State must act now to ensure economic competitiveness

Editorial by SCOTT MORRIS;
Tacoma News Tribune

3/20/03

Washington State - Economists predict Washington's economic recovery will lag behind the rest of the country. How long our economy will suffer, and whether recovery is confined to the Seattle area or spread across the state, depends upon many factors. Perhaps the most crucial of them is politics.

Washington is simply not well-regarded as a place to do business. Without question, the Legislature can set the tone for the state's business climate by taking decisive action. It's up to lawmakers to fix the problem.

A company called Buck Knives recently announced that it will move its operations from San Diego to Post Falls, Idaho, providing 200 family-wage jobs. Washington was in contention to land this new employer, but as reported in the Spokesman-Review, "what tipped the scales to Idaho was the ... business-friendly legislative environment."

The Oregon Legislature has a similar reputation. It has created an effective network of state and local economic development experts and enabled the state to offer work force training funds and tax abatements to employers. If we expect to compete, Washington lawmakers have some serious work to do.

Gov. Gary Locke wants to correct the situation despite serious constraints. Lacking the tools of other governors, Locke is asking lawmakers to devote more money to public works projects, fund additional college enrollment positions for high-demand fields, enable communities to build infrastructure that attracts new development, and stabilize funding for rural community revitalization. These are excellent ideas, considering that the state's nearly $2.5 billion budget deficit impedes bolder solutions.

During the 2003-2005 biennium, the state can only spend $950 million for new prisons, schools, college buildings and other public institutions unless extraordinary measures are pursued. Locke wants to bond against lottery revenue so that projects can be built and jobs created sooner than would otherwise be possible. The state can also take advantage of low interest rates to borrow money and construct as many public facilities as possible.

The Legislature can either endorse the governor's approach or devise an alternative way to find more capital, but it must do something to spawn future economic growth.

The governor also has introduced legislation that would allow local governments to use tax-increment financing, backed by a small contribution from the state, to finance public infrastructure serving new retail or manufacturing facilities. Tax-increment financing does not rely on new taxes, and it is not a novel idea. Almost every other state does it. Washington should, too. Hopefully, the Legislature will agree.

The Governor's Competitiveness Council concluded that Washington requires sustained policy direction and adequate resources, including effective work force training and grant programs, in order to strengthen its economy.

Several legislators have introduced bills establishing a commission to direct the Department of Community, Trade and Economic Development (CTED) in pursuing economic development strategies. That's a positive start, and the Legislature should be applauded for taking this initiative. Now it needs to approve one of these bills.

Legislators also have started an effort to preserve tools we already have that allow the state to compete with others. High-technology companies across the state have created new jobs and products because, several years ago, lawmakers granted them tax exemptions for research and development. These exemptions are scheduled to expire soon. If legislation to extend them is not enacted, new investments will be made elsewhere.

All the economic development proposals initiated by the governor and lawmakers have less value if the state can't recruit and keep employers. Only two CTED employees are assigned to recruiting and retaining business. That level of staffing is woefully inadequate. Increasing it will entail the difficult proposition of reprioritizing CTED's budget, but legislators need to do it.

The work doesn't stop with new hires. The state needs to provide leads to be worked by local economic development entities across Washington. And the state needs to develop a plan to market itself throughout the West - and beyond.

The Legislature has a tough job to perform this year, given the magnitude of the state's budget deficit. But it must act decisively, in bipartisan fashion, to improve the state's economic development infrastructure and remedy Washington's reputation for having a poor business climate.

It's time to prove that our state deserves favorable comparison with others.

Scott Morris, senior vice president of Avista Corp. in Spokane, is chairman of the Washington Economic Development Commission. He served on Gov. Gary Locke's Washington Competitiveness Council and was chairman of the statewide Task Force on Economic Development.