States Are in 'Crisis Mode:' Washington Governor
“Those who represent the jobs of tomorrow for us are given real tax breaks,” said Gregoire of corporate taxes in her state. She said Washington targets the aerospace, green technology, high technology, and health care industries for tax exemptions.
Personnel costs in Washington also tend to be higher, she said, due to the high level of education of new hires, especially in the technology industry.
“They don’t stay here, they don’t come here, to get paid small wages,” she said of Washington’s workforce, adding that many industries find they need to offer higher wages in order to attract and retain these skilled workers. “But as a result, we have a reputation of being one of the finest quality producing states in the nation.”
Despite its recent corporate restructuring, as well as its presence on nearly every street corner, Starbucks hasn’t been enough to save Seattle, whose declining economy is another source of anxiety for Washington state officials. As of August, the Seattle City Council expected a $67 million budget shortfall for next year—$11 million worse than previously forecast.
Asked if any of the states, including her own, will require a federal bailout, Gregoire said that Congress might have to consider it as a possibility.
“We don’t have the ability to borrow, we can’t run a deficit so we’re managing our way through this national recession,” she said. As a result, Washington and other struggling states are hurting the national economy, she said, by consuming valuable dollars in order to remain afloat.
“Over the next few years, without some help, the states are going to hurt the national recovery,” she predicted.
Gregoire remained optimistic in response to the question of whether the worst is yet to come for Washington. “All of my council of economic advisors tell me we’ve hit bottom,” she said, suggesting that the state’s economic condition should improve in the coming months.
As for the possibility of the states failing all together, Gregoire said, “We’re not going to fail. That’s not in our vocabulary. I don’t know a governor who would say we’re going to fail.”
Preparedness and tapping into emerging trade markets are what Gregoire believes will edge Washington out of the recession and prevent the state from going the same way as some of the country’s major banks.
“The banks unfortunately didn’t see it coming and failed,” she said. “We see what’s required of us and we’re stepping up to it. We’re going to be competitive internationally—we know that’s what’s at stake.”
Look for Nicole Lapin's interview with Governor Gregoire on Thursday, October 28 in her "States of Pain" report on "Worldwide Exchange," 5-6am ET on CNBC.