Terry Corbell, The Biz Coach
By Terry Corbell
Business Consultant

Analysis: Steps for Economic Success in Washington State

 

July 29,2009 –

 

In assessing economic-development strategies, it’s shortsighted to merely look at the headlines. But you can tell a lot about the economy by taking a cursory look at the unemployment rate. Unfortunately, Washington ranks No. 34 in the nation – tied with Missouri at 9.3 percent.

How can government brighten the unemployment picture? The effectiveness of economic policies depends on government and whether it has economic wisdom. That means allowing for economic and political liberties.

Economic liberty is the freedom to make decisions in a free-enterprise system. Political liberty is possible when government stops its unproductive practices so entrepreneurs can have the necessary tools to create jobs and take full responsibility for their successes or failures.

Here are economic strategies for government to consider:

Discernment of Main Street’s issues. Listen to business. This column warned about economic conditions long before the recession was recognized. My confidential discussions with businesses revealed an undercurrent of pending economic chaos long before the recession was publicly acknowledged.

Encourage consensus building among stakeholders, including business and unions. Adversarial relationships and chest-beating fail to create and maintain jobs. Better communication among stakeholders is paramount. Management must listen to workers, and develop quality plans and implement them. Unions need to understand how business works. In other words, choose to disagree but focus on principles, not personalities.

Prioritize government services. You might recall the inspiring headlines when Gov. Gary Locke implemented Priorities of Government budgeting. The goals were fiscal responsibility while providing quality services. But when was the last time we enjoyed such headlines? To most businesspeople, government is not concerned with performance, but is seen as focused on imposing financial barriers and justifying costs.

Develop budgets that enable us to live within our means. Admirably, Gov. Chris Gregoire publicly denounced tax increases when the economy soured. It was heartening news.

But public servants have a history of failure to treat budgets as they would their own pocketbooks. You might recall when state spending skyrocketed by an average of more than 17 percent per biennium – so voters passed Initiative 601. They obviously wanted spending limits, but the Legislature amended I-601 seemingly countless times. To make matters worse, a lawsuit was filed when government played what was described as a shell game to artificially manipulate spending limits.

Another challenge: Underfunding of government pensions. In addition, except for many big-business CEOs, public-sector pensions are too laissez-faire compared to the private sector – a time bomb set to go off.

Quality government behavior. Many government workers try to do a good job. But some employees overseeing business, e.g. Department of Revenue employees, do not understand their own regulations.

In a panic to increase revenue, they’ve forced businesses to waste time and resources to justify tax filings because the agency employees were unfamiliar with their own guidelines.

Agency employees could learn another lesson from the private sector. Companies succeed when they correct their mistakes and apologize to customers.

Create a healthy tax system. Start by listening to small business owners – review and correct the state’s business and occupation tax. Washington’s B&O tax is unfair. The tax is based on a business’ gross receipts instead of net profits. It’s a major reason why new companies fail to sustain their workforces and close down.

And why should companies carry the burden for more than 50 percent of state and local taxes? Washington is the second-highest in the nation for unemployment insurance taxes and the third-highest for workers’ compensation benefits.

Government must review its policies, procedures, taxes, fees and charges. At every juncture, governments should ask the question: “Is this productive for economic development?”

Outlaw predatory financial practices. Thousands of state residents have been victimized in financial services – from credit card companies to post-transaction marketing. Work with representatives in Congress to outlaw predatory behavior by credit card companies and debt collectors.

To his credit in 2009, Attorney General Rob McKenna requested lawmakers to pass a law that would stop the deceptive Internet marketing behavior of a Bellevue company, Intellius. But lawmakers failed to act. 

Instill greater public confidence. Today’s public officials can learn lessons from President Franklin D. Roosevelt and his fireside chats on radio to reassure Americans. Businesses will start making investments in their businesses and hiring workers, if they have reasons to be confident.

After developing strategic plans, government leaders at all levels – the state, counties and cities – can be a positive influence. Like any good marketing campaign, they should tell the public what they’re going to do to improve the economic climate. Remind citizens as they enact new policies and procedures. Then, tell businesses about their economic accomplishments.

If governments get this done, Washington will become the leader.

From the Coach’s Corner, it’s helpful to be mindful of I call “The 20 Characteristics of a Healthy Economy.”

Here are my 20 healthy-economy characteristics:

  1. A big-picture consensus and strategic plan for economic development
  2. Action plan resulting in increased entrepreneurship – local businesses that hire more local workers
  3. Diverse industry base of employers
  4. Success at encouraging families and businesses to invest and locate in the community
  5. Family wage jobs
  6. Decreased need for social services
  7. Balance between responsible development and redevelopment without driving out residents or businesses
  8. Infrastructure and solutions, including diversity of land uses that are self-sufficient without relying on outside sources for repeat, large funding
  9. Growth that doesn’t damage the environment or use excessive space
  10. Accessibility and equity for residents in education, employment, housing and transportation
  11. Happy and healthy residents who have a strong pride in the community
  12. Festivals and celebrations
  13. Positive public image
  14. Enhanced shopping opportunities
  15. Anchor projects that encourage commercial, retail and related mixed uses
  16. Optimal tax revenue
  17. Continuous efforts for beautification, for improvement in quality roads and transportation
  18. Widespread charitable contributions for robust nonprofit organizations – vibrant civic and service clubs, churches and their respective organizations, and other groups.
  19. Open and creative community leadership that encourages and nurtures emerging leaders
  20. Ongoing review and fine-tuning of the strategic plan for economic development and creation of jobs
Seattle business consultant Terry Corbell provides high-performance management services and strategies.