Former Washington Governor Christine Gregoire says the evidence is clear that the region is losing financial advantages, and leaders must also lose their complacency to reverse the trends. “We have lost our competitive advantage,” Gregoire, CEO of Challenge Seattle, told KOMO News. “We have tremendous assets, but the warning signs are very, very clear.” In an exclusive interview ahead of Monday’s release of a new report, Gregoire says local elected leaders must come together to advance a strategy to keep existing employers in the four-county region of King, Pierce, Snohomish and Kitsap. Starbucks expects to create up to 2,000 supporting jobs over the next five years in a new $100 million Nashville office, including moving some select equipment from Seattle. Meanwhile, Amazon plans to leave another South Lake Union office when its lease expires next year. The companies’ decisions reflect different business strategies, and none has said that Washington’s taxes or regulations alone drove the measures. Starbucks has said Seattle will remain its global headquarters. But Gregoire says Puget Sound can no longer assume that major employers will automatically choose the region when deciding where to add jobs, invest or expand. The new Challenge Seattle report says central Puget Sound lost nearly 7,000 jobs in 2025, while employment continued to grow nationally. The report says the decline followed two years of stagnant job growth and marks the first annual regional job loss outside of a major recession or pandemic in at least two decades. The report, Keeping Puget Sound Strong: A Regional Plan for Jobs and Opportunity, calls on counties to address what it describes as growing threats to the region’s competitiveness. “It’s about jobs. That’s what we need to focus on,” Gregoire said in an interview. “And to do that, we have to make ourselves more affordable. We have to make ourselves much more competitive than we currently are.” The report says Washington’s overall business ranking fell from first to 11th between 2017 and 2025, while its cost of doing business ranking fell from 32nd to 47th. It also notes that Washington has the lowest five-year business survival rate in the country, slower venture capital growth than peer regions and a 5.2% unemployment rate in the central Puget Sound, which is a little more than a percentage point above the national rate. Gregoire acknowledged that current Gov. Bob Ferguson is right that some indicators remain positive, including Washington’s overall business ranking at No. 11. But he said the long-term direction should concern political and business leaders. Gregoire was governor from 2005 to 2013, and that period included legislation to give Boeing significant tax breaks to keep jobs in Washington, which was later expanded and improved under Gov. Jay Inslee. “A decade ago, we were number one,” he said. “But you can’t deny the warning signs when the business climate is classified as it is, when corporate taxes are as they are, when regulation is as they are.” The report argues that the problem is not a tax, a rule or a local policy. Instead, it cites the cumulative effect of higher costs, new regulations, pressures on housing and child care affordability, and what it calls a weakened culture of partnership between government and employers. He says state and local business taxes have increased dramatically since 2020, while state regulation has also increased. The report states that “state agencies adopted approximately 71 percent more regulations last year than in 2015. Washington is now the eighth most regulated state in the country with more than 200,000 state regulations on record.” Gregoire said companies must be able to plan. “They make decisions based on: Can we expect what will happen tomorrow where we are now?” she said. “If we can’t, then they’ll take a hard look at whether we should stay, expand here or go somewhere else.” Starbucks has said its Nashville location will complement its Seattle headquarters. The company said most support teams will remain in Seattle, but some teams will move as Starbucks looks to be closer to suppliers, a growing talent pool and future store growth in the south and east. But some of the layoffs were reportedly related to employees who refused to move to Nashville. Amazon plans to vacate an 81,000-square-foot office when its lease ends in March 2027, part of a broader effort to reduce leased space in Seattle. Last week, WaFd Bank announced it will merge with Jacksonville, Florida-based EverBank, with tens of billions of dollars in assets. Quietly, the former Washington company also announced that its holding company will move its offices from Seattle to Bellevue. “WaFd Bank has the opportunity every day, if we wanted, to move its headquarters to another state, like people have done, to Nevada or Idaho or other places where you hear people are moving their businesses. Again, the state of Washington has been very good to us. It’s been our home for almost 110 years. We’re not going to give up on Washington. We’re going to open an office in Bellevue for the holding company. Bellevue is booming, Seattle is still struggling a little,” explained Vice President Brad Brad. WaFd senior. Well. He added that customers will not see any immediate impact and that the on-site banking services that have been the company’s strength for decades will remain. “We have another team that we are joining forces with that is based in Florida. I’m sure we will keep an even stronger and more focused eye on what’s happening in Olympia, what’s happening in Seattle, as we should, to manage the bank properly.” That idea first came up during the last session. “If Washington state passed a payroll tax, it would be like waving a flag asking companies to move jobs out of state as quickly as possible. Yes, it’s like a tax tailor-made for the 1920s, not the 2020s,” Smith said in an interview. “If a payroll tax were ever enacted in Washington state, that would be the day we would have to start looking hard at moving jobs elsewhere. It simply wouldn’t make economic sense anymore. Other states are offering tax incentives to move jobs. Why stay in a place that raises the tax to keep them here? will probably disappear in Olympia. Seattle Mayor Katie Wilson was not present for Gregoire’s announcement, but gave a speech to kick off a forum at which other local mayors participated. He later responded to the report and noted: “We are in a really fragile moment. I think we all recognize that.” But when asked if he would include an extension of the JumpStart payroll tax in his budget proposal, Wilson avoided a direct answer. “There are multiple factors that businesses consider when thinking about where to locate, and taxes are certainly one of them. That’s certainly a consideration I’m taking seriously as I prepare my budget that we’ll release next week,” he said. “I’m not going to put out my own budget announcement, but I will say that we’re in a very challenging environment where we have a very large budget deficit, and I’m taking very seriously the need to be economically competitive.” King County Executive Girmay Zahilay was present during the announcement and was asked about it after the presentation. “I’m concerned about a lot of things. I am concerned about our workforce and the displacement caused by AI. I am concerned about the competitiveness of this region in terms of attracting investment. I’m concerned about a lot of things, and I think the antidote to that concern is strong collaboration,” he said, although he noted that a payroll tax is not on the table because “King County doesn’t have the authority to do any type of taxes like that. We are often caught between a rock and a hard place. Do we work? priorities we want to fund that are critical, or we avoid raising property taxes and sales taxes Unfortunately, I believe we already have the highest sales tax in the country.” The Challenge Seattle plan calls for 20 near-term recommendations, including business concierge services in cities and counties, a simpler and more predictable tax structure, economic impact analyzes for major tax and regulatory proposals, periodic reviews of existing rules, and clearer permitting schedules. It also calls for stronger partnerships to workforce involving the University of Washington and regional universities, along with strategies to support the technology, aerospace, defense, maritime, clean energy and commercial fusion industries. Challenge Seattle and its members say they will invest $1 million in Greater Seattle Partners to help implement the plan and publicly track whether or not we are making progress. that we need to have the kinds of jobs and the kind of future that Puget Sound and its residents deserve,” he said. Gregoire also linked the economic development effort to public safety, saying Seattle’s challenges affect the entire region. The report came not long after Challenge Seattle and several business leaders pressed Seattle Mayor Katie Wilson to address public safety concerns. He also notes that police department staffing relative to other major U.S. cities is a problem: “Seattle has one of the lowest levels of sworn police staffing among major U.S. cities, with approximately 40% fewer officers per resident than Denver, 43% fewer than San Francisco and 58% fewer than Boston,” the report states. “We need to up our game, stop taking everything for granted and realize we have a real problem,” Gregoire said. “We have to do it now.”
