Article by Erik Smith. Published on Wednesday, March 30, 2011 EST.

Roundtable’s ‘Benchmarks for a Better Washington’ Puts Emphasis on Education, Transportation and Business Climate

At the round table: Washington Roundtable President and CEO Steve Mullin, McKinstry CEO Dean Allen, Microsoft General Counsel Brad Smith and Port Blakely Cos. Chairman James Warjone.

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, March 30.—Here’s a memo from business you probably weren’t expecting:

            Washington’s top business executives say the state shouldn’t compete by being cheap. They say it should compete by being good.

            At a time when lawmakers worry about making it through tomorrow, the Washington Roundtable, an association of the state’s largest businesses, says it’s time to start thinking about the next 10 years. It’s pitching what it calls “Benchmarks for a Better Washington,” a bit of long-range thinking that puts the emphasis on education, transportation and the state’s business climate and tax structure.

            You might call it a business way of looking at things – in more ways than one. Certainly it emphasizes the things business says is critical to the state’s long-term economic vitality. And there’s no talk about a crying need for big environmental initiatives and expansive social service programs.

            But the execs are also taking what you might call the boardroom view. They’re looking at things they can measure, thinking about how the state stacks up, and setting goals for improvement. And definitely, every year the Legislature can expect a performance review.

            Here’s something else. They’re not saying the state ought to cut business taxes to the bone. That’s a cost strategy. Other states compete that way, but they say Washington doesn’t have to.

            Explained Microsoft general counsel and senior vice president Brad Smith, “We’re trying to say that we want to compete on value.”

            A Million High-School Dropouts

            Top Roundtable business executives made the rounds of Olympia this week as they offered their long-term recovery plan. The timing was no accident. Their pitch comes just as the Legislature is struggling with the biggest budget problem the current generation of lawmakers has ever faced. It’s a mammoth budget shortfall brought on partly by the national recession and partly by their own galloping spending when times were good. Federal aid allowed them to defer the toughest decisions as the recession took hold over last two years. But now they must whack about $3 billion in state spending in order to make their next budget balance.

            A daunting task, certainly. Roundtable leaders are worried it might mean another round of short-term thinking that could imperil the state’s long-term economic vitality. Disproportionate cuts to higher education, for example. Inaction on business-taxation issues. Failure to invest in highways. And reluctance to make the cuts that would make the state budget sustainable.

            It’s all about setting priorities, Smith said as Roundtable execs met with reporters. For example – think about the fact that 29,000 high school students drop out every year.

            “How many people in this state of six and a half-million people understand that we are currently on a path to produce 300,000 high school dropouts this decade?” Smith asked. “You know, over the next 30 years we will produce 1 million high school dropouts. What does that mean for the future of this state? Right now I don’t believe the people are even aware of the magnitude of the problem.”

            All of which explains their new initiative.

            A Simple Idea

            What they’ve done is to find national performance indicators in the areas they say matter most to the state’s economic health. Hundreds of possible performance measures were boiled down to 12, and don’t worry, there’s plenty of backup. But let’s take it down to the executive-summary level. The Roundtable execs say Washington ought to rank among the top ten states in:
             *    Private-sector job growth. Right now it’s 15^th.
             *    Number of patents granted annually. Right now it’s 5^th.
             *    High school graduation rates. Right now it’s 35^th.
             *    K-12 math and science performance. Right now 8^th grade math scores are ranked 9^th nationally; science, 21^st.
             *   Number of bachelors’ degrees awarded annually, per capita. Right now it’s 35^th.
             *   Lowest percentage of obsolete bridges. Right now it’s 42^nd.
             *   Highest percentage of roads in “good” or “very good” condition. Right now it’s 16^th.
             *   Shortest commute travel times per person. Right now it’s 39^th.
                *   Lowest electricity rates. Right now it’s first.

Where Top-Ten Scores Are Bad

And then you have the areas where the state ought to get out of the top ten:
*   Business tax burden. Right now Washington ranks 13^th or 8^th, depending on how you define the terms.
*   Unemployment insurance tax rates. Right now it’s 5^th.
*   Worker compensation benefits paid per covered worker. Right now Washington ranks 2^nd.

Looking at Things the Business Way

Here’s the problem, Smith said. Washington can compete on value or it can compete on cost, but it doesn’t look like it’s doing either. Electricity rates and patents aside, its performance can’t be called stellar in any category. “It would be one thing if we were a high-cost state but we were funding higher education much higher than competing states,” he said. “You could say, hey, we have an innovation strategy. But we don’t have an innovation strategy or a cost strategy.”

It’s the kind of thing big business thinks about constantly as it tries to decide where to go or whether to stay, said Roundtable chairman James Warjone, chairman of the board of the Port Blakely Companies. “You’re in a situation where we are judged every day,” he said.

But there’s another point the executives want to make. Washington shouldn’t try to compete on, say, South Carolina terms. It shouldn’t aim for the lowest business costs. There are reasons Washington is going to be a bit higher than other states, said McKinstry Co. CEO Dean Allen. For one thing, people actually want to live here. If a state is a desirable place to live, certain business costs are bound to be higher.

“We’re not saying that we should have a workers’ comp and unemployment insurance system that is in the top 10 or 20 most inexpensive in the country, but we’re trying to get out of the bottom 10. So we’re okay if it’s 30, 35, something like that.

“But the message to the Legislature is – we like Washington, we love the state, and we are here to report as business folks that we are not being as competitive as we need to be to provide opportunities for our citizens.”

Your support matters.

Public service journalism is important today as ever. If you get something from our coverage, please consider making a donation to support our work. Thanks for reading our stuff.