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A note for our readers: the views reflected by the authors do not reflect the views of ASPA.
By David J. Robinson
Public administrators are the leaders of state and local efforts to retain and attract high-wage jobs. Unemployment and the economy is the top concern among Americans and has been for the most part since 2008. However, Bill Gates, the wizards of Wall Street and the leaders of the auto industry in Detroit are not going to provide the solution to America’s economic challenges. Frankly, solving America’s economic challenge is not their job. It is not the fiduciary duty they owe their company and they likely do not own this skill set. Private sector business leaders are focused, as they should be, on creating profitable companies to produce returns for their investors.
Leaders of American based companies are not responsible for growing the American economy. It is the job of public administrators at the local, state and federal government level to adopt policies and implement approaches to address America’s economic challenges. Retaining and attracting high-wage jobs produce a quality standard of living, fund schools and essential public services. Economic development is clearly a public good.
Starting in the 1960’s, New York City is given credit with hiring the first economic development staff member. Today, local and state governments across the nation hired thousands of employees to promote their region as a prime location for high wage jobs. Local and state government public administrators focus on the creation of wealth among residents by promoting entrepreneurism to develop a new generation of companies and retaining and attracting high-wage, private sector jobs in growing industries and occupations.
Public administrators develop infrastructure, acquire land for economic development through annexation and eminent domain, permit uses through land use regulation, develop a regional workforce pool, award economic development tax incentives and address larger quality of life issues affecting company location decisions. These basic or building block strategies are a core function of local and state government designed to spur economic growth. More advanced regions also focus on attracting high-wage, private sector energy, service, technology, global and manufacturing jobs known as the five drivers of economic development.
Just because economic development is the responsibility of public administrators it does not believe they alone perform these services. Much like the government utilizes the services of health insurance plans and hospitals to provide government funded health care or private construction companies to build roads, the public sector more and more is relying on the private sector to implement economic development policy. The debate about engaging the private sector more directly in economic development has unfortunately become wrapped up in politics. Usually, a new governor comes to town and proposes a new economic development model. The opposite party declares this approach a step away from anarchy.
Ohio and Wisconsin recently joined Florida, Indiana, Michigan, Kansas, Pennsylvania, Rhode Island, Virginia and Wyoming in turning to private sector organizations to lead economic development. In some cases, these states abolished their governmental agency previously coordinating economic development and, in others, such as Ohio, the state development agency remains but with a different focus. Local economic development moved to the private sector model decades ago. Major cities from Charlotte to Indianapolis to Cleveland created private sector, regional economic development organizations to lead the campaign to retain and attract companies a decade ago.
These regional and state economic development organizations promote economic development among local governments. Too often, local governments do not think regional and operate solely in the interest of their jurisdiction. Regional economic development groups provide a mechanism to force communities to come together on company retention and expansion strategies, create common tax incentives and share tax revenues to prevent border wars over jobs. These private sector economic development organizations also can access private sector funding to leverage public economic development investments.
Public administrators still have a strong role to play even if the private sector is leading a state or region’s economic development. In many states, home rule authority empowers municipalities to adopt their own tax credits, tax abatements, business loan and workforce programs. Few local governments hand over the authority to award tax incentives to regional private sector business organizations. Nearly all states authorize local governments to offer tax abatement programs typically known as an enterprise zone program. Some municipalities offer job creation tax credits to reduce the municipal tax burden on companies locating high-wage jobs within their borders. This authority, just like zoning powers, rests with local government. Thus, even if a private sector, regional economic development organization is created to launch job retention and attraction campaigns, the public sector remains a major player in awarding government funds to private sector companies.
While Ohio has been in a political battle about transparency arguments for its private sector economic development group known as JobsOhio, the Buckeye state actually kept its development department. The Ohio Development Services Agency operates a range of economic and community development programs ranging from historic and new market tax credits, business loans and actual tax credit awards to companies considering growing in Ohio. In fact, when a company is considering an economic expansion in Ohio they receive an economic development incentive offer signed by both the directors of JobsOhio and the Ohio Development Services Agency. Ohio’s prime economic development tax credit needs approval from the Ohio Job Creation Tax Credit Authority, which is housed and staffed in the Ohio Development Services Agency. JobsOhio battled to operate like a private sector organization and successfully gained legislative approval to avoid state audits and public records treatment like a government agency. However, public administrators in Ohio and elsewhere remain engaged in economic development policy even when private sector groups are hired to support their efforts.
Those interested in addressing America’s economic success should look to careers in public administration. Understanding economic development policy formation and implementation strategies involves business strategies to retain and attract companies but ultimately it is the role of government to lead these efforts. Leadership of economic development may happen through government agencies or the private sector but ultimately public administrators will make that decision.
Author: David J. Robinson is an Adjunct Professor at the John Glenn School for Public Affairs at the Ohio State University and Principal of the Montrose Group, LLC, [email protected].