Legislative Newsletter – October 2015 Issue
October 2015
Drought: Dry Times in the Golden State
Clearly, water is the lifeblood of any laundromat operation. And that’s why laundry owners in California are getting nervous.
The state is experiencing its fourth consecutive year of drought conditions – with last year’s rainfall totaling just nine inches, which is the third worst on record. In fact, the average rainfall for the state is 23 inches.
The 2015 “water year” – which ran from October 2014 to September 2015 – also saw the highest average temperature in 120 years of record-keeping. According to the California Climate Tracker, the state’s average temperature was 58.4 degrees – more than three degrees warmer than average and almost a full degree warmer than the previous high in 1995-96.
The biggest impact of warmer temperatures has been that they intensify the effects of drought, increasing evaporation and drying out the soil.
Meanwhile, new reports have shown that many of the state’s groundwater basins are critically depleted and some farmland in the San Joaquin Valley is sinking at an accelerated pace. As the water year ended, reservoirs across the state were holding only about 54 percent of their historical average.
Officials said in May that about 1,900 wells had gone dry, leaving people in some of California’s most disadvantaged communities without water.
Public polling has shown that the drought has become a top concern for Californians, and a majority would be willing to pay for water infrastructure or other drought fixes.
In fact, Californians surpassed Gov. Brown’s current 25 percent emergency water reduction mandate in June and July for a cumulative statewide savings of 29.5 percent.
“Californians’ response to the severity of the drought this summer shows that they get that we are in the drought of our lives,” said Felicia Marcus, chair of the State Water Resources Control Board. “This isn’t your mother’s drought or your grandmother’s drought – this is the drought of the century.”
“We’re getting to a point where this is not just about people turning off their sprinklers,” said water board staff scientist Max Gomberg, in a recent Los Angeles Times article. “This is really a major shift toward greater awareness about the value of water and what we all have to do when water is scarce.”
What can self-service laundry owners in California (and other drought-stricken portions of the U.S.) do?
At a recent Golden State Coin Laundry Association meeting, Brian Brunckhorst, president of the northern California CLA affiliate, outlined a number of measures to help operators cope with the dry times in their state. His suggestions for decreasing water usage included: (1) maintaining your current equipment, especially looking for any leaks in hose bibs, water lines and drain valves; (2) reducing the number of wash cycles by eliminating the prewash and/or one rinse cycle; (3) lowering water levels on your machines; and (4) replacing old equipment.
Of course, equipment replacement is a “win-win” in that today’s more efficient machines will not only have a direct positive impact on your monthly water bills, but also will command an increased vend price.
What’s more, it’s critical that laundry owners be proactive in promoting the fact that their businesses are indeed the best water-saving option during times of drought, due to the fact that:
• Home washing machines typically consume 30 to 40 gallons of water per wash load, or 2.5 to 3.0 gallons per pound of clothes laundered. High-efficiency, commercial clothes washers found in self-service laundries typically use as little as 0.5 to 1.5 gallons of water per pound of clothes laundered.
• Commercial clothes washers are designed by manufacturers to deliver superior washing results while consuming the absolute minimum volume of water.
• Utilities are the single greatest expense for the operation of self-service laundries. Laundry owners are driven by profitability to install the most efficient equipment possible for their customers.
• By washing clothes at the local laundromat, residents in drought-stricken areas will save at least half of the water they would typically use at home.
For more talking points as to the water conservation in self-service laundries, store operators can visit: coinlaundry.org/blogs/coin-laundry-association/2014/11/09/water-conservation-in-self-service-laundries. Creating a “Laundromats Save Water” fact sheet to be distributed among local lawmakers, utility companies, media outlets, environmental groups and other stakeholders is great step toward trumpeting the industry’s eco-friendly stance.
“This is a real sobering period we’ve gone through,” said California Department of Water Resources spokesperson Doug Carlson. “We hope that a year from now we’re looking back at water year 2016 with a great deal of satisfaction to see the drought come down to a halt or at least slowed down in its intensity.”
“Pray for rain,” he added.
