Governor Gary Locke’s Remarks
Governor’s Economic Development Forum
December 1, 2004

Thank you, Juli, for that kind introduction. I am pleased that so many of the economic leaders from around the state are here today. The strong turnout reflects the importance of this meeting. I want to thank the Association of Washington Cities for their help in making this conference a success.

In less than two months, I will leave this job I’ve grown to love so much. As I’ve reflected on how much I have enjoyed serving the people of Washington, I’ve felt many things. Gratitude. Humility. Hope. Satisfaction. A sense of accomplishment.

I’ve been deeply honored to serve as Governor of this great state. And I am very proud of the progress we’ve made during my two terms.

From raising academic achievement and job growth to regulatory reform;

From increasing sales of Washington agriculture to foreign markets to improving services to Washington citizens.

We have Washington right on track for a very bright future.

I’m especially proud because we’ve faced some formidable challenges. Challenges that seemed to come from every direction. A major earthquake. An energy crisis. Droughts. September 11th, and the constant challenge of improving Homeland Security. A severe economic downturn. Serious state budget shortfalls. Not to mention the recent challenge of rebuilding the Mariners!

Yet here we are. We survived, we’ve rebounded, and we’re charging ahead. The people of Washington have a right to be proud of our progress.

Despite continued national economic distress, Washington state is showing clear signs of a strong economic recovery. The Washington recovery is broad and deep and all across our state.

Employment in Washington is increasing more rapidly than in the country as a whole. We added over 61,000 jobs in the last year, including 10,000 net new jobs in October alone. Our unemployment rate has dropped by almost two percentage points since a year ago, twice as fast as the rest of America. We’ve gone in a short time from one of the highest unemployment rates in the country to the national average!

All this growth means that we have virtually regained all the jobs lost during the recession that began after 9/11.

The jobs that are being created are good jobs, too. Between the first and second quarters of this year, Washington had the highest increase in personal income in the country. Our earnings growth was twice the national average.

Many of these jobs have been created by businesses choosing to set up shop here in Washington. For example, nine national companies have chosen Washington over Oregon, Idaho and even California for major regional distributions, operations or manufacturing centers, directly employing 2,500 new employees. And REI has recently committed to expanding its distribution center in Sumner—another great example of a business recognizing what Washington has to offer.

Recent studies by independent organizations confirm our success in improving our business climate.

A study by the Tax Foundation ranked Washington 9th best in the nation for business friendly tax climate.

The Small Business Entrepreneurial Council ranked Washington the 4th friendliest business environment.

The Pollina Corporate Real Estate company, one of the top U.S. corporate site relocation experts, recently named Washington one of America’s ten most business friendly states.

And the U.S. Census Bureau recently released state rankings for combined state and local tax burdens. We ranked 31st, meaning 30 states have higher combined tax burdens. This is the lowest our state has ranked since 1981!

So how did we do it?

There are many actions we took as a state. From our Priorities of Government budget process to the nickel transportation package, to targeted tax incentives to skills training for specific business sectors, we have taken many steps to bring economic prosperity back to the state.

Our trade missions are a great example of how we have helped facilitate economic success for businesses from both sides of the state.
We have worked hard to open markets in places like China, Japan, South Korea, Vietnam, and Mexico.

And our efforts have resulted in significant success. Our first trip to China in 1997 has resulted in the lifting of longstanding restrictions on the import of Washington wheat. We helped create record sales of cherries in Asia after our 1998 mission to Japan and Taiwan. We created a great market in Mexico for Washington potatoes and French fries. We had similar success with our potatoes in South Korea. We sent first-ever potato shipments to both these markets in 2003.

Washington hops were introduced to Japan, with nearly $1 million in new contracts signed.

Our last two trade missions to China have been very successful. Our business delegates reported actual sales of $3.9 million and approximately $81.4 million in projected new sales during the next 12 months. All these sales contracts create new jobs in Washington state.

Partnerships between state and local governments and private organizations have also been significant contributors to our state’s success. A great example is the Action Washington team that convinced Boeing to locate final assembly of the 7E7 in Washington.
The statewide, bipartisan effort of the Action Washington team was unprecedented—and very successful.

This effort was never about a few thousand new assembly jobs, but keeping all Boeing aircraft production jobs in Washington – and the 150,000 direct and indirect jobs!!

State agencies, state and local leaders, business and labor leaders, economic development councils, tribes, ports, and many others worked together to showcase our state’s global competitiveness, but more importantly, to make changes to laws and policies within their purview. Together, we’ve developed a powerful model of collaboration for business retention and recruitment.

