SENATE BILL REPORT

SHB 1495

BYHouse Committee on Trade & Economic Development (originally sponsored by Representatives Vekich, Cantwell, Hargrove, Basich, Belcher, Kremen, Day, O'Brien, Locke, Jones, Ferguson, Wineberry, Rector, Wang, Cooper, P. King, Walk, Schoon, Sayan, Spanel, Dorn, Rasmussen, Brekke and Morris)

Establishing a business and job retention program.

House Committe on Trade & Economic Development

Rereferred House Committee on Appropriations

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):March 21, 1989; March 28, 1989

Majority Report:  Do pass as amended and be referred to Committee on Ways & Means.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McMullen, Matson, Murray, Saling, Smitherman, Warnke, West, Williams.

Senate Staff:Jack Brummel (786-7428)

                  March 29, 1989

Senate Committee on Ways & Means

Senate Hearing Date(s):April 3, 1989

Senate Staff:Lynn French (786-7715)

                  April 3, 1989

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, MARCH 28, 1989

BACKGROUND:

Washington's business failure rate has been among the highest in the nation over the past 20 years.  The costs to the state include lost taxes, lost jobs, and increased social service expenditures.  The total estimated job loss over the seven year period from 1979 and 1985 due to business failures, plant closures, or the permanent abolition of shifts or positions is between 308,000 to 385,000 jobs.  Increased social costs to the state were estimated at $8,900 in 1986 for each primary job lost in the form of increased unemployment compensation, public assistance, and lost tax revenue due to lost wages.

The formation of public/private partnerships to address the problems associated with business failure and job loss has proved effective in a number of states.  These programs typically include a means to identify those businesses or work forces needing assistance and the coordination of public and private resources at the local level. 

The 1988 supplemental budget contained an appropriation of $300,000 to the Department of Trade and Economic Development for the creation of a business and job retention program.  The program will expire at the end of the 1987-1988 biennium unless it is reauthorized.

SUMMARY:

A business and job retention program is established within the Department of Trade and Economic Development.  The program includes a retention services program which will provide technical assistance, including turn-around assistance, to businesses and workers in which there is a risk of a plant closure, mass layoff, or business failure.  The department may contract for specialized services to provide this turn-around assistance.

The department is to establish an early warning program using information available from state agencies to identify firms at risk of closure.  The program will also work with business organizations, labor groups, educational institutions, nonprofit organizations, and others in order to develop and implement means of identifying at-risk firms on a statewide basis.  Confidentiality requirements contained in statute must be observed.

A labor liaison position is established as part of the business and job retention program.  The labor liaison will be responsible for helping to identify firms at risk of closure, provide labor with business and job retention services, assist in the formation and operation of employee-owned businesses, and identify opportunities for increased labor-management cooperation.  The department may contract to provide these services.

The Department of Trade and Economic Development develops model local business surveys and assists local efforts in the use of the surveys.  The surveys will gather information that will help identify firms at risk of closure and identify the potential for long-term job retention and expansion.

The Business and Job Retention Program is to identify research activities that would enhance the ability of the state to identify firms at risk.  A report describing these activities shall be provided to the appropriate House and Senate committees by December 1, 1989.

The Governor is directed to establish a Business and Job Retention Advisory Committee consisting of eight members.  The committee consists of four business members, four labor members.  The following directors of agencies or their designees as ex-officio members: Department of Trade and Economic Development, Department of Community Development, Department of Revenue, Office of Financial Management, and the Department of Employment Security.  Staff assistance to the committee is furnished by the Department of Trade and Economic Development.

The department, in consultation with the advisory committee, provides funds to study the feasibility of various options for continuing or renewing the operation of industrial facilities which may close or have already closed.  Funding may be provided to local governments, ports, local associate development organizations, local labor organizations, or local nonprofit community organizations.  The department may require a dollar-for-dollar match for the funds.  No more than $35,000 of state funds may be spent on any study, and only one study may be funded for each industrial facility.

The director, with the approval of the advisory committee, solicits proposals and selects local development organizations to undertake local business and job retention activities.  Local business and job retention activities shall include identification of local firms at risk through the use of local business surveys or other methods; initial assessments of businesses and workers to determine their viability, identify problems, and determine the skill levels of workers; and the provision of technical, managerial, training, and related assistance to businesses and workers.

Local organizations receiving contracts must show they have the ability to identify and assist firms at risk, build a partnership between labor and management and work with affected parties.  Local need and geographic balance will also be considered in awarding contracts.  The department is responsible for implementing training programs for local organizations who receive contracts.  The advisory committee is directed to work jointly with any labor-management cooperation program which is established.

The Department of Community Development, in consultation with the Employee Ownership Advisory Panel, is directed to fund training for labor and management in cases of employee buyouts to retain employment in the state.  The department may require a dollar-for-dollar match for state funds.  No more than $10,000 may be given to any one employee-owned firm.  Priorities for funding must be given to firms with a large number of employees, and firms which play a major economic role in distressed communities.

The Employment Security Department, the Department of Community Development, the Department of Revenue, and the Office of Financial Management each assist the Department of Trade and Economic Development in carrying out the purposes of the act.  In addition, the State Board for Community College Education and the Superintendent of Public Instruction are directed to assist in providing coordination between local business and job retention programs and local educational institutions on educational and training needs.

The Department of Trade and Economic Development presents an annual report to the appropriate House and Senate committees on the activities of the program.  Information must be reported by county, standard industrial classification, and size of firm.

Proprietary information is exempt from the Public Disclosure Act.  The department must incorporate provisions to ensure that confidentiality is maintained over any financial or proprietary information into each contract.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

SUMMARY OF PROPOSED SENATE AMENDMENT:

The business and job retention program is established in the Business Assistance Center of the Department of Trade and Economic Development.  A business and labor advisory committee is created with legislators serving as ex officio members.  Twelve service delivery areas are designated and business and job retention proposals are solicited from each area.  Local organizations selected with the approval of the advisory committee must show the capacity to identify firms at risk, conduct outreach and coordinate the delivery of retention services.

The department is to offer model surveys and training to local organizations providing retention services, develop and maintain a list of firms and individuals with expertise in business retention, and use the experts as appropriate.

Feasibility study funds are made available to local governments, ports, associate development organizations, and community organizations to study options for operation or ownership of firms that have closed or are in danger of closing.  The department may require matching moneys or the return of money used for feasibility studies.

Confidentiality of business information is to be maintained by the department and by local organizations contracting with the department for the delivery of local retention assistance.

Senate Committee - Testified: ECONOMIC DEVELOPMENT & LABOR:  Gary Smith, IBA; David McFadden, Yakima County Development Association