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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

August 27, 2012 at 10:15 AM

Q&A: Tech talk with Inslee and McKenna

Whichever way the fall election goes, Washington will end up with a new governor that enthusiastically supports the state’s tech industry.

That’s my take on the gubernatorial candidates, Republican Rob McKenna and Democrat Jay Inslee. Both see education and innovation as keys to nourishing the high-tech sector, a cornerstone of the economy.

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These similarities were highlighted earlier this month during a breakfast event in Seattle hosted by the Washington Technology Industry Association (WTIA).

Neither candidate has a tech background — they’re both lawyers — but each has touched important tech issues.

As attorney general, McKenna made Internet safety a priority, going after a number of online scammers. In Congress, Inslee pushed the FCC to license unused TV spectrum that can be used for wireless broadband, a priority of Microsoft, Google and other tech companies.

But is that enough to lead a state that’s the nation’s “primary hub for software production,” according to the TechAmerica Foundation?

For a closer look at the candidates’ tech positions, I circled back after the WTIA event and interviewed them separately. I asked each the same set of questions, to see how they stand on issues they may face in office.

Here are their responses, edited for space:

Q: One of the most popular Web apps in Washington was developed by a state agency — the Department of Transportation’s real-time traffic maps. What can the state do to continue nurturing that kind of innovation by state employees and others?

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Inslee (above): We’ve got to look for every chance possible to encourage a bottoms-up approach to creativity and innovation in our state agencies.

Some of my lean management proposals that I’ve made really focus on that — looking for innovation that is created and recognized by folks in the field and the lower end of the ladder who really recognize how you improve the performance of state government.

McKenna (left): First of all, we should reward superior performance with improved compensation. In other words, we should link performance to pay. I adopted the Department of Management’s personnel system when it became available in 2006 for that very reason. That’s an approach that ought to be adopted throughout state government. Unfortunately, I run the only large agency where we’ve adopted it.

I look forward to issuing an executive order that requires all agencies to move to performance management, so we have rigorous performance evaluations for everyone twice a year so we begin connecting compensation to performance.

Q: Universities, particularly the University of Washington, are partnering with private investors, bringing in venture capitalists and creating investment funds to nurture spinoff companies based on the schools’ research. How do you balance the public, educational mission of these schools with the drive to become business incubators?

Inslee: I really see very little conflict in those roles. I think they’re mutually supportive. This is probably my favorite proposal on what we can do to accelerate the creation of small, innovative businesses in this state … It’s not a bad thing that we would be generating revenue.

By the way, when we do that, I want to propose that goes back to the colleges and their STEM (science, technology, engineering and mathematics) programs.

McKenna: I don’t think that those goals are in conflict with one another. Some of the best teachers in a college are some of those on the cutting edge of research and development.

It’s good for our local economy when there are spinoffs from technology development at the universities. One famous example, of course, is the development of the technology that led to Google at Stanford. That’s been a huge boon for Stanford, Palo Alto and the state of California. We want to successfully leverage intellectual property developed at universities.

Q: Tax credits for companies’ research and development spending will expire during the next governor’s term, and there’s interest in extending them. Should they be made permanent and should there be any sort of cap on the breaks? Perhaps limiting them to companies that have profits under, say, $1 billion a month?

Inslee: I believe fundamentally that the driving force of economic development in our state is research and development. If you’re going to have incentives in any place, that’s probably the first place to put it …

I’m not a fan of trying to limit as to size of companies because research can be just as risky at a large firm as it as at a small firm.

McKenna: I don’t know if there should be caps. I frankly haven’t studied that idea. I do think all tax preferences should be reviewed on a regular basis for efficacy and fairness. In most cases I expect productive tax preferences will be extended.

Based on what I know of the existing R&D tax credit, there’s a good case to be made that it should be extended.

Q: The state’s oversight of telecommunications has diminished, through federal deregulation and technological shifts. People are moving from regulated wireline to deregulated wireless and broadband services. Is there anything the state can or should do to ensure the quality and availability of these services?

