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State Economic Development Bulletin
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State Fiscal Recovery Fund Spending (National Conference of State Legislatures). The Coronavirus State Fiscal Recovery Funds (CSFRF) provide flexible funds to states that can be used to assist with longer term economic recovery. The CSFRF provided $195.3 billion to states and the District of Columbia. The distribution formula is based on population and unemployment rates, with a minimum of $500 million to each state, and $169 billion allocated based on the states’ share of unemployed workers over a three-month period, from October-December 2020. To date, at least 36 states have allocated a portion of the CSFRF. New spending trends have emerged with CSFRF to include broadband expansion and access, many of which target rural underserved and unserved communities; premium pay and hazard pay stipends to essential workers; revenue replacement; and water, stormwater, and sewer infrastructure. States also continue to prioritize spending that was supported with Coronavirus Relief Fund dollars, signaling a persistent need for financial assistance to communities, businesses, and individuals.
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* SEDE Web Forums Launched *
Try Out the New Online Forums Available for SEDE Members
The SEDE Network recently launched online forums available to state economic development leaders to better collaborate, ask questions about specific policies, programs, or to generally bounce ideas off other state colleagues in a shared space.
Go here, sign in using your SEDE website credentials, and start interacting with your peers!
Feel free to contact Bob Isaacson with any questions.
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State Economic Performance
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Employment Higher in 49 States (Bureau of Labor Statistics). From August 2020 to August 2021, nonfarm payroll employment increased in 49 states and the District of Columbia, while employment in Wyoming was essentially unchanged. The largest job increases occurred in California (+874,300), Texas (+681,000), and New York (+411,100). The largest percentage increases occurred in Hawaii (+9.4 percent), Nevada (+8.3 percent), and Vermont (+6.4 percent). These data are from the Current Employment Statistics (CES) program which produces industry estimates of employment, hours, and earnings of workers on nonfarm payrolls for the nation, all 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, and about 450 metropolitan areas and divisions. Each month, CES surveys approximately 144,000 businesses and government agencies, representing 697,000 individual worksites.
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* Economic Outlook *
U.S. Economy Still Faces Considerable Risks
Over the next 12 to 18 months, risks facing the U.S. economy are tilted toward the downside, according to nearly half (or 47 percent) of economists polled for Bankrate’s Third-Quarter Economic Indicator survey. That was the largest cluster of respondents, with 26 percent seeing risks as tilted toward the upside and another 26 percent judging risks were evenly balanced. Economists in Bankrate’s poll cited soaring inflation, lagging labor force participation rates, political tension, supply chain issues, and vaccine-resistant virus variants as the most prominent causes for concern over the next year and a half. Among reasons to be positive about the outlook were ongoing vaccinations against the coronavirus and a recovering global economy. Current Federal Reserve estimates see the U.S. economy growing at a robust 5.9 percent in 2021, then slowing to a more modest pace of 3.8 percent in 2022 and 2.5 percent in 2023.
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Pharma Companies Need Resilient Supply Chains (McKinsey & Company). In the past two decades, the worldwide value of pharmaceutical goods traded has grown sixfold, from $113 billion in 2000 to over $600 billion. Amid this growth, supply chains have become increasingly global, complex, and opaque. More companies are outsourcing production to contract manufacturers, adding new modalities (such as cell therapy), and exploring novel ways to reach patients. For some products, this results in supply chains that are so complex that they start in Asia and circumnavigate the globe twice. While leading pharma companies have succeeded in shifting their supply chains to drive growth and manage costs, supply-chains remain susceptibility to disruption. Nearly 50 percent of pharma executives cite sole sourcing of inputs as a critical vulnerability, and 25 percent point to a lack of visibility into supplier risks. Pharma companies can minimize their supply-chain disruptions through greater visibility, rigorous risk management, and newer technologies that help companies better anticipate and respond to shocks.
