Whoever becomes Washington’s next governor will face one painful reality: His power is much more limited than the electioneering would have us believe. And one major warning: First, do no harm to a state economy that is healthier and has better bones than most.
Jay Inslee or Rob McKenna will face a fuzzy national and global economic outlook. Healing from a major financial crisis takes longer than other kinds of recession triggers. Some signs point to a slow improvement in the United States even as the eurozone crisis continues and Asia slows.
Some economists argue we’re in for a long period of slow growth. Even if that doesn’t happen, competition is increasing. So no state can assume its assets or living standards are safe. Washington is not immune to the historic inequality and lack of economic mobility now seen in America.
The costs of human-caused climate change will rise. In the long run, energy will be more costly, however much we wish it not to be. Much in our economy is broken. As social critic James Howard Kunstler points out, many issues we face can’t be “solved” as much as met with intelligent responses.
With that backdrop, here are 10 areas that could benefit from the new governor’s leadership:
1. Understanding what government must do well. Dogma aside, government and the private sector have worked together in America since the building of the Erie Canal. Across the world, no matter the regime, successful nations have governments that provides effective support to the economy.
At the state level, this means education, infrastructure, incentives, streamlined regulation and investing in human capital.
2. Investing in the universities. A consensus has arrived that the state has cut too much from the universities. We’re especially playing with fire in defunding the world-class University of Washington. No successful technology cluster can be maintained without a great university. And tuition hikes are putting a college education out of reach for more Washingtonians; tuition has risen some 94 percent since 2009.
The consensus hasn’t reached Olympia, and that’s where a strong governor can make a difference. It’s not just a matter of money. The universities need more flexibility and control over how they spend their money instead of the micromanagement that comes from the Legislature.
3. Keep Boeing happy. The new governor must work to keep our economic clusters competitive, but none is more important or problematic than aerospace and Boeing.
The Chicago-based company has shown a willingness to play states off against each other. Boeing doesn’t deserve the moon, but it will require careful care and feeding. The governor will also have to reach out to Boeing’s unions and encourage them to work with the company as much as possible.
That said, avoid playing too many favorites. Picking one industry over another penalizes all but the chosen one. Aerospace deserves special attention, but the governor must be mindful of the challenges facing every sector.
4. Pay attention to business costs and headaches. I hear from businesspeople across the political spectrum: This can be a difficult state in which to start and run a company. We don’t have to become South Carolina or Mississippi to take this seriously and reform overlapping regulations and those that aren’t effective.
“I think a governor has to understand that employers can outsource labor to other locations that are more competitive, just like U.S. companies do abroad,” Steve Gordon, president of Gordon Trucking, told me. “We need to juxtapose our education, legal, regulatory and tax climates with other states, adopting best practices where possible, and not become so insular that we think current employers will continue to grow here simply because they’re here today.”
5. The two Washingtons. Too many Washingtonians don’t finish high school, receive effective job training or have transportation to job centers. In addition, a large slice of the workforce remains unemployed from the Great Recession.
Washington only gets a C from Education Week’s respected Quality Counts report. That’s not good enough in the global economy. The Annie E. Casey Kids Count survey showed 18.2 percent of the state’s children living in poverty in 2010, vs. 15.5 percent in 2006.
Washingtonians aged 18 to 34 made up 50 percent of the unemployed in 2010. Nearly one in four live in poverty.
Taken together, this is a horrendous waste of human capital. The Seattle area continues to attract talent from the world, a good thing. But too many state residents aren’t in a position to take advantage. The new governor must focus on closing these gaps in opportunity.
6. An unhealthy port rivalry. Tacoma and Seattle fight a tit-for-tat battle over container traffic, but the dirty secret is that the region is losing market share. These pressures will only grow as the wider Panama Canal opens and Canada’s Prince Rupert gains business.
Port consolidation is the place where angels fear to swim and Pierce County would never allow it. But the governor can work with both ports to gain new business.
7. Push immigration reform. Agriculture is Washington’s third-largest export sector but suffers from a labor shortage. Right now, lack of workers will leave apples unharvested.
Nobody expects a governor to succeed where George W. Bush and Barack Obama failed. But he can, along with other governors, push Congress to adopt a guest-worker program.
After the heat of the election dissipates, the time might finally be right.
8. The revenue imbalance. Washington’s tax structure is built around a state that no longer exists, one from the 1950s. Tax revenues as a share of the state economy have fallen from 7.6 percent in 1990 to 5.4 percent in 2010.
Voters have shown no inclination to approve an income tax. But they do like government services, and the needs of a populous, urbanized state have outstripped revenue. A governor can lead a fresh look at this imbalance and creative ways to broaden the tax base and phase out unfair, costly tax breaks.
Cutting alone won’t succeed. Just ask the recession-slammed United Kingdom.
9. Infrastructure. Washington must continue investing in infrastructure to compete against international rivals. Urban areas need more and better transit, as well as better freight-rail capacity in some places. Rural areas need better ways to get their goods to market, both highways and rail.
Trucking executive Gordon said, “We need better integration between state and local funding mechanisms because the ‘last mile’ connectors are often afterthoughts in the process and can create large safety and congestion issues.”
10. Sell, sell, sell. Washington is among the nation’s most trade-dependent states, so the governor must be constantly pushing state exports, working to attract foreign direct investment and draw tourists. He also needs to be selling the state in the other Washington for diminishing but still vital federal dollars for research and infrastructure.
Still want this job? We all hope so. There’s much work to be done to keep Washington competitive.
You may reach Jon Talton at firstname.lastname@example.org
About Jon Talton
Jon Talton comments on economic trends and turning points, putting them into context with people, place and the environment in the Pacific Northwest