Assembly Committee on Jobs, ED, & The Economy Testimony

Wayne Schell testified on March 17, 2009 at the California's Economic Recovery: Charting a New Path Forward held by The Assembly Committee for Jobs, Economic Development and The Economy. Below is the testimony

Members of the legislature my name is Wayne Schell and I am the President & CEO of the California Association for Local Economic Development.

CALED is a professional association made up of over 1,000 local economic developers in cities, counties and economic development corporations across California who the stewards of their local economy. In which community benefits are created.

The words economic and development means better households! Economic development is purely and simply the creation of wealth in which, community benefits are created.

Business and government both have roles to play in economic development. Businesses role is to marshal resources to create marketable goods and services. Business motive is profit.

Government's role is to influence business investment and location decisions with infrastructure, incentives, services, investment, regulation and marketing. Governments motive is revenue and jobs.

Local and state economic development efforts should be viewed as an investment program designed to leverage private sector capital to induce actions that.
1) Improve business activity
2) Increase employment
3) Increase wages and
4) Pay for community services

Economic development programs are revenue solution not just another government program. Economic development is not an expense or cost to government it is an investment by government.

There are 3 fundamental forms of economic development.
1) Retention & expansion of existing business
2) Creation of new business
3) Attraction of new business

Unfortunately in California the economic developers mantra is that we are faced with great opportunities brilliantly disguised as impossible situations.

A survey by Pollina Corporate Real Estate Inc. Demonstrated that the southern states are considered the most pro-business and California did not even make the top 25.

The state ranked low in virtually all pro-business factors examined, which reflects the general perception by businesses that California has an anti-business environment."

The point of this brief reflection on business climate research is that there are a lot of these studies. And that no matter how great our assets or if the research is true or not, or even fair or not...perception is reality!

In California when dealing with government it is sometimes easier to get forgiveness than to get permission. So, if we accept the reality that California is what it is then maybe the better solution for California is to make government work better...which is a lot of what local and state economic development is about.

So what do the California economic developers think we can do?

#1 - WHAT'S THE STRATEGY? If you don't know where you are going you are sure to end up somewhere else! A strategy means the art of the general. An economic strategy must be top down to be effective. The governor is the general and California needs to have a "jobs strategy." Economic development in bits and pieces does not work.

#2 - WHO IS RESPONSIBLE FOR THE STATES ROLE? Not only do we not have a strategy we are the only state in the union that does not have a state policy that designates who is responsible for economic development. Ask yourself does this make us smarter than 49 other states that have formal economic development programs and strategies!

#3 - BUSINESS RETENTION should be the number one strategic objective. Anticipate tomorrow's technology and let's focus on key business clusters. We must keep and grow the businesses we have.

#4 - SUPPORT AND INVEST IN THE EXISTING NETWORK OF LOCAL ECONOMIC DEVELOPERS. Give them the resources and tools to do their jobs better and more efficiently. They are the stewards of the economy...help them!

#5 - LEVERAGE $ LEVERAGE $ LEVERAGE $ We do not need more resources we need to better tweak existing resources and expand the role of the State Economic Development Infrastructure Bank. Lets be more creative in leveraging existing state funds to enhance business opportunity... invest in the bank...they are a very under utilized tool for economic development!

#6 - RED CARPET NOT RED TAPE! The word is "permit" not "prohibit" while, public and private stakeholders have differing missions and at times competing objectives, most have shared values and common interests on which consensus agreements can be built! Time to market is critical so let's make a big statement and let's become the #1 customer service state in the union or the world for that matter. One way to re-establish the State Office of Permit Assistance.

#7 - READY TO GO LAND IS ESSENTIAL TO COMPETE. DEVELOP A STATEWIDE SHOVEL READY SITES PROGRAM. Site readiness is an imperative (90 days to start work...to turn dirt)...provide incentive to communities who develop sites.

#8 - EXPAND WORKFORCE PROGRAMS AT COMMUNITY COLLEGES. Build skills tied to needs. Be demand driven!

#9 - REDEVELOPMENT & ENTERPRISE ZONES ARE INVESTMENT TOOLS FOR ECONOMIC DEVELOPMENT. So for goodness sake stop taking local governments economic development investment money for the states general fund! In these times of economic disparity we need redevelopment funds more than ever to be used for job development.

As policy makers your job should be to:
1) Articulate vision
2) Explain the importance of economic development
3) Understand the obstacles and needs of business
4) Identify and leverage existing state programs and resources to address the obstacles and needs of business... be creative
5) Invest long-term in economic development
6) Insure a "customer service" government

With regards to the current economy, an effective short-term economic stimulus package should raise demand in the "short run" while improving the capacity of the economy to supply goods and services in the long run. We need to focus on those hardest hit by the down turn while at the same time tackling long-standing infrastructure need. This tactic will have a larger impact on the economy, on a dollar for dollar basis. We should put a high priority on pushing out and leveraging programs and resources already in place i.e. money that people can soon pump back into the economy by a quick increase in government spending.

The best ways for the state to intervene in the economy "quickly" is to accelerate existing funding projects to fruition and by using tactics to leverage existing funding resources. So why out of 27.4 billion dollars of approved proposition 84, 1b, and 1c funding has only about 4 billion been allocated by the legislature?

Another tactic in the short term is to accelerate the process for state and local projects that can create jobs. A temporary relaxation of rules and regulations will go a long way to help people survive during this down economy.

We urge the legislature to become a "bully pulpit" for economic development in California and to remember that the word to permit should not mean to prohibit! Lets put out the red carpet not the red tape!

Remember government can be as healthy as the economy. CALED stands ready to help each and every one of you to take a leadership role in statewide and district economic development.