Governor Gary Locke’s Remarks
Seattle Chamber of Commerce 2002 Leadership Conference
October 18, 2002
Good afternoon ladies and gentlemen. It’s a pleasure to be here.
Albert Einstein once said, “I don’t worry about the future. The future comes soon enough.”
What may have worked in Einstein’s day, doesn’t work very well for us today. Looking at the challenges we face, most of us would agree that the future is already here and that what we do today greatly impacts the future. We can’t help but worry about the future. Our challenge is to translate our concerns into constructive action. To ensure our vision of the future becomes reality.
The future seems especially immediate to me when I think about my children. Just last month, Mona and I took our daughter Emily to kindergarten for the first time. Our son Dylan is only two years behind her. They are growing up fast, reaching critical milestones. We wonder—we ask—we agonize over—what our state will offer to them as adults. Will Central Puget Sound and the rest of Washington be the kind of place where they want to live, work and raise their families?
I hope so. Today I want to share a vision for Seattle, the Puget Sound region and our state, then discuss the challenges we face in achieving our vision.
I envision a Greater Seattle region that is even more global in reach. A city recognized in the same class as such cities as Sydney, Milan, Barcelona. Cities built on ideas, energy, and global linkages. Cities tempered by a strong commitment to livability—civility and diversity.
The foundation is already in place. Seattle has roots in international trade and production for export. The Puget Sound region and our state are known around the world for software, timber and forest products, seafood and agricultural goods, airplanes and fine wines. We’ve assumed a leading role in information technology. Seattle entrepreneurs have created business models and a “Seattle brand” recognized around the world. We have Gates and Microsoft, Shultz and Starbucks, Bezos and Amazon.com,.
Our trade missions show us that we’ve only just started to tap our international trade potential. And the quality of life in the Puget Sound region is consistently rated as one of the best in the world.
I also envision a Seattle region that capitalizes on its strengths in knowledge and innovation. Human capital and innovation are the fundamental sources of competitive advantage in the modern economy. The Seattle area enjoys tremendous resources in this area. World-class research institutions. Powerful industrial R&D centers. Leading technology companies in aerospace, information technology, telecommunications, and biotech.
But the competition for talent, for research dollars, for investment, for new and expanding companies is intense.
The vision includes our exceptional quality of life. The Seattle region is rich in cultural resources and natural amenities. Preserving this heritage, and improving on it, is a fundamental obligation of stewardship that we owe to our children.
Quality of life is also a competitive asset. It is essential in attracting and keeping talented individuals with the skills and knowledge to fuel the Innovation Economy.
Finally, I envision a Seattle region that is inclusive. A region that creates opportunities for all of its citizens. A region that welcomes diverse, talented and ambitious people from throughout the state, the nation and the world.
Global presence, knowledge and innovation, high quality of life, inclusiveness. These are the elements for sustainable development across all of Washington state. But achieving this vision will not easy. Key challenges stand in our way.
It’s an understatement to say that these are tough economic times. But it’s true. It’s a cliché to say “things are tough all over.” But that’s true too.
Forty-six states are experiencing major deficits as a result of the recession brought on by the Sept. 11 attacks against our country. The total expected state budget shortfalls across the country is $58 billion for the next one fiscal year.
Some states have taken radical steps to cope with tough times. Twenty-three states cut K-12 education funding in either their 2002 or 2003 budgets. We made minor cuts last year. Sixteen states raised taxes by more than one percent over their 2001 collections. Thirteen states boosted motor vehicle fees. We did neither of these.
Our Chief Economist, Dr. Chang Mook Sohn, recently revised state revenues downward over the next two years. We face a potential shortfall of $1 billion a year for the next two years. And that’s just to maintain existing programs with no enhancements and no new initiatives.
Ninety percent of our state budget can be summarized in three words: education, medication, and incarceration.
The situation is not hopeless, however. It isn’t even unprecedented. We’ve been here before.
Our unemployment rate has been fluctuating a little above 7 percent. But during the 1971 recession, it rose to 10.4 percent. During the recession of the early ‘80s, it was 12 percent.
This is, however, the first time revenues to the state are less than the previous biennium!
I served on a panel recently with former Governors Evans, Spellman and Gardner. We talked about how our state has weathered tough times before and emerged stronger.
We will this time too. We’re in for a longer struggle than before, but we will emerge stronger. And we’re starting by changing the way we approach the 2003-2005 state budget. And in our vision of state government.
We are asking four critical questions. They are:
1. How much revenue will we have?
2. What are the core results we must deliver to citizens?
3. What are the most effective ways to deliver those results with the resources we have?
4. What are the criteria for measuring programs?
We’re asking these questions from a fundamentally different perspective than before. Rather than just assume historical funding levels for existing programs, based on legislative tradition, our premise is that our budget must be based on desired outcomes. Instead of asking, for example, how much must be spent to keep health care programs running, we’re asking how can we improve the health of Washington citizens. Desired outcomes. Not just continued spending.
