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Tax reform: B. On the plus side, Washington state repealed the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