The Northwest Economy: What price recovery? Some fear Northwest's culture is at risk



This is the first installment of a three-part series on the future of the Northwestís struggling economy by the Gannett Co.ís three newspapers in the Northwest: The Olympian and The Bellingham Herald in Washington and the Statesman Journal in Oregon.

•Sunday: The jobless rates in Washington and Oregon have topped the nation for more than a year. If the two states are to take advantage of the nationís economic recovery when it comes, experts say they must be prepared to improve their business climates.

•Monday: Businesses are getting creative as they try to deal with a growing transportation crisis that costs the Puget Sound economy an estimated $1.5 billion a year. Some look to Portland for answers.

•Tuesday: The region faces major obstacles in its economic recovery, including a lack of confidence in its leaders, increasing global competition and, perhaps, the very culture of the Northwest.

The Olympian Online

Visit the Northwest Economy section to find:
•An interactive map
•Audio of the Washington economic development forum at The Olympian on Oct. 29, 2002
•Agency reductions and adjustments in the 2003-05 governor's budget
•Readersí views
•Links to state economic agencies
•Each day's Northwest economy stories

Many business leaders say that tax and regulatory systems make the Northwest a difficult place to do business.
But the reason many of those policies exist is a result of strongly held beliefs on the part of some Northwest residents that have become part of the region's culture.

The Northwest is home to strong environmental and growth management movements, a place where polling in recent years shows that, when asked to list priorities, more residents choose environmental protection or clean air and water than job growth.

"That is the reason why people move here," said Jacques White, director of Science and Habitat Programs for Seattle-based People for Puget Sound. "This is a nice place specifically because we don't have 14 freeways and we protect shorelines and the environment. This is a different region with different values."

That value system creates havoc for Northwest legislators, who are faced with pressure from both sides: Do more to protect the environment, and do more to support businesses and job growth. With the economies of Washington and Oregon struggling, that pressure is particularly strong now.

Washington state Rep. Kelli Linville, D-Bellingham, says that in some ways legislators have created the regulatory problems they face.

"We've developed a very complicated, top-down system," Linville said. "It assumes everyone follows the same steps to get the same results. But we've found it doesn't work."

Linville was among the Washington legislators who authored changes in state permitting rules in 2002. The changes require regulators to provide businesses applying for state permits with cost estimates, information and a firm date when the permits will either be issued or denied. Linville said she sympathizes with business people in Washington, where more than half of state taxes are collected from businesses.

Some in the environmental community share that sympathy. Lisa McShane, community outreach director for Northwest Ecosystem Alliance, said Washington needs to replace its business-based tax systems -- including the hated business and occupations tax -- with a state income tax. But she said the state needs more environmental regulations, not fewer.

"We don't have the cleanest air in the nation, and we don't have the cleanest water," McShane said. "The shorelines in this state are heavily armored. There's not a lot natural that's left, and that's because of the lack of regulation."

A core disagreement

The question about how much regulation is enough is at the core of the disagreement over economic growth in the region.

In Oregon, leadership on the environmental side comes from the group Alternatives to Growth Oregon, whose president Andy Kerr is best known as the environmentalist and timber industry nemesis who helped make the spotted owl a household name. The group's brochure says it wants to expose "the myths of sustainable growth." It has inspired the spinoff Alternatives to Growth Washington.

"People are becoming more conscientious that growth per se is not good," said Chuck Adams, outreach director for Alternatives to Growth Oregon. The group's goal is to encourage debate about growth's true costs, he said.

Concerns about traffic gridlock, environmental problems and declining quality of life have activists pushing for more restrictions on growth. They say communities should have the right to say no to developers. They want to raise fees charged to developers, whether they're building houses or factories, and end the practice of awarding tax incentives to attract new companies.

The underlying message: Why should the public subsidize growth through higher taxes and tolerate reduced levels of public services? As Adams explains, any proposed development should be able to demonstrate that it's a net benefit for the community.

For example, communities should realize that a factory promising to generate 1,000 new jobs likely will offer less than half of them to people already living in town, he said. The rest of the work force will come from new residents moving into the area.

To spread its message, Alternatives to Growth Oregon has given presentations to high school and middle school students. The group also has set up local chapters in Salem, Corvallis, Eugene and Ashland. It's trying to establish chapters in Bend, Coos Bay, La Grande, and Clackamas County. Membership in the group has grown to more than 1,200.

Next on its agenda is proposing legislation to expand the range of fees communities can charge developers, Adams said. In Oregon, local governments now can charge development fees for parks and recreation, transportation, water, storm drains, and sewage costs. Alternatives to Growth Oregon wants to broaden the list of development fees to include charges for services, such as police, fire protection, schools, and government administration.

A fundamental shift

Business people say that what groups like Alternatives to Growth are proposing fundamentally shifts the way things have worked in the Northwest. And they say the attitude is as much to blame for economic struggles as anything else.

"In the last decade or two, there has been more regulation and more restriction," said Bruce Ayers, owner of Ayers Consulting, a land-use business in Bellingham.

"It used to be that you could do what you wanted on your own property as long as you didn't hurt your neighbor. Now you can't remove a tree, you can't build a driveway -- there is very little you can do -- without asking the government for permission."

In Whatcom County, where Bellingham is the county seat, 82 percent of the land is owned by the federal or state government, held in parks or forestlands, and 12 percent is zoned for agriculture or forestry, Ayers said.

"The prevailing attitude is we are paving over our county at a breakneck pace," said Ayers, a former Bellingham city councilman. "That just isn't true. Most people are just trying to live on the 3 to 5 percent of the land available to us, but it gets to the point that you can't even do that."

Voters and their representatives in the Oregon and Washington legislatures have embraced many of the ideas that business leaders say cause the problems.

But People for Puget Sound's White said he thinks most people in business embrace the regulations that some single out as problems.

"In my discussions with the business community, there is more concern with inefficiency than with the actual laws," White said. "The biggest concern is it takes eight months to get a permit, not that they can't build directly on the water."

White also has sympathy for regulators and legislators. In Washington, voters have cut taxes through initiatives but then demanded more regulation to protect the quality of life they so hold so dear.

"When the public supports environmental protections, it adds layers of oversight, and that is not free," he said. "If we want these kinds of protections, we have to pay the costs, and businesses should not shoulder the burden. We all benefit, so we all should pay."


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