HOUSE BILL REPORT

E2SSB 6277

BYSenate Committee on Ways & Means (originally sponsored by Senators Warnke, Smitherman, Fleming, Williams, Conner and Lee)

Establishing the business and job retention program.

House Committe on Trade & Economic Development

Majority Report:  Do pass with amendments.  (15)

      Signed by Representatives Vekich, Chair; Wineberry, Vice Chair; Amondson, Cantwell, Doty, Fox, Grant, Holm, Kremen, McLean, Moyer, Rasmussen, Schoon, B. Williams and J. Williams.

Minority Report:  Do not pass. (2)

      Signed by Representatives Beck and Heavey.

House Staff:Stephen Hodes (786-7092)

AS REPORTED BY COMMITTEE ON TRADE & ECONOMIC DEVELOPMENT

FEBRUARY 22, 1988

BACKGROUND:

A large majority of the state's citizens will continue to be employed in the next ten years at firms which are currently in operation in the state. The industrial restructuring and cyclical economic downturns in many of the state's traditional industries has resulted in considerable suffering by employees, firms, and communities and has also entailed substantial expenditures of public funds.

Between 1979 and 1985, an average of 2.2 million jobs a year were lost in the nation due to plant closures, business failures, and mass layoffs.  During the same period, Washington State permanently lost between forty-four thousand and fifty-five thousand jobs per year, a total of between 308-385,000 jobs.

Estimates of the public costs of economic dislocation in the state range from $10,800 in 1982 to $8,900 in 1986 for each primary job lost in the state in increased unemployment compensation, public assistance costs, and lost tax revenue due to lost wages. The annual total cost to the state of these three items ranges from $158 million in 1982 to $130 million in 1986. These estimates do not include the costs of increased social and health programs due to rising social problems caused by higher levels of unemployment.  The estimates also do not include the costs to the state of lost secondary employment.

As the state economy has experienced the strains associated with industrial restructuring in the 1980's, state agencies have responded, utilizing limited available state and federal resources.  State agency efforts have included: data analysis, assistance to the unemployed and retraining on the part of the Employment Security Department; assistance to local communities by the Department of Community Development;  efforts to locate new buyers for viable facilities by the Department of Trade and Economic Development.  State agencies have worked together to respond to threatened firm or facility closures in the often restricted time available.  A working agreement has been developed between the Departments of Community Development, Employment Security, Trade and Economic Development, and the State Board for Vocational Education defining their roles in preventing or reducing the impact of plant closures and mass layoffs.

Other states have initiated more ambitious efforts to respond to reduce the impacts of industrial restructuring.  Among the most extensive programs are those in New Jersey, Massachusetts, New York, California, Arizona, South Carolina, and Illinois. Major elements of these more extensive programs include: early warning systems to identify endangered firms, the provision of technical and financial assistance to firms-at-risk; assistance in identifying new buyers and other assistance to assist in the reopening of viable closed facilities under new ownership; the provision of assistance to employees impacted by facility closures and mass layoffs, including retraining, if necessary.

SUMMARY:

BILL AS AMENDED:  The Business and Job Retention Program is established in the Department of Trade and Economic Development.  The director of the program is appointed by the governor and consults with an advisory committee in implementation of the program.  A 6-member advisory committee is created, with members representing statewide business organizations, statewide labor organizations, and government and other members representing a wide range of organizations.  The director designates service delivery regions and designates a regional coordinating organization for business and job retention efforts in each region.  Regional efforts shall involve affected groups, including local businesses, local government, local labor organizations and a wide range of organizations.

The director develops and implements a training program to prepare the regional coordinating organizations and other groups for their responsibilities.  In addition, the director develops a model business survey for use in the local efforts.  Information from the surveys will be used to identify firms-at-risk and to target various types of assistance to those businesses and work forces indicating a need for assistance.

Regional coordinating organizations in regions with more than 70,000 residents are directed to undertake local business surveys, while organizations in regions with fewer residents are encouraged to undertake such surveys.  Regional coordinating organizations are responsible for soliciting assistance from private and public entities within their regions as well as appropriate expertise from outside the region.  Regional efforts involve the provision of marketing, technical, managerial, and training assistance as appropriate.

The business and job retention feasibility fund is created in the Department of Trade and Economic Development.  The director may provide funds to local governments, ports, associate development organizations or non-profit community organizations to study the feasibility of options for continuing the operation of industrial facilities threatened with closure or which have closed. Each study is limited to 50 thousand dollars. Priority is given to facilities in distressed areas, employee buyouts, large facilities, and facilities in mature industries.

The Department of Trade and Economic Development shall analyze trends in the state's industries and workforces, shall make such analysis available to affected businesses, employee groups and local governments, and shall work with them to develop long-term strategies for economic growth and revitalization.  The Employment Security Department shall collect a wide range of relevant data and shall make it available to the managing director. The Department of Community Development shall assist the local efforts through its existing programs. The Board for Vocational Education shall assist the program through the development of partnerships between educational institutions and businesses to utilize the Job Skills program.

$600,000 is appropriated the the Department of Trade and Economic Development from the federal interest payment fund to finance the program.  This includes $100,000 for the activities of the business and job retention feasibility fund to finance feasibility studies as necessary.

AMENDED BILL COMPARED TO ENGROSSED SECOND SUBSTITUTE:  In the amended bill, the advisory committee is composed of six members, including representatives from statewide business organizations, statewide labor organizations, government, and others.  In the original bill, the committee was limited to twenty members.  The director is to designate a regional coordinating organization to undertake retention efforts in the region which is to involve a range of listed groups in such efforts.  In the original bill, an organization was designated to coordinate the efforts of local job retention teams, and teams were to include a list of mandated participants.  In the amended bill, local business surveys shall be administered in service delivery regions of over 70,000 residents, and are encouraged in smaller regions.  Such surveys are required for all regions in the original bill.  A business and job retention feasibility fund is created in the Department of Trade and Economic Development in the amended bill.  The fund is created in the custody of the state treasurer in the original bill.  There is an appropriation of $600,000 to the Department of Trade and Economic Development from the federal interest payment fund in the amended bill.  The original bill contains an appropriation of $500,000 to the Department of Trade and Economic Development and an appropriation of $120,000 to the business and job retention feasibility study fund in the custody of the state treasurer, both from the federal interest payment fund.

Appropriation:    $600,000 to the Department of Trade and Economic Development from the federal interest payment fund.

Fiscal Note:      Requested February 16, 1988.

House Committee ‑ Testified For:    Pat Green, State Community College Board; Jim Tusler, Washington State Labor Council; Don White, Washington Public Port Association.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Input from workers is important in a program designed to retain jobs and businesses and should be encouraged. Monies are needed for feasibility studies for business retention.  Ports increasingly recognize need to assist local businesses before they close to retain existing firms.  Community colleges have distributed material regarding training and retraining efforts and support such efforts.

House Committee - Testimony Against:      None Presented.