Amid rising concerns over Washington’s cooling economy — and mounting criticism of its business climate — Gov. Bob Ferguson is turning to executives from Amazon, Boeing and other big Washington employers.
Those C-suite-ers will join labor and tribal leaders, development experts and others on a new economic development council tasked with identifying barriers to business expansion and developing pro-growth legislation.
“We need to make sure businesses can start and grow here in Washington state,” Ferguson said Thursday at a Seattle news conference where he signed an executive order creating the council. “We can’t take that for granted.”
Ferguson’s call to action follows several rounds of high-profile tax hikes, as state lawmakers grapple with a widening budget crisis amid growing indicators of an economic slowdown.
Washington's unemployment rate of 5.2% in May is tied for third highest in the U.S. Individual income growth is slowing, according to new state data.
And the latest projections by the state Economic and Revenue Forecast Council, which landed Friday, indicate lawmakers may face a larger-than-expected shortfall in the next two-year budget.
Coupled with higher-than-expected costs for government services, “we’re facing a tough budget cycle,” K.D. Chapman-See, director of the office of financial management, said in a statement Friday.
But Ferguson's council has a political objective, as well. He and fellow Democrats have faced heavy pushback from the business community, especially since the recent legislative session and passage of the so-called millionaires tax" on high earners.
Business leaders and conservative commentators say state taxes and the combative anti-business rhetoric from some progressive Democrats are leading employers and entrepreneurs to leave the state.
In April, Seattle-based Starbucks confirmed plans for a new office in Nashville, Tenn., with up to 2,000 jobs. Publicly, Starbucks explained the move as part of a regional expansion, but company insiders said it was also motivated by a 2025 increase in a state business tax.
Starbucks isn't a member of the new council.
In June, Janicki Industries, an engineering and manufacturing company based in Sedro-Woolley, said it would open a facility in Montana with up to 1,000 jobs, and explicitly called out Washington’s taxes and regulatory climate.
“Decisions at the state level (are) making it difficult for us to create new jobs for future employees by investing in local growth,” John Janicki, company president, said in a statement issued by Montana Gov. Greg Gianforte, a Republican.
“With this in mind, it is best for Janicki to focus its large-scale expansion into a more business-friendly environment, so we are pursuing out-of-state growth,” Janicki said.
Ferguson rejected the notion that the council comes in response to recent criticism.
“I didn't wake up last week and think about forming this council,” he said during a question-and-answer session with reporters Thursday.
But Democratic leaders clearly sense the political risks of more business flight from a state already struggling economically.
Although Ferguson said he didn't invite Starbucks to be on the council, he was quick to emphasize his outreach to the company. In an interview following Thursday’s news conference, Ferguson said he had “a lengthy, direct one-on-one conversation” with CEO Brian Niccol after the Nashville announcement and that his office has “a direct line of communication with them.”
“I've made it clear, call me anytime,” Ferguson said. “We understand how important Starbucks is."
Since May, Ferguson has also had calls and meetings with business leaders, including some members on his council, according to his official calendar released under a public records request.
That includes calls with Amazon executive David Zapolsky, Microsoft President Brad Smith and Boeing Commercial Airplanes CEO Stephanie Pope, as well as a meeting with Puyallup Tribe Chair Bill Sterud.
Council membership heavily favors state business interests.
In addition to Amazon, Microsoft and Boeing executives, council members include representatives from T-Mobile, Puget Sound Energy, Alaska Air Group, Uwajimaya and Stemilt Growers in Wenatchee, along with influential industry advocacy groups.
Other represented organizations include economic development organizations, state universities, port authorities, native tribes and labor groups. Ferguson and Lt. Gov. Denny Heck are also members.
Ferguson said the council's goals include boosting “family wage” jobs, identifying regulatory barriers, attracting out-of-state businesses and developing a comprehensive statewide strategy for economic development.
Ferguson said he wants proposals for long-term initiatives as well as near-term “ideas that state agencies can take action on immediately,” and pointed to work the state has already done to cut processing times for licenses and permits.
He said he would be open to more aggressive financial incentives to attract out-of-state business, though he conceded that would pose challenges in the current budget environment.
Tennessee will pay Starbucks $30 million as an incentive for its office expansion.
Ferguson said he expects the well-connected council will help shape his budget proposals and help ensure those proposals move in Olympia. “These conversations are going to influence what I'm putting in my budget, what legislative proposals we’re making,” Ferguson said.
Business leaders say the key to competitiveness isn't incentive packages but lower taxes and more predictable tax and regulatory environments.
In recent years, they note that Washington lawmakers have repeatedly raised and lowered business and other taxes, and are now betting on a high-earners tax that, even if it survives legal challenges, won’t close the budget gap.
That unpredictability is a major disadvantage for Washington employers, “especially for a company that's headquartered here but competes nationally,” Mike Katz, chief business and product officer at T-Mobile, said in an interview following Thursday’s announcement.
Ferguson reiterated his promise not to include any new tax increases in his next budget proposal. He also indicated he’ll push for cuts to deal with a growing budget shortfall, though many observers expect both promises to be tested by Democratic lawmakers in coming sessions.
Still, Katz and other business members in attendance Thursday sounded cautious optimism over the governor’s council and welcomed a greater role in policymaking.
Labor members on council were also hopeful.
Heather Kurtenbach, executive secretary of the Washington State Building and Construction Trades Council, which represents construction workers, electricians and other trades, conceded that her seat on such a pro-business council is likely to get some criticism from the state's more progressive unions.
But Kurtenbach said some of the workers represented by the trades council tended to be "a little more conservative" politically than some other unions, and are often just as frustrated as businesses are with permitting delays and other regulations.
"We want businesses to build things, Kurtenbach said. “A lot of the folks I represent are not working right now.”
Seattle Times politics reporter Jim Brunner contributed to this report.
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