Chris Cargill: Poor state policies compound our problems

By Chris Cargill

In his first Inaugural Address, President Ronald Reagan famously said, “Government is not the solution to our problems, it is the problem.”

His insightful observation has stood the test of time. There seems to be no problem, no matter how personal, that government is not currently trying to solve – whether it be at the local, state or national level. And with government intervention comes a host of negative consequences.

The latest example is playing out here in Washington state. Starting Friday, thousands of people are expected to flood a government website to try and opt out of the state’s new, long-term care payroll tax, which kicks in this January.

This tax, approved by state lawmakers in recent legislative sessions, allows the state to grab money out of the paychecks of all working Washingtonians to fund a long-term care “benefit.” The lifetime benefit is minuscule – just $36,500 – no matter how long or how much you pay into the system. Every worker receives the same amount.

If you live in Idaho and work in Washington, you get nothing. If you pay into the system your entire life and move out of the state for retirement, you get nothing. If you’re near retirement, you’re unlikely to be able to vest in time.

The small benefit, high tax and lack of flexibility have forced thousands of Washingtonians to attempt to opt-out by buying private insurance they may not want or ever need. The demand has been so great, most private insurers have stopped issuing long-term care policies in our state.

State leaders say the program’s budget is already in trouble, even before the thousands of opt-outs. It is likely some legislators will try to hike the new payroll tax even more to make up for the program’s budget shortfall, further hurting workers.

On another front, you may notice a hike in your home or vehicle insurance premiums. Why is this happening?

The state insurance commissioner decided to ban insurance companies from looking at your credit worthiness when issuing a policy.

Typically, a good credit score means a careful homeowner or a good driver. But because insurers are banned from assessing that risk, rates are rising for many Washingtonians.

During a recent hearing in Olympia, state bureaucrats admitted the new rule disrupted the insurance market. A national actuary expert said it would significantly increase costs, especially for seniors. The insurance commissioner did it anyway, using an emergency order and bypassing the Legislature.

Need another example? Consider the push for rent controls and moratorium evictions.

Cory Brewer, the vice president of residential operations at Windermere Real Estate, recently noted in the Seattle Times that, “state and local lawmakers are creating a problem they do not – or refuse to – understand.”

Windermere says it saw a 48% increase in the number of clients selling off their Seattle rental homes in 2020 as compared with 2019.

“With every extension of the statewide eviction moratorium came a new wave of calls from clients to inform us that they would be selling,” Brewer said, a trend that cuts the number of options for renters.

Still more problems are being created by recent state legislation requiring communities to follow Seattle and reset development codes in favor of additional emergency shelters and transitional public housing in nearly any neighborhood.

Some communities have resisted such action, pointing to the lack of need and the negative impact it could have in family residential areas.

The land of unintended consequences is littered with hundreds of laws and new government programs that were supposed to fix problems. Often, they make things worse, and working families, seniors and the most vulnerable pay the price.

Chris Cargill is the Eastern Washington director for Washington Policy Center, an independent research organization with offices in Spokane, Tri-Cities, Seattle and Olympia. Online at washingtonpolicy.org. Members of the Cowles family, owners of The Spokesman-Review, have previously hosted fundraisers for the Washington Policy Center, and sit on the organization’s board.