Our nation is in its worst economic crisis since World War II, 75 years ago. Washington is not immune to the national economy. Like almost every state we face crippling unemployment and many people have lost significant portions of their asset base – their home, their retirement portfolio, and the money they were saving to send their kids to college. Total peak to trough job losses in Washington were over 210,000. 5.5% of the labor force lost their job, almost twice as bad as the next worst post-war recession.
We are starting to come out of the recession, but very slowly. Boeing is ramping up their 737 and 777 production significantly and is bringing some work back to the state. Microsoft is hiring again and the software sector is growing. Our state economist predicts that we will perform better than the national economy, but this is faint praise.
Task number one is to do everything we can to restore our job base. We should approach this task with humility – our state government can help job creation, but private businesses will do most of the heavy lifting. We must focus our strategy on those areas of the economy that are growing rapidly, offer competitive wages and take advantage of the unique elements of Washington State.
In the short term we should take actions that preserve as many private sector jobs as possible, consistent with managing a balanced budget.
– Stay the course on the 520 bridge and Viaduct replacement projects and overcome any political hurdles. 520 alone creates 5000 construction jobs in the sector of the economy hit hardest. We are building these projects anyway; getting them started ASAP creates jobs faster than waiting.
– Follow-up on our datacenter bill of 2010 and create incentives for facility creation in lines of business in which we are not competitive. There are several opportunities, including solar cell construction, chip manufacturing, etc. We have the natural resources for these and the proximity to ports that make this attractive. To remain budget-neutral, configure the incentives so they don’t pay out if the projects aren’t built.
– Renew the R&D tax credits now, re-assuring businesses that the credits will be there in 2015 when they currently expire. These are proven to create jobs and improve the state revenue picture.
The long-term strategy is to create the infrastructure that makes it possible to locate high-quality jobs here. Infrastructure is both physical (roads, sewers, bridges, etc.) and social (trained workers, functioning courts.)
The Washington Technology Industry Association (WTIA) has over 600 open jobs that aren’t getting filled because we don’t have people with the skills. Microsoft has thousands. Aviation Technical Services, the largest third-party airplane repair facility in North America is dying for skilled workers.
– Convert some 2-year community college capacity to 4-year in technical fields. Aerospace, software, biomed… This would be cheap and fast, and not require a lot of capital construction. Bellevue College would be a great first step.
– Focus on improving the output of 2-year technical training. There are jobs for people with technical skills in airplane repair, etc. These degrees are expensive to produce, but there are jobs waiting for graduates.
– Renew our focus on tech transfer from our Universities to the private sector – eliminate as many barriers as possible to getting this research out into the world. The land grant universities like Washington State transformed agriculture in the last century and we can do it again with renewable energy, biotech and other new fields.
– Consider the use of a portion of our pension investments in Washington State-focused venture funds. We must ensure hands-off investment decisions to avoid obvious conflicts, but helping increase venture fund availability in this area would help job creation in new, small businesses.
– Transportation efficiency and access to global supply chains are critical to modern high-tech manufacturing. Eliminate transportation bottlenecks for the Ports of Seattle and Tacoma with targeted freight mobility investments.
– Local infrastructure matters. We must enable local governments to create the infrastructure that enables successful businesses. Design a tax-increment financing system similar to that in 49 other states that allows cities to borrow against future tax revenues to get projects built, but focus the incentives tightly on transit-oriented development that improves our transportation concurrency.
Costs and efficiency matter for businesses. Too often permitting hassles and high costs make investment decisions difficult in Washington.
– Instead of creating a new agency to assist businesses coordinate multiple permits, simplify the system by combining agencies that regulate similar areas. In natural resources we can maintain our focus on providing an attractive and safe environment while reducing the number of sources of regulation to one, and having a single inspector provide oversight of the work.
– Significantly reduce the number of tax returns filed by combining L&I, Employment Security and Department of Revenue tax collection staff into a single agency, with a single computer system Cancel the ESD new computer project and use the funds to modernize the best of the three systems.
– Rework state and local government relationships to determine where the appropriate point of contact with the business is.
- There should be a single permit tracking system across cities, counties, and the state. A single level of government should own the permit, typically the one closest to the customer. This eliminates duplicate work and scheduling, reducing time to market for the business and reducing government cost.
- Tax collections can, in many cases, be combined. B&O taxes can be collected centrally with a single return, and appropriately delivered to the cities. There are 39 cities with B&O taxes in Washington.
Many of these proposed actions are significant changes in how state and local government works. We should be careful in how we do this, but we must simplify these systems quickly to reduce needless burdens.