Keeping Washington's Competitive Edge

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Keeping Washington's Competitive Edge
Washington Competitiveness Council
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Competitiveness Council Members
Co-chairs
Executive Director
Kerry Killinger Chairman, President and
CEOWashington Mutual, Inc., Seattle Bud Mercer,
President Mercer Ranches Inc., Prosser Alan
MulallyPresident and CEOBoeing Commercial
Airplanes, Renton Norman B. Rice President and
CEOFederal Home Loan Bank of Seattle, Seattle
Judith RunstadFoster Pepper Shefelman PLLC,
Seattle
Dick Thompson, Director of Government
RelationsUniversity of Washington, Seattle
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Competitiveness Council Members
Other members
John T. Powers, Jr., MayorCity of Spokane
Andrea Riniker, Executive DirectorPort of
Tacoma Paul Schell, Mayor City of Seattle The
Honorable Barry Sehlin (R-10), Washington State
House of Representatives Ron Sims, King County
Executive The Honorable Sid Snyder
(D-19)Washington State Senate Lucy Steers,
Civic Activist and Public Involvement
ConsultantSeattle Tom Stokes, CEOTree Top,
Inc., Selah Steve Tso, PresidentWaferTech,
Camas The Honorable James West (R-6)Washington
State Senate
Bob Drewel, Snohomish County Executive Ed
Fritzky, Chairman, President. And CEO,
Immunex Joseph K. Gavinski, City ManagerCity of
Moses Lake Sally Jewell, Chief Operating
 Officer, REI, Inc., Sumner John F. Kelly,
Chairman and CEOAlaska Airlines, Inc., Seattle
Terry Knapton, Chief Operating Officer, Colville
Tribal Enterprise Corporation, Coulee Dam
Richard L. McCormick, PresidentUniversity of
Washington, Seattle Scott Morris,
PresidentAvista Utilities, Spokane Bill Neukom,
Executive Vice PresidentLaw and Corporate
AffairsMicrosoft Corporation, Redmond H.
Stewart Parker, President and CEO, Targeted
Genetics, Seattle
Tom Alberg, Managing DirectorMadrona Venture
Group, LLC, Seattle Stan Barer, Co-Chairman and
CEOSaltchuk Resources, Inc., Seattle John
Begley, President CEOPort Townsend Paper, Port
Townsend Rick Bender, PresidentWashington State
Labor Council, AFLCIO, Seattle Roger Boatwright,
Executive SecretaryWashington State Building and
Construction Trades Council, Olympia Jeff
Brotman, ChairmanCostco Wholesale, Issaquah
Phyllis J. Campbell, ChairCommunity BoardU.S.
Bank of Washington, Seattle The Honorable Frank
Chopp (D-43), Democratic Speaker of the House
Washington State House of Representatives M.R.
(Mic) Dinsmore, CEO Port of Seattle
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Objectives

• Discuss key business climate issues.
• Improve public understanding of the importance of
  a healthy business climate to the future of
  Washington's economy.
• Engage the business community in advancing a
  competitiveness agenda.
• Identify and implement public policies that
  strengthen state and local governments' ability
  to respond to business community needs.

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Issue Areas

• Taxes and Fees
• Regulatory and Permitting Issues
• Physical Infrastructure
• Human Capital and Innovation
• Benchmarking

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Recommendations

• Proposed changes in statute--require legislation
• Proposed changes in the Washington Administrative
  Code (WAC)--require a formal rulemaking process
• Proposed administrative actions
• Statements of position by the Council
• Benchmarks/performance measures

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Meetings

• August 30
• September 18
• October 16
• November 13
• December 11

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Most Imperative Recommendation Fix our
Transportation Problem

• The most important competitive investment the
  state of Washington can make is to improve its
  transportation infrastructure.
• Washington's currently overwhelmed transportation
  system threatens jobs and economic vitality,
  wastes people's time and money, diminishes
  quality of life, and degrades our environment.
• To ensure Washington State's prosperity in the
  future, given the interdependence of the
  economies both east and west of the Cascades, we
  must improve our ability to move people and
  products.

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Taxes and Fees

• Council Findings
• Taxes and fees significantly affect Washington
  business's ability to compete.
• Washington State must balance two competitiveness
  issues - the need to provide essential state
  services and the need to minimize the relative
  tax burden on business.
• Currently, Washingtons initial tax burden on
  business is one of the highest in the nation.