Minimum Wage: Cities Increasingly Joining the Conversation
The minimum wage is getting maximum coverage these days.
On the presidential campaign trail, Vermont Sen. Bernie Sanders has pressed fellow Democrat Hillary Clinton to endorse the $15 minimum wage.
In New York, Gov. Andrew Cuomo created the Fast Food Wage Board this past spring after the state legislature failed to act on the wage increase – and, in July, the board recommended that the state’s minimum wage, which is currently $8.75 an hour, gradually rise to $15 over the next three years in New York City, and over the next six years across the rest of the state.
Meanwhile, social media has been ratcheting up the grassroots effort nationwide, with rallies that have sent “#Fightfor15” and “#15now” trending.
The federal minimum wage has been at $7.25 since 2009, when it was raised from $5.15. Since then, many states have taken the task of hiking minimum-wage requirements into their own hands. These wages can vary greatly from state to state – from $5.15 in Georgia and Wyoming, to $9.47 in Washington.
However, as the public debate over raising the minimum wage spreads throughout the U.S., cities such as Los Angeles, St. Louis and Birmingham, Ala., have gotten into the act recently by implementing their own citywide minimum wages, arguing that state and federal wages are too low for urban workers, due to the higher cost of living in metro areas.
Also, in Seattle, shortly after taking office, Mayor Edward Murray formed the Income Inequality Advisory Committee to address the issue of compensation for those who work within the city. The committee – comprised of labor, business and non-profits – agreed to raise the minimum wage to $15 per hour, to be phased in over several years.
For some states, a more locally based minimum wage might be an option for coping with the vast differences in purchasing power that can occur within a state, proponents argue. Cities such as SeaTac, Wash.; San Jose, Calif.; and Santa Fe, N.M. all have their own minimums. And, at the end of 2014, Chicago voted to implement its own minimum wage, which will rise to $13 by 2019 and be pegged to inflation thereafter. This made Chicago the largest city in the U.S. thus far to implement a separate minimum wage, and the 20th city overall to enact such a plan.
The idea of municipalities determining their own minimum wages isn’t new; Santa Fe and San Francisco enacted theirs in 2003. But the trend has certainly picked up steam, with five local minimum-wage ordinances passed in 2013, and that number more than doubling in 2014.
But some states are fighting back against local efforts to raise wages above the state level. In an overview of recent developments, the Wall Street Journal noted examples from Alabama, Missouri, Montana, Michigan and Rhode Island where state and local governments are clashing over wage hikes.
Alabama Rep. David Faulkner has introduced a measure in his state to bar cities from setting minimum ages.
“It’s not an ‘us-versus-them’ scenario,” Faulkner said. “It is a state issue. I don’t believe anyone anticipated cities would start introducing their own minimum wages.”
The Missouri cities of St. Louis and Kansas City both have recently passed local minimum wage measures – and a recent report commissioned by Gov. Jay Nixon on how to effectively “respond to the root causes of racial unrest in the St. Louis suburb of Ferguson” suggested a minimum wage increase.
However, state legislators recently implemented “legislation that prohibits St. Louis, Kansas City and other communities from setting minimum wages” after successfully overriding the governor’s veto.
A similar effort by Montana lawmakers was vetoed by Gov. Steve Bullock earlier this year.
It’s unclear whether or not Rep. Faulkner’s legislation will be successful in Alabama, or if a previously passed St. Louis minimum wage will be reversed pending a lawsuit by the business community. However, the Journal report noted that Kansas City’s minimum wage is likely “dead following the override by the legislature.”
With debate over minimum wages continuing, it’s likely that more state-versus-city battles will occur in the legislature and the courts.
“The big blue cities have been very aggressive in pushing the minimum wage,” noted Jack Mozloom, a spokesperson for the National Federation of Independent Business.
And, as large cities across the U.S. implement or consider $15 per hour minimum wages, business owners are sounding alarms about the consequences – from moving their operations to locations with lower wages to cutting jobs and/or worker hours.
