Published January 2003

Locke sets tone with budget to return state to prosperity

By Don Brunell
Guest Editorial

While no family or business relishes sacrificing because it has a limited amount of money, neither do governors. Gov. Locke’s budget proposal released in December attempts to deal with the realities of living with $2.4 billion in lower state revenues for the next two years in hopes our state’s struggling economy will rebound.

Families and our state’s employers — the job providers — are suffering through a prolonged recession and have to cut back on expenses and lay off workers because the money just isn’t there.

The reality of our state’s revenue situation is agonizing for the governor and legislators, and they are faced with some very difficult choices. We here at the Association of Washington Business think the governor is taking the right approach in facing up to those tough decisions early.

The proposed 2003-05 biennial budget would wipe out the revenue while attempting to fund essential state services. Former Gov. Booth Gardner summed up the situation best when he said every state program has a constituency and a need, but Locke is faced with what the state has to do to survive. It is a difficult situation that no governor relishes.

Employers and families in Washington have been in a survival mode for about two years. We’ve lost over 60,000 manufacturing jobs, and the recovery is slow. Many jobs will not come back when the recession is over.

Locke has realized that structural changes are occurring in our economy. Companies have had to become more competitive to survive, and that means they have to produce more products and services at a lower cost with fewer people. If they don’t, a foreign competitor runs them out of business, and there are no jobs and no tax revenues for the state.

The AWB supports the recommendations of the Governor’s Competitiveness Council as well as the work of his Priorities of Government. Both have recognized that Washington has high unemployment and faces a growing competitive disadvantage.

With employers facing a 29 percent increase in workers’ compensation and a 15 percent hike in unemployment insurance costs starting in January, a huge tax increase would be a “job killer.”

A tax increase even larger than the Legislature passed in 1993 would be necessary if lawmakers simply try to fund government the way they traditionally do. We can no longer just add on to government spending to adjust for inflation and other additional costs. We just can’t afford the size of government we have today.

If the Legislature did impose new taxes instead of following the governor’s lead, the AWB believes the bulk of those taxes would fall on employers. In Washington, businesses pay about half of the state and local taxes compared with the national average of about one-third.

In the end, the job providers would feel the brunt of the new taxes.

We are in a very precarious situation, and we are going to work to make sure our state roars back when the economy turns. We believe the private sector must lead the state back to recovery.

We need to all recognize that we are going to lose something, but in the end, we’ll lose a whole lot more if we don’t face reality. The governor’s budget attempts to do that.

There is a lot of work ahead, but the governor should be commended for his courage in starting the budget process on the right foot.

Don Brunell is president of the Association of Washington Business, the state’s chamber of commerce and umbrella organization for more than 120 trade and professional associations. Its 3,700 members employ more than 600,000 workers in Washington state’s private sector.

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