moving your community from surviving to thriving barry bluestone director, the dukakis center...

Moving Your Community from Surviving to Thriving

Barry BluestoneDirector, The Dukakis Center

Northeastern University

National League of CitiesLeadership Training Institute

February 6, 2011Savannah, GA

Today’s Agenda

Economic Trends Demographic Trends State and Local Fiscal Condition 5 Steps to Becoming the “CEO for

Economic Development” Takeaway Action Items

NATIONAL ECONOMIC CONDITIONS

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

0.4%

-2.4%

3.2%3.6%

4.2% 4.2%4.0%

3.6%3.2%

2.8%2.5% 2.5% 2.5%

Projected Growth in Real GDP (2008-2020)

Source: U.S. Office of Management and Budget

Economic Recovery

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

5.8%

9.3%9.7%

9.0%

8.1%

7.1%

6.3%5.7%

5.3% 5.2% 5.2% 5.2% 5.2%

Projected Civilian Unemployment Rate (2008-2020)

Source: U.S. Office of Management and Budget

But even with rapid GDP growth, unemployment remains above 6% through 2014

Stubbornly high unemployment means

Sluggish recovery in state and local revenue

Continued high unemployment insurance costs

Continued high Medicaid costs

DEMOGRAPHIC TRENDS

U.S. +14.8%

Source: U.S. Census Bureau

Percentage Growth in Number of Households (2007-2020)

40%+ 15-35% 10-15% 5-9% <5%

Projected Population Growth (2007-2020) Arizona +40.4% Nevada +40.4% Florida +34.4% Texas +22.7% Idaho +22.6% California +20.5% N.H. +20.4% N.Carolina +20.1% Washington +19.1% Delaware +18.0% Virginia +18.0%

N. Dakota +2.2% Iowa +4.0% Nebraska +4.3% Ohio +4.3% W. Virginia +4.4% S. Dakota +4.5% New York +4.8% Illinois +5.5% Oklahoma +5.8% Indiana +6.4%


-800,000

4,300,000

-900,000 -1,700,000

8,500,000

9,600,000

2,700,000

-4

-2

0

2

4

6

8

10

12

18-24 25-34 35-44 45-54 55-64 65-74 75+

Change in Adult U.S. Population by Age Cohort 2008-2018 (in millions)

Age 18-54: + 900,000Age 55+: + 20,800,000


-3.7%

19.8%

-4.1%-7.8%

39.2%

44.2%

12.4%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

18-24 25-34 35-44 45-54 55-64 65-74 75+

Percent Change in Adult U.S. Population by Age Cohort

2008-2018

Age 18-54: + 4.1%


Age 65+: + 56.7%

Age 55+: + 95.9%

D.C.

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Arizon

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Was

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Califo

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Geo

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Virgin

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U.S. T

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Tenn

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Loui

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a

Sout

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olin

a

Michi

gan

Arkan

sas

Mississ

ippi

Color

ado

Misso

uri

Kent

ucky

New M

exico

Conne

cticut

Penn

sylv

ania

Alaba

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Wyo

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Nebra

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0%

100%

200%

300%

400%

500%

600%

93%99% 106% 113%135%

149%

530%

Proportion of State's Household Growthaccounted for by those Age 55+

2007-2020

U.S.: 99%


Potential Job Gap

Today, we have an unemployment rate of 9.6 percent and nearly 14 million unemployed

But after the recovery and at current labor force participation rates, if we return to a normal economic growth rate, there will likely be more than 15 million new jobs in 2018 but only about 9 million new workers

Public Finance Crisis

With only 900,000 additional adults between the ages of 18 and 54

Who will fill the jobs in our cities?

Who will be around to pay the taxes we need to provide services?

Impact on State and Local Government

Will the aging of the population

Have a major adverse effect on state and local revenue?

Lead to an increased need for state and local public services?

And the retirement of public employee workforce create a drain on state and local budgets?

FISCAL CONDITION OF STATE BUDGETS

FY2009 FY2010 FY2011 FY2012

-$160

-$140

-$120

-$100

-$80

-$60

-$40

-$20

$0

-$79

-$123

-$101

-$134

State Budget Shortfalls after Use of Federal Recovery Funds (FY2009-FY2012)

Source: Center on Budget and Policy Priorities, December 2010

Projected State Budget Gaps: FY2012 Illinois 50.9% New Jersey 37.4% Nevada

37.1% South Carolina

26.6% Minnesota

24.5% Texas 22.3% California

22.2% Louisiana

22.0% Connecticut 20.8% North Carolina

20.0% Washington 18.5%

Only three states are projected to have no budget gap North Dakota Alaska Arkansas

Source: Center on Budget and Policy Priorities, December 2010

GAO State and Local Study

“Because most state and local governments are required to balance their operating budgets, the declining fiscal conditions in our simulations reveal the fiscal pressures the sector faces and foreshadows the extent to which these governments will need to make substantial policy changes and other adjustments to avoid growing fiscal imbalances.”

