Washington unprepared for the new economy

As we begin the new year, we face a new economy _ an economy that is fast-paced, dynamic, demanding and global.

  • Friday, October 3, 2008 4:51am
  • Opinion

As we begin the new year, we face a new economy _ an economy that

is fast-paced, dynamic, demanding and global. It is unlike anything we

have seen before. Semi-skilled manufacturing jobs will continue to decline,

replaced by high-skilled high-tech jobs. Information technology will be

king and global competition will intensify.

According to a recent report by the National

Governors’ Association (NGA), succeeding in the

new economy won’t be easy. Both employers and workers will need to

be flexible and willing to invest time and money in

upgrading technology and skills.

But according to the NGA, state governments will face the

biggest challenge. States must encourage business development and re-engineer

the way state governments do business _ become more flexible, more

business-friendly, more efficient and more focused on customer service.

The state has already implemented some of the principles outlined by

the NGA. But a look at its “New Economy Report Card” shows that

Washington state merits only a “D.”

Regulatory reform: B-. On the plus

side, Washington has set up “one-stop shopping” to streamline

business licensing, and in 1995,

legislators mandated that all new regulations

be reasonable, fair and effective. But some agency bureaucrats

continually use administrative maneuvers to circumvent the reforms. And now,

state regulators want to impose ergonomics rules, which would enable the

state to manage virtually every aspect of an employer’s business.

Tax reform: B. On the plus side, Washington state repealed the

1993 Business and Occupation tax hikes and approved a 1996

manufacturing sales tax exemption to encourage manufacturers to expand or

locate here. But despite its success, the state’s Department of Revenue now wants

to limit the exemption.

Local government tax fairness: D. Washington business owners can

be taxed on more than 100 percent of their income, because several

cities, towns or counties can levy taxes on the same shipment of goods as

it passes through their jurisdictions.

Workforce Training: C+. The state has brought together

business, labor and educators to work on the issue, but so far not much has been

accomplished _ the jury is still out.

Transportation: D. On the plus side, voters approved Referendum

49, which dedicated 75 percent of Motor Vehicle Excise Tax (MVET)

revenues to transportation. But the following year, they gutted the fund by

approving I-695. Governor Locke’s budget failed to address the

transportation dilemma and legislators have yet to determine how they will fund

vital projects. In the meantime, some of the state’s largest employers are

talking about picking up and moving elsewhere if a solution is not found.

Contracting Out: F. Washington law

prohibits contracting out state services.

Unemployment Insurance: D-. Despite record low

unemployment, state unemployment insurance taxes continue to rise because they are

tied to an archaic, inflexible formula.

Health Care: F. In 1993, 18 insurers sold individual health

insurance policies in Washington state. Today, not a single company is selling

individual health insurance policies to new customers.

Environment: C. On the plus side, state regulators helped

negotiate a groundbreaking environmental agreement for private forestlands.

But now, state regulators want to establish 200-foot buffer zones along all

shorelines in the state _ a move that would devastate businesses and

negatively impact virtually every citizen in Washington.

The stakes will be high in the fast-paced, ever changing new

economy. The future holds great rewards and great peril. Businesses or states

that hesitate or resist changing with the times will quickly be left behind.

Don Brunell is president of the Association of Washington

Business, Washington state’s chamber of commerce. Visit AWB on the Web

at www.awb.org.

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