Clearly, the strong push toward increased minimum wages – now at the city level as well – remains one of the leading issues facing many of today’s small-business operators.
Illinois Laundry Owners Gear Up for Sales Tax Battle
Due to the extremely poor financial condition of the state of Illinois, the state legislature is exploring various ways to increase revenues. And one of the ways that continually comes up in such conversations is the expansion of the sales tax to services, including self-service laundry.
In fact, Illinois Sen. Michael Noland has sponsored a bill (SB 1260), which specifically places a tax on laundry and drycleaning services. This bill has been co-signed by Illinois Senate President John Cullerton and Senate Majority Caucus Whip Mattie Hunter.
Such a tax would result in what is essentially a gross receipts tax that, depending on where a store is located, will represent from 6 percent to 10.25 percent of that business’ gross receipts.
“This means that, for example, a laundry owner in Chicago who grosses $4,000 a week will have to pay an annual tax of $21,320,” said Illinois Coin Laundry Association President Paul Hansen.
Five years ago, a similar bill came before the state legislature, and the Illinois CLA affiliate was able to mount an effective legislative education and lobbying campaign effort to defeat it. Of course, this victory came at a price, to which many laundry owners contributed.
This time, the ILCLA has hired the firm of Nicoly and Dart, LLC to lobby the state legislature on the industry’s behalf.
“At the present time, no legislation is moving through the legislature due to the budget impasse in Springfield,” Hansen explained. “Our lobbyists have met with all four legislative offices, as well as the governor’s staff, to present our concerns about including self-service laundry in any expansion of the sales tax. They are monitoring the situation and will let us know if SB 1260 or any other related legislation starts to move forward.”
Of course, such legislative battles are expensive, and funds are critical to finance this effort. To make a donation, call Paul Hansen at (773) 436-1994, or visit: coinlaundry.org/ilcla.
What’s more, the CLA is asking laundry owners to contact their local state senators and representatives to voice their concern over this topic, as well as to explain the devastating impact a sales tax would have on their small businesses and the communities they serve.
The CLA has developed a concise set of talking points to which laundry owners can refer during such discussions:coinlaundry.org/advocacy/stop-laundry-tax.
For more details about the tax threat in Illinois and how you can help, please visit: coinlaundry.org/ilcla/laundry-tax.
Pennsylvania Budget Fight Drags On
Nearing its fourth month, at press time, the state of Pennsylvania is still without a plan to pay for government operations, after Gov. Tom Wolf vetoed a Republican-crafted, short-term spending measure.
Wolf recently vetoed the two-bill package, saying it would sell out the people of Pennsylvania to oil and gas companies and special interests, increase the state government’s deficit, and harm its credit rating. In June, Wolf vetoed a $30.2 billion budget package passed by both chambers of the Republican-controlled legislature.
As of this writing, Wolf announced that he was putting together a new tax proposal in an effort to gain the support needed to break the state’s budget impasse. This plan likely will increase the personal income tax rate to 3.75 percent, impose a natural gas severance tax with an effective rate of 5 percent, and introduce some sort of property tax reduction, according to Ryan Maness, senior policy analyst and tax counsel to MultiState Associates, Inc.
Notably absent from this slate of policies are any changes to the state’s sales tax system. The governor had previously called for expanding the sales tax to include professional services – such as self-service laundry – and increasing the rate from 6.0 percent to 6.6 percent; however, those ideas are not expected to be included in the revised plan.
Thus far, the state’s Republican leaders haven’t agreed to any sort of tax increase and are pressing Wolf for larger concessions on an overhaul of public pension benefits
CLA Member Benefit-Legislative Monitoring Tool
The Coin Laundry Association has partnered with MultiState Associates, the nation’s leading government relations company, and monitors all 50 states’ legislatures and every piece of legislation affecting the laundry industry.
CLA members have access to the CLA Legislative Monitoring Tool – this tool allows users to search for bills by topics, local area and much more. The portal posts a new summary of any potential issues affecting the laundry industry each and every week, making it easy for members to stay informed.
Access Legislative Monitoring Tool