Improving Washington’s Business Climate — It Will Require Long-Term Commitment and Hard Choices
The Washington Legislature and its counterparts in many other states have struggled through the painful process of cutting billions of dollars in spending. This “reset,” as it has become known, may not be over. The economy is attempting to recover from the worst recession since the 1930s. One of the unanswered questions is whether one of the outcomes from this reset will be an actual improvement in our state’s business climate.
The legislative agendas for many statewide organizations call for improving the business climate. Among the most frequently appearing benchmarks are:
- A sustainable state budget
- Investments in transportation infrastructure
- Long-term commitments to improving both K–12 and higher education
Last year, the voters participated in the process by adopting Initiative 1053, which requires any tax increase to receive approval by a two-thirds vote of the Legislature. Voters also rejected a limited state income tax. The Legislature got the message. Cutting $5 billion from the state budget — more than 12 percent of spending — on top of last year’s cuts means that many discretionary programs will be eliminated and many core functions of government will be significantly reduced. However, achieving a sustainable budget means dealing with major unfunded pension liabilities and the rate of growth in health care costs. Several public employees’ retirement system plans have significant unfunded liabilities due to underfunding by the Legislature and investment losses. Discipline and reform will be needed to make the pensions actuarially sound. It will take time, but there must be a willingness to discuss and begin implementing solutions.
This article first appeared in Seattle Business magazine.