Governor Gary Locke’s Remarks
Seattle Chamber Breakfast
October 30, 2003

Good morning. Thank you, Judy.

It’s great to be here.

I flew in from our very successful China trade mission last week. Just in time to fly back out to Snohomish and Skagit counties to survey massive flood damage.

Just a few weeks ago, we wrapped up our final paperwork for federal drought relief received from the 2001 drought. Now we’re petitioning the federal government for flood relief. All of this on the heels of some of the most severe wildfires we’ve ever seen this past summer.

It’s been an eventful year – with a lingering national recession, 47 states with the worst budget problems since WWII, and the war in Iraq. Today I’d like to reflect on the past year and also talk about some of my top priorities for the coming 14 months.


Progress in Education

In spite of fire and floods and a national recession, this has been a year of progress. Beginning with education. The strike in Marysville may have overshadowed things, but this past summer we saw very encouraging proof of success in our schools statewide. Our kids are making some of the greatest academic gains in the nation.

The National Assessment of Education Progress reported that our 4th and 8th graders scored above the national averages in both reading and writing. More Washington students are succeeding on Advanced Placement courses.

Our state leads the nation in S.A.T. scores. In states with large numbers of students taking the test, Washington is number one in both math and verbal! The College Board has stated that Washington has had the largest gains over the past ten years.

And on the American College Test, which is used by many private colleges, Washington students tied for first with two other states.

The WASL scores released in August also showed great progress.

These tough new WASL standards were established by Washington parents, educators and business and civic leaders to reflect what our kids should master to be successful in this global, high tech 21st century economy.

Look at what we’ve accomplished in just six years! Fourth graders meeting the reading standard went from 48 percent in 1997 to almost 67 percent this year.
In math, fourth graders went from 21 percent passing to 55 percent this year.

Seventh graders have made great progress in writing, going from 31 percent in 1997 to nearly 55 percent this year.

I am very proud of our students, teachers, principals, parents and school district staff. We have very high standards, and they are paying off.

We must stay the course. We cannot back off. We can’t be lulled by student performance on national tests as a reason to abandon our tougher standards.


Improving Our Business Climate

We also made great strides this year in improving our state’s business climate. We are becoming more competitive, especially in responding to the recommendations of the Washington Competitiveness Council.

After this year’s session, we received a “report card.” The Competitiveness Council Scorecard issued at the end of this year’s legislative session concluded: “Extraordinary effort led to remarkable results.”

The Competitiveness Scorecard tallied 32 bills that the Legislature passed and I signed into law this year—32 bills that advanced the Competitiveness Council agenda.

Plus many other recommendations have been implemented via Executive Order.

Our centerpiece accomplishment: We passed a 10-year transportation improvement plan, with $4.2 billion in new transportation improvements across the state.

We didn’t give up after voters rejected a 9-cent increase last fall.

This is a great start. Projects have already begun and one safety project was completed on time and within budget.

King, Pierce and Snohomish Counties have also been given local option taxing authority to supplement state money to focus on regional priorities, especially the Alaskan Way Viaduct and the 520 bridge.


I know this group shares my determination to continue pressing for more transportation improvements for our state. We must continue to improve our transportation system. Our economic development depends on mobility of people and freight.

We also made substantial progress in regulatory reform, cutting red tape and streamlining regulatory processes. The Department of Ecology has set a goal to act on 90% of water quality permits within 90 days. We’re on target to meet this goal.

One year ago, permits were issued within 60 days for cleanup of contaminated land in Auburn. The land was Boeing surplus land that Safeway wanted to purchase to build a multi-state distribution center – the largest construction project in the company’s history. To get this project off the ground, Safeway and Boeing sought an expedited permitting approach to assist the real estate transaction.

The permits were issued within six weeks without any objection or appeals by environmental groups.

We simplified municipal B&O taxation, and prohibited “double taxation” of the same activity by two cities, giving greater predictability and encouraging investment in Washington.

We passed sweeping reforms to Unemployment Insurance, proposed by the business community, and passed Injured Workers’ Compensation reform, proposed by my administration.

We put an exclamation point on the session with our efforts to keep the 7E7 production in Washington. We passed a $3 billion tax incentive package for the aerospace industry if the 7E7 is built in Washington. We showed that we’re passionately committed to keeping our great companies.

We are confident in the proposal we submitted to Boeing in June. We’re continuing to clarify our proposal to Boeing. And we are hopeful that Boeing will choose Washington as the best place to build this airplane.

Why so much for a few thousand new aerospace jobs? It really only translates into a few thousand aerospace jobs.

But if Boeing builds the 7E7 in another state, it could also – 10 or 15 years down the line – decide to build the next generation of the 747 or the 737 in that other state that lands the 7E7.

That could mean a potential loss of 135,000 direct and indirect jobs. And it could cost the state nearly half a billion in General Fund tax revenues per year – money the state needs for education, operating our prisons and providing for our vulnerable children and adults.


We have made great strides in improving our state’s business climate. According to U.S. Census Bureau figures for the last few years, we’ve been below the national average in state and local taxes per $1,000 income for the first time since the early 1980s. We were ranked 31st – 33rd. We did not raise general taxes during this recession to solve our fiscal problem, unlike other states. So, we expect to remain a low tax state when the numbers are updated.

