For some reason when I search the role of elected officials in the Ohio Economic Development manual it only appears 5 times (in an exhaustive 262 page document no less. In my former place of work, there is an entire chapter devoted to the role of elected officials in the economic development. For communities like ours where the private sector is not meeting demand, our officials and interested persons would be wise to read this section and act accordingly.
The Role of Elected Officials
Elected officials at all levels of government are instrumental in the process of economic development. In North Carolina, state legislators, county commissioners, and city council members support professional organizations that handle economic development by providing resources and keeping the state and its communities attractive destinations for business. These efforts require public investment. Elected officials who provide support understand that economic development is a means for creating quality jobs and investment, generating tax revenue, and improving the standard of living of North Carolina residents.
Below are examples of some of the roles and responsibilities of elected officials in economic development.
1. Supporting professional economic development organizations. Elected bodies—city councils, boards of county commissioners, and the General Assembly—provide core financial resources necessary to support economic development at the local, regional, and state levels. Costs incurred by economic development organizations include expenditures for
• client recruitment,
• advertising/marketing, and • office space.
2. Investing in infrastructure. When locating their new facilities, businesses need basic infrastructure—water, sewer, natural gas, electricity, telecommunications (including high-speed Internet and digital wireless), rail, industrial parks, and highways. Most types of infrastructure require elected bodies to authorize public financing. Infrastructure can be considered a public investment because it creates a tangible asset for a community and meets the operating requirements of industries.
According to the N.C. Department of Commerce, most companies begin their location searches by looking for available buildings in which to locate. Communities can respond to this reality by investing in shell buildings, which can be customized to fit companies’ exact needs. This can save the companies time and money and reduce their project start- up risks. Local governments can provide funding to construct the facili- ties or partner with organizations such as Committees of 100, banks, and private developers to build them. Local governments can also work together to develop regional business parks and share the tax revenues.
3. Building a competitive business environment. Elected officials can support their states, counties, and communities in creating an appealing business climate. In addition to infrastructure, localities can invest in industrial parks and shell buildings and can offer financial incentives. Other activities that can make a community “business-friendly” include promoting workforce development, supporting quality education from pre-kindergarten through post-secondary levels, maintaining reasonable tax and utility rates, and instituting effective planning and permitting processes. A competitive business climate also entails having a regulatory environment that is not overly burdensome and assisting firms in complying with all necessary regulations.
4. Helping existing businesses. Existing firms create a majority of new jobs and contribute to the tax base of a jurisdiction. State and local elected officials can encourage their economic development organizations to work with existing businesses in order to promote retention and expansion. Establishing a formal program of activities for assisting existing firms can go a long way toward making those companies feel better connected to their jurisdictions.
5. Providing incentives. Performance-based state and local incentives are important tools for attracting new industries and helping to retain and grow existing ones. When used appropriately, incentives can be considered a public “investment”. Like any investment, they must offer a suitable rate of return for the public investors or taxpayers. With the guidance of economic development organizations, elected officials make these public investment decisions that influence a company’s location and expansion choices. (Incentives are discussed in greater detail beginning on page 33.)
6. Protecting the public investment. Elected officials who authorize the use of tax dollars to support economic development should ensure that public funds are spent prudently and that the investment in economic development provides a net benefit
to their jurisdictions. This starts by making informed decisions about economic development that are based on sound planning and analysis, as discussed below. Organizations receiving public funds can be held accountable through representation on governing boards, reporting requirements, performance measurement, and program evaluation.
Several mechanisms exist to help state and local governments avoid paying too much in the form of incentives for too little in return. These include some safeguards already adopted in North Carolina, such as
- setting formal eligibility guidelines,
- requiring analysis of economic and fiscal impacts,
- tying incentives to company performance,
- requiring performance contracts,
using clawback provisions (which mandate that a firm reimburse the government if the firm does not satisfy certain investment and jobs targets), and maintaining wage/job quality standards.
7. Investing in quality of life amenities. Elected officials are uniquely positioned to make public investments in various types of amenities that enhance the quality of life in a given place. States and communities known to be rich in such amenities tend to become attractive places to live, work, and play. These amenities may include public parks, bike paths, walking trails, recreational activities, arts and cultural attractions, amateur and professional sports facilities, entertainment venues, good schools, and the like. Quality of life amenities are thought to be increasingly important in attracting the creative and talented people that many knowledge economy companies seek to hire.
Economic development should be a win-win proposition for compa- nies and communities. A high level of government support for these activities demonstrates a commitment to existing and prospective industries. It shows that elected officials are serious about improving their communities and that they are partners, not adversaries, with businesses.