Gregoire looks back, and ahead

Gov. Chris Gregoire says that whoever takes over as governor needs to be more than just a presence in economically depressed areas like the Harbor, they need to be willing to pick up the phone or write a letter to really sell the area.

“I have every reason to think we’re on track,” Gregoire said. “Look at what we’ve done here with the Port. And the Port is up where it was the same time last year with the autos, with the logs, so we need to keep developing the Port. You can’t let major employers go. You can’t let Cosmo go down, you can’t let the plywood company go down. You have to find ways to help the county find new ways while creating a new economic opportunity. You’ve got to help small business. Small business has got to be a priority.”

Gregoire says that she truly wishes the unemployment rate was lower. On the Harbor, it’s been double-digit since 2008 and last month it was at 12 percent — the highest in the state. Even so, 12 percent is the lowest unemployment rate since a high of 15.7 percent in January 2010. That shows some improvement.

Gregoire was in town last week when Harbor Paper celebrated its grand opening. But she’s not just been on the Harbor during the good times, but during the down times, too.

Gregoire remembers coming to a packed Grays Harbor College auditorium in 2005, just after the Weyerhaeuser Co. announced it would lay off more than 300 workers, shutter the large log mill in Aberdeen and the Cosi Pulp Mill a few months later.

She remembers coaxing a generally quiet audience to talk to her, a moment where she became the state’s Sympathizer In Chief. She recalls taking time to visit a multi-generational family who had all worked at the mill after the fact.

She dedicated $80,000 from her budget for a feasibility study to look at the viability of the mill. Then, she assigned a staff member to work with the community and Weyerhaeuser to sell the mill. She personally wrote letters to potential Chinese and Japanese buyers. She even made personal contact with a former customer of the mill, Japanese-based Daicel.

And when Cosmo Specialty Pulp re-started the mill and had its own grand opening in May of last year, there was no place she would have rather been. Unfortunately, the state’s budget troubles called her away and she missed her victory lap.

Bob Buchan, spokesman for Cosmo, said that Gov. Gregoire could have just called it quits as soon as the mill sold.

“But she’s been a presence for us,” Buchan said. “We’ve been able to meet with her and work through some pretty important issues.”

Gregoire assigned a facilitator to work with Cosmo and shellfish growers to work out issues involving the effluence that gets discharged from the mill. Too much effluence can lead to a state-mandated automatic shutdown of oyster beds as far away as South Bend. Gregoire’s office is helping the company be pro-active to avoid shutdowns, and possibly even change the way the state looks at the science behind the effluence discharges.

And with permit renewals on the horizon, Buchan said that Cosmo officials have been meeting with Gregoire’s office and have received critical assistance.

“We just met with her office last week and she continues to help us get our permits buttoned down,” Buchan said.

In the weeks before it looked like Grays Harbor Paper was going to shut down, company officials met with Gregoire’s staff to see if there was anything that could be done to prevent the closure. Email records from those encounters show the situation was a bit too dire and, ultimately, the company ran out of money and shuttered.

However, in September of last year, Gregoire joined efforts to recruit a company from Thailand to take a look at the mill.

The deal didn’t work out, but the Thai company’s vice president told Gregoire, “Your office has contributed to the positive impression we have of Washington state.”

Ultimately, Harbor Paper would take over the mill, thanks to the investment of Cesar Scolari, who retired to Gig Harbor after selling a distribution staffing company in California. Gregoire points out that the deal’s financier is Craft3, which used the small business credit initiative through the state Department of Commerce to leverage a line of credit to purchase the mill. Gregoire said the problem is that there are banks that have simply stopped giving loans or lines of credit.

“The line of credit to start up the mill is from us,” Gregoire said. “The federal government gave us funds as part of stimulus to help businesses.”

The CANDIDATES

The candidates running to replace her — Democrat Jay Inslee and Republican Rob McKenna — have been critical of the way the state Department of Commerce has worked. Both Inslee and McKenna say they will make changes to the agency. Inslee wants to take the economic development arm of the agency and put it under the Governor’s Office, while McKenna wants to ensure a leader of the department that knows economic development issues and directs staff to arrange more site visits and does cold calls to businesses.

