SENATE BILL REPORT

ESSB 5872

BYSenate Committee on Ways & Means (originally sponsored by Senators Anderson, Smitherman, Lee, Murray, West, McMullen, Benitz, Saling, Barr and Patterson)

Establishing a rural affairs revitalization committee and undertaking rural development projects.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 17, 1989; February 20, 1989; January 10, 1990; January 11, 1990

Majority Report:  That Second Substitute Senate Bill No. 5872 be substituted therefor, and the second substitute bill do pass.

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

Senate Staff:Patrick Woods (786-7430)

                  January 15, 1990

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, JANUARY 11, 1990

BACKGROUND:

During the last decade, the state's rural counties experienced continued economic downturns that proved disproportionately severe compared with the urbanized counties in the central Puget Sound region.  Twenty-two of the state's 39 counties, all of which are rural, fall within the category "distressed" as defined under several state programs.  It is estimated that distressed counties have lost approximately 14,000 jobs between 1980 and 1986, opposed to a net gain of 185,000 jobs in the rest of the state.  The contrast between the two regions is further demonstrated by the difference in per capita income. The average income level of the central Puget Sound area is 15 percent over the state's average, while other regions are 10 percent below the average income level (1987 average state per capita income was $12,615).  The reasons for the economic disparity within the state are complex and varied.  However, the dependence of rural regions on agriculture, timber, fishing and resource-based industries, along with the depressed markets for the majority of these products during the 1980s, is considered to be a major factor driving this phenomena.  In an effort to promote rural economic development, the Legislature established a number of programs administered by several agencies including the Department of Community Development, the Department of Trade and Economic Development and the Department of Agriculture.

SUMMARY:

The Rural Revitalization Interagency Committee is established within the Department of Community Development to provide policy direction and promote coordination of the state's rural development programs.  The committee is comprised of state government agencies that provide services to rural areas. 

The Department of Community Development, in consultation with the committee and other interest groups, is directed to develop a rural development plan and establish revitalization projects modeled after the Tri-Cities Diversification Act.  The goals of the projects are to encourage the formation of new businesses and industries in rural areas; retain existing businesses; maintain and develop infrastructure conducive to revitalization; and build local development capacity with an emphasis on local decision making.  The department in consultation with the committee is authorized to develop an application and evaluation process for the projects.  The committee, in choosing project sites, is to consider the degree of economic distress in an area and the feasibility of significantly impacting the community's economy.  The types of development activities that may be undertaken include export promotion, import substitution, tourism development, maintenance and improvement of essential public services, and a university-based industrial extension assistance program which is a required activity.

A local revitalization board is established to assist the department in carrying out the projects, and pre-approve all development activities.  The board is comprised of local representatives of the business community, labor, government and development organizations.  The Department of Community Development is responsible for oversight and administration of the projects.

The 1990 termination date of the Tri-Cities diversification program is rescheduled to 1991.

The use of a special excise tax on hotel and motel accommodations is expanded to include the financing of roads and other utility improvements on municipally owned property to promote economic development.

The implementation of the rural revitalization program is subject to a budget appropriation.

EFFECT OF PROPOSED SECOND SUBSTITUTE:

The term "council" is substituted for "committee."  The council is appointed by the Governor and chaired by the Director of the Department of Community Development.

The council's responsibilities are expanded to include building local capacity through leadership training. The rural revitalization project goals and duties are modified to emphasize local decision making in economic development efforts.

Provisions pertaining to a university-based industrial extension program and a local advisory board are removed. Provisions expanding the use of hotel/motel tax funds for economic development projects and rescheduling the termination date of the Tri-Cities diversification project are deleted.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested

Senate Committee - Testified: Don Krupp, Washington State Department of Community Development (pro); Art Yoshioka, Pacific County Economic Development Council (pro); Judith St. Claire, Clallam County Economic Development Council (pro)