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Taxes and Fees

• Council Recommendations
• Avoid increasing taxes on business. Maintain
  existing exemptions and incentives.
• Transportation improvements will require new
  revenue. Generate them through user fees,
  regional taxes and alternative financing
  mechanisms.
• Clarify and simplify tax provisions, especially
  the following
• Manufacturing machinery and equipment sales and
  use tax exemptions,
• Municipal taxation, and
• Deduction of investment income from the business
  and occupation (BO) tax.

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Taxes and Fees

• Council Recommendations (continued)
• Reform unemployment insurance (UI) to make it
  more fair, predictable, and stable.
• Develop and use tax incentives to keep and grow
  businesses in Washington.
• Adopt key performance measures to better judge
  Washington's overall competitiveness, and the
  effect of its tax system on business climate.

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Regulations and Permitting

• Council Findings
• Washington's environmental regulations are
  important to the environment and the health of
  citizens.
• Rather than weakening Washington's environmental
  safeguards, the Council seeks a culture change
  within the regulatory agencies to help businesses
  get things done.
• Washington's current environmental regulatory
  system is uncoordinated and inefficient, and
  contributes to regulatory problems that damage
  Washington's competitiveness.
• The current regulatory structure unnecessarily
  delays projects, increases project cost, creates
  unnecessary uncertainty, reduces operating
  flexibility, and increases barriers to business
  growth.

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Regulations and Permitting

• Council Findings (continued)
• Washington's inadequate water systems impose
  uncertainty on businesses and growing
  communities.
• A lack of affordable housing impedes a company's
  ability to attract a quality workforce.
  Regulatory requirements that are overly
  burdensome can exacerbate the housing shortage.

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Regulations and Permitting

• Council Recommendations
• Create leadership to streamline and build
  accountability in the environmental regulatory
  process.
• Create a greater service ethic, improve attitude
  within regulatory agencies, and improve the
  agencies accountability.
• Consolidate and/or coordinate permitting
  processes between agencies and levels of
  government.
• Create a single state-government contact for
  businesses considering locating or expanding in
  the state.
• Tighten the Washington Administrative Procedures
  Act (APA) to reduce agency discretion in the
  rulemaking process.

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Regulations and Permitting

• Council Recommendations (continued)
• Increase funding to make the Growth Management
  Act work in a timely and effective manner.
• Streamline the adjudicative processes related to
  land use.
• Delay implementation of the proposed ergonomics
  rule until questions about its cost and
  effectiveness are answered.
• Ease regulatory pressures to make it easier to
  build affordable housing in Washington.

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Physical Infrastructure

• Council Findings
• Transportation, utilities, and telecommunications
  systems must ensure the fluid movement of people,
  products, and information.
• The most important competitive investment the
  state of Washington can make is to improve its
  transportation infrastructure. Washington
  citizens currently lose 2 billion per year
  because traffic congestion wastes time and fuel
  and causes shipping delays.
• Washingtons water laws and infrastructure do not
  adequately provide the capacity to meet 21st
  century demands and responsibilities.

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Physical Infrastructure

• Council Findings (continued)
• Washington must reduce unnecessary delays in the
  siting of telecommunications and energy
  facilities.
• Low-cost and reliable electricity is critical to
  Washington's economy. The financial viability
  and access to capital for Washingtons utilities
  are essential to meeting Washington's energy
  needs.
• The Pacific Northwest needs additional electrical
  transmission lines to meet expected growth in
  energy demand.

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Physical Infrastructure

• Council Recommendations
• Secure long-term, stable, reliable funding for
  transportation.
• Establish performance measures to show that
  transportation investments are effectively
  addressing needs.
• Use regional funding authority and alternative
  financing mechanisms.
• Build additional water storage capacity.
• Reduce unnecessary delays in siting
  telecommunications and energy.
• Promote a regulatory and political environment
  that supports the financial health of the state's
  utilities and ensures the BPAs ability to invest
  in new transmission capacity in the Pacific
  Northwest.

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Human Capital and Innovation

• Council Findings
• Human capital and innovation are fundamental to
  gaining a competitive advantage in the modern
  economy.
• Without action, Washington will fall behind other
  states and regions that are investing massively
  in these areas.

