'Jobs are the way out of this recession'

State of State: Governor pitches employment plan, raising revenue

January 13, 2010 

Gov. Chris Gregoire made a case Tuesday for raising state revenue to preserve the social safety net, and she proposed a plan to create as many as 40,000 jobs this year in Washington state.

House and Senate lawmakers of both major parties listened as Gregoire, a Democrat, delivered her 30-minute State of the State speech. She described the state’s and the nation’s economic plights as the worst collapse since the Great Depression, and she called on state leaders to take bold steps.

“Jobs are the way out of this recession,” Gregoire said, winning a rare moment of robust applause from both sides of the aisle. “We owe it to our families to provide job opportunities. I have a plan to create as many as 40,000 new jobs this year.”

Gregoire also touched on state government’s deep financial hole – budget shortfalls of $12 billion over two years – at a time when there are jobless rates of 14 percent in some counties, longer lines of people seeking food handouts, and hardships all around. She said it is time for leaders to display decisiveness and compassion in rebuilding the economy and helping those in need.

House Minority Leader Richard DeBolt, R-Chehalis, said the governor’s job-creation goal was close to what is needed, but he said tax increases are not merited. DeBolt said GOP leaders met with Gregoire a month ago and proposed looking for ways to create 50,000 jobs, cut regulations and cut state expenses.

DeBolt questioned Gregoire’s call for a “One Front Door” program to speed multi-agency permit requests through a single state portal. He said he wants to see less red tape instead of creating a new office to help businesses find their way through the tangle.

DeBolt also cautioned that jobs are needed in the private sector, not the public sector. He said state Employment Security statistics show a loss of 170,400 private sector jobs since February 2008, while the public sector gained 8,200 jobs in the same period.

The state “can’t tax our way out of this” nor can it recover by creating government jobs, DeBolt argued. “Otherwise we’ll be France.”

House Majority Leader Lynn Kessler, D-Hoquiam, said the governor’s broad goals of job creation and increased revenue were on the mark.

“Will we agree with everything? Probably not. … I think most of our caucus was pleased to see we’re leading with jobs, holding to our values and protecting the safety net,” Kessler said.

Gregoire said her economic plan – one she intends to spell out in more detail Thursday in Seattle – includes more efforts to attract capital investment into the state and a tax credit for small businesses that add employees. She wants to speed permit handling by agencies, extend the life of permits by two years where credit-strapped companies have run out of time to start projects, and amend the rural county tax credit program so its help is easier to tap.

Gregoire also touched on other topics – the deaths of seven police officers last year; the state’s high ranking by Forbes magazine as a place to do business; the need for retraining of workers; and the promise of jobs in the high-tech, bio-tech and renewable energy sectors.

The governor made a pitch for more efforts to streamline government, eliminating 78 more boards and commissions, merging many small agencies into larger ones, and $65 million in savings from closing part or all of 10 state institutions including prison wings and institutions for the developmentally disabled.

Gregoire also highlighted some of the programs – levy aid to tax-poor schools, money for early childhood education, financial aid for college students, and help with health care for the poor – that she wants to pay for by raising $779 million in new state or federal revenue. Even with that new money, she is expecting to seek budget cuts of almost $1 billion in the cycle ending in June 2011.

The governor singled out University of Washington student Janel Brown in her comments about the need to provide financial aid, which her original budget would have cut. Brown said later the Husky Promise scholarship program has helped pay her schooling costs.

“I’m terrified, ’cause I have a year left and I’m actively seeking scholarships to make sure I can finish. School’s expensive,” Brown said. Without the promise of aid, Brown said other students still in high school won’t be as motivated to excel.

Kessler, whose party holds a 61-37 majority and can pass legislation without GOP help, said she agrees with Gregoire on finding new revenue for early learning programs, financial aid, the Basic Health Plan, a life-line giving aid to the disabled, and giving help to tax-poor school districts.

But she thinks Gregoire’s goal of $779 million in new revenue – as the governor outlined it in testimony before a budget committee – is a bit higher than what House Democrats are looking at.

Kessler declined to identify specific tax increases on the table – other than wanting to close a tax exemption for certain out-of-state food vendors, which a Supreme Court ruling broadened last year. Her caucus has talked about taxes on bottled water, candy and pop, and cigarettes.

Gregoire also has been shy about identifying specific tax loopholes or exemptions she wants to close, although she did reveal about $105 million she would like to see approved – including closing the loophole in the Dot Foods court case and ending tax breaks for gold bullion dealers.

Sen. Linda Evans Parlette, R-Wenatchee, gave her party’s response to the governor’s speech, saying in prepared remarks that “people are genuinely worried. They are angry about the economy and the lack of job opportunities. And they are very, very concerned about the deficit spending that continues.”

Republican Sen. Joseph Zarelli of Ridgefield added during a GOP news conference after Gregoire’s speech that he has doubts whether the state should accept more federal aid.

Although he does not support tax increases, Zarelli said tax increases would not be as bad as taking more federal aid, which has strings attached; if the state does get more one-time federal help, Zarelli said it should be spent to reduce the state’s pension obligations.

Zarelli also wants majority Democrats to declare a fiscal crisis that would, he thinks, allow contracts with state workers to be declared void. That would open the door to new negotiations over pay and reducing the cost of employees on the state payroll, but Democrats have little interest in doing that so far, according to Kessler.

South Sound Democrats liked the governor’s speech.

Rep. Kathy Haigh, D-Shelton, said Gregoire’s proposals for jobs and restoring funds for schools and levy aid were on the mark. Haigh said she is willing to vote for some tax or revenue increases, including an end to some tax exemptions, but she also will vote for cuts.

Democratic Sen. Karen Fraser of Thurston County said Gregoire set the right tone by calling for compassion and decisiveness.

“How do you be upbeat in times like these? And she was,” added Democratic Rep. Sam Hunt of Olympia.

Maks Goldenshteyn contributed to this report.

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