We need to bottle the energy, enthusiasm and collaboration we generated during the 7E7 effort to focus on other economic development objectives in other parts of the state. Action Washington demonstrated that when we all work together–state and local governments, labor and private businesses–we can accomplish great things for our state. But instead of waiting for the next opportunity to come along to unleash this powerful partnership, let’s create our own opportunities by targeting those industries that can be engines of prosperity in Washington.

One example of how we are working to grow another key industry is the Bio21 initiative. Two years ago I convened a group of industry experts, scientists, venture capitalists, and government officials to look at how our state can be even stronger in biomedical research.

We would accomplish this by bringing together bio-tech and info. tech. to accelerate medical research and ultimately develop treatments and cures. We could take some of our future tobacco settlement bonus payments and in partnership with private foundations create a huge fund to support research and good paying jobs in every part of the state.

We have had great success in other industries already. Marine services, food processing, forest products, energy efficiency and various high-tech sectors are just a few examples of targeted industries in our state that have resulted in economic success.

The message from the state is that we will partner with you to target and focus on business and job growth.

And we look forward to collaborating with businesses and local governments to reach the common goal of economic growth for Washington state.

One great tool we must maintain and indeed enlarge is funding through the Community Economic Revitalization Board. CERB is a valued program that creates significant economic impacts in participating communities. But the demand for CERB funding far exceeds the available dollars. A stable funding source is needed to ensure the future of the program.

Proposed changes to the current funding formula will allow critical local public infrastructure projects to continue – projects that encourage private development and investment in high-wage jobs.

We must give our communities the economic development tools they need. We should partner with local communities to fund infrastructure to attract new businesses and help existing businesses grow and expand. Forty-eight states now use tax increment financing to allow growth to pay for itself. I’ve proposed legislation allowing tax-increment financing. It passed the Senate, but failed in the House. Our communities need this tool to keep moving in the right direction. It’s time we delivered it.

I am pleased with the many steps we have taken to grow the economy here in Washington. But there is another component to a strong economy that I haven’t discussed yet.

To keep our state economy strong, we must continue to build a strong, world-class education system. Our children will need the best education possible to prepare for the global, high-tech, 21st century economy that awaits them. A good education system is something companies looking to locate in Washington always ask about. They look for strong public schools and job training programs for their employees at local colleges.

We have made great strides in education reform. We’re proud of our progress. But we must do more. Our education system must keep up with the demands of the new economy. We must help every child from every background do well in school, and provide the opportunities for a college education.

At the K-12 level here in Washington state, we’ve made great strides in raising academic achievement during the past several years.

This year’s WASL results are proof. Our students have made significant gains in reading and math at all three tested grade levels over the last seven years.

In fact, our kids are making some of the biggest academic gains in the entire nation!

Despite limited funds over the last seven years, we have taken many steps to help each student reach his or her full potential.

Washington is a national leader in education reform. We have set high, rigorous standards for academic achievement for all students.

Our standards are higher than most other states, because we know these are the skills students really need. And our students are still meeting these goals at a greater rate than those in the states with lower standards. We know we are on the right track.

But we must be careful not to get off this successful track. We can’t turn back and lower our standards or abandon these reforms.
There is too much at stake.

And once students finish high school, they need a place to go to develop their skills and talents to the extent needed to get a job in our ever-changing economy.

For the 2008-2009 school year, an additional 30,000 high school graduates a year will be wanting to go on to college. We need to make sure there is room for each of these students.

The training provided by our community and technical colleges is vital for our state’s businesses. The partnerships that have been established between industries and schools benefit employers and potential employees. And strong training programs attracts companies to our states.

We can’t tell our students to wait a few years before going to college. We can’t tell our businesses to suspend growth or hiring a few years until we expand our colleges and universities so our kids can get the education they need to compete for these good paying jobs.

A good education is not only the great equalizer; it’s the key to a vibrant economy and a better quality of life for the citizens of Washington state. Education benefits everyone. We must take necessary, essential, steps to reap broad rewards.

The Governor’s Council of Economic Advisors unanimously agreed that two components are key to our future economic success, for both western and eastern Washington: physical infrastructure and human infrastructure. We took great strides to address our physical infrastructure needs by passing the nickel transportation package in 2003. Now we need to do more to bolster the human infrastructure by funding our colleges and universities so they can educate more students.

Our state is a leader in so many areas. And that didn’t happen by accident.

We’ve worked hard and made tough decisions over the years because we believe in this state. And we believe in an even brighter future for our citizens.
I commend all of you here today for taking part in this effort to help strengthen the state’s economy and quality of life. Your leadership in pushing these issues to the top of the public policy agenda is vital.

Our citizens enjoy living, working and raising their families here in Washington. What must we all do to make it even better and more prosperous?!

Thank you.