Deep cuts to K-12 and higher education.
Reductions or elimination of an array of social service programs ranging from child care and housing to basic health insurance and mental health services.
Unfunded workforce training programs.
Elimination of tax incentives for business.
These are only a small sample of what is pending or completed as federal and state lawmakers take on budgets unsustainable in the prolonged economic downturn. The common denominator for us? Kitsap County residents, as with everyone else in Washington, will feel it.
While what’s occurring carries many perspectives, the government right-sizing at the state and federal levels underscores a fundamental fact in the economic development world: the business climate on the Kitsap Peninsula has a lot to do with decisions that are made elsewhere, not here.
So from an economic development perspective, there is cause for serious concern about the long-term impacts the economic downturn is having on the public policy that influences Kitsap’s future. Our ongoing quest for new business investment and jobs must not only adapt to new realities, but also spur our resolve to influence the decisions that affect us most in the future.
Take the first item, reductions in education funding at all levels. The single greatest economic asset on the Kitsap Peninsula is the availability and quality of the workforce. Fully 47 percent of the resident labor force commutes to jobs outside Kitsap County. It’s good that there are jobs available nearby, and local residents can bring those earnings home (as opposed to having to relocate for a job). But as many retire, will new entrants into the workforce be as competitive for the jobs, regardless of where they are?
The availability of that workforce pool is a tremendous asset for employers here who want to expand, and for companies outside the region looking for new expansion locations. The quality of our human resource has everything to do with the quality of education our kids and adults alike receive. When the economy improves over time and state revenues increase, we can’t “buy back” the missed attention.
State lawmakers also are grappling over whether certain business tax incentives should be eliminated, which would in turn reduce the reductions by increasing state revenues. While there is no question there are antiquated tax credits and exemptions in Washington tax law, our economic development interests could be significantly disadvantaged if the approach doesn’t differentiate wasteful from valuable tax incentives. Let’s agree that a valuable tax incentive is one that supports the kinds of employers that create and retain family-wage jobs.
For example, if a research and development company were considering whether to build a new facility within Bremerton’s Community Empowerment Zone (essentially downtown), or build in Portland, state tax law could weigh heavily in the decision-making. In Washington, sales tax is charged on construction materials and construction labor…unless you are a qualifying R&D company locating in a CEZ or rural county. Choose Bremerton’s CEZ and the sales tax on construction is deferred, and later forgiven.
Oregon has no sales tax, so it is not an issue. But if Washington state legislators eliminated this tax incentive, the added sales tax to construction costs becomes a very significant expense.
Education, workforce training, and tax incentives are only part of the economic development foundation eroding from budget reductions. But they serve to illustrate that all of us will be impacted in some way by these processes that seem so distant when we read or hear about them.
