Fourth Economy Prepares Economic Plan for Lebanon, PA

City-of-Lebanon-UpdateAfter several months of stakeholder engagement and data analysis, the City of Lebanon, Pennsylvania along with hundreds of regional stakeholders came together in May 2015 to release its new economic plan, Grow Lebanon 2020.  Fourth Economy was engaged to assist the City in the plan’s development, action agenda and public release event. Continue reading “Fourth Economy Prepares Economic Plan for Lebanon, PA”

Ignorance Is Bliss, and It Gets the Job Done for Now…

Would you cut your personal budget today by $1,000 if you knew, as a result, you would lose $3,500 five years from now?

Pennsylvania and many other states are contemplating significant reductions in their funding of programs that support economic diversity. While I recognize that government has not done well to reign in spending, the rationale for reductions must be thought through much more than what is currently being proposed. I am increasingly fearful that the actions being taken, not just in Pennsylvania but also in many other capitols across the country, are going to have mid- to long-term ramifications for U.S. competitiveness and future economic recovery.

Pennsylvania’s Acting DCED Secretary recently summed my concerns up best:

“Just as a farmer doesn’t eat the seed corn during a drought, you don’t cut economic development programs during a recession,” Walker said. “This is actually when we need new tools in our arsenal to survive and grow.”

As many in the field of economic development have begun to focus on ‘economic gardening,’ providing assistance to local firms to support growth, his statements are right on the mark.

The issue before us is that the easy path to balanced budgets is to eliminate anything that is not understood. The example formula above is being played out in Pennsylvania as the state cuts millions from its budget. The ratio of $1 in state investment equaling $3.5 in tax returns is taken from the actual impact measures shown from the Ben Franklin Technology Partners. Over the past few years over $10 million in annual investment has been taken from this program. Two years of these reductions represents over $70 million in lost future tax revenue.

Pennsylvania’s state government has been a pioneer and decades-long leader in supporting technology-based economic development. In 1983, then Governor Thornburg responded to the serious economic threats caused by the demise of the steel industry employment base by calling for the creation of the Ben Franklin Technology Partnership. In similar fashion the Governor of Ohio announced the creation of the Edison Center Network. These two efforts have led the way and today are still being replicated in state’s that are seeking to diversify their economies and create an environment that supports high growth, high wage companies. The visionary leadership has benefited us well for almost three decades.

Today we all must make hard choices but I hope that we can start doing so with informed and deliberative decision-making rather than the sound bite-filled rhetoric that has guided the current proposed cuts. The science of program evaluation is often difficult to understand, but so is the reality that we have eaten our seed corn and have nothing left for the future.