Keeping Washington's Competitive Edge Washington Competitiveness Council.

Keeping Washington's Keeping Washington's

Competitive EdgeCompetitive Edge

Washington Competitiveness Council

CCompetitivenessompetitiveness CCouncilouncil MMembersembers

Co-chairs:Co-chairs:

Kerry Killinger Kerry Killinger Chairman, President and CEOChairman, President and CEO

Washington Mutual, Inc., Seattle Washington Mutual, Inc., Seattle

Bud Mercer, Bud Mercer, President Mercer Ranches Inc., President Mercer Ranches Inc.,

Prosser Prosser

Alan MulallyAlan MulallyPresident and CEOPresident and CEO

Boeing Commercial Airplanes, Renton Boeing Commercial Airplanes, Renton

Norman B. Rice Norman B. Rice President and CEOPresident and CEO

Federal Home Loan Bank of Seattle, Federal Home Loan Bank of Seattle, Seattle Seattle

Judith RunstadJudith RunstadFoster Pepper & Shefelman PLLC, Foster Pepper & Shefelman PLLC,

SeattleSeattle

Executive Director:Executive Director:

Dick Thompson, Director of Government RelationsUniversity of Washington, Seattle

CCompetitivenessompetitiveness CCouncilouncil MMembersembers

Other members:Other members:

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 Secretary

Washington State Building and Construction Trades Council, Olympia

Jeff Brotman, Chairman

Costco Wholesale, Issaquah

Phyllis J. Campbell, ChairCommunity Board

U.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

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 Affairs

Microsoft Corporation, Redmond

H. Stewart Parker, President and CEO, Targeted Genetics, Seattle

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 Consultant

Seattle

Tom Stokes, CEOTree Top, Inc., Selah

Steve Tso, PresidentWaferTech, Camas

The Honorable James West (R-6)Washington State Senate

ObjectivesObjectives

Discuss key business climate issues.Discuss key business climate issues.

Improve public understanding of the importance of a Improve public understanding of the importance of a healthy business climate to the future of Washington's healthy business climate to the future of Washington's economy.economy.

Engage the business community in advancing a Engage the business community in advancing a competitiveness agenda.competitiveness agenda.

Identify and implement public policies that strengthen Identify and implement public policies that strengthen state and local governments' ability to respond to state and local governments' ability to respond to business community needs.business community needs.

Issue AreasIssue Areas

Taxes and FeesTaxes and Fees

Regulatory and Permitting IssuesRegulatory and Permitting Issues

Physical InfrastructurePhysical Infrastructure

Human Capital and InnovationHuman Capital and Innovation

BenchmarkingBenchmarking

RecommendationsRecommendations

Proposed changes in statute--require legislation Proposed changes in statute--require legislation

Proposed changes in the Washington Administrative Proposed changes in the Washington Administrative

Code (WAC)--require a formal rulemaking process Code (WAC)--require a formal rulemaking process

Proposed administrative actions Proposed administrative actions

Statements of position by the CouncilStatements of position by the Council

Benchmarks/performance measures Benchmarks/performance measures

MeetingsMeetings

August 30August 30

September 18September 18

October 16October 16

November 13November 13

December 11December 11

MMostost I Imperativemperative R Recommendation:ecommendation: Fix our Transportation ProblemFix our Transportation Problem

The most important competitive investment the state of The most important competitive investment the state of Washington can make is to improve its transportation Washington can make is to improve its transportation infrastructure. infrastructure.

Washington's currently overwhelmed transportation system Washington's currently overwhelmed transportation system threatens jobs and economic vitality, wastes people's time threatens jobs and economic vitality, wastes people's time and money, diminishes quality of life, and degrades our and money, diminishes quality of life, and degrades our environment. environment.

To ensure Washington State's prosperity in the future, given To ensure Washington State's prosperity in the future, given the interdependence of the economies both east and west of the interdependence of the economies both east and west of the Cascades, we must improve our ability to move people the Cascades, we must improve our ability to move people and products.and products.


Council FindingsCouncil Findings

Taxes and fees significantly affect Washington business's ability Taxes and fees significantly affect Washington business's ability

to compete. to compete.

Washington State must balance two competitiveness issues - the Washington State must balance two competitiveness issues - the

need to provide essential state services and the need to need to provide essential state services and the need to

minimize the relative tax burden on business. minimize the relative tax burden on business.

Currently, Washington’s initial tax burden on business is one of Currently, Washington’s initial tax burden on business is one of

the highest in the nation. the highest in the nation.


Council RecommendationsCouncil Recommendations

Avoid increasing taxes on business. Maintain existing exemptions Avoid increasing taxes on business. Maintain existing exemptions

and incentives. and incentives.

