As Washington sits on sidelines, jobs just slip away

Texas outgunned an unknown number of other states last week in a fight to score a back-office operation that will eventually employ 4,200. When you show up with a $295 million “Enterprise Fund,” chances are the showdown is going to go your way.

The state of Washington was a bystander. That should not be acceptable.

Maybe the state just did not meet Washington Mutual’s specifications. Houston-based spokesman Joe Arbona will not say what states the bank approached with its plans, nor what incentives were sought. Community size, work force and quality of life were among the criteria.

“We look at all the options. Certainly, incentives are an important part of what we look at,” Arbona says.

Texas obliged with a $15 million grant, no strings attached, from that Enterprise Fund. San Antonio and Dallas-Ft. Worth are offering additional assistance to secure the plant. San Antonio would seem to have the edge: Washington Mutual has already signed a letter of intent to buy an MCI-owned building that once housed 2,500 employees. Only 200 are left.

Mario Hernandez, president of the San Antonio Economic Development Foundation, says the community has set aside $3 million in grants and tax abatement to help pay for infrastructure improvements and training of the 3,000 employees Washington Mutual expects to hire the first year.

If the bank follows up on a commitment to hire 4,200, the project will be the largest in terms of employment the foundation has ever been involved in, Hernandez says. But not by much.

Toyota, lured by $133 million in state and local assistance, will open an $800 million truck factory in San Antonio next year. The plant will employ 2,000, Toyota suppliers another 1,500. A new National Security Agency facility will eventually employ 4,000.

The boom you hear is the sound of San Antonio becoming the eight largest city in the United States.

Gov. Rick Perry credits the Texas Enterprise Fund with attracting 29,000 jobs to the state, and $6.4 billion in private investment. The fund, created just two years ago, still contains about $66 million but Perry has asked the legislature for a $300 million reload.

Washington’s constitution bars that kind of giveaway, but the state has wised up to the need to provide what incentives it can to encourage economic development. The $3 billion in tax breaks and other assistance made available to Boeing Co. two years ago is the best example. The $350 million set aside by this year’s Legislature to boost biotechnology is another.

Washington is not exactly struggling. More than 53,000 jobs have been added in the state since last April.

Dick Larman, director for business and project development at the Washington Department of Community, Trade and Economic Development, says the state is a great place to do business. He does not like losing an opportunity like the Washington Mutual center — “I’m a competitive guy,” he says — but the state too often beats itself up when it comes to business climate.

Yet Larman concedes the state had no direct communication with the bank regarding its plans. Officials heard of the new center only by rumor.

Don Brunell, president of the Association of Washington Business, says that only goes to show how out of touch state officials are.

“They don’t get it in terms of the cost of business,” he says.

Whatever the assistance granted Boeing and biotech, the state climate toward business is too unpredictable for businesses trying to plan their future. Many, for example, are frustrated by a rollback in unemployment insurance reforms by this year’s Legislature. Unemployment premiums have long been a hot-button issue with business, which liked changes made just a year ago in the formula used to calculate benefits.

Nor does business think the higher taxes on liquor and cigarettes imposed by the Legislature, plus a restructured estate tax, will solve Washington’s long-term budget problems. Many foresee broader tax increases.

The AWB and Washington Research Council may release a study this week showing how Washington stacks up against Idaho and Oregon as a place to do business.

Brunell says state officials should assume every business, particularly those like Boeing and Washington Mutual with international and national operations, is constantly re-evaluating whether it not it wants to remain in Washington.

“Washington Mutual is no longer a thrift in Seattle, it’s a nationwide bank,” he says.

Seems Texas already got that message.