As California struggles through the recession, state lawmakers and others are debating the appropriate role of government to help generate jobs and regain economic momentum. The state government is obviously not the answer to economic recovery, but the government can play an important support role.
Businesses interested in moving into – or out of – California often want to hear from “the state,” be it in the form of permit assistance, access to or information about state incentives, or even a welcoming attitude. But the current economic crisis has made clear that the state cannot provide this service, in large part because the state’s economic development programs are not organized in a way that businesses and cities can use them – or even find them.
When the state dismantled the Technology, Trade and Commerce Agency in 2003, it swept away more than the state’s foreign trade offices that had come under increasing scrutiny. It spread the state’s remaining economic development tools across several departments, agencies, boards and commissions. The state still possesses a large, but largely unknown, toolbox of economic development resources, from job-training funds to gap-financing services. These resources, however, are provided too often on a piecemeal basis, first-come, first-served.
That’s because there’s no single location where the state’s economic development programs come together.
More than 10 advisory panels, with more than 150 combined members from the public and private sectors, also provide guidance on how the state should spend billions of dollars each year on economic development and job-training programs. This fragmentation helps explain why the state government lacks a vision or voice for California economic development, complicating efforts to coordinate activity and shepherd resources, and to evaluate the overall effectiveness of the state’s economic development efforts.
Gov. Arnold Schwarzenegger has been a tremendous salesman for California and its products, at home and abroad, but star power alone cannot bridge the organizational gaps in state government that will become even more apparent under a new governor. The governor needs to leave behind a permanent governance model that can leverage the state’s resources with local, federal and private economic development efforts.
In its February report, “Making Up for Lost Ground,” the Little Hoover Commission called for a new Governor’s Office of Economic Development.
The idea was not to re-create the previous commerce agency or form a large government bureaucracy that would administer new programs. Instead, the commission recommended building on existing resources to make the government more responsive to businesses. Instead of a traditional top-down bureaucracy, a more agile entity is needed that can function as a convener and coordinator.
Creating a pipeline to the governor is a first step. A Governor’s Office of Economic Development, simply named, would make it obvious to outsiders and insiders that it is the authoritative source for inquiries about business growth opportunities.
The office must be invested with the imprint and influence of the governor. It must be a credible networking operation, staffed with experienced and capable professionals. It should be opportunistic, serving as an ambassador, matchmaker, strike team and portal that connects businesses and economic development consultants with local, regional, state, federal and private sector resources.
An existing state entity – California Business Investment Services – should be expanded to form the foundation of a more robust outreach unit that can respond to immediate and emerging issues affecting industries and specific companies.
CalBIS is one of the few entry points in state government for local economic development organizations and businesses seeking state-level assistance, but the five-member staff is buried organizationally in the state’s Labor and Workforce Development Agency.
The Governor’s Office of Economic Development also must include a policy arm to articulate how the state government views its role in the economic recovery, to establish priorities and begin developing a long-term strategic plan to execute the governor’s vision for economic growth and increased competitiveness. Without a strategic plan, the state’s economic development programs likely will continue to drift, unconnected to, and potentially undermining, other policy goals. Appropriate metrics also must be developed to evaluate programs for efficiency and effectiveness. Such outcomes can be as varied as job creation, personal income growth, the state’s share of patents, unemployment rates or poverty rates.
The new office must establish itself as a useful clearinghouse for economic development and accountability – not a hollow gesture that adds another layer to the government. Ultimately, it should lead to the elimination of boards, commissions and programs that prove to be superfluous, obsolete and ineffective.