Washington counties face huge border battle
Richard Davis says he was never much for that grass-is-greener stuff. Business owners always grouse about taxes, regulations and associated issues. Why would Washington’s business community be any different?
Maybe it’s because they have real problems to grouse about.
Davis, as president of the Washington Research Council, has prepared an annual assessment of the state’s business climate since 2000. But even the differences logged in the annual Competitiveness Redbook did not bring home the obstacles businesses in some communities face, until he helped research “Across State Borders,” a new study comparing Washington with Idaho and Oregon.
Greener grass? You betcha, particularly over the Idaho border. It doesn’t all go up in smoke come August.
The analysis of business conditions focuses on the implications for Spokane, Whitman, Kootenai and Latah counties on the Washington-Idaho border, and Clackamas, Multnomah, Washington and Clark counties on the Washington-Oregon border.
It was the Spokane Regional Chamber of Commerce that suggested the research council and other groups, through a coalition called WashACE, narrow its usual Redbook tabulations to just the challenges facing counties adjacent to Idaho and Oregon.
The results, says Chamber President Rich Hadley, should underscore for Washington officials the different problems border communities face compared with more insulated Puget Sound-area cities.
“On a day-to-day basis, (border) counties are competing for a job here, a job there,” he says. “That’s different from what Seattle faces.”
And how. You may have heard this before: Kootenai County’s economy is on fire. And Moscow in Latah County has out-pulled Pullman in Whitman.
According to the WashACE study, for example, Kootenai County added 3,235 jobs between 2000 and 2003, to Spokane County’s 1,817.Whitman County actually lost 515 jobs over the same time period, while neighboring Latah County added 311. In both cases, the Washington counties were the most populous, Spokane by a greater than three-to-one ratio over Kootenai.
A caution here; Jeff Zahir, economist with the Washington Employment Security Division, pegs 2000-to-2003 job growth in Spokane County at 5,800, based on different data. But that same information would probably show greater job growth in Kootenai County, as well.
Idaho’s advantages include a lower minimum wage, training assistance, and lower unemployment and workers’ compensation levies.
How do those factors affect decision-making? Well, Idaho outbid Washington for a new Empire Airlines maintenance center by offering an estimated $4.8 million in grants and other aid. Buck Knives just felt better about Idaho’s business climate when deciding to relocate its manufacturing plant from California to Post Falls instead of Spokane or Bend, Ore.
Davis says he expected to find advantages for businesses in sectors like retail, where Washington’s high minimum wage increases the cost of selling goods. But he was surprised by how many other segments did well in Idaho by comparison with Washington.
“Clearly, there’s a problem,” he says. “Across state lines, our competitors are doing better.”
Comparisons with Oregon are more favorable, although officials can offer financial incentives. Spokane lost out to Springfield, Ore., for a Royal Caribbean Cruises call center because the Oregon city waived property taxes for three years and the state kicked in $600,000 for infrastructure. But Davis says Oregon’s allure has faded because of recent severe budget problems, which have had hurt education at all levels.
Education emerges at Washington’s strong suit in the region, the report says.
“We are well ahead of Oregon and Idaho in education reform,” Davis says, an edge that will be increased thanks to a new budget that will add new facilities and fund 7,900 more students on Washington campuses.
Instability like that in Oregon puts off business. Davis says Washington has made some progress on that score, although from a business standpoint there has been some backtracking on issues like unemployment benefits. In the most recent legislative session, labor groups successfully pushed for a change in the formula used to calculate payments.
But, notes Marty Brown, legislative director for Gov. Chris Gregoire, lawmakers also put $15 million at her disposal for providing some of the same kind of infrastructure help that landed Royal Caribbean in Springfield. He calls the WashACE study straightforward, but unlikely to prompt significant changes like enactment of an income tax to replace the business and occupation tax, or changes in the state constitution that block most types of direct aid to business.
As the study points out, the B&O tax, combined with the absence of an individual income tax, works well for highly profitable businesses with well-paid employees. Unfortunately, that’s just not the profile of a typical Spokane company.
Until that changes, Spokane officials will continue to play on the comparative advantages of Idaho and Washington in their business recruitment efforts. A job in Kootenai County will spin off dollars into Spokane County, and vice versa. A job in Springfield or Bend will not.
The WashACE analysis concludes with a few recommendations, most suggesting careful management of state finances, as well as the limited incentives Washington does have available. Play up our edge in education, and planned new investments in our transportation system.
“We can compete, but our horse starts with a little extra weight added,” Davis says.