to come up with intrastate versions of the crowdfunding concept. As a result entrepreneurs in most states have the choice of federal or state regulations to use in seeking start-up capital from average investors, a choice that would likely not have come to pass without the SEC's foot dragging.
And in fact, the act's regulatory debut of 17 federal filings the first day was characterized as "pretty impressive" by Faith Anderson, the respected Registration and General Counsel Program Manager in the Securities Division of the state Department of Financial Institutions (DFI).
How the individual states have fared in the responses to their crowdfunding legislation has depended on a number of factors. Oregon, for example, because it has a non-profit dedicated to helping entrepreneurs through the process, has had good reviews.
Montana, on the other hand, has an unusual constraint that requires that half of a startups' business must be done in Montana.
"Makes it a pretty small prospective market," quipped Liz Marchi, the Kalispell-based leader of three Montana angel funds.
Before its crowdfunding legislation was approved last year, Montana was already rated the top state in the nation for start-up businesses on the Kauffman Index, the annual state ranking of startups by the Kauffman Foundation, largest entrepreneurship-focused non-profit in the country.
Marchi, who is finding enough entrepreneurs already emerging in the Big Sky Country, is not a big fan of crowdfunding for entrepreneurs, saying "I plan to stay away until all the unintended consequences have been worked out."
Meanwhile, Oregon's non-profit called Hatch Oregon, which travels around the state vetting startups it works with, is getting positive attention from startups there for what amounts to an incubator that seeks to guide entrepreneurs past the financial rocks and shoals of the crowdfunding game.
Hatch, whose platform hosts 10 of the 11 offerings filed in Oregon so far, offers no guarantee to the companies it works with. The incubator also produced a video called "Let's Be Frank" that tries to outline the risks in plain language.
Washington has no such entity to inexpensively help entrepreneurs along the road toward fundraising. But regulators have sought to put in place a program that helps guide startups to produce a document that ensures they are in compliance with securities laws, that investors are protected and entrepreneurs themselves are steered away from possible future liabilities.
The intent is an entrepreneur could be helped through the process without having to necessarily incur the expense of an attorney.
But the fact not all startups want to be so carefully guided is evident by the fact that one of two companies filing under the crowdfunding law got considerable media attention by lamenting that its efforts to get the paperwork done and get to fundraising was being hung up in red tape.
The sense is that what the filing firm viewed as "red tape" was insistence by state regulators that all the requirements be met, and one of the challenges for startup hopefuls is that not all attorneys understand the law and its regulatory requirements at this point.
One nagging aspect of the SEC rules in place that govern the crowdfunding laws of all the states is something known as Rule 147, referred to as the "intrastate offering" exemption, which has strict requirements that intrastate offerings be contained within the boundaries of a single state. In other words, an entrepreneur filing under the Washington State law not only can't take money from the resident of another state, but the resident of another state isn't even to see the offering.
So far, the SEC has been firm in the view that if someone in another state sees the information on the offering, it is no longer intrastate, which would basically nullify the fund-raising effort.
Anderson, chair of the Small Business/Limited Offerings Project Group of the National Securities Administrators Association, produced a report some months ago for the securities departments of all 50 states that was critical of Rule 147 and its impact on entrepreneurs.
The SEC has apparently gotten enough push back from the states on that constraint that, as Michelle Webster, financial legal examiner for DFI, explained, the SEC has several proposals, which are currently merely proposals it will consider that would amend the JOBS Act rules. One that would address that almost universal Rule 147 irritant would allow intrastate visibility for an offering as long as only residents of the filing company's state were permitted to invest.
But the fact is there is no timeline for the SEC to actually act on proposed amendments to rule 147. And some suggest the agency might never act since they do not have a Congressional push to do so.
Joe Wallin, a Seattle attorney with Carney Badley Spellman, who basically wrote the state legislation that created the crowdfunding law in this state, has been critical of the fact that those assisting entrepreneurs to raise funds cannot legally charge a fee representing a percentage of dollars raised unless licensed as a broker-dealer.
That's a federal restriction and Wallin is convinced an easing of that rule would find a lot of individuals and groups stepping forward to provide fee-based assistance based on a percentage of the dollars raised rather high hourly fees.
Washington' Securities Administrator, Bill Beatty, suggested that from now forward, with both federal and state options open to would-be crowdfunders, to be determined is: "will the federal model, which requires the use of licensed portals, or the typical state model, which allows issuers to conduct the offering, be more attractive?"
The sense has been that the cost of using a licensed portal could be a substantial slice of the $1 million that a crowdfunding startup would be permitted to raise the first year. But Beatty said he has gotten the sense of more reasonable pricing from some portal operators.
"If the costs prove to be reasonable, I think federal crowdfunding has a much better chance of gaining traction and being a useful tool for some small businesses," he said.
|Rep. Jeff Morris|
But despite that expectation, in the 15 months since DFI enacted the rules and the law went into effect, only two businesses have filed to raise money in this state via crowdfunding. In fact, according to DFI Director Scott Jarvis, only 100 companies around the country have used intrastate crowdfunding to raise capital.
Thus there seems to be optimism that what Congress launched with the right intent, but watched while the SEC dithered for almost four years, may still produce an opportunity for entrepreneurs to create jobs rather than being jobbed by thoughtless regulations.
The Seattle banker who became one of the world's most influential women in banking, the man who set Alaska Airlines on the road to national leadership in its industry and Seattle's clown king of fish and chips have been selected as 2016 laureates of the Puget Sound Business Hall of Fame.