Inslee: We could elect a governor who really understands the need for additional spectrum and the need to develop white spaces and new apps and opportunities that can come from that. I was the one who worked with others to improve our access to white-space spectrum.

There are some things we can do to try to coordinate broadband application and I’m eager to do those things. Every opportunity we can.

McKenna: We want to make sure that rural areas are protected and that they continue to receive the same quality of service that urban areas receive. Broadband represents tremendous potential for economic development in rural areas of our state.

I think state and local policies today are moving broadband into rural areas pretty effectively. So we want to keep an eye on the actual quality and availability of those services, but the trend seems to be going in the right direction at this point.

Beyond that, of course, there’s always a role for UTC [the state Utilities and Transportation Commission] to monitor service quality and to be a resource for consumers and businesses that are themselves consumers of telecom.

As we see more and more competition in the telecom space, we need less regulation because the purpose of regulation to begin with was to assure fairness in a monopolistic environment.

Q: Is there anything the state can do to improve access and quality of broadband, perhaps encourage more competition or use right-of-way leases for leverage? Or is it out of the state’s hands?

Inslee: I think the state in transportation corridors can help sometimes … We can certainly be an advocate. Governors have a bullhorn and they can use it at the federal level as well, in a variety of different ways. Knowing the ropes at that level will help being governor.

McKenna: Most of that’s controlled at the local level because franchises are required for right of way usage. Typically it’s those franchise agreements that require broadband access, public access, etc., so I’m not sure what else the state can be doing that we haven’t already done.

Q: How can Washington state’s cluster of clean energy companies grow if federal green energy credits diminish?

Inslee: This is a tremendous opportunity for the state of Washington. This is right in our wheelhouse. We are a perfect test bed for these new technologies and manufacturing center for these new technologies.

We have a very broad-based beginning of what could be huge industries in the state of Washington. It’s a perfect moment to help these businesses thrive.

I’ve proposed a number of very targeted ways to help these industries — targeted R&D incentives, tax breaks. We think this suite of proposals is tailor-made for what we do well, which is to build small businesses around innovation.

McKenna: It obviously makes development of wind power more challenging if those credits diminish or disappear, although I certainly would lobby for their extension as governor.

There are other policy areas that the state directly affects that we really need to concentrate on. For example, the defunding of research institutions.

One of our advantages, of course, is research and development. Washington State University and UW are both involved in fields that connect to clean energy. If we keep defunding our higher education institutions, that capacity is going to diminish.

Q: How can the governor encourage the growth of tech companies outside the Seattle area?

Inslee: Elect a governor who spent almost two decades on the other side of the mountains helping businesses grow. I do think the experience I’ve had helping the agricultural industry in Central Washington makes me alert to opportunities.

McKenna: We have to get off the top 10 list of the most expensive states in America to do business. It is hurting our ability to attract companies and capital.

Tech companies, like all companies, can’t start or grow without talent, so we need to develop more talent that’s available to tech companies throughout the state, including outside of urban areas. One way to do that is to expand higher education opportunities throughout our state through community colleges, tech colleges and branch campuses.

Q: Anything else you think the governor can do to nurture the state’s tech industry?

Inslee: There’s a thousand things and I’ve got about 75 of them in my jobs plan.

The single most important thing overall that state government can do for the tech industry is produce people with intellectual capability to produce new products.

That’s why giving our children an opportunity to be proficient in science, technology and math is probably the single most important thing our state can do to help the state technology industry.

McKenna: Absolutely. We’ve got to adequately fund public schools. We’re not doing that now. By doing that, we’re going to increase the number of people who go on to earn degrees in colleges.

We’re not preparing our students well enough in high school and before high school — K-12 generally — to be successful in post-graduate education. Every student has to be prepared for some postgraduate training.

We’re clearly not getting the job done in public schools in terms of preparing students in reading, writing, math and these critical skills. We have to start catching up to other states in terms of reforms to get us there.

Comments | More in Interviews | Topics: governor, inslee, mckenna

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