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Inside America’s Broken Supply Chain (Washington Post). For goods to move seamlessly from overseas factories to American addresses, the oceangoing vessels, shipping containers, cargo terminals, truckers, chassis providers, and railroads all must work together, like runners in a relay race. If equipment gets stuck at any point, delays ripple along the entire chain. Unfortunately, the commercial pipeline that brings $1 trillion worth of toys, clothing, electronics, and furniture from Asia to the United States annually is clogged and no one knows how to unclog it. The median cost of shipping a standard rectangular metal container from China to the U.S. West Coast hit a record $20,586, almost twice what it cost in July, which was twice what it cost in January. The pandemic is partly responsible for the backlog, but even before the coronavirus, the United States lagged other major economies in moving goods efficiently. In 2018, the World Bank ranked the U.S. 14th out of 160 countries, down from ninth four years earlier. Upgrading infrastructure and more information sharing would help. For instance, with more sharing of commercial data for planning purposes, carriers, terminals, truckers, and dockworkers could better position equipment and people. For an additional study by the Manufacturing Extension Partnership (MEP) National Network on How Small Manufacturers Can Develop Risk Management Strategies for their Supply Chains, click here.
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Opportunity Zone Deadline Approaching (National Law Review). There has been significant capital investment in Opportunity Zone (OZ) projects throughout the country. The interest in the OZ program has been driven in large part by three potential federal tax benefits available to OZ investors, including: (1) deferral of tax on the capital gain income invested into a qualifying opportunity fund (“QOF”) until December 31, 2026; (2) permanent exemption from tax on 15% of capital gain income invested into a QOF and held for at least 7 years by (or permanent exemption from tax on 10% of capital gain income invested into a QOF and held for at least 5 years) by December 31, 2026; and (3) permanent exemption from tax on gains realized upon the exit of an OZ investment held for at least 10 years. While current law provides taxpayers with the opportunity to qualify for the tax benefits noted in (1) and (3) above with respect to qualifying investments made into a QOF as late as December 31, 2026, the deadline for investors seeking to qualify for the tax benefit described in (2) will soon be expiring. Although the 15% exemption is no longer available with respect to investments into a QOF made after December 31, 2019, the 10% exemption is still available to taxpayers and investors that make qualifying investments into a QOF by December 31, 2021.
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The Opportunity Zones program provides a tax incentive for investors to re-invest their unrealized capital gains into Opportunity Funds that are dedicated to investing into Opportunity Zones designated by the chief executives of every U.S. state and territory. Treasury has certified more than 8,700 census tracts as Qualified Opportunity Zones (QOZs) across all states, territories, and the District of Columbia. For a map of all designated QOZs, click here.
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How States are Using EDA Planning and Tourism Grants * * SEDE SURVEY RESULTS * * The State Economic Development Executives (SEDE) network asked states for insights in how they would be spending the $59 million in the non-competitive State Planning Grants and $510 million in the non-competitive State Tourism Grants. The Center for Regional Economic Competitiveness (CREC) conducted two surveys to learn state plans for each of the two grants and found that the uses varied significantly among respondents. Most state economic development leaders responding to the survey expected to work closely with local economic development districts in activities funded by the grant. See the link above for more information on how leaders responded.
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Behind Moderna’s Covid-19 Vaccine Innovation (Harvard Business Review). The notion that breakthrough innovation is a random, chaotic process largely dependent on the visionary powers of gifted geniuses makes many organizations hesitant to embrace it as a core element of strategy. That is unfortunate given the massive value that breakthroughs produce for society and the companies that create them. But there is nothing mysterious or magic about the process. Breakthroughs can emerge through a rigorous and disciplined process of intellectual leaps, iterative search, experimentation, and selection. For example, a relative upstart in the Covid-19 vaccine race and a company that few people had heard of before the pandemic, Moderna looked to be an overnight success. But that success was 10 years in the making. Rather than a one-and-done stroke of luck, the vaccine emerged from the accumulation of numerous advances—some big and many small. There was no precise “aha” moment when the mRNA breakthrough happened. In fact, there was no single mRNA breakthrough: The Moderna mRNA platform was built on a constellation of technologies, methods, techniques, and know-how that evolved over time.
