by Mark Gardner
Clean air and clean water; safe jobs at good wages; habitat and farmland preservation: These are all things most would agree are worth saving or achieving in the Evergreen State. But there's just one problem: all of these are bad for the business climate. Or so Washington's business establishment would have you believe.
Under the guise of improving conditions for business, corporate interests have unleashed a broad-scale effort to weaken environmental laws and roll back protective regulations during this year's legislative session. The recent economic slowdown and anti-government mood evidenced by the passage of Initiative 601 have created a window of opportunity for business associations and lobbyists. And they aim to make the most of it.
The first round of this campaign started in 1991. Stung by the City of Everett's levying of $50 million in impact fees to cover infrastructure costs for Boeing's expansion, Chairman Frank Shrontz let loose with a barrage of speeches threatening to pull production out of the state unless its costs were reduced.
Boeing was also offended by the passage of the Growth Management Act (GMA), and it led efforts to gut the GMA soon after it became law. Corporate and development interests succeeded in getting legislation out of both houses creating loopholes for giant projects, but they were ultimately stymied by then-Gov. Booth Gardner's veto pen.
Grousing against growth management has blended with other anti-regulation currents. Business interests are pushing a broad agenda aimed at cutting the costs of doing business. While there's nothing wrong with this goal in the abstract, it's the particulars that are worrisome. They include preventing state regulations from being stronger than national ones; clamping down on state agencies' regulatory discretion; and reducing employment costs by weakening various protections offered workers.
Businesses are also strongly pushing to "harmonize" the GMA with the State Environmental Policy Act (SEPA), one of the state's best weapons against environmentally unfriendly development. At best this effort will streamline the permitting process for legitimate industrial and construction projects by fostering concurrent GMA and SEPA reviews. At worst, some environmentalists fear, it will weaken the stronger SEPA regulations and reduce GMA's effectiveness.
What's wrong with this picture? While some business worries are valid, their lobbyists want to use the temporarily favorable political climate to push a wish-list that enhances profits but does nothing for most state residents. They are not only trying to undermine goals broadly accepted by the population; it's not even clear whether most of these changes are even needed to help business.
First, this state does not have a particularly bad business climate. While the state's economy has lagged a bit in shaking off the recession, big declines in unemployment - which now equals the national average - indicate a strengthening recovery.
These positive signals are registering in corporate boardrooms as well. As the Puget Sound Business Journal reported in January, two major local indicators of business confidence have gotten a boost since last year. In the latest survey, those who "agreed strongly" that taxation, regulation and growth management have "created an anti-business environment in Washington state" declined to 38 percent, down from 66 percent in July and 43 percent last March.
Even more important than these temporary improvements, Washington's economic fundamentals are much stronger than corporate press releases would have you believe. The state is extremely well-positioned in software, biotechnology, tourism, and export and import trade. Our universities also produce an ample supply of trained graduates, although 601 has put this in jeopardy.
Indeed, according to the 1993 Development Report Card for the States, Washington ranks very high in a broad array of economic indicators. Published by the Corporation for Enterprise Development, the report is unlike other "business climate" indices, in that it focuses on actual economic performance and levels of development, and not just business costs.
According to the report, Washington has the lowest unemployment duration in the nation, the second-best long-term employment growth, and the third-best short-term employment growth. "Washington exhibits exemplary human and infrastructure resources, while technology and financial resources are above average."
The report concludes that "despite recent fears about its future, Washington possesses very strong development capacity across-the-board - the acid test of whether the state can recover from its present difficulties."
This said, we ought to be wary of "the sky is falling" arguments designed to suspend the better judgment of both citizens and legislators. The campaign against the Growth Management Act is a prime example of how business exaggerates the costs but underplays the benefits of regulations. You will never hear from them about how growth management can improve economic efficiency.
Growth management is not just a tool to be implemented in fat years and dispensed with during recessions. It helps to modulate the economy by restraining hell-bent speculation in boom times. It also reins in laissez-faire development, which is cheap for the individual developers but expensive for society as a whole. The GMA requires utilities, such as roads, sewers, power, to be in place before development can proceed. Government and the taxpayers then have some say over how development will proceed, and how much development they are willing to pay for.
Growth management is also the best way to balance competing land uses while maintaining environmental quality. The law imposes constraints on some industries in order to sustain the viability of others.
According to Eleanore Baxendale, executive director of 1000 Friends of Washington, a growth-management watchdog group: "By protecting fish and wildlife habitat and wetlands, and precluding development in geologically hazardous areas, it will enhance the salmon fishery industry, and it helps the shellfish industry.
"In Jefferson County, for example, they've had instances where development on hillsides has caused collapse of those hillsides into the shellfish beds, and where you've got runoff from development actually polluting the shellfish beds."
The Growth Management Act also requires that significant agricultural and timber producing areas be identified and preserved, which prevents one industry - the land developers - from engulfing many others.
Another casualty of unplanned development is a rational and efficient transportation system. Southern California-type sprawl is not good for transit planning. Endless traffic jams are not good for business, much less for humans or the environment. Business groups themselves frequently list the solving of transportation problems as a high priority, but fail to note that the GMA can help to achieve this goal.
In addition, it is not clear that strong laws lead to construction bottlenecks, as the business establishment claims. Oregon has a very strong land-use regulation system. Developers painted the Oregon system as Stalinist when it became a template for the creation of the GMA. Yet, once the GMA passed, developers did an abrupt about-face and now tout the Oregon system as superior because of its quicker permitting process.
Other "business climate" legislation falls into similar patterns of cutting business costs while increasing the burden on the public. The National Association of Independent Business, for example, wants to repeal the employer mandate which will finance health care reform. And the Association of Washington Business (AWB) is opposing property tax relief for homeowners and wants to cut funding for the unemployment and worker's compensation systems.
Citizens' and public-interest groups should watch the legislature extremely closely right now, and oppose with all means available the most illegitimate items on the corporate wish-list. In a broader sense, however, environmentalists, unions and those concerned about jobs and social justice need to better explain that growth management, environmental protection and worker protections not only regulate business, but also help to create fair and sustainable economic development.
Beyond the rhetoric, the costs of doing business in Washington do raise some legitimate concerns. The same business survey mentioned above also notes that 13.4 percent of business respondents were likely to relocate or expand their company out of state. In this light, streamlining regulation may help reduce business costs, while at the same time enhancing the rapidity and clarity of enforcement. But businesses need to realize that more efficient regulation and permitting may also mean more decisive prohibition of activities deemed subversive of the public good.
Boeing Vice President Deane Cruze has said that while the GMA encourages higher-density development, SEPA penalizes it. Given this, we ought to consider eliminating mitigation fees for projects meeting stringent environmental and development goals. But business groups - particularly the vehemently anti-tax AWB - must stop undermining the state's tax base so that governments can have enough money to support legitimate development.
The best way to achieve these goals is to follow the lead of the governor's Regulatory Reform Task Force, which has submitted some streamlining proposals in this legislative session but has held off on proposing large-scale rewrites of laws until a broader consensus is achieved.
Washington will be much worse off if legislators, scrambling to curry favor with businesses in an election year, push for a wholesale gutting of laws that are only in need of fine-tuning.
-Mark Gardner is a graduate student pursuing a Ph.D. in political science at the University of Washington.
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Contents on this page were published in the February/March, 1994 edition of the Washington Free Press.
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