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State of the State Address

Governor Mike Lowry
Delivered January 9, 1996
House Chambers
Washington State Capitol

Introduction and overview

Thank you, Mr. President, Mr. Speaker, distinguished members of the Supreme Court, distinguished state elected officials, members of the Legislature, Consular Corps, and citizens of the great state of Washington.

Thank you for the privilege of serving as your governor.

As I stand here today, our state is in excellent shape, and our future looks bright. I want to thank all of you in this chamber and those watching at home or at work for making that happen.

Three years ago, we were facing serious economic problems. The state had a $1.5 billion deficit. Today, we have a $677 million reserve.

Three years ago, we were in the midst of huge job layoffs. Today, we have reversed that trend, creating 120,000 net new jobs over the past two years.

Three years ago, we set out to make state government more efficient. Since then, we have cut the growth of state general fund spending in half. And we have reduced the growth of state employees to less than a quarter of what it had been in the previous decade.

Our hard-working public employees - who are often under-recognized for their dedicated work - are a major reason for this success.

Washington, as a whole, is in good shape.

· We have increased our reputation as the nation's top international trade state and are well on our way to achieving our goal of being one of the world's major high-technology centers.

· Major manufacturers are choosing to locate here - investing billions of dollars, creating thousands of good-paying jobs. Over the past few months, we have had the opportunity to welcome a number of world-class companies to our state - companies like Intel, BHP Steel, and Ponderosa Fibres.

· So it's no wonder that state economist Dr. Chang Mook Sohn recently announced, "There are no dark clouds on the horizon..... this strong growth will continue throughout 1996 and '97."

· That's good news, and something we can all be proud of.

I would like to pause for a moment here to recognize, and thank, the bipartisan legislative leadership who have worked together so well over the past three years. Your efforts have shown time and again just how much we can accomplish for the good of the people of Washington if we join together in a spirit of cooperation. Thank you, Speaker Clyde Ballard, Majority Leader Sid Snyder, and Minority Leaders Marlin Appelwick and Dan McDonald.

People of Washington are reason for strong economy

The strength of our economy is in the strength of the people who live here. People who care about our quality of life, about our environment, and about our schools. People with a strong work ethic in a skilled workforce that has employers across the country taking notice. People who are committed to moving into the future without sacrificing the gains of the past.

That commitment is part of the reason why some of the best companies in the world are moving to Washington - because the people who live here, and those who make decisions that guide public policy, share that vision. Our state is a great place to live.

Tax policies spur economic growth

There is another reason why companies are choosing to locate here:
We have taken significant, deliberate steps over the past three years to make Washington a great place to do business.

· We have implemented tax incentives that allow companies that provide family-wage jobs to spend less on taxes and more on investments that will help their companies grow. Three years ago, our state was ranked as one of the worst of 12 comparable states for manufacturing investment. We are now one of the very best.

· Because of our tax incentive for companies that locate in distressed areas, more than 170 businesses have moved to or expanded in counties with high unemployment rates.

· We now have the lowest workers' compensation premiums in the country, yet we provide the highest level of benefits.

· And our state has gained a remarkable reputation for regulatory teamwork.

Last October, during the dedication ceremony for the largest economic development project in a decade in Southeast Washington, Ponderosa Fibres President Martin Bernstein said the application process his company went through to do business in our state would have taken three years in other states. In Washington, it took less than six months. Mr. Bernstein said:

"We've not been able to do something like this in the state of Pennsylvania. We've not been able to do something like this in the state of New York. We've not been able to do something like this in the state of Georgia. We've not been able to do something like this in the state of Wisconsin."

But in Washington, Ponderosa Fibres found not only tax policies that were superior to those of other states, but a spirit of cooperation among government and local communities that gave new meaning to the phrase "customer service."

There are other keys to our success. Among them: improved government efficiency.

· Over the past three years, state spending increases have been well under the rate of inflation and population growth.

· And state agencies recently gave back $108 million in unspent appropriations.

In the final analysis, however, all the tax incentives and government efficiency in the world won't, by themselves, convince companies to move to our state. Time after time, business people have told me they are also looking for a skilled workforce and a quality of life that will make their employees want to stay here. In that regard, all roads lead to Washington.

Quality of life part of Washington's business appeal

In the past couple of years, we have been under extreme pressure to compromise our commitment to education, to the environment, and to our children. We have not done that. Our work is not finished, but our momentum is clear.

· Today, we are starting to make progress in education reform, so that a child's advancement in school will be based not on what he or she is taught, but on what he or she has learned. There is no higher goal for our state than to achieve our paramount duty of providing an excellent education system.

· We have begun to increase access to higher education, opening college doors to more students and helping others who may be long on desire to learn, but short on dollars for tuition. We must continue that commitment.