Transportation improvements will require new revenue. Generate Transportation improvements will require new revenue. Generate

them through user fees, regional taxes and alternative financing them through user fees, regional taxes and alternative financing

mechanisms. mechanisms.

Clarify and simplify tax provisions, especially the following:Clarify and simplify tax provisions, especially the following:

– Manufacturing machinery and equipment sales and use tax Manufacturing machinery and equipment sales and use tax exemptions, exemptions,

– Municipal taxation, and Municipal taxation, and

– Deduction of investment income from the business and Deduction of investment income from the business and occupation (B&O) tax. occupation (B&O) tax.


Council RecommendationsCouncil Recommendations (continued)(continued)

Reform unemployment insurance (UI) to make it more fair, Reform unemployment insurance (UI) to make it more fair,

predictable, and stable. predictable, and stable.

Develop and use tax incentives to keep and grow businesses in Develop and use tax incentives to keep and grow businesses in

Washington.Washington.

Adopt key performance measures to better judge Washington's Adopt key performance measures to better judge Washington's

overall competitiveness, and the effect of its tax system on overall competitiveness, and the effect of its tax system on

business climate.business climate.

Regulations and PermittingRegulations and Permitting


Washington's environmental regulations are important to the Washington's environmental regulations are important to the

environment and the health of citizens. environment and the health of citizens.

Rather than weakening Washington's environmental safeguards, the Rather than weakening Washington's environmental safeguards, the

Council seeks a culture change within the regulatory agencies to help Council seeks a culture change within the regulatory agencies to help

businesses get things done. businesses get things done.

Washington's current environmental regulatory system is Washington's current environmental regulatory system is

uncoordinated and inefficient, and contributes to regulatory problems uncoordinated and inefficient, and contributes to regulatory problems

that damage Washington's competitiveness. that damage Washington's competitiveness.

The current regulatory structure unnecessarily delays projects, The current regulatory structure unnecessarily delays projects,

increases project cost, creates unnecessary uncertainty, reduces increases project cost, creates unnecessary uncertainty, reduces

operating flexibility, and increases barriers to business growth. operating flexibility, and increases barriers to business growth.


Council FindingsCouncil Findings (continued)(continued)

Washington's inadequate water systems impose uncertainty on Washington's inadequate water systems impose uncertainty on

businesses and growing communities. businesses and growing communities.

A lack of affordable housing impedes a company's ability to A lack of affordable housing impedes a company's ability to

attract a quality workforce. Regulatory requirements that are attract a quality workforce. Regulatory requirements that are

overly burdensome can exacerbate the housing shortage.overly burdensome can exacerbate the housing shortage.



Create leadership to streamline and build accountability in the Create leadership to streamline and build accountability in the

environmental regulatory process. environmental regulatory process.

Create a greater service ethic, improve attitude within regulatory Create a greater service ethic, improve attitude within regulatory

agencies, and improve the agencies’ accountability. agencies, and improve the agencies’ accountability.

Consolidate and/or coordinate permitting processes between Consolidate and/or coordinate permitting processes between

agencies and levels of government.agencies and levels of government.

Create a single state-government contact for businesses considering Create a single state-government contact for businesses considering

locating or expanding in the state. locating or expanding in the state.

Tighten the Washington Administrative Procedures Act (APA) to Tighten the Washington Administrative Procedures Act (APA) to

reduce agency discretion in the rulemaking process.reduce agency discretion in the rulemaking process.


Council Recommendations Council Recommendations (continued)(continued)

Increase funding to make the Growth Management Act work in a Increase funding to make the Growth Management Act work in a

timely and effective manner. timely and effective manner.

Streamline the adjudicative processes related to land use.Streamline the adjudicative processes related to land use.

Delay implementation of the proposed ergonomics rule until Delay implementation of the proposed ergonomics rule until

questions about its cost and effectiveness are answered. questions about its cost and effectiveness are answered.

Ease regulatory pressures to make it easier to build affordable Ease regulatory pressures to make it easier to build affordable

housing in Washington.housing in Washington.



Transportation, utilities, and telecommunications systems must Transportation, utilities, and telecommunications systems must

ensure the fluid movement of people, products, and information. ensure the fluid movement of people, products, and information.

The most important competitive investment the state of The most important competitive investment the state of

Washington can make is to improve its transportation Washington can make is to improve its transportation

infrastructure. Washington citizens currently lose $2 billion per infrastructure. Washington citizens currently lose $2 billion per

year because traffic congestion wastes time and fuel and causes year because traffic congestion wastes time and fuel and causes

shipping delays. shipping delays.

