Governor Gary Locke’s Remarks
Association of Washington Business
September 25, 1997

I want to begin by thanking AWB for endorsing Senator Dan McDonald's call for a 75-cent per gallon increase in the gas tax.

And now that I have your attention, I'd like to address a few other issues.

And I'd like to do so within the framework of your emphasis on partnership.

That emphasis is both welcome and long overdue.

And much of the work of my administration in our first few months has been focused on making government a better, more efficient, and more humble partner.

I want you - and every other citizen - to be able to see day by day and month by month, state government becoming smarter, more sensible,

and more responsive to the needs of citizens.

We simply have to get smarter if we're going to make ends meet four or five years from now.

Boeing employment is up not just because the economy is great,

but because they're working hard to catch up on a backlog of orders.

But Boeing's leaders and other expert Boeing watchers say that in the year 2000, a combination of catching up on the backlog and productivity gains is likely to cause Boeing employment to start ramping down again.

With our economic diversity, it's our hope those workers will be able to find new jobs quickly.

But while our economy has become more recession-resistant, it is not recession-proof.

The business cycle of ups and downs has not ceased to exist, nor has our population -- and the demand for critical state services like education, prisons and nursing home care -- stopped growing.

So we have to squeeze every dime out of our state bureaucracy til it squeaks, and craft fiscal policies that preclude the need for general tax increases in years to come.

The two watchwords I keep coming back to are stability and investments.

The need for stability is obvious: state budgets should not operate like roller coasters.

None of us ever wants to revisit the scenario we had in the early 1980s, and yet again in 1993, when we faced both tax increases and painful cuts in state services.

And the need for strategic, targeted investments - in education, transportation, and resource protection - becomes more apparent with every passing day.

Most of our current surplus is a one-time windfall.

And the Washington CEOs and economists that I've met with to discuss fiscal policy have been unanimous in the belief that today's economic euphoria won't last forever.

That's why we're being very careful in our approach to fiscal policy.

Since 1994, this state has made significant progress in crafting policies that support economic growth and private investment.

We have attracted companies like Intel and BHP Steel by providing a carefully targeted manufacturing tax break.

We've created special tax incentives for high tech facilities, and tax credits that helped the Centralia Coal Plant keep operating while cleaning up its emissions.

In the 1997 session, we worked with AWB to complete the roll-back of the B & O tax to pre-1993 levels.

In fact, since 1994 business taxes have been reduced -- above and beyond the repeal of the 1993 taxes - by over $700 million. And property taxes will be reduced if the referendum on this fall's ballot passes.

And working with many of your members, we made it clear that there will be no tax on intangibles Washington state.

So what should we do with this year's surplus accumulated so far - 4% of our operating budget?

CEOs from all across the state are very clear about this:

Put as much away for rainy day - the inevitable rainy day - as possible.
Avoid across-the-board "feel good" tax cuts. But if tax cuts are considered, carefully and strategically target them to achieve a better workforce or demonstrable economic investments or growth.
Finally, invest as much as possible in education.
In the years to come, we intend to honor the instincts of our CEOs

by crafting strategic, targeted tax measures that promote investments in job training and education.

We also want to promote family-friendly policies that - to give just one example - would help reduce turnover in employees because those employees can't afford day-care and have to quit their jobs to care for their children at home.

But we're not going to make any decisions about fiscal policy -

either spending or targeted tax relief - until we have thoroughly analyzed their likely impacts on state revenues and expenditures four or five years down the road and our ability to sustain them.

And we are going to be equally rigorous in analyzing potential investments - in education, transportation, or the stimulation of business - to determine what long-term dividends they will produce.

There is just no doubt that strategic investment and long-term stability are far more important than the short-term thrill of politically popular tax reductions.

And there is no doubt that what's most important to the businesses of this state is the improvement of our schools.

I hear that message over and over and over again, from employers who produce everything from potato chips to space stations.

As most of you know, we recently received a startling wake-up call about the state of our schools.

In our first test of how well our fourth-graders measure up to our new, tougher academic standards, we found that only 22% met or exceeded the standard in math, and only 47% met the reading standard.

As Frank Shrontz just wrote in a guest column, this doesn't mean that our fourth-graders are any less capable than they've ever been, or that our teachers aren't doing a good job.

It just means we've raised the bar.

These standards were developed by Washington state teachers, Washington state business leaders and Washington state parents.

Our standards are high, but they are achievable.

They represent a level of learning that we know our children will need to thrive in the 21st century.

And we are not going to back away from those new standards - not one inch.

But to help all our students meet or exceed those new standards,

we will need an unprecedented level of public engagement in our schools.

I urge each of you to ask your local school to send you its test scores.