· We have taken steps to ensure that more people have access to health care, including the working poor and their children. We have made health care coverage more affordable for small-business employers. And we have put into place some very important insurance reforms, so that no one with a pre-existing condition will ever be denied coverage. We are the only state in the nation to guarantee that protection in every health insurance policy. We must continue that commitment.

· Finally, we have maintained our pledge to protecting the environment. Good environmental policy is good economic policy. We must never forget that.

When you step back and look at how much we've got going for us in this state, it's easy to see why so many of us have chosen to live, and work, and raise families here.

The challenge before us today is to preserve and enhance what is working in our state, improve where we can, and plan for the future with vision and courage.

The supplemental budget and legislative agenda I am submitting to the 1996 Legislature will help do that.

That budget includes investments in education, children and the environment, an expansion of job-creating tax policies, and a fiscally prudent reserve in the bank to prepare for the future.

Federal cutbacks top list of future challenges

My request to you is to keep enough money in the bank to help offset unexpected emergencies and a likely reduction of up to $4.2 billion in federal funding over the next seven years. Congress has made no secret of their commitment to deep spending reductions and shifting to the states much greater funding responsibilities for the elderly, children, people with disabilities, education, health care, transportation and the environment.

Here in Washington, the deepest cuts won't be felt for a while. The economists tell us that under Congress' plan, the reductions will escalate over the next seven years, and that in 2002, the effect on the state budget will be 33 times greater than in 1996.

Of course, until Congress and the President agree on a final budget plan, no one will know exactly what's really in store for Washington. We DO know, however, that any plan to balance the federal budget in seven years will require a significant reduction in the flow of federal funding to the states - and the state of Washington is no exception. We must resist the call to pass the buck to future Legislatures, future governors, and future voters.

That's why we need to maintain a healthy reserve fund, so that we are prepared for whatever plan comes our way. And that's why last year, I had to veto tax cuts that were so large that they were a great danger to our state's future - if Congress even comes close to the size of funding cuts they have already announced. In addition, the tax cuts I vetoed would have provided very little tax relief for average-income families in our state, while significantly reducing our savings and jeopardizing our future.

The property tax bill I vetoed would have saved $19 a year - $1.60 a month - on a $100,000 house. However, it would have cut the tax on a major downtown office building, such as Seattle's Columbia Tower, by more than $33,000 a year.

The B&O tax bill I vetoed last session would have saved a $60,000 small business about $156 a year - $13 a month. Meanwhile, it would have saved a $5 million law firm $13,000 a year.

It seems pretty obvious to me who would have benefited from those tax cuts - and it wasn't "mom & pop."

There is a clear question facing the 1996 Legislature. Do we maintain a healthy financial reserve and sound fiscal policies designed to meet major financial unknowns and keep the future bright? Or do we gamble that future on election-year tax cuts that have a clear vision of November 1996, but a much cloudier vision for the rest of the decade and the 21st century?

I know there are those for whom I have great respect who did not agree with my tax cut vetoes, and there are others whom I greatly respect, who advocate large tax cuts now. As individuals, and as friends, I hold you in high regard.

This debate is not about whether there should be tax cuts or not.... there will be tax cuts.

The debate is over how much we should save today.... and whether those tax cuts will rob our state's future, or whether they will enhance our economy and create jobs.

Education, help for working families, environmental issues also key

Our commitment to the future doesn't end with good tax policy. Perhaps even more important are steps we must take to protect our children, help working families, and safeguard the environment.

· We must bring more students into the state's higher education system by increasing the number of spaces available, offering additional financial aid, and expanding electronic communication between campuses and communities.

· We must take steps to restore, protect and enhance our watershed areas. We must continue the successful Jobs for the Environment program, and reauthorize the critically needed Puget Sound Water Quality Authority.

· We must strengthen our juvenile justice system by increasing sentences for juvenile sex offenders, improve security at crowded juvenile institutions, and help young offenders "go straight" and avoid a life of crime.

· We must keep violent sexual predators locked up. As a father, a husband, and an elected official, I want to find a way to guarantee that our communities, and our children, are protected from these very dangerous individuals. I know you do, too. I commend you for that, and we WILL find a way to do it.

· We must increase counseling and treatment services for runaway youth and their families.

· We must put a stop to the epidemic of domestic violence. Today, nearly one third of all homicides in King County are attributed to domestic violence. Last year, felony charges linked to domestic violence increased 46 percent. There is no excuse for that increase.

· We must make sure that working families have access to child-care assistance, to help them maintain their economic independence.

· We must provide real property tax help to people who need it most: those who stand to lose their homes when property tax bills rise faster than their incomes.

