Legislative Resources i Promoting Economic Development in Vulnerable Communities By Monica Kearns William T. Pound, Executive Director 7700 East First Place Denver, Colorado 80230 (303) 364-7700 444 North Capitol Street, N.W., Suite 515 Washington, D.C. 20001 (202) 624-5400 May 2003 National Conference of State Legislatures 73 ii Promoting Economic Development in Vulnerable Communities The National Conference of State Legislatures is the bipartisan organization that serves the legislators and staffs of the states, commonwealths and territories. NCSL provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues and is an effective and respected advocate for the interests of the states in the American federal system. NCSL has three objectives: • To improve the quality and effectiveness of state legislatures. • To promote policy innovation and communication among state legislatures. • To ensure state legislatures a strong, cohesive voice in the federal system. The Conference operates from offices in Denver, Colorado, and Washington, D.C. Printed on recycled paper ©2003 by the National Conference of State Legislatures. All rights reserved. ISBN 1-58024-288-X National Conference of State Legislatures Legislative Resources iii CONTENTS List of Tables and Figures ................................................................................................. iv About the Author ............................................................................................................. v About the Strengthening Families and Neighborhoods Project ...................................... vi Preface and Acknowledgments ........................................................................................ vii 1. Introduction ............................................................................................................... 1 Intent of this Report ........................................................................................... 1 Themes ................................................................................................................ 1 2. Public Policy Goals .................................................................................................... 5 Defining Economic Development ...................................................................... 5 Economic Development In Vulnerable Communities ........................................ 8 The Job Creation Conundrum ............................................................................ 8 Measuring Results ............................................................................................... 9 3. Public Policy Options for Targeted Groups ............................................................. 16 People Who Could Start a Business .................................................................. 16 People Who Could Fill Unmet Demand for Workers ....................................... 20 Community Development Organizations ........................................................ 22 Local Governments ............................................................................................ 23 Existing Business Owners.................................................................................. 29 4. Conclusion ............................................................................................................... 36 Notes .............................................................................................................................. 37 National Conference of State Legislatures iii iv Promoting Economic Development in Vulnerable Communities List of Tables and Figures Table 1. Gross State Product, 2000, and Personal Income, 2002 .................................... 6 2. State Business Churning Statistics: 1998, 2001 ............................................. 10 3. Employment Status of the Labor Force, 2001 .................................................. 12 4. State Individual Development Account (IDA) Programs ................................. 19 5. Community Development Block Grants to Entitlement Communities, 2002 .................................................................. 27 6. Community Development Block Grants to Non-Entitlement Communities, 2002 ......................................................... 28 Figure 1. Business Churning, 2001.................................................................................. 11 2. U.S. Annual Unemployment Rate, January 1993-January 2003 .................... 11 iv National Conference of State Legislatures Legislative Resources v ABOUT THE AUTHOR Monica Kearns is a policy specialist with the Fiscal Affairs Program at the National Confer- ence of State Legislatures. Ms. Kearns works primarily on economic development and community issues, including business climate, small business development, tax incentives, rural economic development and gambling. She is the author of Retooling State Economic Development Policy for the New Economy and editor of Meeting the Challenges of Rural America: A Report from the Rural Development Task Force. She is author of a number of articles, including “A Survey of Economic Development Funding Trends and Key Legislation, March– April 2003,” “Has the New Economy Been Overplayed?” and “Understanding State Busi- ness Climate,” and she co-authored “Fighting Poverty with Individual Development Ac- counts.” Ms. Kearns has represented NCSL on assignments to several countries in West Africa. Before joining NCSL in 1999, Ms. Kearns worked in marketing research and communica- tions at a land use planning firm. She earned a master’s degree in international public policy and an undergraduate degree in communications and international studies from the University of Denver. National Conference of State Legislatures v vi Promoting Economic Development in Vulnerable Communities ABOUT THE STRENGTHENING FAMILIES AND NEIGHBORHOODS PROJECT State legislatures face real challenges and opportunities in enacting, funding and imple- menting state policies that strengthen vulnerable families and their neighborhoods. The National Conference of State Legislatures/Annie E. Casey Foundation Partnership is an initiative designed to raise legislators’ awareness of 1) the needs of vulnerable families and neighborhoods, 2) the policy tools available to legislators to strengthen those families and improve conditions in such neighborhoods, and 3) proven methods that allow legislators to focus on outcomes that affect families and neighborhoods, regardless of the committees on which legislators serve. More information about the partnership is available at www.ncsl.org/programs/sfn/sfn.htm. The 17-member NCSL/Casey Partnership Advisory Committee includes state legislators, a former legislator and legislative staff. The advisory committee helps NCSL formulate is- sues, set goals and explore existing state programs related to the project. The advisory committee members are: Senator Ray Aguilar, Nebraska Representative Evelyn Lynn, Florida Representative Mary Lou Dickerson, Senator Angela Monson, Oklahoma Washington Representative Nan Grogan Orrock, Representative Dwight Evans, Georgia Pennsylvania Hubert Price Jr., Michigan Representative Ro Foege, Iowa Phil Price, Arkansas Senator Beverly Gard, Indiana Senator Stephen Saland, New York Jack Hailey, California Representative Marie St. Fleur, Representative Doug Hart, Michigan Massachusetts John Kasprak, Connecticut Senator David Steele, Utah Bob Keaton, Louisiana The Casey Foundation web site—www.aecf.org/—features additional information about helping families and neighborhoods. vi National Conference of State Legislatures Legislative Resources vii PREFACE AND ACKNOWLEDGMENTS The National Conference of State Legislatures thanks the Annie E. Casey Foundation for its support in making this publication possible. The contents do not necessarily represent positions or policies of the Annie E. Casey Foundation. The author is deeply indebted to several legislative staff who offered invaluable perspective, review and editing of the report: • Bob Keaton, Louisiana • John Rappa, Connecticut • Hannah Shostack, New Jersey At NCSL, the author wishes to thank Ron Snell and Mary Fairchild, whose comments, guidance and support helped this report at every step. Leann Stelzer edited the text, Scott Liddell formatted the report and Lisa Houlihan assisted with tables. The cover was designed by Anabliss Graphic Design, Denver, Colo. National Conference of State Legislatures vii viii Promoting Economic Development in Vulnerable Communities National Conference of State Legislatures Introduction 1 1. INTRODUCTION Intent of this Report In This Chapter Economic development is consistently cited as a major concern • Intent of this report in improving the well-being of struggling communities. In fact, • Themes that tie together the main points of and just as states have specific policies and programs to improve fam- correlated thoughts on community economic ily support, public health, housing and other conditions in dis- development: tressed places, they also have economic development strategies - Efforts to measure results can clarify goals and that are designed to improve their economic conditions. options - Helping people who could start a business is This report is designed for those who are interested in helping particularly important distressed places and determining how state economic develop- - Effective local government and nonprofit ment funds might