We’re mapping out multi-year blueprints and strategies for accomplishing these outcomes. We have more than a new working philosophy—we’re putting together a detailed strategic plan on how our government should operate. And how it should operate not just for the next two year budget cycle, but several years beyond.
We’re developing criteria for both existing programs and new ideas. Specific criteria that will tell us whether or not a program or idea qualifies for future funding. This is much like the way you in business might use hurdle rates to evaluate potential investments.
State government will change because of this approach. This is a dramatically different way of doing things. We’re just not going to be satisfied with trying to do the same old things with less money. Yes, we must always seek greater efficiencies. But we must ask if we should even be doing the same old things. The old way is not a long-term solution. It is not a solution at all.
The state budget I’ll unveil in December will have deep cuts – tough choices. They may not be palatable to everyone. If so, citizens must be engaged in what they want of government and how to pay for it.
We are at a crossroads, and we need dramatic and constant innovation. Washington state citizens have a right to expect that of their government. Washington citizens ask nothing more than sound government that delivers the right outcomes. We must give them nothing less.
While we work through our budget challenges, we must not lose our focus on long-term economic growth. After all a stronger economy will ultimately provide the funds for police, fire and medical care for seniors and low-income children. A strong economy is essential to achieving our vision. And education is an essential foundation for economic vitality. We simply cannot retreat on high academic standards and we must not short-change higher education. I have long-favored greater management authority, but not completely privatized undergraduate education.
A strong economy will require that we identify new opportunities. Right now, the convergence of biosciences, information technology and computer science is creating a new industry—the bioinformation industry. We are strongly positioned in these fields. That’s why I convened a high level working group from within these sectors that’s been working since summer. To aggressively pursue this opportunity we have an exciting protocol we’ll be announcing soon. We can be a leading regional center for this emerging industry.
We must seize the initiative to create this and other new competitive advantages. Information technology is transforming the life sciences, wireless telecommunications, clean energy, and agriculture. And our state is on the cutting edge.
As the Washington Competitiveness Council recommended, government needs to partner with our business, education, and research institutions. Let’s make our state a leader in these industries. We have made a good start with the Northwest Energy Technology Collaborative. This collaborative will accelerate the development and marketing of energy technologies and companies that call Washington state home. There is a huge worldwide market for efficient energy technology. We can do the same in bioinformation, which promises to change the face of medicine. We can do the same in other exciting new fields. As I said, we are well-positioned to lead the way. But the time to act is now. And a source of capital for these emerging sectors and companies are our state pension funds. Our funds are not invested in many companies but we can and must do more.
There are other challenges. We have acted on many of the key recommendations of the Competitiveness Council from tax policy to regulatory reform.
The Competitiveness Council recommended that environmental regulatory and permitting procedures be streamlined and shortened while maintaining high environmental standards. The Department of Ecology has done a great job of following through on that guidance. Let me give you an example. In July we issued a water-quality certification and permits to the Port of Seattle to rebuild the deteriorating Pier 90. That was just one month after the application was filed. The pier was needed to serve as an interim docking facility for Princess Cruise Line and Holland America. The Port was able to begin construction this summer as needed. That will mean jobs with the cruise ship lines, and more tourism dollars for the state.
But we have failed to act on the most important recommendation of the Competitiveness Council. We have failed to address the desperately needed improvements to our transportation system.
Transportation demand has steadily increased in our region over the years. Yet after you adjust for inflation, we actually have fewer state dollars per year for transportation now than we did a decade ago! Our economy loses $2 billion every year due to congestion—$2 billion in wasted time, wasted fuel, and shippers’ delays.
These losses increase costs for growers, for manufacturers, for merchants, and, ultimately, for us—the consumers. Washington businesses struggle to remain competitive under such a burden. Some businesses relocate or expand elsewhere—and some new businesses are reluctant to locate here.
We all know what it feels like to be stuck in the I-5 parking lot. We lose precious time staring vacantly into the brake-lights of the car ahead. Time we’d much rather spend with our families. Time we need to do our jobs well—and time we could be using to enjoy life. This human loss is not a reasonable price to pay for growth. There are also too many unsafe roads, too many accidents and fatalities. This is not a reasonable price to pay for growth either.
This problem will not go away—it will only get worse. The economic impacts will only get worse. The solutions will only get more expensive. And if we don’t solve the problem now, we will be leaving our children a shameful legacy—a legacy of immobility, lost economic opportunities, and a compromise in safety and the quality of life.
We have the opportunity to revitalize and improve our transportation system next month.
If we successfully meet the challenge of improving our transportation system, our economy will benefit in many ways. If central Puget Sound also authorizes regional improvements there will be more than 20,000 new jobs. That’s 20,000 family wage jobs across our state, sustained for several years. Long-term economic development depends heavily on a healthy transportation system. We won’t prosper without it.
That’s why we’re here in Vancouver—fostering a dialogue about our shared vision. I commend the Seattle Chamber of Commerce—and all of you—for your ongoing leadership in Seattle, in the Puget Sound region, and in Washington state to ensure that brighter future.
Working together, I am confident that we will turn our dreams—and the dreams of our children—into reality.