Participation’s the key

mid_hudson“Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations.”

— John Maynard Keynes, 1936

New York’s state government has done a better job than the counties in articulating a coherent regional vision for the Hudson Valley. It’s not that Albany has come up with goals that are startlingly new. But it has devised a coherent system for a regional process that has amply rewarded regional participation.

The state’s Mid-Hudson Regional Economic Development Council (REDC), which despite formal representation from local government, academia and the business world remains very much a top-down process, issued a progress report in September refocusing its priorities to reflect changing circumstances. Motivated in no small part by being awarded $92.8 million in state funding under the consolidated funding application (CFA) process for 84 projects within the region last year, the regional group developed an ambitious list of priority projects for 2013.

Soon we’ll know who’s been naughty and who’s been nice this year. The state government anticipates announcing this month how much money each region will get and for what. For the local governments, non-profits and private-sector players, this is the biggest competitive game around. The last two rounds were funded to the tune of about $700 million each. Such substantial stakes have made almost everyone willing to play.

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The strategies the Mid-Hudson REDC report recommended, developed and refined in the past year fell into four core categories. The Mid-Hudson REDC made recommendations for capital funds for 17 priority projects (of which eight were in the three northernmost metropolitan counties: Ulster, Dutchess and Orange) in three of the four categories — technology, natural-resource related and infrastructure. The remaining category, the attracting and retaining mature industries such as financial and professional services, corporate food and beverage, and distribution projects, didn’t get priority projects this year; the REDC promised a focus on them in 2014.

In addition, the regional REDC backed 21 non-core regional projects, some comparatively small, to be funded by various state agencies. Of these, seven were in the three northern metropolitan counties.

Investment in technology, the first core strategy, backed job-creating investments in the biotechnology, biotech, biomedical, advanced healthcare technology and information technology clusters. Of the seven technology projects supported by the regional REDC, five were in the three northernmost metro counties: one in Ulster County, one in Dutchess, and three in Orange.

The sole Ulster application is for $4.353 million of REDC capital for the widely touted 3D printing initiative at SUNY New Paltz. The total cost of that program (excuse me, investment in) is pegged at $14.255 million, and it is estimated that the project will create nine new jobs, six-part-time jobs and 73 indirect jobs, plus 50 construction jobs to create new campus space.

Also of note locally is the appearance on the priority list of Northern Dutchess Hospital’s request for $9 million in state funding as part of a $45-millon medical-surgical pavilion that would add 16 jobs and employ 100 construction workers creating six new operating rooms and 40 single-bed patient rooms.

None of the four natural-resource-related recommended priority projects, the second core strategy, were located in the northern mid-Hudson metro counties.

Four of the six recommended infrastructure projects, the third core strategy, were in the northern metro counties, three in Orange County and one in Dutchess County.

Of the non-capital-fund priority projects, three were from Ulster County: Ulster BOCES wants to provide training in the health professions for unemployed workers. Sono-Tek Corporation in Milton wants money to train all its employees in sustainability, as well as sales and machine-shop training for some workers. And the City of Kingston is seeking funding to develop a system of non-motorized mobility and to achieve smoother motorized traffic.

 

Evolving structures

If it follows its pattern of the past three years, the state government will fund some but not all the local REDC’s recommendations, and it will award money to many projects not on the regional priority list.

The first years of the evolving CFA process have already brought a dramatic shift in the way economic development priorities are established in New York State. Individual county and local efforts are increasingly being brought under the umbrella of this ambitious state-driven process for broad economic development. Governor Andrew Cuomo continues to describe these efforts as reflecting the priorities set by the REDCs of the ten economic-development regions. It is possible that over time such a regional structure will evolve. Meanwhile, the sense of participation that such efforts encourage can be of itself a positive dividend.

Economic development is not a science, but it is a significant process. As Lord Keynes noted almost 80 years ago, positive economic activity “depends on spontaneous optimism rather than mathematical expectations.” When will what the English economist termed “the animal spirits” of business decision-making finally turn unabashedly positive?

We’re now entering the seventh year of the Great Recession, and the economy, national, state and local, still sucks. Yes, things are gradually improving, and yes, there are bright spots here and there. But as we enter 2014 the economic recovery is still far from complete. Most businesspeople still find it difficult to muster those positive animal spirits that Keynes predicted could provide a distressed economy a healthy jolt.

“We’ve just come through a record 48 consecutive months when unemployment stayed above eight percent,” recently stated James Parrott, chief economist at the Fiscal Policy Institute and a leader in the half-empty school of New York economic analysis. “Yes, New York State is in recovery. But we’re still not able to walk across the room without crutches, not to mention start training for a marathon.”

Ulster County, its leadership drowned in good intentions and inadequate follow-through, really hasn’t a strategy to deal with this unprecedented situation. Ulster Tomorrow, the county’s main document for strategic planning, was mostly written in 2007 and formally adopted in 2008. Its conclusions, too general to be a road map for economic development, are in most ways so obvious as to be tautological (the word is defined in rhetoric as “a self-reinforcing pretense of significant truth”). They’re also obsolete by now.

So it’s a very good thing that New York State government has stepped up to the plate in terms of leadership in economic development. The state likes to pretend that its decisions are made at the local level and pushed up through the state’s regional apparatus. And the localities like to pretend that it is their own profound understanding of economic priorities that leads to state support for their projects.

Though based on mutually illusory premises, the results from that partnership can turn out more nice than naughty. ’Tis the season.

 

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