Economic Development and Manufacturing & Technology and Technology

Dems hope for some strategic input: Indiana Economic Development Council completes state plan, but it could get lost in switch

January 10, 2005

For months, Jackie Nytes has been developing a strategy for statewide economic development. It comes off the presses this week.

But the inauguration of Mitch Daniels leaves her wondering whether anyone will ever read it-let alone act on its recommendations.

Nytes, a Democratic member of the City-County Council, serves as president of the Indiana Economic Development Council Inc. Daniels, the Republican governor-elect, is folding all state economic development efforts into the Indiana Economic Development Corp.

The corporation, a public-private partnership, was formed in 2003 and takes charge this summer, unless the General Assembly makes it happen even sooner. It will absorb agencies such as the Indiana Department of Commerce and the 21st Century Research and Technology Fund.

Democrats are eager to retain a voice in the job creation debate. Now that Republicans hold sway, they could choose to disregard their predecessors' entire playbook.

Nytes emphasizes that her report, "A New Path to Progress: Indiana's Strategic Plan for Economic Development 2005," is a nonpartisan attempt to assemble the top minds available and issue the most powerful recommendations possible.

"Not everything we recommend would have ent of the Indianapolis Business Journal.

Daniels' other plans reflect the fiscal reality of the state's structural budget deficit, figured to be between $600 million and $2.2 billion, depending on the source. He would increase the state's research and development tax credit, for example, but only by 5 percent, to 15 percent, and even then only in 2008 when it's expected the state budget has returned to solvency.

"We've got to get the bills of this state paid and back into a position of balance in order to move this state forward," he said.

That makes Nytes' most ambitious recommendations, such as quadrupling funding of the 21st Century Fund to $150 million a year, unlikely at best.

"It's tough to talk about that one," she acknowledged. "But the fact of the matter is that innovation is one of our biggest challenges. We have in our universities some good, creative work being done. We can't leave it sitting on the shelf. It has to be commercialized, and the 21st Century Fund has shown what it can do."

Economic development without a surplus of funds available for infrastructure improvements and new development will be difficult, no matter what Daniels prioritizes, said IUPUI political science professor Brian Vargus. At the moment, Republicans are a bit like car-chasing dogs.

"Now they caught the car," he said. "I'm not sure they've figured out what to do with it yet."

But Republicans and Democrats actually already agree on most economic development goals. Job creation is acknowledged as critical by both parties. Both Nytes' report and Daniels emphasize adoption of daylight-saving time, retention of the Crane Naval Warfare Center, appealed to the previous administration. Not everything will appeal to this administration. But it all comes from the best thinking of people around the state," Nytes said. "We're offering this up in a very objective fashion, in the hopes both the Legislature and the new administration will find it a useful tool."

But Republicans and Democrats don't always begin with the same assumptions in mind. Nytes' report, for example, has the same tone of optimistic realism that Gov. Joe Kernan made his campaign signature.

It acknowledges Indiana's challenges, but trumpets Democratic calling cards, such as tax restructuring. It seeks to preserve the regional structure of the Indiana Department of Commerce and to maintain the Indiana Economic Development Council.

Daniels campaigned on the concept that Indiana is failing and desperately needs change.

And even though the council has been expected to be nonpartisan since its formation in 1985, Nytes' predecessor left to lead the Republican think tank, the Hudson Institute, after a series of his harsh appraisals were ill-received.

"There are some that say, and I think accurately, that Graham Toft was forced out of that role for producing reports deemed too critical of the state and the Department of Commerce," said Indiana Chamber of Commerce President Kevin Brinegar.

The modesty of the council report's goals reflects the facts of Indiana's challenges. For example, it aims to see Indiana move merely to the top half of states for percentage of adults holding bachelor's degrees. In 2003, Indiana ranked 45th, with just 22.2 percent of Hoosiers holding such a degree. It also seeks to increase Indiana's average income to the national average, from $31,975 to $36,176.

Meanwhile, despite his campaign rhetoric, even Daniels has to bow before reality and that likely means new spending is off the table. The job- and economic-growth package he submitted to the General Assembly makes the Indiana Economic Development Corp. his top priority.

Daniels wants not a day's delay for his secretary of commerce, Pat Miller, and his IEDC president, Michael S. "Mickey" Maurer, plus "the other outstanding people who have stepped forward on the job of selling Indiana and its workers around the world," he said.

Maurer is co-owner of IBJ Corp., parand an increase in Indiana's share of federal research grants.

"Fundamentally, the goals of Democrats and Republicans are pretty much the same when it comes to economic development," Vargus said. "Where they differ is over who gets to run it, simple as that."

Some agencies are keen to get aboard Daniels' "freight train of change." Indiana Business Modernization and Technology Corp. President Del Schuh, for example, is more than willing to run his organization as part of the new Indiana Economic Development Corp.

"This is a new administration. They're going to run economic development the way they believe it needs to be run," Schuh said. "There will be a manufacturing extension in the state, because the feds want it that way. We hope it's us."

"Trying to re-create that wheel doesn't make a lot of sense," he added. "We've got an awful lot of talent."

Over the course of his campaign, Daniels showed he's not particular about the source of good ideas, said Indiana Legislative Insight Publisher Ed Feigenbaum. That's why he's reached out to the business community for many of his appointments, particularly IEDC's leadership.

"I don't think the new governor wants these people because they'll be in lockstep thought with him," he said. "I think he wants them because he needs the best minds available, and I assume he will trust them."

Which explains why, with her audience uncertain, Nytes finished her statewide strategy.

"That's why I didn't turn in my resignation the day after the election," she said. "I believe in my opportunity here."
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