Remarks to the Wichita City Council, February 15, 2011.
Mayor and members of the council, last week Governor Sam Brownback released his plan for economic development in Kansas. While his plan specifically addressed the state and its activities, the principles apply to local government. In fact, we need to harmonize our strategy with the state’s if we are to succeed.
Besides reorganizing the state’s economic development agencies, the governor’s plan calls for a shift in economic development strategy. Instead of targeting industries or specific companies, Kansas should seek to establish a strategy that is simple, fair, and of high capacity.
The governor’s plan seeks to promote an economy where a diversity of companies can thrive, each engaging in entrepreneurship or business experimentation. This is the type of environment that creates the conditions where the next Apple Computer, Google, Microsoft, or Pizza Hut might be launched.
Can we identify the companies that may be — or may not be — future successes? Will they satisfy the city’s criteria for receiving various forms of economic development assistance? Or being of entrepreneurial mind and spirit, will these young companies even consider coming to city hall for assistance?
There are those on this council and in city hall who believe we can formulate policies that identify these companies. I don’t think that’s possible, and the governor’s economic development plan doesn’t think it’s possible.
We need an environment that nurtures these unknown futures success stories, and as many as possible. Not only large success stores, but smaller-scale success, too. That’s what we don’t have, and this is what the governor’s plan seeks to create.
I mentioned capacity. When each economic development deal must pass through city hall bureaucracy, we can have capacity constraints, not to mention high cost. As an example, last April this applicant company received a forgivable loan from the city of just $15,000. How much effort did it take to process that loan? I would suggest it was a sizable fraction of the loan amount. And the same thing happened across the street at the county commission.
Mayor, you said in your recent State of the City address that in 2010, economic development efforts saved 745 jobs and created 435 jobs, for a total impact of 1,180 jobs. To place those numbers in context, the U.S. Census Bureau indicates the labor force in Wichita is 191,760 persons. This means that the economic development efforts of the City of Wichita and its agencies affected a number of jobs equivalent to 0.6 percent of the city workforce.
This small number of jobs impacted — representing less than one percent of the city’s labor force — is overwhelmed by the natural flow of economic events. Yet, to accomplish this, we have a large and costly bureaucracy in place. We increase costs for the numerous young companies that we now know are the engine of job growth.
Mayor and members of the council, we can start moving towards an environment that promotes diverse economic growth by voting against this item and the other targeted economic development incentives on today’s agenda. But if the council decides to approve each item, I would ask that the council identify specific spending somewhere else to cut, so that the cost of these programs are not spread among all the residents and businesses in the city.