FINAL BILL REPORT

HB 1836

                                  C 170 L 88

BYRepresentatives Hargrove, Wineberry, Schoon, Vekich, Braddock, Brekke, Sanders, Winsley, Lewis and Todd

Encouraging economic self-sufficiency through self-employment of families receiving aid to families with dependent children.

House Committe on Trade & Economic Development

Senate Committee on Economic Development & Labor

SYNOPSIS AS ENACTED

BACKGROUND:

The success of European programs established in the 1980's, such as the Enterprise Allowance Scheme in the United Kingdom and Chomeurs Createurs D'Enterprise in France, which permit the use of transfer payments by recipients to initiate small businesses, has resulted in growing interest in similar programs by state governments.  The federal Department of Labor is operating a demonstration project in which state governments are permitted to continue to pay unemployment compensation to unemployed persons attempting to establish their own businesses.  The project provides participants with lump sum payments equivalent to their unemployment insurance entitlement to use as seed capital for small businesses.  Washington is one of the states involved in this demonstration project.  State efforts are managed by the Employment Security Department.

A similar multi-state self-employment demonstration project is being initiated to establish whether self-employment can provide a route to self-sufficiency for a significant number of welfare recipients, and whether effective support systems for such self-employment can be established.  The project currently includes Iowa, Michigan, Minnesota, Mississippi, New York, New Jersey and Wisconsin.  State program participation requires waivers under the Social Security Act.  Key elements include the maintenance of Medicaid and Food Stamps for participants for one year.

SUMMARY:

The secretary of the Department of Social and Health Services is directed to seek a federal waiver to permit recipients of Aid to Families with Dependent Children to become self-employed.  If the waivers are obtained, the department is directed to adopt rules to allow recipients to separate business assets from personal assets during a start-up period and to provide for deductions from income for business expenses, that are to include capital expenditures, payment on the principal of loans to the business, and reasonable amounts for cash reserves.  The program is to be operated in cooperation with the self-entrepreneurship demonstration project operated by the Employment Security Department.

VOTES ON FINAL PASSAGE:

      House 96   0

      Senate    49     0 (Senate amended)

      House 90   0 (House concurred)

EFFECTIVE:June 9, 1988