Governor Gary Locke’s Remarks
Taxation Law Section, Washington State Bar Association
May 21, 2003

Good afternoon.

Congratulations to Jon Schorr the former Dean of Hjorth.

It’s an honor to address this group today.

I want to begin by congratulating my friend, Professor Meade Emory, on his receipt of the Stouder [rhymes with “Chowder”] Award.

It’s great to see a fellow Boston University Law School alumnus honored today.

Aristotle was known as “the Peripatetic” for walking around constantly as he taught his students in ancient Greece.

Well, I’d say Professor Emory could be the rightful heir to this title, “the Peripatetic.”

He has it all over Aristotle.

He traveled considerably farther as he taught at no fewer than 11 law schools across the country.

And I am very confident that Professor Emory knows more about taxation than Aristotle ever did.

I join the Washington State Bar Association in thanking you, Professor, for your outstanding contributions to our state and to American jurisprudence.

I also want to congratulate Audrey Nutt on winning this year’s tax scholarship.

What an impressive and remarkable record of academic achievement and hard work!

I can’t help but think that if we’d had your help with the budget this year, we might not be in special session right now!

Congratulations to you, and best of luck as you strive toward your educational and professional goals.

Today I’d like to talk about Washington’s business climate and the steps I think we must take for long-term economic recovery.

These continue to be tough economic times.

Our state faces a deficit of nearly $3 billion, and our economy is still struggling.

The Legislature is still working on the budget.

The results-oriented budget proposal I originally proposed is a dramatic response to our deficit.

Nearly every state in America faces serious economic challenges – 48 states are facing huge deficits.

But we are the first state in the nation to tackle our problems head-on by re-examining how we govern—and fundamentally changing how we make choices in allocating our resources.

Our Priorities of Government approach has become a model for other states to follow.

We exhaustively studied all that we do—examining some 1,400 state government activities.

The budget proposal clearly states what we believe are the highest priorities of state government:

Education, jobs, healthy families, safe communities, and protection of vulnerable children and adults.

The proposal lets us do what matters most without a general tax increase.

A general tax increase in these tough economic times will hurt, not help, our economic recovery.

The way to get back on our feet economically is to live within our means.

This is the conviction on which I based my budget proposal.

It remains my conviction today.

Holding the line on our state budget is just part of the solution.

We must also take decisive steps to improve the business climate and develop our economy.

A stronger economy will ultimately provide the revenues for education and medical care for seniors and low-income children.

A healthy economy will help us better serve the priorities we all care about most.

In December 2001, the Washington Competitiveness Council issued some very significant recommendations.

Recommendations to improve our business climate and make our state more competitive.

We have acted on virtually all of the key recommendations by passing legislation or by administrative order.

We’ve made substantial progress since the Washington Competitiveness Council issued its recommendations.

We must continue to improve our business climate to stay competitive in attracting and keeping businesses.

We took a giant step in this direction on Monday when I signed our new transportation improvement package into law.

This was the number one imperative recommendation of the Council.

After many detours, dead-ends and roadblocks, we are now in the express lanes to a brighter future for our state.

We’ve been losing $2 billion a year in wasted time, wasted fuel, and shippers’ delays, not counting too many accidents.

We’ve also been cutting red tape and streamlining regulatory processes.

The Department of Ecology set a goal to act on 90% of water quality permits within 90 days.

We’re on target to meet this goal.

Last year, for example, we approved a Safeway distribution center—the largest construction project in Safeway’s history—in less than 60 days without lowering environmental standards – a key recommendation of the Competitiveness Council.

Seven national chains have located major regional distribution centers in Washington state since January of 2002.

These operations generate approximately 1900 jobs in our state.

That’s 1900 meaningful opportunities with good companies.

1900 families in our state with new, promising beginnings.

These companies chose Washington for many reasons.

Washington has always been a great place to do business – with a great environment, a trained workforce and a prime location.

And we’ve been working very hard the past few years to make our state even more competitive.

It’s paying off.

While we’ve heard some criticism about the fairness of our tax system, we’re among the best in the country in the management and administration of the tax system.

In fact, Governing magazine rated the Department of Revenue's administration of Washington's tax system among the best in the nation in its February 2003 issue.

There’s a reason for that—we’re aggressively trying to improve.

We’re looking at every aspect of our tax system to determine what we can change, do better, or eliminate.

No one enjoys paying taxes.

I suspect that doesn’t come as a major shock to this group.

