To: Stephen D. Harlan Managing Partner Peat, Marwick, Mitchell & Co. Washington, D.C.
Congratulations on your recent election as president of the Greater Washington Board of Trade, a post you'll assume early in January.
As incoming head of this area's most broadly representative business organization, you are being honored for past contributions to the entire Washington community. It's also fortuitous that an accounting professional will head the Board of Trade in 1982, since budgets and money will be priority items for any group during a recession.
Priorities are the purpose of this communication. Obviously, it is presumptuous to tell the Board of Trade what it should be doing. But you've always been open-minded and perhaps you'll consider some suggestions.
One recent event, in particular, indicated that the Board of Trade is willing to take steps in a new direction for the benefit of long-term, community well-being.
As the organization itself described it, an unprecedented coordinated effort took place in October and November when the Board of Trade joined with the Urban League, Council of Churches of Greater Washington and other groups to oppose actively a proposed tax credit for private school education on the D.C. ballot Nov. 3.
Maybe this tax credit would have been defeated as soundly as it was without business community lobbying. But the important development is that the Board of Trade took a stand on an issue of immediate importance only to the District of Columbia, in recognition of the damage that could be done not only to the city but also to neighboring jurisdictions.
Said Sears, Roebuck executive J. Pat Galloway, whom you will succeed as Board of Trade president: "We intended to defeat this proposal by apprising all of our D.C. firms of our position and requesting their assistance in providing both financial and active support of organized efforts to oppose this measure . . . to defeat this unwise and unwarranted issue which threatened the well-being of our city. It is further our concern that efforts such as this are not duplicated in our neighboring jurisdictions."
By taking action on a D.C. problem, the Board of Trade was acting in the best interests of the broader Washington area community. A loss of an estimated $24 million in revenues to the District in the first year alone would only further cripple a city government faced with monumental financial problems.
And that brings us to some suggestions for Board of Trade priorities in the new year. For too long, the greater Washington business community has ignored the overall regional impact of a weak District economy, partly because the financial problems of the city have been masked by a continuing boom in office-building and subway construction. And most of the leaders of major Washington area businesses live in the suburbs, where they don't experience first-hand the problems of the District.
In 1982, however, the most important fact about the local economy is likely to be that growth has stopped. And the reason is that the declining base of jobs and tax-producing business in the District is now equal to the expansion of the suburbs. In recent years, the suburbs have been growing at a rapid-enough pace to outdistance the city's decline, and that has produced overall area economic growth.
But employment statistics from recent months indicate that people are beginning to move away from Washington because job growth has stopped. Total employment in the suburbs rose about 20,000 between September 1980 and September 1981 but the District lost 25,000 jobs in the same period. Thus, overall figures for the recent 12 months show that total area jobs are down more than 4,000; the D.C. decline is more than growth in the suburbs can match.
Lawyer and former Board of Trade president Robert Linowes added some perspective to this problem at a recent seminar on private sector employment here, held by the area chapter of the American Society of Public Administration. "Given the broadest view, Washington is no longer a local marketplace," he said. "It is part of a vast region defined by interdependent social, political and economic elements covering a score of jurisdictions spanning much of Maryland, Northern Virginia and the District."
He ticked off some of the problem areas in an economy increasingly dominated by the private sector: Federal and local government layoffs, the demise of The Washington Star (many former employes of which took jobs in other cities), the air controllers' strike and reductions in airline jobs as well as related travel industries, the housing depression, a falling-off of some government contracts (particularly those not related to defense), a record number of business bankruptcies.
Linowes said these factors added up to "an unprecedented employment slump" here. He also pointed out that D.C. always has suffered tremendous unemployment among its poor, unskilled and uneducated. "Indeed, this community has the nation's highest rate of unemployment among minority youth aged 18-25 years," he added.
The point is this: D.C.'s economy must be strengthened and the city must be allowed to participate in economic growth if the area is to remain healthy. Some of the ways the city could be aided by the business community involve lobbying and active support for what would normally be considered unorthodox Board of Trade priorities, such as the recent tuition tax credit issue. A sampler of suggestions:
* SUPPORT FOR A COMMUTER TAX: The city must be able to tax workers who use city services every day. Look at the example of one city council member who will seek legislation early next year to impose a payroll or commuter tax intended to make suburbanites who work in the city contribute to its revenues. That city council member is Henry Richardson and the city is Richmond.
The concept of a commuter tax is not alien to the Constitution and other American cities have one in place. If the government in Richmond is thinking of seeking Virginia approval for a commuter tax there, certainly the time has come for all area businesses to stand behind such a tax for the District as a major priority designed to give the city some financial independence and less reliance on the whims of Congress, as expressed in the annual federal payment battle.
The suburbs of Washington and the state treasuries in Annapolis and Richmond are currently the only beneficiaries of the District's inability to tax a large portion of its work force. Only the broad business community here, including the top business leaders from the suburbs, have enough clout to lobby this economic justice into reality.
* THE VOTING RIGHTS AMENDMENT: To date, the city's political leadership has made a mess of winning support for the D.C. voting rights amendment to the Constitution, partly by making it a partisan issue at the start. At least 38 state legislatures must support this amendment by mid-1985 and only 10 have approved it so far.
This is not an event that should pit Democrats against Republicans, and the best way to correct past mistakes and secure approval by enough states is to get started now on a true, grass-roots lobbying and educational program. There is no better resource than this region's business community, which happens to be home for more than 2,000 trade associations and professional groups whose membership includes most Americans. These people have experience and the contacts at state and local levels.
Just imagine that if the American Bankers Association could be convinced that D.C. residents have a right to representation in Congress, and every local banker in the country went to work on his state legislators, what might be the result. Maybe the ABA isn't interested, but why not try? A local business community summit on this issue could be the start of something big--especially for a city where there long has been distrust of the business community.
These are probably the two most important initiatives that local business could take to begin restoring health to the District, although other opportunities exist, such as helping the public school system graduate students skilled in job needs of today, organizing an area-wide approach of help to charitable and nonprofit organizations which are in a state of panic with Reagan administration aid cutbacks, and trying to eliminate some of the divisions in the broader community fostered by so many separate groups that promote economic advance for one area jurisdiction while ignoring the rest.
As Bob Linowes said in that talk recently, "Compared to most other major urban centers economic growth here is almost totally unique. One could even say that this uniqueness--which is real--has contributed to a few unrealistic perceptions. Not the least of these is that Washington, more or less, has always been this way--and that Washington, more or less, will always be this way. The first is patently false. The second is neither certain nor predictable."
Without change in the current status of the District as a dependency, the city's economy will continue to get weaker and more jobs will be relocated to the suburbs, where the cost of living gets so high that outsiders don't want to move there. The surface appearance may be boom times for the suburban jurisdictions, but the reality would be a soft core that is eating up regional expansion to an ever greater degree.
It is likely you might have even better ideas about how the business community can work on this issue. It's time to bring them out into the open.