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Guidance Released for $10 billion Coronavirus Capital Projects Fund (U.S. Treasury Department). The COVID-19 public health emergency revealed and continues to reinforce our understanding that communities without access to high-quality modern infrastructure, including broadband, face impediments to fully participating in aspects of daily life, such as remote work, telehealth, and distance learning. U.S. Treasury is launching the Capital Projects Fund to allow recipients to invest in capital assets that meet communities’ critical needs in the short- and long-term. A key priority of this program is to make funding available for reliable, affordable broadband infrastructure and other digital connectivity technology projects. Recipients may also use funds for certain other capital projects, such as multi-purpose community facilities, that enable work, education, and healthcare monitoring, including remote options. The program encourages recipients to focus on economically distressed areas, support community empowerment, and adopt strong labor practices. The deadline for states to request funding is December 27, 2021.
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* SEDE Network Roundtable *
Integrating Equity into Incentive Metrics
November 9, 2021
2:00 PM Eastern Time
Register
State and local economic development organizations are striving to make their financing and incentive programs more equitable. Stakeholders are asking for new metrics and public reporting on program outcomes to assess how well these efforts are working and to understand their impact on communities. This roundtable will bring together experts in equitable economic development and state and local economic development practitioners to discuss emerging approaches to measuring and reporting on diversity, equity, and inclusion (DEI) impacts within incentive programs. This roundtable is being hosted by the State Economic Development Executives (SEDE) network, Center for Regional Economic Competitiveness (CREC), and Smart Incentives.
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Tennessee Megasite Lands $5.6B Ford Plant (Tennessee Lookout). Tennessee announced that Ford Motor Co. has selected Memphis for one of the largest battery and vehicle manufacturing campuses in the nation. Ford and SK Innovation will invest $5.6 billion to build a 3,600-acre mega campus called Blue Oval City on the Memphis Regional Megasite, where production of all-electric F-Series trucks will begin in 2025. The project will result in 5,800 new jobs in West Tennessee. Blue Oval City will be designed to be the largest, most advanced, and most efficient automotive production campus in Ford’s history. The campus will include the Ford assembly plant, a supplier park, and a battery manufacturing plant operated by BlueOvalSK, Ford and South Korea-based SK Innovation’s joint venture. The State of Tennessee intends will offer incentives totaling more than $500 million for successful completion of the project, along with plans to develop a new Tennessee College of Applied Technology location beside Ford’s future manufacturing campus. The Tennessee Valley Authority was also part of the negotiations, offering discounted electricity and supporting infrastructure for the campus.
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Florida Considers Film Industry Rebate Program (Florida Politics). Florida has not offered any type of film industry incentives since 2016, unlike many other states in the South. While Georgia provides the real world setting for Marvel productions and Louisiana cultivates a reputation as a “Hollywood of the South,” Florida struggles to attract any notable projects. Once the Number 3 state for film production, Florida no longer breaks the top 20. The greatest success story as far as attracting cameras in recent years has been in Georgia. There, the state offers a 20% tax credit for companies that spend $500,000 or more in production or post-production. That has led Disney to film many of the top-grossing movies of the last decade at its Trilith Studios campus south of Atlanta. A bill in the Florida state legislature would budget $20 million a year for rebates over a four-year period, which is expected to bring a $100 million economic boost to the state each year the program operates. However, there continues to be skepticism of incentives and rebates in the Legislature, so the bill’s chances of passage are uncertain.
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The State Business Incentives Database is a national database maintained by the Council for Community and Economic Research (C2ER) with almost 2,000 programs listed and described from all U.S. states and territories. The Database gives economic developers, business development finance professionals, and economic researchers a one-stop resource for searching and comparing state incentive programs. To view the information available in the database, click here.
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West Virginia Remote Worker Program Big Success (Business Insider). Earlier this year, the state of West Virginia offered remote workers $12,000 in cash if they relocated there for two years. Unsurprisingly, it was flooded with applications. The talent attraction and retention program, dubbed Ascend West Virginia, was created by the state’s tourism department and a $25 million donation from Intuit Executive Chairman Brad D. Smith and Alys Smith. Ascend WV announced it has selected 53 people for its first class of remote workers moving to Morgantown, West Virginia. Those workers, who hail from 21 states as well as countries like Germany, will receive $12,000 in cash, plus free outdoor recreation, the option to earn certifications through West Virginia University, and access to coworking space and networking opportunities. The remaining 7,500 applicants will be offered $2,500 off their closing costs if they purchase a home in West Virginia through a state partnership with Rocket Mortgage. The program is now accepting applications for its next host city, Lewisburg, which is in the southern part of the state.