Finally, we must do a better job of protecting children who are in the state's care. To start with, we simply must reduce the impossible workload of 36 at-risk children to one state social worker. That ratio keeps those children in too great a danger.

Other challenges

There are other challenges ahead. I am deeply concerned that in our nation today, discrimination keeps raising its ugly head.

I want to be very clear. The state of Washington is committed to equal opportunity, equal rights and respect for diversity. To those who would bring hate and intolerance of any person, belief, lifestyle or circumstance into our state, I say, "hands off."

We will not tolerate discrimination in any form, for any reason. And we absolutely will not tolerate the sort of back-door discrimination against families and children that many today call "welfare reform."

The welfare reform system may well be broken, but the answer to repairing it is not to break kids.

Punishing children to get their parents off public assistance is not the answer; it is not fair; and it is not welfare reform.

True welfare reform doesn't turn people away and simply hope for the best, and it doesn't hurt children. Rather, it takes real steps toward helping people gain long-term financial independence.

Today, we also face the challenge of keeping our children safe in a world that has already taken too many young lives and irreparably damaged countless others.

The cycle of violence that is killing our children begins long before a child joins a gang or steals a weapon. It begins during the most impressionable time in his or her life, when a child is abused, or sees parents hitting each other.

And until we deal with the root causes of violence, until we deal with child abuse and neglect, with domestic violence, and with fetal alcohol syndrome, we will continue to spend millions of dollars building new prisons, and our streets won't be one bit safer.

Make no mistake - responsibility, accountability, and tough penalties for serious crimes are critical. But until we can stop a child from picking up a gun for the wrong purpose, we will have failed.

Earlier, I spoke of the economic growth that has been such good news for Washington. However, in the midst of this very bright future is a dark reality for a lot of working people: more and more, people's wages are simply not meeting their expenses.

Nationally, wages are growing at the smallest rate on record. Economists are calling the national economy a "wageless recovery," with record business profits and stagnant wages. We're doing a little better here in our state, but I want us to do a whole lot better.

Many of us today have become part of the new "stretch generation," struggling to contribute toward our children's expenses - whether that means college tuition or braces - while also caring for aging parents. Believe me, I know what that's like.

A lot of families today never imagined they'd have a hard time making ends meet on incomes they once only dreamed of. Most of them never imagined they might not be able to buy a house, or send their kids to college.

And it isn't just two-parent families with college-aged kids that are feeling stressed out these days. People in their 20s and 30s who have been to college are facing tough choices too, about where they can afford to live, and whether they'll be able to go back to school - even whether they can afford to start their own families.

The "stretch generation" and others for whom slow-growing wages are the wild card in life's economic decisions are the reason we must maintain our commitment to greater access to higher education, child care for working people, affordable health care, and property tax reform that helps middle-income people afford to stay in their homes.

There are other hard-working people who aren't getting a fair shake these days.

Tomorrow, tens of thousands of Washington citizens will get out of bed before sunrise, go to work, and put in an eight-hour day. They will work in warehouses and fast-food restaurants, offices and nursing homes. And at the end of the day, they will take home about $33 in pay. Thirty-three dollars.

With that, they'll have to put food on the table, pay part of the rent, and hope no one gets sick before the next payday.

People who work a 40-hour week ought to be paid enough to survive. Period. That's why I am submitting legislation this session that will take the first step toward wage fairness, by raising the state's minimum wage to $5.30 an hour. It is the right thing to do.

I would think that corporate CEOs, who on average make 140 times more than their employees, would be the first to agree that raising the minimum wage is the right thing to do.

Optimism for the future

Despite these challenges, our future, as a state, looks bright.

We have weathered storms. We have strengthened - and diversified - our economy. And we have created a quality of life that is the envy of people throughout the world.

The question today is whether we will have the vision, and the courage, to make decisions that will carry us forward, not backward.... decisions that will continue the course of economic growth that has turned our economy around, and positioned our state so well for the years ahead.

Will we have the vision to look beyond the next election, and say no to the short-term politically popular promises that rob our state's future?

Will we have the courage to do what's right for our children, and for generations to come?

In the end, little else matters quite as much. If we take care of our children, they will take care of our future.

Our obligation, as elected officials and as citizens, is to create for our children a safe place to live, a chance to grow up healthy, an opportunity to realize their dreams. The chance to learn, and to live in a world free of discrimination.

Years from now, when people look back on the decisions that we make today, my hope is that they will see our past the way I visualize our future:

Let them say that we helped hard-working people get a fair deal out of life.

Let them say that we created a cleaner environment, a stronger education system,
and a better quality of life.

Let them say that we spoke for those who had no voice, that we cared for those who most needed help, and that, in the twilight of their lives, we honored those who had given so much.

Most importantly, let them say that we made our decisions with vision and courage.

Thank you.