The state legislature convened today in Olympia for the 60 day session. As has become customary, the primary task facing lawmakers is cutting the state operating budget. Since the economic downturn hit in earnest in 2009, the legislature has cut the state budget 3 times; first in the 2010 session that also included tax increases, which were largely erased by the voters that year; in the 2011 special session and then again in December 2011.
The 2012 session will be the fourth time in a row where the state legislature has had to cut spending. Unemployment rates remain stubbornly high in some key sectors (construction, finance, real estate) that generate lots of tax revenue. The state spent literally every penny of real estate excise tax that was generated by the housing boom, without putting enough away for the inevitable downturn. Then when the economy did not regain strength as it did in the 2001-03 period, revenue growth had to be re-forecast downward several times over the last two years and thus the assumptions on which the state budget is written.
Yet, parts of the state economy are literally booming. Aerospace, agriculture, biotech/life sciences/healthcare and IT/software/internet have all been growing at fairly steady clips over the last three years. In the sectors IT and tech sectors that WTIA represents, companies of all sizes have been growing.
We at WTIA hear regularly about the need for software developers, software engineers, electrical engineers, web designers and other high skilled positions that usually require a four year degree or more. In the aerospace sector, aeronautical engineers are needed and in biotech/life sciences, it is biology related degrees that are most desired.
So as the need for holders of bachelor’s degrees in STEM fields grows, the legislature cuts higher education. The higher education system has made up for that loss by raising tuition, cutting certain low demand majors, limiting high cost majors (which are also often high demand, such as engineering) and experimenting with “differential” tuition where students pay more for majors that cost more. Again, engineering falls into this category.
The result of not funding higher numbers of STEM degrees from Washington universities is that local companies either have to incur substantial costs to recruit from out of state or positions remain unfilled for long periods of time. Salaries in the technology field are far above the state average and benefits are usually generous.
WTIA will be in Olympia as we are every legislative session, advocating for STEM degree production and to limit budget cuts to higher education. WTIA has been very active for a long time on higher education issues, especially around STEM degree production.
We may be calling on you to communicate with your state lawmaker on the need for supporting higher education and especially to keep producing high quality STEM degrees.
With the revenue picture still lagging, there are now a wide range of tax increase proposals being discussed. The governor has a temporary half-cent sales tax increase proposal.
Other legislators are floating an income tax, a capital gains tax and all other kinds of ways to increase revenue. We will see proposals to curtail tax incentives for R&D that are widely used by all types of technology companies. Many if not most of these ideas are not well thought out; they are simply ways to raise more money to avoid more difficult cuts. WTIA is not in favor of having useful and valuable tax incentives that help companies grow be curtailed. We will evaluate tax related proposals if they are not punitive to the technology sector and help prevent more cuts to higher education and K-12.
If you are interested in finding your legislator, check the legislature’s website here: http://apps.leg.wa.gov/DistrictFinder/Default.aspx
Keep an eye on this blog for regular updates during the legislative session. Follow me on twitter at www.twitter.com/lewismcmurran