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Talent Development/Attraction
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Hispanics or Latinos One-Fourth of Labor Force in Six States (Bureau of Labor Statistics). New Mexico, California, Texas, Arizona, Florida, and Nevada had the largest shares of their labor force that were Hispanic or Latino in 2020. Hispanics or Latinos composed more than a quarter of the labor force in each. By comparison, Hispanics or Latinos accounted for 18.0 percent of the U.S. labor force. Other states with large Hispanic or Latino shares of the labor force include Colorado, New Jersey, Illinois, and New York. These data are from the Current Population Survey, a monthly survey of households conducted by the Bureau of Census for the Bureau of Labor Statistics. The CPS survey provides a comprehensive body of data on the labor force, employment, unemployment, persons not in the labor force, hours of work, earnings, and other demographic and labor force characteristics.
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Great Resignation Hitting Some Industries Harder (Inc.). About 40 percent of workers in the computer and IT industries and 24 percent of employees in financial firms have already quit or have plans to quit by 2022, setting off the “Great Resignation”—a period of massive job switching after more than a year of sheltering in place. That’s followed by 18 percent of employees in the health care industry and 16 percent of employees in food and hospitality industries saying they plan to leave. Among employees who plan to quit, 50 percent say their primary reason is better pay and benefits. Others want to explore new career opportunities, with 44 percent of workers interested in starting their own business; this number jumps to 70 percent for employees in the tech industry. Remote work continues to be draw for many. About 43 percent of workers say they’re quitting to find jobs that don’t require being in an office. As more workplaces shift back to in-person, flexible work schedules and the option to stay remote may help businesses retain talent.
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Sandra Watson
President & CEO
Arizona Commerce Authority
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Sandra Watson brings more than 28 years of economic development leadership experience to Arizona. She and her teams have successfully attracted to Arizona more than 1,000 companies that have committed to invest nearly $45 billion in capital and create more than 160,000 jobs. During her tenure with the Arizona Department of Commerce, and now the Arizona Commerce Authority (ACA), Ms. Watson served in multiple positions with increasing responsibilities and results. She has led Business Attraction, Business Development, Innovation & Technology, Workforce and Marketing divisions. She served as the Executive Director on the Governor’s Council of Innovation & Technology in advancing the state’s Innovation and Technology roadmap.
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Ms. Watson is a collaborative leader who excels in strategic thinking and relationship building. She worked tirelessly to implement the new vision for the Arizona Commerce Authority, providing leadership and stability during its transition from the Department of Commerce into one of the nation’s first public-private partnerships focused on economic development. She was instrumental in guiding the ACA’s aggressive five-year business plan promoting the state’s pro-business, competitive value proposition. Under her leadership, the ACA has transformed into Arizona’s leading economic development organization.
Ms. Watson began her career in Canada and brings not only a wealth of knowledge on the regional, state, and national levels but can execute effectively on an international scale. She earned an Honors Bachelor of Commerce degree from Laurentian University and has completed the Global Leadership Certification program at the Thunderbird School of Global Management. In addition to serving on numerous regional and statewide Boards of Directors, Ms. Watson serves on the Board of Trustees for the State Science and Technology Institute, a national organization focused on promoting technology-based economic development and is a board member of the Make-A-Wish Foundation of Arizona.
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The SEDE Network Steering Committee includes: Stefan Pryor (RI), Chair; Sandra Watson (AZ), Vice Chair; Julie Anderson (AK); Mike Preston (AR); Kurt Foreman (DE); Don Pierson (LA); Kelly Schulz (MD); Kevin McKinnon (MN); Chris Chung (NC); Alicia Keyes (NM); Michael Brown (NV); Andrew Deye (OH); Dennis Davin (PA); Adriana Cruz (TX); Joan Goldstein (VT); Mike Graney (WV).
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For further questions on the content in this Bulletin or for information on the SEDE Network contact Marty Romitti, CREC Senior Vice President, at mromitti@crec.net.
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