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State and Local Economic Development

State Budgets and Local or Regional Industrial Recruitment

Economic development programs are a primary tool for advancing industrial policies at the state and local levels. State governments, regional development authorities, and municipalities often provide significant tax incentives, bonding authorities, and direct investment for business attraction and retention. These funding streams and other financial incentives deserve close attention to identify the full public subsidy of development efforts – either in support of new programs or simply to understand how subsidies work within your community.

These subsidies can appear “on budget” as actual spending line items and grant programs that fund activities, such as site preparation and assembly, new equipment for manufacturers, feasibility studies, and infrastructure upgrades. This subsidy can also take place “off budget” through policies that preferentially alter the cost structure for economic development projects. These benefits can take many forms, from tax abatements to loan guarantees for securing low-cost private borrowing, to preferential rates from public utilities, to low-interest public loans usable for everything from new construction to working capital and bridge loans. Often these “off budget” subsidies are even larger than the more visible direct public investments.

Sources of State and Local Funding

How is economic development administered? What is available? Most states and counties have an agency or staff dedicated to business information. They help identify what incentive programs and services the government offers, and help to bundle access to these resources, services and programs that may be in a variety of agencies. Extensive data is often collected at the state and county level on available parcels of land, labor market trends, suppliers, regulatory systems, and other issues of interest to business. Most of these business development agencies conduct marketing campaigns to sell the attractiveness of their communities as business locations.

Training resources are a good example of how components of the economic development system are often scattered across institutions. There may be a customized training fund in an economic development agency, training resources within a community development agency, state and local resources through workforce boards, and business and training resources in community colleges. All of these resources are publicly funded, but access can be complex.

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