Source: GAO State and Local Governments’ Fiscal Outlook, March 2010

State and Local Operating Balance as % of GDP

From 2000-2008, State & Local budgetsin Operating Balance

From 2010 through 2060, State & Local budgetsare increasing out of balance


68%

20%

12%

State & Local Government Current Receipts by Category, 2008

Current Tax Receipts

Federal Grants-in-Aid

Other Receipts


State and Local Government Taxes as % of GDP

Between 2010 and 2060, a decline in sales tax revenue; stable property tax revenue; and recovering income tax revenue


Federal Grants to State and Local Government as % of GDP

Between 2010 and 2060, Medicaid grantsroughly constant, but other grants declinesharply


Health and Non-Health Expenditures of State and Local Governments as % of GDP

Non-health spending will be Forced to drop substantially

As health care spending increases sharply


The Size of the “Fiscal Gap”

To close the fiscal gap would require a 12.3% reduction in state and local government expenditures each and every year through 2060

Or … a 12.3% increase in state and local revenues each and every year through 2060.

Or … a combination of the two

ECONOMIC DEVELOPMENT TO CLOSE THE FISCAL GAP

Closing the Fiscal Gap

From the GAO analysis, it is clear that ways must be found to control health care costs

Providing local services more effectively and efficiently will also help to close the fiscal gap

Regionalizing some local services can also help gain scale economies that help to make the gap manageable

But the Real Answer to Fiscal Health is …

Boosting local economic development

Attracting business investment and jobs

Generating additional tax revenue from new and expanded business for vital public services

How to Boost Economic Development in Your City or Town

5 Steps to becoming the “CEO for Economic Development”

1. Become SWOT aware2. Capitalize on strengths; mitigate

weaknesses3. Identify appropriate industry sectors4. Know the language and requirements

of businesses5. Build a business friendly environment

Become SWOT Aware

Objectively explore internal strengths and weaknesses

Inventory physical assets, local businesses, and knowledge/skills base

Understand the role of each municipal department in economic development

Engage business leaders, real estate experts, and other stakeholders

Prioritize economic development objectives; build consensus

Become SWOT Aware

Objectively explore external opportunities and threats

Know your competition

Know what potential investors think of your city/town

Collaborate regionally

Take advantage of regional and state programs and resources

Know what is important to business in a global economy

Capitalize on Strengths and Understand Weaknesses

Build upon Strengths What do existing businesses need in order to

grow? Use that knowledge to define initial economic

development strategies Build critical mass and/or attract supporting

businesses Highlight strengths/assets of your municipality in

marketing Plan strategically based on strengths—envision 10

projects into the future

Capitalize on Strengths and Understand Weaknesses

Mitigate Weaknesses Address those that are most important to

businesses Include economic development in all municipal

policies Use good communications practices to

“rebrand” your community, internally and externally

Don’t try to hide weaknesses; it’s better to take action in correcting them

Indentify Appropriate Industry Sectors

Target industries that make sense for your municipality

Consider physical assets, existing businesses, workforce, geography, and regional efforts

Try to build a critical mass or range of supplemental services

Use direct marketing within an industry

Know the Language and Requirements of Businesses Speak their language and know the jargon

Appreciate “time to market” and other global economic realities

Learn “Deal Makers/Breakers”: parking, cost of rent, skilled labor force, access to markets, and timely permitting

Rely on “Deal Closers” sparingly: tax incentives

Build a Business Friendly Environment

Streamline municipal services Create One Stop permitting Use transparent and efficient

permitting processes Provide check lists and technical

guidance Use overlay zones, improvement

districts, or develop pre-permitted sites

Finally … as CEO for Economic Development build a Business Friendly Environment

Coordinate local and regional strategies for long run success

Build support within the community and among stakeholders to convey a consistent message

Takeaway Action Items

What immediate steps can you take as the “CEO of Economic Development?”

Write down several action items to take home.

Thank you!

Barry BluestoneDirector, The Dukakis Center

Northeastern University

[email protected]

moving your community from surviving to thriving barry bluestone director, the dukakis center...

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