OLYMPIA— Washington state is the second-best state in which to do business, according to Forbes magazine’s “Best States” ranking on competitiveness. Last year, the state ranked third.

Don Brunell, president of the Association of Washington Business, said the ranking is welcome news for employers in the state.

“During these tough economic times, a second-place Forbes ranking is encouraging news and hopefully will cause employers looking to invest in modernizing or building new facilities to look at Washington as a place to create new jobs and opportunities,” said Brunell.

“It is key to Washington’s economic recovery to have our state’s business advantages nationally recognized. When you step back and look at Washington in relation to the rest of the country, we are doing well,” he said. “Neighboring states like Oregon and California are struggling right now, raising fees and taxes to balance their budgets.

“Washington also continues to support and foster its manufacturing base with tax exemptions for machinery and equipment purchases, repair and replacement parts and research and development,” Brunell added.

“The Legislature could have removed this exemption last year in its effort to balance the budget, but lawmakers recognized the opportunity this exemption presents far outweighs the challenges. This gives us a huge leg up on other states, like California, which have eroded their manufacturing base by jettisoning similar incentives.”

Forbes’ Best States ranking measures six categories considered essential to businesses: costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life. The magazine considers 33 different data points to determine the rankings in the six main areas. Business costs — including labor, energy and taxes — are weighted the most heavily. According to the magazine, rankings are based on data compiled from nine different data providers; the business information site Moody's Economy.com was the survey’s most-utilized resource.

While Washington does have a tax on a business’ gross receipts, known as the Business and Occupation or “B&O” tax, Brunell said the lack of a personal or corporate tax may have contributed to the state’s high ranking, something the magazine generally considers an advantage.

“The Forbes ranking is quite a compliment, but we still have some work to do,” Brunell added. “Our unemployment insurance, regulatory and workers’ comp costs are still too high. Those are big factors employers consider when looking to grow or locate a business in our state.

Brunell said AWB is concerned about pro-union organizing legislation and strikes that have been particularly detrimental to Boeing. “Employers at this time really need certainty in the workplace and must take advantage of what orders are available.”

Low cost hydropower has been a tremendous competitive advantage, he added. “We need to insure the dams on the Columbia and Snake rivers continue to generate electricity and we need to find ways around sighting problems for new wind farms.”

“We are committed to positioning Washington state as a top tier, globally competitive business climate and look forward to working with our state’s elected leadership to achieve this goal,” concluded Brunell.

“Washington state is a great place to do business, and we must do everything we can to protect — and enhance—that competitive advantage.”

About the Association of Washington Business
Formed in 1904, the Association of Washington Business is Washington’s oldest and largest statewide business association, and includes more than 6,700 members representing 650,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.