Sorry, this is work-related, but we are considering bidding on the management of campgrounds on Lake Merwin, Yale Lake, and Swift Reservoir near Mt. St. Helens in WA. Since these facilities are under a lot of snow, I won't be able to get a good feel for them. Anyone out there familiar with these facilities? If so, I would love an email or comment post about them, good or bad.
Posts tagged ‘WA’
Unemployment insurance is a disaster for a seasonal business like mine. As background, most of my employees are retired, and don't really need to work. They work for me in the summer, and then frequently take the winter off. Unfortunately, some of the more unscrupulous ones will file for unemployment over the winter, telling the state office they are looking for work (usually a requirement) when in fact they have no intention of working. I had two employees last year for whom I received a notice of their unemployment filing the very same day they called me to tell me what a great time they are having over the winter fishing in Mexico.
For those who don't know how it works, if I get a lot of unemployment claims I am punished with a higher rate the next year, despite the fact that by the nature of the business I have absolutely no work I can offer people in the winter. Not surprisingly, I guess, my worst problems with such behavior are in the three Pacific coast states (CA, OR, WA) where the prevalent culture of big government benefits and limited individual responsibility combine to make people feel totally OK about such malfeasance (this behavior is 20 times more prevalent for me in these three states vs. the other ten we operate in). In fact, I have challenged several people who I knew were not looking for work and cheating me and the unemployment system and, rather than deny the charges, they threatened me with a lawsuit if I either reported them to the state or disciplined them in any way.
I'm not really going anywhere with this -- this is just my annual rant I post every year when I get my unemployment insurance rates for CA and OR. I pay over 6% of wages as premiums in CA, and there is not a thing I can do about the fact that all the facilities we run are under 10-20 feet of snow in the winter and don't need employees.
Arizona has a ballot initiative here in November to raise the minimum wage to $6.75. Perhaps more worrisome, the law has been structured to raise the rate every year based on some cost of living increase. (As an aside - these cost of living escalators in government-mandated wage rates are insanely recursive. The government raises wages, which increases prices, which leads to a further increase of the statutory rate). An Arizona group opposed to the initiative has put out a nice Word document with the proposed laws language annotated with facts and refutations.
I will not be coy and pretend that I don't have an interest in this question. The campgrounds we operate on public lands were run by volunteers in the past, until the courts decided that private companies were not legally allowed to use volunteers. Most of our camp hosts, who tend to be in their 70's or older (we have many employees in their eighties and a few in their nineties!) get paid minimum wage plus a camp site in a nice park for the summer (the latter is what they really want). Unlike private campgrounds that are built to be efficient to operate, the public campgrounds we operate tend to be small and labor-intensive.
We make about a 5% profit on sales in the camping business (yes, I know that is pathetically low). Labor is 60-70% of our costs, if you include costs that are directly tied to wages like payroll taxes and workers comp. premiums. This law would raise the minimum wage by 31%. You do the math. In a stroke, this ballot initiative would raise our costs by 20% (.31 x .65) in a business where costs are 95% of revenues. Something has to give. I am not going to work the hours I work and run the business for charity. A 5% margin is almost there already. We are therefore planning for two different contingencies.
- Camping fees will have to rise by approximately 20%. This means that a camping fee of $16 will go up by $3. I will not make any more money, this will all be a pass-through to my employees, most of whom really wanted to volunteer in the first place. One could rename this ballot initiative the "vote yourself a camping fee increase" initiative. A few years ago, an attempt to raise lodging taxes on camping by a few percent met with howls of opposition. But in effect this is ballot initiative in in effect adding a 20% tax to camping fees.
- My labor model of hiring retired people may well have to change. There is a real trade-off in hiring retired folks to maintain campgrounds. On the plus side, we get a lot of honest and responsible people who have the time and the flexibility in their life to pick up stakes and go live in a campground all summer. The down side, of course, someone who is 75, or 85, is not going to work as fast or as productively as younger folks. My workers also tend to get injured more easily (my insurance company freaks every time it sees my employee list with dates of birth) which costs a lot in workes comp. premiums.
When presented with the choice in the current market of hiring a retired person at $5.15 an hour or a younger, faster worker at $7.50 an hour, I have been happy to hire retired people. This model has worked great for us. Unfortunately, I must revisit this business model when my choice is between hiring a faster worker at $7.50 and a slower worker at $6.75 (and rising). Already in high minimum wage states like CA, OR, and WA we have begun shifting away from hiring as many retired people. I also hire a lot fewer people, having invested in automated fee collection in high labor cost areas. (Think about this, at least for a few seconds, before all of you start sending me the inevitable emails I get for being a heartless brute for paying anyone minimum wage).
