2002 Chair's Report

Dark clouds no longer gather on the business climate horizon. The storm is here. More than 75,000 private sector jobs have been eliminated as the economic downturn hit every region of the state. Washington has the highest unemployment rate in the nation and analysts estimate state employment levels may not rebound until the middle of 2005. Retaining current employers and attracting new investment should be the state’s highest priorities.

After a difficult budget year, during which policymakers patched a $1.9 billion shortfall with short-term mechanisms, the state now faces a $2 billion structural deficit, the most severe fiscal crisis in decades. The combination of poor fiscal health and ailing competitiveness make this a particularly daunting time for state leaders.

Our state began 2002 with a list of recommendations from the Washington Competitiveness Council to improve the state’s infrastructure, regulatory climate, tax system and human capital. The Council; comprised of business, labor and elected leaders; delivered a roadmap for improving competitiveness and nurturing economic growth. Policymakers took steps and initiated processes to implement several of the Council’s recommendations. More action is needed to achieve lasting, quantifiable success. 

To move Washington toward a healthier business climate, state leaders must advance competitiveness priorities. The Washington Roundtable encourages state leaders to make implementation of the Council’s recommendations a priority next session. These improvements will make Washington a better place to live, work and raise a family.

Sincerely,

John F. Kelly, chair

Competitiveness – pressing concern

Washington’s business climate has reached a critical stage – the transportation infrastructure is deteriorating, business continues to bear a disproportionately high share of the state’s tax burden, and the regulatory climate frustrates investment. The sluggish economy only magnifies these issues and creates a greater sense of urgency.

The Roundtable has produced case studies that showcase successful strategies for regulatory reform, economic development and use of incentives. States that make progress in these areas:

• provide visible and sustained leadership,
• demonstrate a customer-service mentality when recruiting employers,
• invest in the business climate both during times of prosperity and economic challenge,
• balance the tax system fairly, and
• create structures that support growth and vitality.

Legislature hits gridlock over transportation

Policymakers temporarily filled the state’s $1.9 billion budget shortfall last session with fund shifts and one-time revenues. Consequently, the projected structural deficit for the 2003-05 biennium surpasses $2 billion, a figure equal to approximately 10 percent of the general fund budget. 

To fix this structural budget problem, the governor and legislators must establish clear budget targets for the 2003 session and contain the fastest growing budget areas, particularly health care costs. State policymakers must prepare the budget with an eye to the long-term and begin discussing potential solutions now. The Roundtable released an analysis detailing the scope of the budget problem and will work with policymakers to address this pressing issue during the coming months.

Transportation – cautiously optimistic

Transportation remains the most important economic issue facing our state. Our ailing infrastructure is riddled with blocked freight routes and dangerous, congested roadways. Gridlock is harming our quality of life and robbing the state economy of $2 billion a year in lost productivity.

The Roundtable was disappointed when state leaders chose to send the statewide transportation measure to the November ballot. Nonetheless, the Roundtable believes Referendum 51 represents an opportunity for progress. It is a strong package that addresses safety, traffic relief and accountability. The Roundtable endorses Referendum 51 as a significant first step toward making needed transportation improvements in Washington state.

Education – More Work to Do

The Roundtable was pleased to see state leaders stay the course on education reform during the 2002 session. As Washington marks the 10th anniversary of state education reform, it is important to acknowledge the state’s accomplishments – standards are in place and the achievement gap is shrinking. Policymakers and education leaders should be encouraged by this success and recognize there is more progress to be made. 

The Roundtable calls for a structured implementation plan for the Certificate of Mastery and alignment of entrance requirements to Washington’s post-secondary institutions with our state’s standards. As the state faces a multi-billion dollar budget deficit next session, support for education reform must remain strong. 

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