Manufacturing

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Reshaping Economic Development Policies from the Governor’s Office

31 Jan, 2019

By: Scott Neale
Five States to Watch in 2019

The 2018 elections caused a spirited debate on job creation, the economy and the direction our country will take to maintain economic prosperity. Although the election tended to focus on federal offices and President Trump’s effect on the national political discourse, several important gubernatorial elections were also at stake. A total of 36 governorships were up for election, presenting an opportunity to impact economic development policies and workforce development initiatives in those states.

A few states with newly-elected governors stand out as particularly important in reshaping economic development policy, which will play a major role in their ability to secure new opportunities for capital investment and job creation.

Michigan is one of seven states that flipped from Republican to Democrat, and Gov. Gretchen Whitmer released an 11-page plan outlining her policies for creating jobs and improving Michigan’s economy. The plan includes an Opportunity Scholarship for two years of skills training or post-secondary education, plus expanded initiatives for technical trades. She has also proposed investing $3 billion per year in infrastructure improvements and establishing a regulatory framework for the autonomous vehicle industry. Some of her other economic policies may increase the cost of doing business, including implementing a $15 per hour minimum wage or repealing right-to-work legislation.

Oklahoma’s Kevin Stitt, a Tulsa businessman, defeated Democratic political veteran Drew Edmonson. Gov. Stitt has focused his economic development strategy on engaging with out-of-state businesses, directly competing with the expanded recruitment efforts of neighboring states. In order to compete, Stitt will need to strengthen his administration’s relationships with regional economic development groups and implement new quality of place improvements. Gov. Stitt should capitalize on the momentum created by regional and local partners in his recruitment efforts, and rely on his business knowledge to improve Oklahoma’s tax climate.

Wisconsin’s former governor, Scott Walker, had received substantial criticism for his handling of the 2017 Foxconn expansion project—a deal that involved up to $3 billion in performance-based incentives. New Gov. Tony Evers has suggested disbanding the Wisconsin Economic Development Corporation (WEDC) in favor of reinvesting that money in infrastructure projects and education. At the time of this writing, it is still unclear whether the WEDC will be replaced with a new state agency, or if regional and local groups will need to invent new, creative approaches to incentivizing future projects.

Illinois made headlines for its budgetary woes in 2016, culminating in a showdown between Republican Gov. Bruce Rauner and Democrats in the General Assembly that resulted in some hefty tax increases. Rauner was defeated by venture capitalist J.B. Pritzker, who plans to focus his economic and workforce development efforts on infrastructure, K-12 education and small business development centers through a 21st Century Capital Bill. Critics and supporters alike admit the policy’s multi-billion-dollar price tag may warrant additional tax increases.

Tennessee has consistently scored in the top 15 states for business climate and growth in the last few years, and Gov. Bill Lee has an opportunity to build on that success. While Nashville has received national media attention for high-profile projects, including a new Amazon campus with 5,000 jobs, Gov. Lee has expressed the need to develop vocational, technical and agricultural training initiatives, which should directly impact manufacturing sectors. He will have an opportunity to expand the training portion of the FastTrack program, or perhaps adopt a vocational training model similar to Georgia’s Quick Start.

Each of these governors has an opportunity to influence economic development policies and position their states for job growth and new capital investment. They will all be tasked with managing competing interests regarding workforce development, infrastructure investment, quality of place and business climate, and the adoption of forward-thinking economic development policies will be critical to their success. T&ID

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Scott Neale

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