Our Worker’s Compensation premium costs are low, ranked 44th in the country. Only six states were rated lower according to the WashACE 2004 Competitive Redbook report, which is the only authoritative source of state-by-state comparisons. Until last year and this year, we went 10 years without a rate increase. How many of you have had no rate increases for private auto, homeowners or liability insurance for 10 years, or even get a rebate?

How competitive are we? Seven national chains have located regional distribution centers in Washington state since January of 2002. These companies looked at our state and chose Washington over other Northwest states. These companies like the business climate here. And together these companies are generating approximately 1900 jobs in our state. We are also actively talking with other companies interested in establishing major factories here.


Business Support Needed

Our state’s hard work in improving our business climate deserves the support of business. When we’re negotiating with companies to choose our state, we must often correct misconceptions these companies have about Washington—for example, ergonomics rules.

We welcome the critical analysis by business and local chambers of commerce of problems confronting business. We value the input of business. We share the concerns of companies in our state. Because we all want economic growth and long-term economic vitality to provide good-paying jobs for our residents. And our state has made good progress in becoming a better friend to business. We have spent several years working together toward that end. This past session we really went the extra mile in Olympia. There’s still more to do!

But we also need the cooperation and support of the local chambers of commerce we’re trying to help. We must be partners in promoting our state and attracting new businesses to our state. These new businesses and their employees will end up being your customers and clients.

We must be partners in encouraging businesses to locate and grow here by citing our strengths and our improvements, while being candid about remaining issues.

Strengthening our business base will further develop our economy, which means good family-wage jobs for our sons, daughters and neighbors. And a vibrant economy will ultimately provide needed revenues for education, medical care for seniors and low-income children, and public safety. A vibrant, healthy economy will help us better serve the priorities we all care about most.

Looking Ahead—Top Priorities

That brings me to what we’ll focus on during the next 14 months. As proud as we are of our accomplishments, there is more work to be done.

We have a very good start in education reform. But from preschool to graduate school, education requires more dedicated, permanent, and stable funding.
As we build our world-class education system, we must also strategically plan our state’s economic development. It’s our education system that will supply the first-rate workforce we need for a thriving, competitive state economy.

We are already focused on education and economic development. We must now strengthen the link between the two. A strong public education system prepares our children for a lifetime of achievement. And higher education should be viewed as a powerful economic development tool. Think of all the companies and technology that have been spawned by the presence of the University of Washington! Kidney dialysis and ultrasound were developed at the UW.

We need to better harness higher education to help drive economic growth. We’ve been successful in making our state more competitive by business measures—as evidenced by the scorecard. But we have not been as successful in meeting our goals for higher education.

We are home to some of the most innovative companies and accomplished universities in the country. We should be performing better in training people to work for these companies.

Many of Washington’s companies need workers with post-secondary vocational credentials. But they can’t find them. We’re not producing enough! The Workforce Training and Education Coordinating Board performed a statewide survey of employers in 2001. They found that 83 percent of those surveyed had difficulty finding qualified applicants. The difficulty is due to a gap between the number of jobs available that require these credentials and the number of students prepared for this type of work.

The Workforce Board estimates that currently only about 73 percent of the available jobs can be filled with qualified workers. That’s a workforce gap or shortage of 6,700 workers. This gap is expected to grow in the next few years.
Yet we are turning away more and more students from our colleges and universities because of a lack of funding. Despite rising tuition, tuition only covers a part of the costs of educating students. The state pays the rest. Without more money from Olympia, colleges and universities won’t admit more students.

We can’t tell our kids to just wait a few years, until the economic recovery is complete and more revenue is available before attending college. We can’t ask them to wait until tomorrow for the college and training they need, while those good jobs go to people from out of state today.

When you’re ready to begin hiring, you’re not going to wait 2-to-4 years while our students attend college.

We will continue our efforts to improve our business climate in such areas as taxes, regulations and infrastructure. But it’s painfully clear that we need to focus more intensely on two areas:

· Higher education access and funding
· Workforce training for high demand fields

The Competitiveness Council is now working hard in each of these areas to strengthen the vital link between higher education and economic development. We must approach the coming legislative session with this high priority in mind. Our future economic vitality—and the good jobs that go with it—depends on better developing our human capital in our state.


Conclusion

As I mentioned at the outset, I visited some of our state’s flood areas last week. The men and women I talked to are the true face of Washington. Not the buzz. Not the controversial sound bites. But the people.

Imagine losing everything you own. Your house and all your belongings—gone. Your car, your property—underwater and damaged or lost completely. Your business or your job at that business—gone. Imagine putting your kids to bed in an emergency shelter, trying to reassure them that everything is going to be okay.

The most moving thing about the people who shared their stories with me last week was their determination to pick up the pieces and keep going. They still have faith in the future. Their spirit is unbroken. And their courage and resilience shows the way for the rest of us.

If we approach the work before us with similar resolve, I know we will succeed. We can successfully position our state to prosper in sustainable, visionary ways. I know that working together, we can continue to make Washington a great place to live, work, and raise a family.

Thank you.