Lawmakers look for ways to give economy a boost

Richard Roesler
Staff writer

Associated Press During the State of the State address in January, Gov. Gary Locke said sacrifice and discipline will help get the state through tough economic times.

OLYMPIA -- The winter-to-spring weather forecast in Washington's capital has a lot in common with the state's economic climate: rain and clouds, as far as the eye can see.

"It looks like a very slow recovery," said Kirsta Glenn, chief economist for the state Employment Security Department.

So despite a state budget shortfall of $2.4 billion, many lawmakers don't want to do anything -- like a broad tax increase -- that risks worsening the economy.

"I think the first rule is still `do no harm' because we're not seeing large levels of economic growth," said Rep. Jeff Gombosky, D-Spokane, who chairs the tax committee in the state House of Representatives.

Some lawmakers, and former Gov. Mike Lowry, argue that it harms the economy more to cut thousands of people off state-subsidized health care, lay off state workers, raise college tuitions and make other cuts that Gov. Gary Locke has proposed. But Locke and most legislative leaders so far have said that they'd rather cut programs than increase taxes.

"We're only going to be considering those things that don't have an adverse effect on the economy," said Gombosky.

"If a bill doesn't move the economy, the bill doesn't move," said Senate Majority Leader Jim West, R-Spokane.

What can the state do?

Some Democrats point out that interest rates remain the lowest in decades, making it a very cheap time to borrow money. They want the state to take out loans, using bonds, and spend the money on construction work, such as maintenance work on college campuses. The projects would create jobs.

"Beyond that, there's probably few other things we can do," said Gombosky.

West and some other Republicans think the Legislature should spur the economy by easing state business regulations.

"In many cases, the state can get out of the way," West said.

Sen. Joe Zarelli, R-Vancouver, wants to invest a small percentage of Washington's pension fund holdings in Washington small businesses.

"This is like venture capital, almost," West said.

Another proposal would allow job-producing businesses to go to the front of a long line for water permits, much the way that Safeco Field in Seattle did.

As for the economic forecast, there's one bit of good news for the Inland Northwest: Seattle was by far the area worst-hit by the recession. Boeing aerospace business slumped, software tanked and high incomes that relied on software stock perks evaporated, which cut into retail sales and construction. Boeing alone has laid off more than 20,000 people in the Puget Sound area.

From December 2001 to December 2002, on the other hand, Spokane County lost about 2,000 jobs. That's about 1 percent of the county's 193,600 jobs.

"It's a considerable amount for Spokane, but not a huge amount," said Glenn.

Consider retail trade sales, which represent consumer purchases of building materials, food, apparel, furniture and automobiles. King County retail trade was up 3.8 percent in the third quarter of 2002. Spokane County retail trade, during the same period, rose 5.3 percent. Retail trade was up 3 percent in the city of Seattle, for the same time period, and 5.1 percent in the city of Spokane.

Other areas of Eastern Washington -- particularly agricultural areas -- weathered the storm relatively well.

"They weren't high-tech or Boeing-driven, and didn't depend too much on Puget Sound's economy," Glenn said.

And the sun never stopped shining in the Tri-Cities, where a new nuclear-waste vitrification plant and spinoff jobs kept the economy healthy.

"The Tri-Cities is the hottest part of the state's economy right now," said Gombosky.

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