Washington’s future in “final frontier” economy

Washington’s future in “final frontier” economy
HB 2596 would have the state Department of Commerce examine the best route to foster a strong business climate for the new space economy. Photo: freepik.com

State lawmakers in recent years have monitored the emerging private space economy developing in Washington state, and while previous proposals have struggled to take flight, a new House bill appears to be getting off the ground.

HB 2596 sponsored by Rep. Matt Boehnke (R-8) tasks the state Department of Commerce with creating an advisory committee as well as studying the best path to foster a strong business climate for the industry. The bill, which is currently in the Senate Financial Institutions, Economic Development & Trade Committee, cleared the House on Feb. 19 with a 94-3 vote – and the requisite Star Trek and Buzz Lightyear references.

Boehnke said his bill is about “space, the final frontier, to boldly go where no man or woman has gone before.”

“This is exciting stuff, everybody,” Rep. Alex Ybarra (R-13) told colleagues on the House floor. Ybarra is a former engineer and scientist with the Redmond-based Rocket Research Company that developed the parachute for the Mars Exploration Rover.

According to a September 2018 study by the Puget Sound Regional Council (PSRC), the industry employs 6,200 people and contributes $1.8 billion to the state economy. Other private space companies in the state include manufacturer Blue Origin funded by Amazon CEO Jeff Bozos, Aerojet Rocketdyne, Spaceflight Industries and SpaceX owned by Tesla CEO Elon Musk. There is also LeoStella, a satellite manufacturer. According to the department of Commerce, Space X’s Starlink project is currently the largest satellite constellation in orbit, with every satellite currently built in Washington. The project could potentially have a total of 8,000-30,000 satellites.

“We can look at these jobs of the future, we can look at this manufacturing, (and) we can develop new jobs in our sectors and around the state of Washington,” Boehnke said.

However, Commerce Business Development Manager Connor Duggan told the Senate Financial Institutions, Economic Development & Trade Committee during a Feb. 25 public hearing that “Washington’s continued growth and success in this industry is not necessarily guaranteed. The current cluster should be viewed as a potential opportunity rather than a successful end product.”

He recounted that during a conversation with a new space company weighing the benefits of locating in Portland or Clark County that “the current value proposition for space companies is not bad in Washington, but it is not nearly as developed as with traditional aerospace. Had this been an aviation company knocking on the door, I would have had a wealth of advantageous characteristics to discuss related to specialized programs, initiatives, incentives and other forms of ecosystem support that we have cultivated over the last few decades.”

The PSRC study noted: “competition between other regions in the US and abroad will be challenging in the years to come.” Among its recommendations was the adoption of SB 6411 which was proposed during the 2018 legislative session but failed to clear its original committee after a public hearing. The bill would have provided business and occupation (B&O) tax incentives for companies conducting spacecraft research and development (R&D), in addition to a sales tax deferral for spacecraft R&D and manufacturing facilities.

The PSRC report also called for increased support for startups by encouraging greater venture capital access along and stronger ties between varying-tiered supplier equipment manufacturers.

Under HB 2596, Commerce’s study must include:

  • A 10-year workforce training strategy;
  • Technical assistance to startup businesses seeking national defense contracts; and
  • Recommendations for short-term and long-term legislative actions to support the industry’s growth in Washington.

Duggan said the study is the “clear and logical next step,” adding that Commerce has already had conversations with public officials and gained input with industry members.

HB 2596 is scheduled for executive action on Feb. 27.

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