THE ECONOMY DOES NOT RUN ON AUTOPILOT!

The California Association for Local Economic Development President and CEO, Wayne Schell, calls for political leadership to show economic leadership.

The answer is "yes" according to Wayne Schell, the President and CEO of the California Association for Local Economic Development (CALED). A strategy is defined as the art of the general. So, what is the strategy for the economy General Schwarzenegger, General Steinberg, General Bass?

A State economic strategy must be initiated by the Governor and the Legislative Leadership. Please take a leadership role and lead us!

In recent days we are seeing high unemployment, a weakened economy and a State budget deficit that continues to cripple numerous state and local programs. Now is the time to act! We must look at how a partnerships of the State and communities can move forward to provide new innovative ways to invest, strengthen and create more jobs, thus creating more revenue at the state, local and regional levels.

In the world of local economic development we have a saying. "Government can only be as healthy as its economy." Our economic health is hinging on what we do to create more good paying jobs and opportunities for our citizens. Cities, counties and economic regions all over California have been and are committed to working on specific economic strategies to bring vitality and growth to their own areas. However, there must be a partnership and support from the State.

Why a Strategy?

A strategy is a blueprint for action:

• A decision-making tool
• A tool that will help with anticipating and responding to our changing economy.
• A tool that emphasizes connection between public and private resources
• A tool to assist in producing action
• A tool that will affect changes in behavioral decisions and conditions
  

The results of a strategy should include:

• A set of targeted state and local investments
• A shift from one-shot project orientation
• A shift to a dynamic process based search for permanent influence

Believe it or not, local and state economies do not run on automatic pilot. From a public perspective, economic development is a process of "deliberate intervention" in the normal economic processes of the community to stimulate economic growth by making business growth easier or more attractive. The objectives are to create jobs and create more revenue. There are three fundamental forms of economic development.

1. Retention and expansion of existing business
2. Creation of new business
3. Attraction of new business

The process of economic development should be treated as investment not as an expense. To invest means to commit in order to earn a return for future benefits or advantages. An expense means a financial burden or outlay. A commitment of resources to economic development is an investment in the state and community.

The economy is a living, changing entity that requires guidance and nurturing just like anything else that is dynamic. A recent Public Policy Institute of California (PPIC) survey found that by and large Californians believe that the economy and jobs are the biggest problem facing the state, followed by budget and taxes. Solving the budget problems requires an aggressive economic development effort at the state and local level.

Other countries, states and communities know this as well, and are attempting to lure away our emerging and established high-tech, high-value companies and jobs because these other states and countries know that by investing in attracting these businesses and jobs will help build their future community needs and economic stability.

Stewards of the Economy

Since 1994 because of the pressure to provide essential public services in the face of financial constraints, numerous local economic development programs grew in an effort to meet the fiscal deficits through providing more economic growth. Today in California there are over 250 (out of 458) cities with full-time economic development organizations. Except in a couple of rare instances, every county in California has an established presence by some form of local economic development organization, all of whom are dedicated to attracting new businesses and facilitating the retention and expansion of existing businesses. Over 1,000 stewards of their local economy.

A study conducted by the Institute for Local Self-Government reported that cities that have invested in economic development agencies for more than 10 years saw success in gaining revenue in their local jurisdictions.

In 2003 the State Legislature eliminated the Technology, Trade and Commerce Agency, the one state agency responsible for economic development. In an effort to address the deficit in the budget, the message instead was California's economy runs on autopilot.

National surveys often place California at the top of the list for the worst business climate in the nation. There seems to be a message that is saying anywhere but California. How do we change that? By sitting back and doing nothing? Not likely. That's about as un-Californian as you can get. We are all about jumping into the fray. That's how we got to be the world's 8th largest economy in the first place.

A California county, faced with a large budget shortfall, had been faced with deciding what programs were priorities. A policy statement issued by the county executive put "essential countywide public safety, health and welfare services" mandated by state law as the top priority, then programs that generate income to pay debts and expenses as second. Third priority went to municipal services, including sheriff's patrols and investigations. Additional choices were ranked in descending order after municipal services:

• Safety net programs for the homeless, mental ill and other groups in need.
• General government functions, such as the board of supervisors and the bureaucracy.
• Quality of life programs, such as neighborhood assistance, parks and economic development.
• Prevention and intervention programs, including alcohol and drug treatment services.

So what's wrong with this picture? Every one of those priorities is a cost while economic development is an investment that will generate income to fund all these other categories. The issue is how we grow our way out of a budget crisis! Let's not be cost managers or glorified bookkeepers that know the cost of everything and the value of nothing.

Sometime ago Tulare county supervisor Jim Maples showed leadership because he believed that a healthy economy means a healthy county. In a state of the county address, he said, "the direction of this board is clear: to sustain and improve the economy and quality of life in the county, the board of supervisors must promote job growth and economic development. We want faster response times, a shorter permitting process, and an end to unnecessary regulations."

The downturn in the state economy represents a unique opportunity for leadership and direction guided by fresh ideas and insights. We call upon the state to show economic leadership.

Let's not waste an economic recession! Retreating in times of economic turmoil is not the answer. Those who put on their armor and charge forward will survive and generally find themselves in a stronger market position than they were before.

The current economy is a window of opportunity. The order of the day should be economic development now more than ever! We urge California's State and local political leadership to invest in economic development, as economic development should be viewed as an investment, not an expense! Cutting programs that foster revenue and jobs will merely extend the current hard times long after they should be over.