State Economic Development Bulletin – Issue 78, February 2025

Issue 78, February 2025

A Summary of Cutting-Edge Articles Affecting States

HEADLINES

SEDE News 🗞️

Economy 💰

Trade 📈

Industry Trends 💡

Workforce ⚒️

Business Expansions and Incentives 📊

SEDE News 🗞️

Report Card for CHIPS Act Incentives (Smart Incentives) The federal CHIPS Program Office released an update on its progress toward achieving its Vision for Success and it reports that the “investments are delivering results.”  These investments are strengthening national and economic security by restoring mass production of critical semiconductor technologies to U.S. soil. The United States is projected to produce at least 20 percent of the world’s leading-edge logic chips by 2030 (up from zero percent in 2022). Every award the CHIPS program negotiates is designed to fill strategic gaps in the domestic semiconductor ecosystem while spending the minimum amount necessary to deliver the maximum benefit to U.S. economic and national security.

Impacts of Federal Grants and Other Funds on State and Local Budgets (Congressional Research Service) This report examines the significant role of federal funding in state and local government finances. From FY2021 to FY2023, these governments received over $1 trillion annually in federal grants, supporting services like education, healthcare, law enforcement, and public transit. In FY2022, federal funds constituted 36.1% of state government revenue and 6.2% of local government revenue. The report highlights that Medicaid grants were the largest component, totaling $615.8 billion in FY2023. It also notes that federal funds’ share of state and local revenue has reached its highest point since the early 1970s, partly due to COVID-19 relief measures such as the CARES Act and the American Rescue Plan Act. However, the reliance on federal funds varies by state; for instance, in FY2022, Louisiana and Alaska had the highest shares at over 50% of their total revenue, while North Dakota and Hawaii had the lowest, with less than 30%.

Updates on Federal Data Outages (CREC) If you’ve been following the news, you may be aware of reports that some federal data has become (at least temporarily) inaccessible. CREC has been tracking developments and would like to share an understanding of how data access has been impacted (if at all) and ongoing efforts/resources to provide alternative access, if needed. Keep in mind that, as with much in Washington D.C. nowadays, any developments are fluid and official information is sparse. Datasets from the Centers for Disease Control and Prevention and the U.S. Census Bureau have been one of the highest profile points of impact. There are many great efforts underway to archive and preserve federal datase4ts, such as IPUMS and ICPSR.

Economy 💰

Job Growth Slowed in January, But Overall Picture Remains Solid (The New York Times) Employers added 143,000 jobs in January, slightly fewer than expected, the Labor Department reported. But with large upward revisions to the prior two months and a decline in the unemployment rate to 4 percent, American workers still appear to be in good shape. The rate of job openings has sunk below pre-pandemic levels, as has the share of people quitting. For those still employed, pay increases remain respectable. Average hourly earnings rose 4.1 percent over the year — more than economists had forecast, and well above the rate of inflation. Impressive productivity growth over the past year means that such wage increases can be sustained without pushing up prices.

Examining the Local Economic Impacts of the Community Development Block Grant (RAND) This article provides preliminary evidence on the job impacts of the Community Development Block Grant (CDBG) program. Utilizing a difference-in-differences methodology, the author examines a one-time adjustment in the CDBG allocation formula that led to permanent changes in funding levels for various localities. The study finds that areas receiving increased CDBG funding experienced a significant 7.2% rise in job counts over eight years, with an estimated cost of $21,667 per job created. Conversely, localities with reduced funding saw no significant change in employment levels. These findings underscore the CDBG’s effectiveness in fostering local economic growth and highlight the program’s flexibility in addressing diverse community development needs.