And each of you must work with your local schools to develop the game plan that will help all students master these new levels of learning.

Our schools need you.

Equally important, I hope all of you will help create a culture of learning - a culture in which every home, every community, and every workplace is a center of learning.

There is a great hunger for education in our state among people of all ages.

Thousands of adults want to go back to school, to learn new skills,

to broaden their horizons, or to change careers.

You can whet this appetite for learning by offering your employees new opportunities to educate themselves and update their skills, and by encouraging and supporting your employees' efforts to help their children succeed in school.

You can encourage your employees to bring their children to work, so that kids can see how what they're learning in school is relevant to the workplace.

And you can play a vital role in holding the line on high academic standards, and holding public schools accountable for helping kids reach them.

We simply cannot succeed at raising the academic achievement levels of our children - or creating a culture of lifelong learning - without the full participation of the business community.

But it won't do much good to have a highly educated workforce

if they can't get to work because they're all stuck in traffic.

And truly, those job opportunities for the next generation won't be there

if our transportation system can't support a growing economy.

Highway use in our state has increased by about 80% in the last ten years.

Container cargo through our ports has increased 25% in the last five years.

Right now, over $1.5 billion a year is being lost to congestion -

in lost productivity, in lost opportunity.

It's only going to get worse, and the rate at which it gets worse will accelerate in the next few years.

We're losing the competitive advantage of our ports, because even though they are one day closer to the Far East, that day is being eaten up by the traffic congestion that holds up cargo on land.

In a state where one out of four jobs depends on international trade,

this is more than a problem - it's an impending economic emergency.

Business's stake in transportation is huge: your productivity; the ability of you and your employees to get to and from work without losing your temper or missing dinner; and your ability to ship or receive goods are all in jeopardy.

We simply must come up with a transportation plan that will enable us to move both goods and people quickly and efficiently.

And it must be a comprehensive plan that addresses both state and local transportation needs.

It must include both investments in the repair and maintenance of existing facilities, and the construction of new facilities.

And it must not be financed at the expense of our children's schools or our colleges.

Any discussion of transportation funding should consider all the possible sources - including the current Motor Vehicle Excise Tax.

But short-term, one-time fund transfers are no substitute for long-term, sustainable funding solutions.

On transportation, as on education, we can only succeed if we work together.

And working together means finding a bipartisan agreement.

We need the help of the business community to solve our transportation needs.

And I need your help on an even larger issue.

I want to offer you a deal:

My administration will work overtime to improve the quality of government, if you will work overtime with us to improve the quality of citizenship.

When I met with the AWB board last February, I said I would issue executives orders on regulatory reform and quality improvement.

I've done that.

I want to emphasize that these are not quick-fix solutions,

and that we will be working this agenda for as long as I'm governor.

But I also want to report that we're making measurable, visible progress - thanks, in part, to help from the business community.

At our Department of Labor and Industries, for example, they've eliminated not just lines of rules, but pages of rules - 283 pages, to be exact.

And let me tell you just one story of quality improvement.

For many years, our Department of Retirement Systems has sent out monthly notices to retirees to let them know that their checks have been automatically deposited in their bank accounts.

We recently sent all those retirees a letter, asking if they really wanted to receive that monthly notice.

Most of them didn't.

And the result is a savings of $15,000 a month in mailing costs.

Now we're investing some of that money in a toll-free customer service line - something our retirees have wanted for many years.

That's the kind of common-sense cost savings that must be multiplied many times over, so that we can direct more resources to the direct delivery of services -- like education, or nursing home care -- and less to the bureaucracy.

State government can and will improve.

But in the era we are leaving behind - the era of cynicism, blame, and mistrust - it wasn't just the quality of government that had deteriorated.

The general level of civic engagement, the level of personal responsibility for kids and schools, the networks of family and community - all these vital parts of our society had begun to atrophy.

Now our biggest challenge is to rebuild and revitalize them.

It's not enough to fix government.

We have to fix citizenship, too.

We have to fix what's wrong with our values, and what's wrong with our society.

To do that, we need both a renaissance of public service, and a renaissance of private citizenship.

That's why, as I travel the state, I keep asking everyone to come home

to the core values of service to others, respect for our elders, and sacrifice for our children.

And I'm asking this of the business community, too.

President Clinton said, in his last state of the union message, that the era of big government is over.

Now we must begin the era of the Big Citizen.

So if we want government to do less, citizens simply must do more.

We must never give up on our ambition to make Washington a great place to live, work, and raise a family.

But now we must realize that ambition one family at a time, one business at a time, and one community at a time.

So I hope you will be not just a partner with government, but a partner with your employees, your local public schools, and your community.

Thank you very much.
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