By the way, the federal government gets around this problem for the campgrounds it operates itself. How? Why, it exempts itself from these laws. Most federal campgrounds employ retired persons as volunteers. They don't pay campground workers minimum wage, they pay them ZERO.
Update: I actually underestimated the amount of my costs directly tied to wages, and so I have updated some of the numbers to be more realistic.
The original purpose of this blog was to pass on my experiences and lessons-learned running a small business. Over time, though, since I have the attention span of an 8-year-old boy mainlining Hershey bars, I have gone many different places with this blog, well beyond day-to-day experience of a small business.
However, today I will return to this original goal, at least for one post, by asking the question "what's on my desk this morning?" I tackle this question for two reasons. First, it is interesting to compare how different the issues I struggle with day-to-day are as compared to my previous life as an executive at several Fortune 50 companies. I am sure I did more, but all I can remember from my daily activities at large companies seems to involve either working on PowerPoint presentations or traveling to give them to somebody. The second reason for visiting the contents of my desk is to reinforce my usual libertarian political points, which I think will be made sufficiently obvious just in the description of my to-do list that I won't need to editorialize further.
So here is what's got to get done today [ed note -- while published on Sunday, this is based on my worklist on Friday morning, May 13.]
- Sales tax returns have to be completed, which I usually do myself. We file monthly returns in six states, but one of those is Florida, where we have to file multiple returns county by county. This month I also must complete a lodging tax return for two counties. If it was the end of the quarter, an additional three state returns and two county returns would be due.
- We are nearly completed with a sales tax audit from Washington state. I have written before how complicated the WA sales tax return is, but the funny part was seeing a trained tax accountant from the state of Washington sit in my office for nearly 6 hours and still not be able to figure out how much tax I owed. She kept encountering crazy exceptions like "such-and-such county requires 2% lodging tax unless the facility has more than 63 rooms or campsites and then it owes 50 cents per room-night except if it is in the Seattle convention district where it owes an additional .25% or if it is on a metro bus line where ... etc." When tax law is too complicated for the paid employees of the tax department to figure out, it is too complicated. Wonder of wonders, though, we may get a refund!
- Also sitting on my desk from Washington is a notice that I did not pay my leasehold excise tax last year. For those who don't know what that is, it is a way that states like WA and CA effectively charge property tax on the US government, evading the federal rules against such (basically, I have to pay the tax for the Feds, and then I take it out of the rent I bid to the Feds). Actually, though, I did pay it. Well in advance of the due date. The state has spent the last 2 weeks trying to decipher their own records, and so I need to call them back today to see if they have figured everything out yet.
- The department of Health in one California county is holding up my building approval because the condensate line from a refrigerator condenser coil runs out and drips fresh water on the ground (about a gallon a day). If you have an air-conditioning system at your home, it is very very likely your air conditioning condenser does the same thing. Unfortunately, the county wants this to run into the sewage system. Why the county wants extra load on the sewer system, I don't know, but fortunately my builder caught this early so the change won't cost us much money.
- Speaking of inspections, the ADA inspector at another California facility ruled yesterday that our sales counter was an inch too high and our ramp a half-degree too steep to the front door, so I spent part of this morning already getting the original contractor out there to tear these improvements out and redo them. Interestingly, we previously had the bathroom that was originally in this modular building ripped out, because it could not be made ADA compliant. This was not a big headache for our employees, because there is a public bathroom building next door. However, the local health inspector is now reluctant to approve the building because... it has no bathroom and hand-wash sink. The only food we sell is packaged (think Twinkies) but some health inspectors still want you to follow the same requirements as if you were a restaurant. I am not sure how we are going to resolve this.
- I just got a call from a customer who was mad that the county Sheriff would not respond to several complaints about drunk and disorderly conduct in the early morning hours at one of our campgrounds. A few of our campgrounds, like this one, are too small to justify a live-on-site staff, and the rowdies seem to get the word out which campgrounds do not have on-site security. I promised the customer a refund, and made a note to myself to talk to our manager about having one of our employees come by a few times in the night on a security sweep.
- I have a meeting at 3:00 to meet with my accountant to finish up our income taxes. Since we have to file a federal, 9 state, and a number of county tax returns, our total company return fills two 3-inch binders. Today we are trying to sort out the depreciation schedule, which in and of itself is hundreds of pages long given that we have so many small assets.
