NCSL Economic Development Partners

Posted August 20, 2007

This project is a public/private partnership between NCSL and the following funding partners:

Altria Corporate Services
American Federation of State, County and Municipal Employees (AFSCME)
Committee on State Taxation (COST)
International Council of Shopping Centers (ICSC)
National Education Association (NEA)
NCSL Foundation for State Legislatures

GOALS OF THE NCSL FOUNDATION PARTNERS

Several members of the National Conference of State Legislatures’ Foundation for State Legislatures convened in 1991 to discuss how they could assist in the development of sound state fiscal policy. They concurred that they could pool their resources to examine specific areas of state fiscal policy and then make recommendations on these state fiscal policy issues. This group, known as the Foundation Fiscal Partners, supports the NCSL Fiscal Affairs Program in an ongoing effort to improve the quality of fiscal information available to state policymakers.

One of the continuing goals of the Foundation Partners Fiscal Project is to improve dialogue among state legislators, business representatives, and other organizations interested in and affected by state fiscal policy. Basic information is an important tool for state policymakers making decisions about how best to generate revenue in this new economic environment.

The Economic Development Partners is the eighth Foundation Fiscal Partners project. Previous Foundation Fiscal Partners’ project publications include:

Principles of a High-Quality State Revenue System (November 1992)
Fundamentals of Sound State Budgeting Practices (May 1995)
State Strategies to Manage Budget Shortfalls (December 1996)
Critical Issues in State-Local Fiscal Policy, Part 1: Sorting Out State and Local Responsibilities (July 1997) and Part 2: A Guide to Local Option Taxes (November 1997)
The Appropriate Role of User Fees in State and Local Finance (June 1999)
A Legislators Guide to Property Taxes, 2002-2004
Tax Policy Handbook, 2003

ECONOMIC DEVELOPMENT PARTNERS PROJECT SUMMARY

The goal of the project is to examine how current economic development tools and programs help meet (or perhaps don't meet) state economic development goals. Through a series of focus groups, we've pinpointed the needs and interests of state policy officials in developing economic development policy and summarized them. We'll use the results of that research to provide succinct, reliable and policy-relevant information designed to address the needs of state lawmakers.

IMPORTANCE OF THE PROJECT

Individual states spend millions of dollars annually on economic development programs. Yet few states know the exact amount they spend to support economic development initiatives. No state knows how effectively the money is spent. Academics and policymakers continue—as they have for years—to debate a fundamental question: Do state economic development programs have an effect on state economic growth?

Despite their uncertainty, all states have economic development programs in place to promote business development. However, these programs are not without costs to the community. Some of the costs are direct expenditures, while others are subtle and manifest in unforeseen ways. Neither do states operate in a vacuum. Many local governments offer their own programs. It is important that state policymakers consider the impacts of their decisions on local governments and develop programs that compliment local efforts.

In addition, the nature of economic development has changed as the American economy has shifted from a manufacturing based economy to a new economy that is driven by information, ideas, technology and services. Policies that might entice an auto manufacturer do not necessarily appeal to a software company with little capital equipment. And what about small and existing businesses? Are their needs overlooked in the quest to land the "big one"? Most importantly, how can states promote business development without giving away too much? What was once straightforward is now murky and raises questions about equity. Policymakers should think about what really drives the economic engine in their states.

State legislatures need to address a number of challenges related to current economic development policies. To accurately identify what the needs of policymakers are when addressing economic development issues, the NCSL Economic Development Partners held regional focus groups and is developing a publication that addresses some of the issues identified in the focus groups.

WHY THIS WORK IS IMPORTANT

Budget decisions: As state budgets recover from several years of stress, state legislators still face hard appropriations choices because of competing demands on limited resources. They need reliable information to help them weigh the public benefits of all potential investments of state dollars.
Economic development as a priority: In response to an uncertain economic environment, state legislators are evaluating many different ways to encourage business growth and job creation, stimulate tourism, support consumer spending and maintain the vitality of communities. Which economic development programs help promote these goals? What can states do to provide jobs, enhance workforce preparation and improve community livability?
Building a knowledge base: Hectic legislative schedules and limited staff resources put a premium on succinct and readily-accessible information. Legislative term limits present in many states further compress the time available to state legislative leaders to learn about economic development tools. Informative examples of state programs abound. But little has been done to synthesize this information in a way that is specifically adapted to the needs of state-level policy makers and their staffs.

FOCUS GROUP RESULTS

The focus groups were held in June 2006 in Denver, Colorado and Washington DC. The final focus group report is available.

NEXT MEETING

The next meeting of the economic development partners will take place as part of NCSL's Fall Forum in Phoenix, Arizona on Nov., 28 - 30, 2007.

For more information, contact Judy Zelio in the Fiscal Affairs Program in Denver, Colo., telephone (303) 364-7700 or email econ-info@ncsl.org.