The Lesson of South Carolina

August 13, 2010

By Grant Degginger of Lane Powell PC

0610law-DeggingerG

Grant DeggingerThe Boeing Co.s decision last year to locate its second 787
production line in South Carolina was disappointing news; however, it brought
attention to a critically important topic: Washingtons business climate.

Washington is the most trade-dependent state in the nation.
We are the home to global leaders in aerospace, software, telecommunications,
retail and agriculture, but increasingly, some wonder aloud whether we are
taking these companiesand the jobs they providefor granted. After all, in
most cases, it is not the weather that keeps them here.

Innovative companies like Microsoft, Amazon, Boeing and
hundreds of others are in global competition not only for customers, but also
for human capital. They need to operate in a state with a rational, reasonably
predictable and fair tax structure. Their operations must be in safe cities,
with good schools and the amenities necessary to recruitand keeptop talent.
They must also be assured that the infrastructure necessary to move their
people and their goods within and outside the region will be delivered and
maintained.

So, what is the recipe for a successful business climate?

There probably is not one correct answer to this question.
However, there are several commonly agreed-to necessary elements:

  1. Stable tax and regulatory policies. This requirement
    means stable both on the rates of revenue generation and on the rates of
    spending. Governments at all levels must right-size operations to sustainable
    levels and end the cycle of overspending when economically sensitive revenues
    are rolling in, then having to declare a crisis when the economy cools off. My
    great-grandfather probably did not need to consult with a lawyer before he
    opened his saloon around 1890 in downtown Seattle. Today, the permit and
    regulatory process for startup businesses is daunting.
  2. Making timely investments in infrastructure. While big investments
    deserve a robust and transparent public process, there comes a time when
    decisions have to be made and implemented. It took three decades to implement
    light rail. It took 13 years to agree on a plan to replace the 520 bridge.
    Several years ago, Microsoft started its own bus and shuttle system for its
    employees. What does that action say about the state of transportation in the
    region? If businesses cannot get their people to work and home in a reasonable
    period of time, they will grow somewhere else. We have to do better.
  3. Maintain investments in our research universities and
    higher education. We have two
    great research universities in this state. They are important parts of our
    economy. The University of Washington is one of the largest employers in the
    Puget Sound region. It is a leading public university in terms of federally
    supported research. Washington
    State Universitys role in the states agricultural industry cannot be
    understated. These institutions are important long-term investments in future
    innovation and jobs.
  4. Improve public education. One of the first questions
    anyone contemplating a move to a new location asks is: How are the schools?
    Again, the manner in which we have gone about funding and regulating K-12
    education has made it a tricky question to answer. The states current
    financial predicament will adversely affect education, both its quality and
    competitiveness.

Successful companies, like successful sports teams, usually
execute the fundamentals well. Creating a successful business climate in
Washington state will require consensus on these fundamental principles and
discipline by those in both government and business to stand by these necessary
elements over the long haul.

This is a sponsored legal report from Lane Powell PC. Grant S. Degginger, a shareholder at Lane Powell and chair
of the firms Construction and Environmental Practice Group, focuses his
practice on construction, environmental and commercial disputes. He can be
reached at deggingerg@lanepowell.com
or at 206.223.7390.