JobsOhio Provides a Multibillion-Dollar Return on Ohio’s Investment (The Columbus Dispatch) JobsOhio is the state’s private, nonprofit corporation designed to drive economic growth and job creation. Its organizational model represents a unique approach to economic development, designed to be more agile and responsive in attracting businesses than traditional government-funding efforts. JobsOhio is funded solely from the profits on sales of spirituous liquor in Ohio. According to a third-party study, JobsOhio has returned $15 billion to the state in tax revenue due to the new jobs that have been created. Additionally, JobsOhio has remitted more than $686 million to the state as part of a revenue-sharing agreement. Extending this profitable agreement means these annual payments will continue, along with the benefits from JobsOhio’s programs to attract vital industries and supply chains, expand small businesses, augment Ohio’s skilled workforce and stimulate new development and economic growth in communities across the state.

Trade 📈

Which Imports from Canada and Mexico Would Be Hit Hardest by Tariffs? (PIIE) The possibility of steep tariffs on Mexican, Canadian, and Chinese imports would hit a broad array of goods. The value of U.S. imports from its US-Mexico-Canada Agreement (USCMA) partners represented almost 30% of total import flows into the United States in 2023. The U.S. relies on Mexico for large volumes of transportation equipment, fruits and vegetables, electronics, and machinery, while the U.S. relied on Canada for wood products, metals, fuels, and food products. Among all the sectors hit by new import taxes on the US’s North American trading partners, the US auto sector stands out as the most likely to be disrupted because of highly integrated vehicle production chains that span the continent.

Why U.S. Trade Policy Needs to Prioritize Advanced Industries for Global Competitiveness (ITIF) The Information Technology and Innovation Foundation (ITIF) argues that U.S. trade policy should prioritize advanced industries, such as semiconductors, aerospace, and pharmaceuticals, to strengthen long-term global competitiveness. While recent policies have focused on reducing trade deficits through increased exports of commodities like soybeans and crude oil, ITIF suggests that a greater emphasis on high-tech industries would better support innovation, economic growth, and national security. In 2023, U.S. exports of non-advanced products to China reached $80 billion, surpassing the $68 billion in advanced industry exports. ITIF recommends that trade agreements, tariffs, and industrial policies be aligned to enhance the competitiveness of high-value sectors, ensuring the U.S. maintains its leadership in critical technologies.

Industry Trends 💡

Charging Ahead: What Does Electrification Mean for the Footprint of the Auto Industry? (Chicago Fed) Given the uncertainties over the support for the transition from engine-powered to battery-powered vehicles, carmakers have taken steps to make production of their ICE (internal combustion engine) vehicles more efficient. Such efforts are designed to help carmakers remain profitable during a period of incurring high costs in developing electric vehicles. One strategy available to carmakers is to cut back on the variety of engine models available across their vehicle model offerings. In simplifying engine options available to consumers, carmakers can reduce the number of engine programs needed to be maintained and developed, thereby optimizing scarce resources.

Hawaii to Become the First Fully Fiber-Enabled State by 2026 (Hawaiian Telecom) In an ambitious push toward a connected future, Hawaiian Telcom, in collaboration with federal, state, and county leaders, has unveiled a $1.7 billion initiative to position Hawai‘i as the first fully fiber-enabled state in the U.S. by 2026. This monumental investment not only places Hawai‘i at the forefront of broadband innovation but also ensures access to state-of-the-art fiber connectivity for homes and businesses statewide, including underserved rural communities. This transformative effort has already reached 60% of Hawai‘i’s households and businesses, with the remaining 40% on track to be completed by the end of next year. Hawaiian Telcom’s efforts have been supported by a strong public-private partnership. $107 million in federal and state funding through various broadband infrastructure programs is helping to accelerate the deployment. This underscores the importance of collaboration.

Connecticut Launches $25M Grant Program to Strengthen Supply Chains (State of Connecticut) Connecticut announced the launch of a $25 million state grant program to help supply chain companies in Connecticut’s core industries expand and increase production capacity and encourage the establishment of new operations in the state. The Strategic Supply Chain Initiative will also be sued to attract supply chain operations from other states and internationally. Supply chain companies can apply for grants ranging from $500,000 to $5,000,000 for projects that will increase their production capacity. Priority consideration will be given to supply chain companies in Connecticut’s core industries including, but not limited to, manufacturing, semiconductors, insurtech and fintech, biomedical instruments and life sciences, clean energy, and information technology, including artificial intelligence and quantum computing.