Washington’s water laws and infrastructure do not adequately Washington’s water laws and infrastructure do not adequately

provide the capacity to meet 21st century demands and provide the capacity to meet 21st century demands and

responsibilities. responsibilities.


Council FindingsCouncil Findings (continued)(continued)

Washington must reduce unnecessary delays in the siting of Washington must reduce unnecessary delays in the siting of

telecommunications and energy facilities. telecommunications and energy facilities.

Low-cost and reliable electricity is critical to Washington's Low-cost and reliable electricity is critical to Washington's

economy. The financial viability and access to capital for economy. The financial viability and access to capital for

Washington’s utilities are essential to meeting Washington's Washington’s utilities are essential to meeting Washington's

energy needs. energy needs.

The Pacific Northwest needs additional electrical transmission The Pacific Northwest needs additional electrical transmission

lines to meet expected growth in energy demand.lines to meet expected growth in energy demand.



Secure long-term, stable, reliable funding for transportation. Secure long-term, stable, reliable funding for transportation.

Establish performance measures to show that transportation investments Establish performance measures to show that transportation investments

are effectively addressing needs. are effectively addressing needs.

Use regional funding authority and alternative financing mechanisms. Use regional funding authority and alternative financing mechanisms.

Build additional water storage capacity.Build additional water storage capacity.

Reduce unnecessary delays in siting telecommunications and energy. Reduce unnecessary delays in siting telecommunications and energy.

Promote a regulatory and political environment that supports the Promote a regulatory and political environment that supports the

financial health of the state's utilities and ensures the BPA’s ability to financial health of the state's utilities and ensures the BPA’s ability to

invest in new transmission capacity in the Pacific Northwest.invest in new transmission capacity in the Pacific Northwest.



Human capital and innovation are fundamental to gaining a Human capital and innovation are fundamental to gaining a

competitive advantage in the modern economy. competitive advantage in the modern economy.

Without action, Washington will fall behind other states and Without action, Washington will fall behind other states and

regions that are investing massively in these areas.regions that are investing massively in these areas.



Increase support of research, development, and technology Increase support of research, development, and technology

commercialization in strategically important industrial clusters. commercialization in strategically important industrial clusters.

Give research universities the tools and flexibility they need to Give research universities the tools and flexibility they need to

continue to attract top talent and federal funding. continue to attract top talent and federal funding.

Expand capacity at colleges and universities, particularly in Expand capacity at colleges and universities, particularly in

strategically important fields of science and engineering. strategically important fields of science and engineering.

Accelerate training of workers for high-demand fields, including Accelerate training of workers for high-demand fields, including

new workers, existing workers and displaced workers seeking to new workers, existing workers and displaced workers seeking to

reenter the workforce. reenter the workforce.



Improve still-lagging academic standards. Improve still-lagging academic standards.

Address the challenge posed by a growing number of students Address the challenge posed by a growing number of students

who speak English as a second language. who speak English as a second language.

Reverse a severe shortage of science and math teachers at all Reverse a severe shortage of science and math teachers at all

levels.levels.

Benchmarks and Performance Benchmarks and Performance MeasuresMeasures


Many studies of Washington business climate are available but Many studies of Washington business climate are available but

they are difficult to sort through.they are difficult to sort through.

The Washington State Office of the Forecast Council publishes The Washington State Office of the Forecast Council publishes

an annual Economic Climate Study, but the benchmarks have an annual Economic Climate Study, but the benchmarks have

not been updated. not been updated.

Although benchmarks are available, they are not always used in Although benchmarks are available, they are not always used in

policy analysis. policy analysis.

Benchmarks and Performance Benchmarks and Performance MeasuresMeasures


Reconvene the Economic Climate Study Advisory Board to Reconvene the Economic Climate Study Advisory Board to

update the benchmarks published in the Economic Climate update the benchmarks published in the Economic Climate

Study.Study.

Use benchmarks in policy analysis and performance reviews for Use benchmarks in policy analysis and performance reviews for

state agencies.state agencies.

