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ED Now Feature: Insights from IEDCís 2018 Federal Economic Development Forum
Eli Dile   on Monday, April 9, 2018 at 9:04:00 am

By Eli Dile

One year removed from the debut of the president’s “skinny budget” – which proposed wholesale elimination of critical federal economic development programs – Congress has increased funding for many of those targeted programs and agencies.

Making sense of Washington’s machinations is the draw for economic developers to the nation’s capital for IEDC’s Federal Economic Development Forum. Each year, economic developers and federal officials come together to discuss federal tools that support job creation and wealth expansion locally.

Good news for agency budgets, for now

The latest omnibus spending bill brought increased funding to a host of federal economic development programs, many of which had not seen a meaningful boost in years.

The Economic Development Administration, for example, received a $26 million increase, with its 2018 budget now totaling $301.5 million. Advocacy from the economic development community also ensured that EDA got a leading role in disaster recovery; the organization now has $600 million for post-disaster economic recovery activities.

EDA is still operating without congressional reauthorization, which is troubling, but not an immediate impediment. “In this town, you don’t have to be reauthorized to get money,” said IEDC President and CEO Jeff Finkle during his annual State of Federal Economic Development presentation. “If we don’t win that, the world doesn’t come to an end.”

Another big winner in the omnibus spending bill is the Community Development Block Grant program. The Department of Housing and Urban Development received a $365 million funding increase over 2017, its budget now totaling $3.3 billion. That is a significant boost to a program that has been cut routinely over the years, but not in a historical context: “When I left HUD 32 years ago, the CDBG budget at that time was also $3.3 billion,” Finkle said.

HUD also got a disaster recovery boost, with the CDBG-DR program getting $28 billion to help disaster-impacted communities with housing and infrastructure.

Lack of key leadership positions

More than a year into President Trump’s administration, there is still a severe shortage of federal appointees across all branches of government. Between 30 and 35 percent of presidentially appointed positions remain vacant. Among those vacancies are EDA secretary, Census Bureau director, Department of Labor assistant secretary for employment and training, and Export-Import Bank president.

“We are missing allies,” Finkle said. “We love working with the people we know, but there’s only so much they can do.”

This makes it difficult for communities to learn about new federal programs such as Opportunity Zones, which are designed to encourage private capital investment in low-income areas. Opportunity Zones provide a tax incentive to reinvest unrealized capital gains into an Opportunity Fund that allocates capital in areas of need designated by a state’s governor.

“In past administrations, there would have been webinars and sessions on this. So far, crickets,” Finkle said. “Unless you knew this was out there, there were probably lots of people who got left behind.”

IEDC held a webinar on Opportunity Zones in February; information from that presentation is available here. (Ten days remain for states to file an extension with the Treasury Department to designate eligible census tracts as Opportunity Zones.)

Workforce development valued

Workforce development is largely a bi-partisan issue for federal economic development policy. The Perkins Career and Technical Education Act, for example, was reauthorized in the House unanimously.

One area the Trump Administration has consistently supported is apprenticeships. The omnibus bill added nearly $50 million to the Department of Labor’s registered apprenticeship program, upping it from $95 million to $140 million. Additionally, an executive order last June loosened restrictions around the approval process for apprenticeship programs. Now, third-party groups such as industry associations, companies, nonprofits, and unions may certify apprenticeships. This has helped grow the ranks of nontraditional apprenticeships in fields outside of manufacturing.

“This administration has been very strong on the idea of expanding apprenticeships,” said guest speaker Kermit Kaleba of the National Skills Council. “It’s seen as a high-quality intervention to get the skills needed to advance in a career.”

Kaleba joined other workforce professionals for a concurrent session on federal tools for skills building. One often overlooked program with a big impact is unemployment insurance (see PDF presentation). Because workers who lose their jobs today take longer to find new work and are more likely to become permanently displaced, UI has been a crucial safety net for the involuntarily unemployed. Ranked by the Congressional Budget Office as one of the most cost-effective tools for economic development and job creation, UI is also a proven platform for reemployment, thanks to Reemployment Services and Eligibility Assessments (RESEA). RESEA began as a pilot program that facilitates job reentry by allowing UI recipients to obtain individualized skills assessments, access labor market information, and create an individual reemployment plan.

Despite UI’s effectiveness, its funding has declined since its peak in 1994 at $2.6 million to just under $2 million now. However, good news came in February’s Bipartisan Budget Act, which made RESEA a permanent program under the Social Security Administration, and its funding is set to grow in the future.

More advocacy needed

Despite the omnibus funding boosts, many in the administration still have these programs in their crosshairs. “Trump used many of our programs in his career in real estate, such as TIF and CDBG, yet we’ve found them on a list of programs for elimination,” Finkle said.

Finkle cautioned the audience to treat the omnibus bill as an outlier rather than the new normal. “We did very well as an economic development community, but this is an unsustainable budget. At some point, there’s going to be a day of reckoning,” Finkle said. “If you like any of these programs, you need to let [Congress] know.”

To assist in advocacy efforts, be sure to check out the brief IEDC created titled “Why Invest in Economic Development?

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