Gregoire points out that she works nearly every day with the agency and her agency chief, Rogers Weed, was a leader at Microsoft.

“(The candidates are) probably not the most well informed, but I welcome them to take it up a notch,” Gregoire said. “I welcome them that opportunity to make it happen, but they’re going to have to put some financial resources into it and they’re not going to make it happen in the immediate future.”

Gregoire notes putting more financial resources toward economic development may very well be an impossible task, given a $1.1 billion drop in revenue the state is expecting for the 2013-2015 biennium. And that’s before the extra funding that needs to be found to help figure out the state Supreme Court decision mandating the state fund education better.

Gregoire says she’s still reviewing what her potential last budget will look like. Although both Inslee and McKenna have said they are not interested in pursuing tax increases, Gregoire doesn’t know how the budget can be put together realistically without a tax increase somewhere.

And, she notes, B&O tax increases on some professional services goes away next year, as does a tax hike on beer.

“I watched both candidates on this subject and I say to them, ‘Great, wonderful, but you can’t solve it in 2013-2015,’ ” Gregoire said. “To say you are going to do all that when we’ve already cut close to $12 billion, I don’t see it.”

She notes that LEAN Management, which has been a hot topic of the campaign, is not going to work right away. Neither, she says, is McKenna’s plan to cap growth at 6 percent.

“There’s no program at that level, so it doesn’t do any good to cut it,” Gregoire said. “And you can’t say to Corrections, ‘Put a no vacancy sign up on Walla Walla.’ You can’t say at a juvenile institution, ‘There’s no room at the inn.’ You can’t say at a nursing home, ‘Sorry, we’re not taking any more.’ You can’t say at Child Abuse and Neglect, ‘We’re not going to investigate.’ There’s really limited discretion, so we’re going to struggle to meet the $1.1 billion shortfall and then you look at the McCleary challenge to find another $1 billion on top of that.”

Gregoire says she really wants to introduce a budget that’s closer to her heart, but, “I’m stuck. I’m stuck. State employees are down to 1996 levels — and without any diminished demand for services, and in some cases demand is up.”

MARIJUANA

Gregoire also predicted the next governor could be in store for a messy situation if the marijuana legalization initiative becomes law.

“If that immediately passes, my first call is to U.S. Attorney General on, ‘what are you going to do?’ ” Gregoire said.

She noted she’s not necessarily inviting a temporary restraining order, but it’s definitely on her mind.

“They have to sort it out, right?” she said. “I think it’s going to be a mess and we’re going to be a magnet … and invite federal busts.”

Gregoire said that she’s still in favor of the federal government changing the classification of marijuana to a lower-level narcotic. Right now, it’s classified at the same level as heroin or cocaine.

“That would take the air out of the thing,” Gregoire said.

WHAT’S NEXT?

Gregoire told The Daily World that she’s been approached with ideas about what her future may hold, but says emphatically her focus right now is the state’s next budget.

“I have people coming to me and I tell them I’m focused on finishing my job and any minute I’ll get a call and I’ll get my first grandchild,” she said. “And that’s the focus of my attention right now. I’m not done. I’m not looking for a job. I still have more to give and a lot of interesting things have been suggested to me, and I say, ‘Come see me at 12:01 a.m. on Jan. 16.’ ”

Just two years ago, there was widespread speculation that Gregoire was the leading candidate to replace then-U.S. solicitor general Elena Kagan after she was appointed to the U.S. Supreme Court. After rumors swirled for several months, Gregoire asked for her name to be removed from consideration. Whether she may find herself as part of a second-term Obama administration is anyone’s guess — not to mention that it would depend on Tuesday’s election results. But that doesn’t seem to be of much concern to Gregoire just yet.

“I keep waiting for this job to slow down, but I haven’t seen one iota of that,” she said.