August 14, 2006
NCSL Task Force Seeks Economic Development Do's and Don'ts
By Joe White
Nashville Bureau for NCSL
NASHVILLE—A task force of the National Conference of State Legislatures is trying to develop better information on what works and what doesn't when it comes to economic development.
Meeting at the NCSL Annual Meeting in Nashville, task force members took the next step toward producing a report to bring new information to legislators interested in economic development policies. Indiana Representative Terri Austin, who chairs the working group, said legislators share a common interest in finding out what works. “We want to create for legislators a publication on how to generate and evaluate a high quality economic development policy.”
The key to that evaluation is to focus on “best practices” and "outcomes," a baker’s dozen of state representatives, senators and staff members agreed at the meeting. They heard from marketer Mark Shugoll who outlined the results of two focus groups of legislators he interviewed in Denver and in Bethesda, MD. Participants came from 14 different states and were a mix of Democrats and Republicans, he said. Most had six or more years of experience.
Shugoll said that although the lawmakers he interviewed reported that their states were looking for innovation in economic development, in actuality they are all making the same types of development deals. "It is not that they fully understand the consequences, but they are doing it because other states are doing it.," he said.
The focus groups revealed that “legislators find it difficult to ascertain if the benefits are worth the costs,” Shugoll said. In many cases, he said, confidentiality laws keep legislators from having data to evaluate development deals. Department of Revenue rules prohibit information gathering.
Shugoll also found that legislators don’t really understand how to measure costs and benefits. “Externalities,” the related benefits also called “the spin-off stuff” and the “soft stuff,” are particularly hard to evaluate. “Measuring quality-of-life improvements – they just don’t know how to do that,” the researcher said. And it doesn't matter if states are targeting entrepreneurs and small business or going after big relocations, Shugoll said. Neither strategy has an accurate balance sheet.
In a brain-storming session after the focus group report, task force members voiced a need for accountability for the results of deals made in the name of economic progress. Lawmakers need information to ascertain whether efforts to retain business and especially to promote rural development actually work. The group agreed that they need to hear from business CEOs and economic development professionals to nail down what factors actually drive the business decision to re-locate, or stay.
While tax exemptions are the centerpiece of most legislators’ toolbox for development, other issues actually drive business decisions, suggested Wisconsin Senator Bob Jauch. “Location, location, location,” he said, along with job training, are crucial. Jauch suggested that states and localities need to look at “comprehensive planning,” where each location “looks at what sort of community they want to be.”
Information gathered in the focus groups and the August brain-storming will help the task force plan its final report. Representative Austin said the publication will address effectively attracting and maintaining existing business. She said the group will meet again at the NCSL Fall Forum in San Antonio in early December.
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This summary is provided for information purposes only. NCSL does not endorse any views it contains. |
