Governor Gary Locke’s Remarks
Harvard Business School Club of Puget Sound
January 26, 2004

Good evening. I’m honored to be here.

I use the word “honored” advisedly. Nearly eight years ago, I had the honor of becoming the first Chinese-American governor in U.S. history. Tonight witnesses another significant honor—I believe I am the first Yalie governor to address this group!

I apologize for being a little late tonight—seven months late to be exact. As you may recall, I was originally supposed to speak here last June. But our Legislature had other plans for me that evening. Our first special session ended that night, and I immediately called a second special session to complete the people’s business. Most of us worked all night long.

But it was worth it. Last year’s session was truly one for the record books.

I was looking back over the material this group sent to me for last June’s ill-fated speaking appearance. Here’s the description for that program, seven months ago:

“Not long ago, business was booming in Washington state and national magazines labeled this one of the country’s best places to live and work. Today we face budget deficits, transportation issues, high unemployment, public education concerns, tax debates, the aftermath of the tech meltdown and business without Boeing. How will this community regain its competitive edge?”

What a difference seven months makes!

My Priorities of Government budget funded the priorities Washington citizens care about most with the money we had. The Legislature adopted this approach, and we avoided a general tax increase at a critical time for Washington’s economy. We cut programs or avoided planned spending by $2.6 billion in the current 03-05 budget cycle. We managed this reduction without a budget crisis.

We passed a transportation improvement package that puts us well on the way toward a much better transportation system, especially right after voters rejected a 9-cent increase in the gas tax and observers predicted Olympia would not take up the issue.

Our unemployment rate has dropped, and we are no longer “number one.”

Our students are doing better than ever in school, as last summer’s WASL results and other indicators clearly show. We’re moving in the right direction.

We passed 32 bills last session that advanced the Competitiveness Council’s agenda. And enacted many other recommendations by executive order or agency directive.

And we landed the Boeing 7E7. “Built by Boeing” will continue to mean “Made in Washington by the best aerospace workers in the world.”

The multi-billion-dollar tax incentive package over 20 years was not just for several thousand new jobs, but to preserve 200,000 direct/indirect jobs!

Looking back, I would have to say that waiting seven months to come here resulted in a discussion with greater certainty and positives. The news is better today. Our state is rebounding.

We have established considerable momentum in key areas. We now have a chance to take our state to the next level of competitiveness and seize some unique opportunities.

The question we face today isn’t “Can Washington state compete?” The Boeing decision, and the decisions by seven other major companies in the past two years to locate here show we can compete—and compete successfully.

Just a few weeks ago, a South Korean biotech company, Univera, announced it will relocate its U.S. operations in Lacey, which will result in 300 jobs, including research and development.

The real question now is: Will living in Washington state and raising a family be even better in the years ahead?

Tonight I’d like to share some of my plans for this legislative session. I believe that by aggressively pursuing our agenda in two key areas—economic development and education—we can capitalize on our momentum for an even more competitive Washington.

This session I’ve proposed several key economic development measures.

I believe we must promote innovation. We are home to some of the top technology companies in the world. Our universities enjoy stellar reputations as leading research institutions. They are powerful engines of economic development. Research and development activity in our state has spawned industries of the future in advanced computing, biotechnology, advanced materials, electronic devices and environmental technology.

These industries have created thousands of jobs already, and will provide thousands more in the future. The investments we make in these technology areas will fuel this growth.

I’ve proposed that we extend tax incentives for research and development in specific technology areas and for construction of research facilities, and that we extend R&D sales tax incentives to universities.

We should also 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 that we do the same. Our communities need this tool to keep moving in the right direction.

I support using tax incentives to help develop rural economies. I’ve proposed extending the sales tax exemption on construction of manufacturing and research facilities in these areas. This legislation would also extend the B&O tax jobs credit, and continue the B&O tax credit for help-desk enterprises in rural areas.

I want to continue our efforts to promote our state’s great agriculture products, too. Our trade missions have been extremely successful, and my 2004 supplemental budget proposal maintains funding for a state trade representative for China and Southeast Asia.

Successful economic development also requires investment in education. One of the most important keys to the competitiveness puzzle is the inextricable link between economic development and education. Economic development and education go together like Harvard and crimson.

Everyone in this room understands the value of higher education. Imagine how drastically different your own lives would be if you had not had that opportunity.

But that’s the harsh reality for too many people in our state right now. More people than ever before are seeking a college education. But there just aren’t enough professors at our universities to meet that demand.

Meanwhile, employers are looking for more graduates in high-demand fields like computer sciences, nursing and engineering. Our high-tech companies will be hiring thousands of people each year over the next several years. But our colleges and universities can’t even meet half the need. If our state can’t provide the necessary training and education opportunities for these jobs, businesses will hire people from outside our state.

How can anyone consider giving tax breaks to businesses to create more jobs without also giving our students a chance to land those jobs?

What do we tell those who are waiting for college opportunities? We can’t just say “be patient and wait a few years until the state invests more in education.” We can’t expect them to wait until the economic recovery is 100% complete. We can’t ask them to stand by helplessly while those good family-wage jobs go to people from out of state.

We can’t ask that, and we won’t. I am proposing a $30 million increase in state-funded enrollment at state colleges and universities. This is an increase of up to 5,200 full-time students. And it includes up to 2,700 students in high-demand fields. We must make higher education opportunities more available, and we will.

And getting into a college or university is only half the battle. For many, getting a college education is an impossible dream because they can’t afford it.

We must make higher education more affordable. Promise Scholarships and other financial aid programs can make the difference between an impossible dream and a dream fulfilled.

We established the Promise Scholarships in 1999 to help low- and middle-income students. This program now serves 7,000 students (the top 15 percent at each high school). I’m proposing additional funding for Promise Scholarships, doubling their value to students. We must make college more affordable, and we will.

We’ve made great strides in raising K-12 academic achievement the past several years. Our students now exceed the national average in many subjects, and lead the nation in numerous categories.

More importantly, we’ve made great progress as measured against even our own higher state standards, as I mentioned earlier.

We are proud of this improvement. But we must intensify our efforts.

One way we can support K-12 progress is to improve the WASL and make sure these high-stakes tests are fair. The Class of 2008 must pass these tests in a variety of subjects in order to graduate.

I propose that we allow students to retake tests, or demonstrate their mastery of the standards in alternative ways.

We must also reduce the subjects being tested on the WASL to the basics of reading, writing, math and, eventually, science.

From pre-school to graduate school, we have work to do. We must significantly increase our commitment to creating a world-class education system if we expect to remain competitive.

Building a world-class education system requires funding. The investment needed to get to the world-class level is significant—but absolutely necessary.

The funding source must be dedicated, permanent and stable. We will have tight budgets during the next few years. That’s why I’ve been working with the education community to develop the Washington Education Trust Fund to provide significant new funding for education from early learning and pre-school programs to K-12 and higher ed. The money would also be used to further reduce class sizes and offer extra pay for nationally-recognized teachers.

This is an investment in our children. An investment in lifelong learning for all of our citizens. An investment in our state’s economic vitality. An investment in a better Washington for all of us. It’s time to make this investment and properly fund education.

This will be a pivotal year for our state. Much work needs to be done with legislative approval and within our agencies. I plan to work hard to make sure it’s a successful one. And I hope you will join me.

One of the goals of the Harvard Business School Club is to contribute to the community. Together, we can improve all of our communities with a more vibrant economy and a world-class education system.

Together, we can make Washington an even better place to live, work and raise a family.

Thank you.

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