Workforce ⚒️

Federal Agencies Collaborate to Support an Evolving Rural Coworking Space (NADO) The U.S. Economic Development Administration (EDA) is collaborating with other federal agencies, like the U.S. Department of Agriculture Rural Development (USDA RD) and Northern Border Regional Commission (NBRC), to create economic development outcomes in the rural Northeast Kingdom of Vermont. This cooperation creates benefits such as job creation, skill building, capital investment, and regional economic diversification – all in the pursuit of healthy economic ecosystems that generate sustainable economic growth, resilience, and prosperity. The outcomes of the first year of the development of the Do North Coworking space include 114 coworkers and 228% more individual memberships, drop-ins, and space booking for the year. Do North also offers programming designed to create an entrepreneurial ecosystem in the region, creating opportunities for entrepreneurs to find the support they need.

Michigan: Mobility and Semiconductors (Business Facilities) A first-of-its-kind public-private investment partnership totaling more than a combined $4.7 million will offer new electric vehicle and semiconductor education and career opportunities to students across southwest Michigan, Greater Grand Rapids, and beyond. Michigan Economic Development Corporation (MEDC) has invested nearly $30 million with higher education institutions that are working with advanced manufacturing employers to design and deliver a curriculum that prepares students for in-demand mobility-related careers. With this, the BlueOval Battery Park Michigan (BOBP) project will use both a local and regional approach to fill its 1,700 anticipated new jobs. The future roles will include production, electrical, mechanical, engineering, logistics, and material handling.

Advancing Bills Promote AI Apprenticeships in NJ, Explore Tech’s Impact on Labor (NJBiz) New Jersey’s Assembly Science, Innovation and Technology Committee approved a pair of measures aimed at supporting the state’s artificial intelligence (AI) efforts. The legislation includes bills that would establish an AI Apprenticeship Program in the state labor department and another that would establish the AI and Labor Market Study Commission. The program would collaborate with AI companies to offer apprenticeship opportunities, facilitate partnerships between employers and schools, and assist employers in the establishing apprenticeships – as well as create an AI apprenticeship tax credit program. The AI-driven market is rapidly expanding, and the state hopes to leverage this technology effectively.

Powering Virginia’s Tech Workforce (Smart Incentives) When Amazon announced Northern Virginia as the site of its second headquarters in 2018, the commonwealth responded with a bold investment: $2 billion to supercharge its tech workforce. The Tech Talent Investment Program (TTIP) was born, setting an ambitious goal of doubling the number of computer science and engineering graduates across Virginia’s universities, assuring an educated workforce for the region’s technology companies. At the heart of this initiative is George Mason University. After six years, George Mason is not only meeting its TTIP promises, it is surpassing them by a considerable margin. With a combination of new cutting-edge facilities, increased enrollment, and a strong push for student diversity, the university is proving that Virginia’s bet on tech talent is paying off. Over the past five years, the university has exceeded expectations, graduating 424 more undergraduates and 650 more master’s students than its baseline projections. The TTIP program will continue through 2039.

How Microcredentials are Revolutionizing the Higher-Education Business Model (Manhattan Institute) This report highlights the growing influence of microcredentials – shorter-term, focused educational certifications – on traditional four-year colleges and universities. These credentials are being integrated into degree pathways, offering benefits such as improved return on investment for baccalaureate degrees, better alignment with market demands, increased transparency, and enhanced responsiveness to labor-market changes. However, the report advises that institutions should approach this integration carefully, ensuring that strategies remain student-centered and align with the core mission of higher education, balancing academic rigor with workplace relevance.