Governor Locke’s ResponseGovernor Locke’s Response

Governor Locke’s Priorities:Governor Locke’s Priorities:

Creating new jobs Creating new jobs

Solving transportation problemsSolving transportation problems

Providing economic development infrastructure to rural Providing economic development infrastructure to rural

communitiescommunities

Streamlining the permitting systemStreamlining the permitting system

Making water available to growing communitiesMaking water available to growing communities

Improving Washington’s tax environmentImproving Washington’s tax environment

Governor Locke’s ResponseGovernor Locke’s Response

Governor Locke’s Priorities Governor Locke’s Priorities (continued)(continued)::

Providing universities flexibility to improve their responsiveness Providing universities flexibility to improve their responsiveness

to industry workforce needsto industry workforce needs

Ensuring that Washington workers have the skills to fill available Ensuring that Washington workers have the skills to fill available

jobsjobs

Reinforcing our commitment to education accountabilityReinforcing our commitment to education accountability

Tracking our progress in improving competitivenessTracking our progress in improving competitiveness

Governor Locke’s ProposalGovernor Locke’s Proposal

InfrastructureInfrastructure

Create more than 20,000 new jobs, many in the next few years, Create more than 20,000 new jobs, many in the next few years,

by building roads and other state public works facilities. by building roads and other state public works facilities.

Implement a long-term, comprehensive solution for Implement a long-term, comprehensive solution for

Washington’s transportation problem. Washington’s transportation problem.

Secure long-term predictable funding for the Community Secure long-term predictable funding for the Community

Economic Revitalization Board (CERB) as a vehicle for Economic Revitalization Board (CERB) as a vehicle for

transportation and other infrastructure investments tied to transportation and other infrastructure investments tied to

economic development. economic development.



Establish focused leadership to bring major reform and Establish focused leadership to bring major reform and

accountability to Washington’s regulatory system. accountability to Washington’s regulatory system.

Reduce the time and expense of securing regulatory permits by Reduce the time and expense of securing regulatory permits by

creating a coordinated system that simplifies and speeds up creating a coordinated system that simplifies and speeds up

permitting.permitting.

Provide greater certainty to business by establishing clear Provide greater certainty to business by establishing clear

standards and timelines. standards and timelines.

Expand the Master Business Licensing program to save Expand the Master Business Licensing program to save

businesses time. businesses time.


Regulations and Permitting Regulations and Permitting (continued)(continued)

Benchmark permitting timelines in regulatory agencies to Benchmark permitting timelines in regulatory agencies to

monitor progress and provide accountability to the public. monitor progress and provide accountability to the public.

Work with the Legislature to take the next step in reforming Work with the Legislature to take the next step in reforming

Washington’s water law by setting and achieving proper in-Washington’s water law by setting and achieving proper in-

stream flows and providing safe and reliable water supplies. stream flows and providing safe and reliable water supplies.

Pursue funding for water storage.Pursue funding for water storage.



Clarify tax provisions related to investment income.Clarify tax provisions related to investment income.

Simplify municipal taxation and eliminate the possibility of Simplify municipal taxation and eliminate the possibility of

double taxation by local governments. double taxation by local governments.

Avoid general tax increases. Avoid general tax increases.



Provide tuition flexibility for universities so that they may offer Provide tuition flexibility for universities so that they may offer

competitive faculty salaries in strategically important fields while competitive faculty salaries in strategically important fields while

maintaining access to education for deserving students.maintaining access to education for deserving students.

Tie university and college enrollment increases to high-demand fields, Tie university and college enrollment increases to high-demand fields,

with preference to programs with model articulation agreements. with preference to programs with model articulation agreements.

Expand worker retraining by adding 1,500 new slots for students of Expand worker retraining by adding 1,500 new slots for students of

community and technical colleges, increasing the number from the community and technical colleges, increasing the number from the

current 7,200 to 8,700. current 7,200 to 8,700.

Provide $750,000 in new funding to train workers for newly located or Provide $750,000 in new funding to train workers for newly located or

expanded businesses.expanded businesses.


Benchmarking and Follow-upBenchmarking and Follow-up

Monitor Washington State’s progress toward improving its Monitor Washington State’s progress toward improving its

competitiveness by establishing new competitiveness competitiveness by establishing new competitiveness

benchmarks and using them in policy analysis and agency benchmarks and using them in policy analysis and agency

review processes. review processes.

Reconvene the Competitiveness Council annually to review Reconvene the Competitiveness Council annually to review

progress on implementing their recommendations and discuss progress on implementing their recommendations and discuss

the state’s competitive status. the state’s competitive status.

Continue reviewing recommendations and developing proposals Continue reviewing recommendations and developing proposals

in response to recommendations.in response to recommendations.

Next StepsNext Steps

Follow-up meeting being planned for February:Follow-up meeting being planned for February:

Present a workplan for implementation.Present a workplan for implementation.

Discuss status of administrative reforms and proposed Discuss status of administrative reforms and proposed

legislation. legislation.

Provide additional data for benchmarks.Provide additional data for benchmarks.

Additional follow-up meetings annually or as neededAdditional follow-up meetings annually or as needed

Keeping Washington's Competitive Edge Washington Competitiveness Council.

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