We all know we can’t eliminate taxes.
But we can try to make the process as simple and painless as possible.

If taxpayers or tax practitioners disagree with an action taken by the Department of Revenue, they deserve easy access to a forum within the Department where that disagreement can be aired.

Taxpayers deserve a fresh and thorough Department review of any tax controversy before a final decision is rendered.

So the Department has recently initiated a dialogue with the Washington State Bar Association and other stakeholders on "appeals reform."

The Department wants to know what its final review should look like.

How can it be improved?

Can it be made more timely?

Can it be made more fair?

We need your expertise in determining what the Department of Revenue’s final review of tax matters should look like.

That’s why we’ve initiated this dialogue with this group, and we have high hopes.

I just signed SB 5783, which implements most of the Streamlined Sales and Use Tax Agreement.

Washington was one of 34 states that passed legislation authorizing the development of a multi-state agreement.

The multi-state working group met for over 18 months hammering this out.

The group voted on November 12, 2002 to adopt the agreement, and it passed unanimously.

The agreement streamlines the sales tax system and harmonizes its administration in 45 states and 7,500 local jurisdictions.

This was the result of a state-corporate partnership to create a modern, efficient system for all types of commerce.

Once implemented nationwide, the Streamlined Sales and Use Tax System will enable all sellers to use one, simplified, modern system that is better suited to the digital economy.

The new system could save businesses hundreds of millions of dollars each year. And may ultimately lead to allowing states to collect sales tax for catalogue’s internet sales. Indeed some major national chains have said they will start collecting sales tax, though it’s not required.

As we improve our state’s business climate, we also need to focus on jobs.

Jobs are the key to economic recovery and healthy families.

We must do all we can to create and support jobs in our state.

The Legislature’s approval of my state construction budget will mean more than 13,000 new private sector construction and other family-wage jobs during the next two years.

These are jobs building and renovating facilities on the campuses of our colleges and universities, our public schools and our prisons.

The proposal sustains 11,000 jobs in the two fiscal years that follow.

My proposal allows for $2.5 billion in new public works funding.

Let’s take advantage of the low interest rates!

We must also capitalize on our competitive advantage in international trade.

Trade creates jobs.

Last year, our trade missions to Japan, Korea, China and Singapore were successful in helping Washington businesses sell products and services to some of the world’s most promising markets.

We returned from Japan and Korea with immediate new sales for Washington businesses.

In December we promoted Boeing airplane sales in China and promoted biotechnology in Singapore.

China is already our 3rd largest export trade partner.

It is a huge market with great potential for the sale of Washington products and services.

Washington companies will play a major role in the 2008 Beijing Olympic games.

And Singapore is now interested in funding biotech companies in our state.

We must continue to pursue these golden opportunities to create jobs in our state.

We must also continue to give Washington communities more effective economic development tools.

This session we’ve created new economic development tools to help local governments and rural areas in our state attract new business—and keep the businesses they have.

We must also continue to promote Washington’s emerging technology strengths.

For example, state government is a partner in the Northwest Energy Technology Collaborative.

The Collaborative will promote Washington’s clean energy industry, a potential multibillion industry.

We are also promoting bio-information (bio-tech with computer sciences) by providing seed funding to coordinate private sector and university partnerships in biotechnology and information technology.

And we’re supporting development of technologies for converting agricultural waste into valuable materials otherwise made from petroleum and chemicals.

We must continue to create jobs with investments in education, especially higher education. We need stable, dedicated permanent funding for higher education and increased enrollments.

Our state’s businesses continue to need these critical skills.

I don’t want Washington companies to have to hire people from out-of-state to meet their needs.

I want Washington citizens to have the first chance at filling these good paying jobs.

I don’t have to convince this group of the importance of the federal-state partnership.

We must continue to push Congress and the President for an economic stimulus package that helps our state’s workforce and get us out of the recession.

We will always work hard at the state level toward a future of economic vitality.

But economic problems do not begin and end at state borders.

National responsibility must be assumed as well.

Just a fraction of what President Bush wants by way of a tax cut could be put to use on programs that create jobs now, for example.

Let’s have a meaningful, comprehensive plan for our country’s economic recovery that reaches everyone.

They say that the only sure things in life are death and something else.

I think economic recovery is inevitable too.

If government and business continue to work together and focus on our true priorities, better days are ahead.

Together, we can make sure that Washington continues to be a great place to live, to work, to raise a family—and to do business.

It’s been a pleasure sharing a few thoughts with this group this afternoon.

Thank you.

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