APRIL 2008: ECONOMIC DEVELOPMENT
Split decision
The governor plans to break up the state’s economic
development department. Will it work this time?
By Abraham Hyatt
It’s a surprising move. It may be a risky move.
It’s a move that, if successful, should change how
Oregon’s economic department does business with the world
and with the state itself.
Gov. Ted Kulongoski wants to shift the emphasis of the Oregon
Economic and Community Development Department to business
development, rather than focusing on both business and
community development. Community development wouldn’t be
eliminated; instead it would be an adjunct partner. Both would
remain under the umbrella of OECDD.
OECDD, which is operating on a $414.6 million budget for the
current biennium, uses tax incentives, grants, loans, technical
support and other programs to help municipal agencies, private
industry and nonprofits with business and community
development. Its scope is broad. For instance, Brand Oregon,
the development of industry clusters and community development
block grants all fall under the agency’s purview.
Those in the governor’s office who have been crafting
the proposal — economic development director Tim McCabe
and director of strategic development Nancy Hamilton —
say restructuring is an essential step for the future of the
state’s economy.
The proposal targets macro-level woes: OECDD’s mission
is too broad; using job creation as the only definition of
success doesn’t fit all the agency’s work; the
agency’s structure prohibits it from keeping up with the
pace of business.
“It doesn’t work the way we’re going,”
says McCabe.
There are no specific problems — lost jobs or
failed business projects — as yet being detailed by
McCabe and Hamilton. They say individual issues have nothing to
do with the proposal and that the point is to create an agency
that’s more nimble when it comes to global competition,
business development and handling Oregon’s infrastructure
demands.
THIS IS NOT A UNIQUE IDEA. Restructuring has been suggested
and debated several times since community development was
brought into the same agency as economic development under Gov.
John Kitzhaber in the mid 1990s. In fact, Sen. Rick Metsger,
D-Welches, plans to bring his own unrelated proposal for
reorganizing the OECDD to the Legislature in 2009.
But there’s no guarantee of success. Current and former
directors of the agency see the benefits but also question
whether a division will do more harm than good. They say the
two sides of the agency are too intertwined, too interdependent
for a successful separation.
OECDD director Bob Repine, who was appointed two years ago by
Kulongoski, is noncommittal about the proposal; he says he sees
advantages and disadvantages to restructuring. He praises the
governor for being proactive about economic issues in general,
but offers one caveat about reorganization.
“We need to be able to show that something has changed
for the better,” he says. “We can’t wake up
one morning and just say we’ve restructured.”
As chair of the Business, Transportation and Workforce
Development Committee in the 2007 session, Metsger has seen
OECDD’s problems from the legislative angle. Because of
the cross-pollination between business and community
development, the agency has a hard time proving to legislative
committees what it has accomplished. He calls OECDD a
frustrating agency.
“They really work hard at being synergistic —
one-stop shopping,” he says. “But it has created
more barriers.”
The governor’s proposed plan would take care of that
with one simple slice: refocus the agency on business
development. Both business and community development would get
their own set of metrics and goals.
According to this plan, the two divisions would have many of
the same roles they do now, but better defined. The community
development side would find ways to fund and manage the
state’s public works infrastructure.
The business development side would, among other things, work
to make Oregon more globally competitive, incubate emerging
industries, find ways to retain and create jobs, and perhaps
most significantly, learn to move as fast as the business
community.
BUT IF THIS IS A GREAT IDEA, why hasn’t it happened
before now?
“Reorganization of that agency has been a consistent
theme since I got involved in government 20 years ago.
Reorganization is not a new concept,” says Katy Coba, the
director of the Department of Agriculture and interim director
of the OECDD for several months in 2002.
In the late 1990s, Kitzhaber convened a task force —
which Coba sat on — that looked at reformation; the issue
came up again under the tenure of Marty Brantley, OECDD
director from 2003-2005. Brantley said he considered the idea
but ultimately discarded it for the same reason the two
branches had been brought under the same roof in the first
place: Business development can’t be done if it’s
not working closely with economic development.
“When I look back I still think [keeping the department
unified] was a good idea,” Brantley says.
When asked about a legislative reorganization of the agency
such as Metsger has proposed, Coba was blunt. “I
don’t think reorganizing is going to get where the
Legislature wants,” she says. “It’s very time
consuming and very disruptive. It’s more important to
clearly identify the goals and the mission and let the staff do
the work.”
Neither Brantley nor Coba knew the specifics of the
governor’s plan (publicly announced in late March after
press time) when they commented on the department’s
restructuring in early March. Repine had heard specifics
— he says he has been in communication with
Kulongoski’s office as the proposal has been developed
— but he was uncommitted to whether it’s a good or
bad idea. Reorganization could create stronger divisions, he
says.
He also voiced some of the same concerns that Brantley did.
Business and community development have to work very closely,
Repine says. A business may need a sewer improved before it
moves to Oregon; a city may want to improve its roads so it
could attract businesses.
“In today’s environment,” he says,
“infrastructure is just one more tool for businesses that
want to come here and grow.”
MCCABE AGREES IT’S ESSENTIAL for the two sides to work
closely together. It happens between major state agencies every
day, he says, and the two divisions of OECDD would be no
different.
Will it actually work that way? The architects behind
Kulongoski’s proposal say these are questions that will
only get answered as the plan develops. Hamilton says the
announcement of the plan is an early step in the process. Next
comes input ranging from legislative committees to the
Department of Justice.
As that process continues, the foremost question likely will
be whether the OECDD really needs restructuring. As previous
directors have pointed out, there are strong arguments for
either direction. But McCabe and Hamilton argue that global
economics and increasing demands on the state’s
infrastructure mandate change.
As the chair of the Business, Transportation and Workforce
Development Committee, Metsger says he saw multiple patchwork
attempts at fixing problems within the OECDD. Like others, he
realized Oregon must change in order to stay competitive. And
change couldn’t be incremental or small.
“Just trying to rewrite the regulations is not going to
fix this problem,” says Metsger. “You can only
replace so much in this house. Now we need to tear it down and
start over.”
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