Jacksonville Launches Second Round of Talent-Attraction Campaign with $9,000 Incentives (Jacksonville Journal-Courier) Jacksonville Regional Economic Development Corporation in Illinois has begun the second round of its talent-attraction campaign. The Make My Move campaign uses a digital advertising campaign on various social media sites, videos educating viable candidates about everything the region has to offer, and relocation incentives to attract people. The first round of the effort saw five professionals — including two scientists, two engineers and a marketing professional — chosen from several hundred applicants to move to Jacksonville. The program offers a relocation incentive package valued at $9,000 including $5,000 cash, three free months of fiber broadband service, and $300 in Chamber Checks redeemable at more than 80 Jacksonville Area Chamber of Commerce member businesses, among other items. The second round will emphasize candidates to fill open positions in the fields of healthcare, manufacturing, accounting, engineering, education and legal.

Business Expansions and Incentives 📊

Collection of Economic Incentives Aims to Help Arkansas (TB&P) A plethora of bills aimed at improving Arkansas’ economic development incentives is in the process of being filed and debated at the state Capitol. As many as nine bills may be filed to address industrial authorities, data centers, innovative startups, the burgeoning lithium industry, job retention, and childcare. If all measures are enacted, it will be one of the most sweeping changes to the state’s economic development incentives in years. Legislation being considered will also include speculative development incentives — a sales tax exemption for a spec building, for example — and a matching grant program to help rural communities

New, World-Class Electrical Steel Facility in Alabama (ArcelorMittal) ArcelorMittal announced that it is proceeding with plans to build an advanced, non-grain-oriented electrical steel (NOES) manufacturing facility in Alabama. The new facility will be capable of producing up to 150,000 metric tons of NOES annually, depending on the product mix, in support of automotive and mobility, renewable electricity production, and other industrial and commercial uses of NOES, including electric motors, generators and specialized applications. The project promotes U.S. manufacturing competitiveness and addresses a crucial market need by reducing U.S. dependency on electrical steel imports through the expansion of domestic NOES production. Construction is set to begin in the second half of 2025, with production anticipated to commence in 2027. The project is expected to create up to 1,300 jobs during the construction phase and more than 200 permanent positions to support the plant’s ongoing operations.

Downtown Leaders Say Business Incentives are Changing Memphis (Action News 5 Memphis) The Downtown Memphis Commission in Tennessee is working to bring life to downtown Memphis with incentives, as events that once brough money and people downtown such as the Beale Street Music Festival and the Southern Heritage Classic are paused. In 2024, the DMC helped 20 businesses with over $600,000 worth of incentives to create spaces downtown. The DMC hopes to continue these incentives in 2025 to continue to bring visitors downtown.

$1B EV Auto Plant Expansion in Arizona (Connect CRE) Lucid Group is set to spend $1 billion on Phase II of its Advanced Manufacturing Plant in Casa Grande, Arizona. Lucid will be making its Gravity SUV at the plant and with the extra space hopes to increase its production to 90,000 vehicles a year. It marks one of the most significant and largest investments in vehicle manufacturing in the state. The company has previously said that at full build-out, its campus could total 15 million square feet across 2,000 acres — or the size of an original equipment manufacturer hub that could also house suppliers and 6,000 employees.

 

 

The State Economic Development Executives (SEDE) Network engages in regular events throughout the year. State Economic Development.org lists these activities and offers an interactive forum for discussion among peers. The SEDE Steering Committee includes: Sandra Watson (AZ), Chair; Joan Goldstein (VT), Vice-Chair; Kurt Foreman (DE); Kevin McKinnon (MN); Hope Knight (NY); Christopher Chung (NC); Andrew Deye (OH); Sophorn Cheang (OR); Adriana Cruz (TX);  and Mike Graney (WV).

Allison Ulaky of the Center for Regional Economic Competitiveness (CREC) led the development of this Bulletin; for questions on the content in this Bulletin or for information on the SEDE Network contact Bob Isaacson, CREC Senior Vice President.