AN ACT Relating to promoting economic diversification for defense-dependent industries and communities; adding a new chapter to Title 43 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 unions 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 addressed by existing economic development legislation and programs and requires a specialized program.

This chapter creates a state commission 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 and firms 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 this chapter.

(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) "Commission" means the Washington state commission on economic diversification created in section 3 of this act.

(3) "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.

(4) "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.

(5) "Economic diversification effort" means any effort by a defense-dependent firm or community or a labor union 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 (3) and (4) of this section.

(6) "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.

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

(8) "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.

(9) "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 commission on economic diversification, 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 members shall be from labor unions, one of which shall be a labor union representing 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 director of the department of community development shall serve as the nonvoting chairperson of the commission.

(1) Members of the commission, other than the chair, shall serve for two-year terms. Vacancies shall be filled in the same way as the original appointments.

(2) Members of the commission 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 commission shall employ staff, who shall be state employees under Title 41 RCW, and prescribe their duties as necessary to carry out the purposes of this chapter. The staff shall be supervised by the director of the department of community development.

NEW SECTION. Sec. 4. The commission and its staff 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 commission 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 defense spending and economic diversification, and educate the public about the problems associated with economic dependence on defense spending and about the economic diversification response to those problems. The commission's activities in satisfaction of this mandate may include, without limitation, public conferences, public meetings, press conferences, public speaking by commission members or others at the commission'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, the commission, labor unions, organizations interested in economic diversification, and the news media.

(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 by January 1, 1991, to the governor, the trade and economic development committee of the house of representatives, the economic development and labor committee of the senate, the Washington state labor council, organizations interested in economic diversification, and the news media. The report shall review economic diversification efforts in firms and communities, review the accomplishments of the commission and its staff, 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 unions, 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.

NEW SECTION. Sec. 5. Sections 1 through 4 of this act shall constitute a new chapter in Title 43 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 commission on economic diversification 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.