Calling Olympia: Why no rush to help Spokane?

Washington’s top legislators, Gov. Gary Locke and his would-be successors say they will renew in next year’s Legislature a near-miss effort to approve a sales tax exemption that would apply to, among other things, construction of new call centers in the state. Why was this not done already, given interest from Royal Caribbean Cruises Ltd. in making Spokane its next port of calling?

The Spokane area is competing with Eugene, Ore., for a Royal Caribbean call center that would employ 300 initially, and perhaps as many as 1,400 within five years. Several area land parcels are reportedly under consideration for a facility that could eventually sprawl to 230,000 square feet. Just about everyone involved has been tight-lipped for fear of putting off officials at the cruise ship line and the consultants helping with site selection. That’s understandable. And maybe discretion had something to do with a reluctance to call the Legislature back to Olympia to approve the exemption. You do not want to broadcast the potential availability of 1,400 new jobs when communities all over the United States are pursuing new plants, scarce as those opportunities are.

That said, a special session to consider the exemption would have put the state’s money where its mouth is. There’s no telling what might change between now and the next session of the Legislature. A pledge to take up the issue in 2005 is no guarantee House and Senate majorities will approve a bill even with the best-faith efforts of those who signed the letter supporting the push to land Royal Caribbean.

There was no “next year” attached to Washington’s package of tax breaks and other incentives to assure Boeing Co. would assemble the 7E7 in Everett. With 1,200 jobs at stake, the Legislature met in special session to approve a 20-year, $3.2 billion package negotiated by the governor. Yes, Boeing is a special case because of its history in Washington, exemplary community standing, and the quality of the jobs it provides directly, and indirectly at its suppliers. And losing the 7E7 could well have meant no future generation of Boeing planes would have been built in Washington.

How much would a sales tax exemption for Royal Caribbean cost the state? Assuming a $50 million investment for plant and equipment — a high estimate — Washington would be out about $3.2 million, or one-thousandth the amount of the Boeing incentive package. The jobs may not be equivalent at the starting level, but opportunities to move up are sure to open in a plant with 1,400 employees, and a company with more than 35,000 employees.

Meanwhile, the folks down in Eugene find it funny that Washington makes such a fuss about the financial incentives they can offer while we try to recruit empty-handed.

Jack Roberts, executive director of the Lane Metro Partnership, says the funds available from local and state governments are piddling when measured against the investments a new employer must make in a community. The partnership, comparable to the Spokane Area Economic Development Council, encompasses Eugene as well as Springfield.

Roberts is just as sensitive as his Spokane counterparts on the subject of Royal Caribbean. He did not want to discuss what the partnership might offer the “client,” but says he cannot recall an instance when the governor set aside as much as $500,000 from a strategic reserve for a specific development project. That money, he notes, tends to be allocated to companies in targeted industries like biotechnology, where research could eventually generate more, higher-paying jobs.

Bend, for example, just put together a $150,000 incentive package for IdaTech, a maker of fuel cells. Officials feared the company, with 75 employees, might leave.

“We’re all doing what we can,” Roberts says, adding that the focus on financial packages is misplaced. Many communities can offer more than either Eugene or Spokane in the way of incentives. They were passed over because the two Northwest cities offer superior education, work forces and lifestyles, as well as lower energy costs.

EDC President Jon Eliassen makes much the same point. The lifetime costs of operating a plant overshadow upfront costs. But, so can the revenues from a business that expanded or relocated based on tax abatements and other incentives. Eliassen says he hopes to purchase software that will enable the EDC to make those calculations, and compare Spokane with any community competing for new jobs.

Incentives are tricky. Washington has hundreds for everything from airplanes to bull semen. Doubters rightly question how each works to the benefit of all state residents. Many also wonder why Boeing deserves favors denied other companies that have made substantial economic contributions to the state over decades.

But if Washington must continue to grant tax relief on a case-by-case basis, why not Royal Caribbean? The short time left before the cruise line makes its decision probably precludes any action now by the Legislature. But the thought might have counted. Sometime, as the company’s ads say, you just have to “Get Out There.”