AN ACT Relating to promoting economic diversification for defense-dependent industries and communities; adding new sections to chapter 43.63A RCW; and making an appropriation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that defense spending, defense-related industries, and military bases are important to the state's economy; that economic activity in defense-related industries can fluctuate severely when defense spending changes; and that the state, especially those communities dependent on defense-related industries and/or bases, have suffered in the past when federal spending changed and may suffer again because of limits on federal spending.

The legislature further finds that the state has an interest in helping defense-dependent communities, private firms, and labor organizations and employees cope with changes in the defense budget, and that economic diversification from defense-related to nondefense-related industries is a logical way to avoid the economic troubles such changes often cause.

The legislature further finds that economic diversification is different from economic development in ways not adequately addressed by existing economic development programs and requires a specialized program.

Sections 1 through 4 of this act create a state advisory committee and program on economic diversification which will take initiative in promoting dialogue about, and constructive efforts towards, economic diversification, and which will help defense-dependent communities, firms, and employees in the state to diversify into nondefense-related industries.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout sections 1 through 4 of this act.

(1) "Civilian products and services" means all products and services which can be sold to nonmilitary buyers without substantial changes in those products or services, and for which there is a market other than the military.

(2) "Advisory committee" means the Washington state advisory committee on economic diversification created in section 3 of this act.

(3) "Department" means the department of community development.

(4) "Defense-dependent community" means a municipality or geographical area within the state in which the sum of salaries, wages, and procurement spending by the department of defense or defense-related spending by the department of energy or the national aeronautics and space administration is equal to at least five percent of personal income in that municipality or area during any quarter of the previous twenty-four months.

(5) "Defense-dependent firm" means a firm, partnership, corporation, trust, association, or other form of private business organization which derived at least twenty-five percent of its gross sales during the previous twelve months from spending by the department of defense or defense-related spending by the department of energy or the national aeronautics and space administration.

(6) "Economic diversification effort" means any effort by a defense-dependent firm or community or a labor organization in such a firm or community to change its economic activities in ways which are likely to remove that firm or community from the definitions of "defense-dependent community" and "defense-dependent firm" set forth in subsections (4) and (5) of this section.

(7) "Conversion" is one of several possible strategies for economic diversification. It refers specifically to efforts to convert a production enterprise or military base facility from a defense-related activity to a nondefense activity.

(8) "Industry" includes the provision of services as well as the production of goods.

(9) "Local development organization" means a nonprofit organization intended to operate within a local area, committed to an economic diversification program, and reflecting a broad cross-section of the community, including business and labor.

(10) "Military products and services" means products and services which cannot be sold to anyone but the military without substantial changes in those products and services, or for which there is no market except the military.

NEW SECTION. Sec. 3. There is created the Washington state advisory committee on economic diversification in the department of community development, which shall consist of eleven members and a chairperson. The governor shall appoint the members, except for legislative members. Two members shall be from private sector firms, one of which shall be a defense-dependent firm; two representatives of labor organizations, one of which shall represent employees of a defense-dependent firm; two members shall be from community-based organizations active in economic diversification; one member shall be a professional with expertise in the area of economic diversification; four members shall be from the legislature, one from each political caucus of the senate to be appointed by the president of the senate, and one from each political caucus of the house of representatives to be appointed by the speaker of the house of representatives. The governor shall designate the chairperson of the advisory committee from among the eleven advisory committee members. The director of the department of community development, the director of the department of trade and economic development, and the director of the employment security department shall serve as nonvoting advisory members of the advisory committee.

(1) Members of the advisory committee shall serve for two-year terms. Vacancies shall be filled in the same way as the original appointments.

(2) Members of the advisory committee shall receive no compensation, as provided in RCW 43.03.220, but shall be reimbursed for travel expenses under RCW 43.03.050 and 43.03.060.

(3) The advisory committee shall be staffed by the department of community development.

NEW SECTION. Sec. 4. The department with the assistance of the advisory committee shall conduct a program that promotes diversification from defense-related to nondefense-related industries and local economies. This help shall include but not be limited to the following duties:

(1) The department with the assistance of the advisory committee shall promote and encourage economic diversification as a logical response to the problems engendered by economic dependence on defense spending, take a leading role in promoting dialogue about cuts in defense spending and in educating the public about problems associated with economic dependence on defense spending, and economic diversification responses to those problems. The activities of the department with the assistance of the advisory committee in satisfaction of this mandate may include, without limitation, public conferences, public meetings, press conferences, public speaking by department or advisory committee members or others at the department's or advisory committee's request, consulting with anyone undertaking an economic diversification effort, making fact-finding tours at members' personal expense, studying economic diversification or conversion efforts within Washington state, and elsewhere in the nation and abroad, and helping and promoting one or more pilot economic diversification projects.

(2) Monitor possible shifts in defense contracts and programs, and promptly provide information about such shifts to affected firms, affected communities, labor organizations, and organizations interested in economic diversification.

(3) Research and write reports about the likely effect upon firms and communities of expected or likely shifts in defense contracts and programs.

(4) Research and write a yearly report to be issued every January, beginning in 1991, to the governor, the trade and economic development committee of the house of representatives, the economic development and labor committee of the senate, and to organizations interested in economic diversification, upon their request. The report shall review economic diversification efforts in firms and communities, review the activities of the department and the advisory committee under sections 1 through 4 of this act, review the effect on Washington firms and communities of shifts in defense contracts and programs during its previous year, identify expected and likely shifts in defense contracts and programs which may affect firms and communities in Washington, discuss the possible consequences of such shifts, identify firms and communities at risk from such shifts, and recommend possible diversification efforts and strategies to deal with shifts in defense contracts and programs.

(5) Identify defense-dependent firms and communities, review the nature and extent of that dependence, and provide information on that dependence to affected firms, communities, labor unions, local development organizations, and other affected groups.

(6) Help firms, communities, labor organizations, and local development organizations to undertake economic diversification efforts by helping them to get technical and financial help, including but not limited to help from federal, state, local, and private sources in the following areas:

(a) Training people in new skills and services;

(b) Product development;

(d) Modifying or replacing production facilities in order to produce civilian goods and services;

(e) Raising money from federal, state, local, and private sources to finance economic diversification efforts, including but not limited to loans, investments, and grants.

(7) Coordinate with other state programs that assist businesses and communities, particularly regarding business turnaround efforts or product or market diversification efforts, including those in the department of trade and economic development, the department of community development, and the employment security department.

NEW SECTION. Sec. 5. Sections 1 through 4 of this act are each added to chapter 43.63A RCW.

NEW SECTION. Sec. 6. The sum of two hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1991, from the general fund to the department of community development for the purposes of this act.

NEW SECTION. Sec. 7. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.