In 1992, Bill Clinton’s campaign slogan was, “It’s the economy, stupid.”
In 1993, Washington employers modified the slogan to, “It’s the economy, don’t kill it,” and emblazoned it across a huge banner draped from AWB’s building near the state’s capitol campus, where it could be seen by elected officials driving by.
But lawmakers didn’t get the message 19 years ago; they left employers holding the bag for new taxes and fees as well as added costs for unemployment insurance and workers’ compensation. Hopefully, those lawmakers learned their lesson, because the higher cost of doing business in Washington hurt our state’s ability to create and maintain jobs.
Fast-forward to 2012.
Polls show the bad economy is the primary concern of voters in this election year, with 80 percent of likely voters in a national survey listing it as a top issue. In early January, 60 percent of Washington voters surveyed by Stuart Elway said economic issues were the most important thing lawmakers should focus on during the 2012 legislative session.
When the Association of Washington Business recently asked its more than 7,700 members to name their most important issue, they cited a lack of customers or clients; two-thirds said they would not be hiring in 2012.
Complicating our economic recovery are the massive federal deficit, shaky European economies in Greece, Italy, Portugal and Spain and a worldwide slowdown in business activity. For example, China Daily reports business confidence in China dropped for a second consecutive quarter amid growing concerns over a global economic slowdown. Remember, China is the world’s second largest economy, so what is happening there has significance.
The People’s Bank of China said the business confidence index dropped 6 percent, and Hong Kong’s Nomura International reports that China’s economic growth, which had been in the 10 percent range, is likely to drop to 7.9 percent this year.
So, what is the message to Gov. Gregoire and state lawmakers for the 2012 session?
The economy is unlikely to measurably improve.
The Washington Roundtable says, at best, our state’s economy for 2012 is expected to look much as it does today. They urge the governor and lawmakers to act now to reduce the long-term cost curve for state services and develop a budget that stays within current revenues. Their biggest worry is the cumulative impact of maintaining the current level of state services in future years.
Elway’s poll shows that the second greatest concern among Washington voters is the state’s $1.5 billion budget deficit and doubts about how elected officials spend our tax dollars.
A sustainable budget is essential, but lawmakers must be careful how they approach raising additional revenues. The half-cent sales tax increase proposed by Gov. Gregoire needs voter approval and the $3 billion in federal stimulus money that bailed us out in 2009 won’t be available. So basically, we’re on our own.
The governor told AWB members last September that “everything is on the table. It has to be.”
We also need to understand the Great Recession has fundamentally changed how government works. As difficult as it is, the folks we send to Olympia must recalibrate government.
They must find ways to pay for the most important programs, such as education and figure out how to deliver state services more efficiently.
There are no sacred cows and there is no cash cow in the barn.
Don Brunell is the president of the Association of Washington Business.