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Dick Davis Column: The Grass May Be Greener in Idaho |
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Written On: May/June 2005 |
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Written By: By Richard S. Davis - President, Washington Research Council |
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Mark Sonderen considers Spokane "one of the greatest places in the world to live." Washington, however, does not top his list of great states for business.
The president of family-owned Sonderen Packaging has begun to look across the state line to neighboring Idaho for expansion. He employs 82 people, many of whom live in the Spokane Valley near the Idaho state line.
It’s not a move he wants to make. His family’s roots are in Spokane—his church, the schools that he and his children attended, the urban lifestyle—all of those things we think of when we hear folks talk about the "quality of life."
Yet, like many small manufacturers, Sonderen faces stiff competition. His business includes paperboard packaging for retailers-if you drink Stash or Celestial Seasons tea or snack on Brown & Haley candies, you’ve seen Sonderen’s colorful boxes. It’s a capital intensive business-printing, cutting, folding and gluing high-volume packaging calibrated to meet the customers’ high-speed loading and processing demands. To remain competitive, Sonderen invests in the latest technology, knowing that change comes swiftly. In recent years, when profits have been thin, the state's B&O taxes have been punishing. Less than half an hour east, in Post Falls, his corporate income tax bill would be negligible.
For him, the state’s sales tax exemption for machinery and equipment made a huge difference in his decision to remain Washington based. But other concerns creep in that cause him to reconsider. Ergonomics regulations-finally repealed by the voters-threatened his business. Proposed family leave legislation, new health insurance mandates, high workers’ compensation premiums, reinstatement of the estate tax, and unemployment insurance costs trouble him.
For employers in border counties, these calculations are made daily. It’s not all greener on the other side of the state line. Depending on your business, Washington offers considerable advantages. Highly profitable manufacturing firms fare better under the B&O than they might in an income tax state. Access to ports, research institutions, a large labor market or customer base may make it wiser to stay put.
Still, as the chart shows, it generally costs more to do business in Washington than in Oregon or Idaho. No one picks up and leaves easily. Community ties run deep and relocation can cost millions. But when it comes time for the next expansion, Sonderen may open a second facility in Post Falls. His real estate agent tells him there's a lot of activity and if he wants land at a good price he should move quickly.
To those who point out that in Washington, the political pendulum swings both ways—sometimes toward business, sometimes away-Sonderen says, simply, "In Idaho the pendulum doesn't swing. You don’t have these large shifts in policy."
Our state's leaders spend a lot of time worrying about global competition. That’s fine, but it's dangerous to overlook the competitor next door. Sometimes, however, a few miles either way can make a world of difference.
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