As budget shortfalls loom, state must focus on growth
Last month, the Delaware Economic and Financial Advisory Council projected that the state will have about $167 million less in tax revenues to spend next year – even as costs continue to rise.
That’s the bad news.
The good news is that the next governor and the incoming legislature will have the opportunity to take advantage of challenging times to make the critically important decision to fundamentally change Delaware’s approach to economic development.
The business community is eager to support state leaders at this crucial moment. In fact, the Delaware Business Roundtable earlier this year presented a framework for economic development that – if followed – can make the state more competitive with its neighbors in an era of increased competition for jobs, investment and talent.
The Delaware Growth Agenda, commissioned by the Delaware Business Roundtable, calls on the state to nurture a growing entrepreneurship base built on three strategic goals that should be implemented over the next five years:
1. Building an entrepreneurship and innovation ecosystem. This will make Delaware more attractive to entrepreneurs, helping them grow organically. This approach includes bolstering federal, state and private investment in higher education, and emphasizing the finance, health care, science and technology fields, engineering and entrepreneurship programs. The framework calls for the creation of an “Innovation District” as a destination for entrepreneurs and startups.
2. Pursuing a new approach to economic development. The framework calls for establishing a public-private organization with a renewed focus on economic development, crafting a new comprehensive statewide economic development strategic plan, and a marketing campaign that pursues new investment and jobs in key industries – including financial services, business services, education and knowledge creation, manufacturing, and distribution.
3. Enhancing Delaware’s business climate. The Growth Agenda says the state must ensure Delaware’s infrastructure meets the needs of a 21st century economy, including updating the Coastal Zone Act. The framework also calls for improving the state’s public education system and taking a leadership role in facilitating more efficient development and permitting processes.
This approach is badly needed, as demonstrated by the Growth Agenda, a framework that was developed through a non-partisan, collaborative planning effort that engaged more than 100 state, business and community leaders.
Through those discussions, TIP Strategies, a leading national economic development strategic planning firm, and the Delaware Business Roundtable concluded:
- Many of the traditional economic pillars of the state – including cars and chemicals – are no longer significant job generators.
- Manufacturing accounted for about 20 percent of the state’s non-farm employment in 1990. By last year, it was just 10 percent of all jobs.
- The state lost more jobs in manufacturing and corporate headquarters than any other sector between 2010 and 2014 – while health care and professional services sectors experienced robust job growth.
- Delaware is home to a growing base on which to build a vibrant entrepreneurship and innovation ecosystem – and higher education must become the long-term driving force behind that ecosystem.
- Delaware’s labor force participation rate from 2010 to 2015 showed the fastest percentage point increase among the states, but from 2012 to 2015 wages grew in Delaware by 3 percent while wages in the US grew by 7 percent.
Taken together, these strategic goals will help position Delaware as a global magnet for leading-edge technologies, talent and investment – which is achievable only if we create a more robust partnership between the public and private sectors to guide future success.
This can only happen if all parties and all segments of the economy come together to chart a new, forward-looking agenda for economic development in Delaware for years to come.
Mark Turner is president and CEO of WSFS Corp. and chairman of the Delaware Business Roundtable.