What’s New in Economic Development in the Northeast
What do you do when you’re responsible for economic development in a region that’s been battered by economic downturns and lagging the national pace of recovery?
All 11 states of the Northeast have introduced new economic stimulation plans, programs and policies over the past three years. The programs typically focus on advanced technology, but not always; emphasize mentoring, knowledge-sharing and tactics to tap regional brainpower and networking prowess; seek to integrate federal funding into state and local initiatives; and focus on targeted industries and clusters.
Variously, the programs seek to foster greater collaboration between educational systems and private enterprise, streamline government processes, reduce red tape, foster exporting, help entrepreneurs get funded and reduce the tax bite to startups. Others aim to encourage informal networking and mentoring, promote regional identity, or leverage the people-moving power of their mass transit systems.
For these programs to succeed, they need to “address their regulatory processes and make government easier to navigate, make investments in their infrastructure and make sure tax rates are not too onerous for business owners,” says Karl Seidman, an Urban Studies and Planning professor at M.I.T.. As past president of the Northeast Economic Developers Association, Seidman oversaw a landmark research survey called, “Innovation in State Economic Development,” which was released last fall, and assessed new state plans. The study is available through NEDA.org. Here are some highlights according to the NEDA.
Start-Up New York
Start-Up NY deploys incentives and 10-year tax deferrals to stimulate university-linked business investment and start-up activities within designated campuses, mainly upstate. In addition to universities, as many as 20 state properties will be designated tax-free communities and partnered with universities to encourage startups. Employees at Start-Up NY communities will be exempt from income taxes. The state’s long-standing business incubator program will be expanded to include ten new high-tech innovation centers. The New York State Innovation Venture Capital Fund will provide $50 million annually for seed and early-stage funding. Tax credits for film post-production have been increased by more than $18 million annually. A program called Global NY focuses on encouraging export deals between startups and overseas markets, while seeking to entice foreign direct investment in the state.
Connecticut introduced Small Business Express, a $180 million funding effort that offers loans up to $350,000. A subsidized training and employment program allows manufacturers to defray training costs for new hires. The First Five program was expanded to provide tax incentives to additional larger companies that create at least 200 new jobs within two years or invest upwards of $25 million. A $250 million initiative called Connecticut Innovations was launched to recruit fast-rising technology firms. The $200 million Connecticut Bioscience Innovation Fund now finances targeted bioscience projects aimed at lowering healthcare costs or improving healthcare delivery. A $50 million allotment new goes to bridge repair and upgrades. CTNEXT provides free growth-advisory services including mentorship by serial entrepreneurs and innovation vouchers worth up to $10,000 for consulting and other business services.
The New Jersey Economic Opportunity Act of 2013 streamlines five existing economic development incentive programs into two: Grow NJ, coordinating retention and incentive programs and job creation strategies and Economic Redevelopment and Growth, a “key developer incentive program.” Both plans focus on cluster development, targeting life sciences, transportation/logistics, finance, manufacturing, technology and healthcare industries. Revised in 2011, the state’s Business Retention and Relocation Assistance Grant Program, or BRRAG, awards business tax credits and incentives to businesses that create at last 25 new jobs. A $1.75 billion Urban Transit Hub tax credit program waives taxes for projects constructed within nine designated transportation hubs.
Pennsylvania has passed a series of business tax reforms, including elimination of capital stock and franchise taxes, increase in the net operating loss cap, deductions for start-ups and tax simplifications. Its new Small Business Champion Network helps entrepreneurs and startups launch businesses and tap government services, consolidated state loan programs into a single $1.1 billion pool and increased funding for tourism efforts that double as business recruitment. Other programs include Innovate PA, which sells tax deferrals to insurance companies and earmarks revenues to venture funds and biotech incubators. The state’s R&D Tax Credit program was expanded to $50 million, with $11 million earmarked for small businesses. A $12 million Place-Based Initiative called Partnerships for Regional Economic Performance Regions (PREP) assembles economic development service providers across the state to orchestrate hyper-local business matchmaking services. Discovered and Developed in Pennsylvania (D3PA) funds $10 million a year to programs that promote entrepreneurship, increase technology transfer or strengthen communities economically. Research for Advanced Manufacturing in Pennsylvania (RAMP) connects local manufacturers with the technologies and brainpower of Carnegie Mellon and Lehigh Universities. —WS