- We are still trying to get a liquor license approved for our store on Lake Havasu. The whole liquor license process is one of those funny holdovers. Coming out of prohibition, most states wrote tough procedures to make sure that the organized crime figures who control liquor during prohibition did not receive licenses. As a result, to get a license, my wife and I and my managers have to be finger-printed and have FBI background checks. The applications tend to be long and tedious and small errors cause the application to be returned for corrections. Worse, though, I have found that many towns use the licensing process as an anti-competitive protection for incumbents. In California, if a County is "over its limit" (set fairly arbitrarily) in terms of licenses, it requires the county board of supervisors to meet and approve the new license. In one California county I was told that this was really for my protection - they are protecting me from getting my business in a situation where I might fail due to too much competition. Anyway, I suspect that the strong powers-that-be in Lake Havasu City may be holding up our license, and I need to try to figure out what is going on,though I am not sure how to go about it.
- While I have been writing this, I got a call from a county DA in Arizona. Most states have bad check programs where, if you have a bounced check and can't collect, you turn it over to the courts and they seek collection. In extreme cases, they will arrest and try the offender. I have never been entirely comfortable with this situation. Sure, bounced checks irritate the heck out of me, but arresting people for a $20 bounced check feels like sending someone to a Victorian debtors prison. This morning, I spent about 30 minutes trying to talk the DA out of prosecuting the heck out of some guy who claims that he paid us and we lost his check. I give his story about a 30% possibility, but whatever is the case I have no desire to prosecute the guy. The DA's blood is up, so it takes me a while to talk him out of it. I am adding to my worklist something I have put off for a while, which is to investigate 3rd party NSF check collection.
- My bank just called and still needs yet more paperwork before they can complete an equipment financial loan. AAARRRRGGGG.
- I just finished my annual rant with Arizona Game and Fish about fishing licenses. We sell fishing licenses at a number of locations. We only sell fishing licenses, we don't sell hunting licenses or duck stamps or all kinds of other special licenses that the state seems to sell. Unfortunately, if you are a Game and Fish registered license seller, you can't get just fishing license inventory from them. You have to take their full range of licenses, which they send you piles of in January. We take all this stuff we don't want to sell and put it in the safe, and hope that we can keep track of it for the next 12 months. If we somehow misplace anything and don't return it the following year, we pay for it (and some of those stamps and licenses cost hundreds of dollars). Many of you will recognize that this practice of the state government would in many situations be illegal for a private company. There are many laws out there that limit a manufacturers ability to force a retailer to carry their full line of inventory, or worse, their ability to send the stores a bunch of inventory they did not order.
- I have been putting off registering our 15+ trucks in Washington, but I am going to have to get to it today or this weekend. Last year Washington passed a law that vehicles had to be registered with an in-state physical address (no PO Box). I am not sure if this is a tax or terrorism thing, but it is obviously awkward for an out of state corporation, so they have finally relented a bit and said that you can still have to have an in-state physical address but they will mail paperwork to an out of state address. I or my assistant will need to spend a couple of hours soon typing in two addresses each on all these vehicles before we can register them.
There are a million other things going on, but that is what is burning me up today. In fact, since I have been spending the last hour writing this post, these tasks will probably also be occupying me this weekend. An alien from another planet in reading this post might question whether I am really working for myself or this "government" entity.
Hey, this may be a first -- audit blogging. I have an auditor from the Washington Department of Revenue in my office right now auditing my last two years sales tax returns. She's a nice lady and so far the interaction has been pleasant.
Here is the funny thing - she has spent about 3 hours now trying to figure out what tax rates should apply at my various locations, and she is still at it. I have written several times about the complexity of WA state sales tax variations for lodging, and how they vary by geography (here and here). OK, if your experienced auditor has to spend hours in frustration trying to figure out what tax applies, the system is too complicated.
Update: At halftime I am ahead, with WA owing me $800. Stay tuned.
UPDATE #2: Small potential setback in the 3rd quarter. Several years ago I shifted assets (vehicles) I had bought in Arizona and used for years in Arizona to Washington for operations there. The auditor suggested I may owe use tax on the vehicles in WA. Huh? Use tax drives me up a tree in general, but this seems really crazy. WA is hyper sensitive to this issue because they have high sales taxes and very high vehicle registration fees and neighboring Oregon has not sales tax and lower registration fees.