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Human Capital and Innovation

• Council Recommendations
• Increase support of research, development, and
  technology commercialization in strategically
  important industrial clusters.
• Give research universities the tools and
  flexibility they need to continue to attract top
  talent and federal funding.
• Expand capacity at colleges and universities,
  particularly in strategically important fields of
  science and engineering.
• Accelerate training of workers for high-demand
  fields, including new workers, existing workers
  and displaced workers seeking to reenter the
  workforce.

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Human Capital and Innovation

• Council Recommendations
• Improve still-lagging academic standards.
• Address the challenge posed by a growing number
  of students who speak English as a second
  language.
• Reverse a severe shortage of science and math
  teachers at all levels.

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Benchmarks and Performance Measures

• Council Findings
• Many studies of Washington business climate are
  available but they are difficult to sort through.
• The Washington State Office of the Forecast
  Council publishes an annual Economic Climate
  Study, but the benchmarks have not been updated.
• Although benchmarks are available, they are not
  always used in policy analysis.

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Benchmarks and Performance Measures

• Council Recommendations
• Reconvene the Economic Climate Study Advisory
  Board to update the benchmarks published in the
  Economic Climate Study.
• Use benchmarks in policy analysis and performance
  reviews for state agencies.

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Governor Lockes Response

• Governor Lockes Priorities
• Creating new jobs
• Solving transportation problems
• Providing economic development infrastructure to
  rural communities
• Streamlining the permitting system
• Making water available to growing communities
• Improving Washingtons tax environment

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Governor Lockes Response

• Governor Lockes Priorities (continued)
• Providing universities flexibility to improve
  their responsiveness to industry workforce needs
• Ensuring that Washington workers have the skills
  to fill available jobs
• Reinforcing our commitment to education
  accountability
• Tracking our progress in improving competitiveness

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Governor Lockes Proposal

• Infrastructure
• Create more than 20,000 new jobs, many in the
  next few years, by building roads and other state
  public works facilities.
• Implement a long-term, comprehensive solution for
  Washingtons transportation problem.
• Secure long-term predictable funding for the
  Community Economic Revitalization Board (CERB) as
  a vehicle for transportation and other
  infrastructure investments tied to economic
  development.

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Governor Lockes Proposal

• Regulations and Permitting
• Establish focused leadership to bring major
  reform and accountability to Washingtons
  regulatory system.
• Reduce the time and expense of securing
  regulatory permits by creating a coordinated
  system that simplifies and speeds up permitting.
• Provide greater certainty to business by
  establishing clear standards and timelines.
• Expand the Master Business Licensing program to
  save businesses time.

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Governor Lockes Proposal

• Regulations and Permitting (continued)
• Benchmark permitting timelines in regulatory
  agencies to monitor progress and provide
  accountability to the public.
• Work with the Legislature to take the next step
  in reforming Washingtons water law by setting
  and achieving proper in-stream flows and
  providing safe and reliable water supplies.
  Pursue funding for water storage.

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Governor Lockes Proposal

• Taxes and Fees
• Clarify tax provisions related to investment
  income.
• Simplify municipal taxation and eliminate the
  possibility of double taxation by local
  governments.
• Avoid general tax increases.

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Governor Lockes Proposal

• Human Capital and Innovation
• Provide tuition flexibility for universities so
  that they may offer competitive faculty salaries
  in strategically important fields while
  maintaining access to education for deserving
  students.
• Tie university and college enrollment increases
  to high-demand fields, with preference to
  programs with model articulation agreements.
• Expand worker retraining by adding 1,500 new
  slots for students of community and technical
  colleges, increasing the number from the current
  7,200 to 8,700.
• Provide 750,000 in new funding to train workers
  for newly located or expanded businesses.

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Governor Lockes Proposal

• Benchmarking and Follow-up
• Monitor Washington States progress toward
  improving its competitiveness by establishing new
  competitiveness benchmarks and using them in
  policy analysis and agency review processes.
• Reconvene the Competitiveness Council annually to
  review progress on implementing their
  recommendations and discuss the states
  competitive status.
• Continue reviewing recommendations and developing
  proposals in response to recommendations.

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Next Steps

• Follow-up meeting being planned for February
• Present a workplan for implementation.
• Discuss status of administrative reforms and
  proposed legislation.
• Provide additional data for benchmarks.
• Additional follow-up meetings annually or as
  needed

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