[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
BUILDING PROSPERITY: EDA'S ROLE IN ECONOMIC DEVELOPMENT AND RECOVERY
=======================================================================
(116-11)
HEARING
BEFORE THE
SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
APRIL 9, 2019
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
_________
U.S. GOVERNMENT PUBLISHING OFFICE
37-094 PDF WASHINGTON : 2019
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
PETER A. DeFAZIO, Oregon, Chair
ELEANOR HOLMES NORTON, SAM GRAVES, Missouri
District of Columbia DON YOUNG, Alaska
EDDIE BERNICE JOHNSON, Texas ERIC A. ``RICK'' CRAWFORD,
ELIJAH E. CUMMINGS, Maryland Arkansas
RICK LARSEN, Washington BOB GIBBS, Ohio
GRACE F. NAPOLITANO, California DANIEL WEBSTER, Florida
DANIEL LIPINSKI, Illinois THOMAS MASSIE, Kentucky
STEVE COHEN, Tennessee MARK MEADOWS, North Carolina
ALBIO SIRES, New Jersey SCOTT PERRY, Pennsylvania
JOHN GARAMENDI, California RODNEY DAVIS, Illinois
HENRY C. ``HANK'' JOHNSON, Jr., ROB WOODALL, Georgia
Georgia JOHN KATKO, New York
ANDRE CARSON, Indiana BRIAN BABIN, Texas
DINA TITUS, Nevada GARRET GRAVES, Louisiana
SEAN PATRICK MALONEY, New York DAVID ROUZER, North Carolina
JARED HUFFMAN, California MIKE BOST, Illinois
JULIA BROWNLEY, California RANDY K. WEBER, Sr., Texas
FREDERICA S. WILSON, Florida DOUG LaMALFA, California
DONALD M. PAYNE, Jr., New Jersey BRUCE WESTERMAN, Arkansas
ALAN S. LOWENTHAL, California LLOYD SMUCKER, Pennsylvania
MARK DeSAULNIER, California PAUL MITCHELL, Michigan
STACEY E. PLASKETT, Virgin Islands BRIAN J. MAST, Florida
STEPHEN F. LYNCH, Massachusetts MIKE GALLAGHER, Wisconsin
SALUD O. CARBAJAL, California, Vice GARY J. PALMER, Alabama
Chair BRIAN K. FITZPATRICK, Pennsylvania
ANTHONY G. BROWN, Maryland JENNIFFER GONZALEZ-COLON,
ADRIANO ESPAILLAT, New York Puerto Rico
TOM MALINOWSKI, New Jersey TROY BALDERSON, Ohio
GREG STANTON, Arizona ROSS SPANO, Florida
DEBBIE MUCARSEL-POWELL, Florida PETE STAUBER, Minnesota
LIZZIE FLETCHER, Texas CAROL D. MILLER, West Virginia
COLIN Z. ALLRED, Texas GREG PENCE, Indiana
SHARICE DAVIDS, Kansas
ABBY FINKENAUER, Iowa
JESUS G. ``CHUY'' GARCIA, Illinois
ANTONIO DELGADO, New York
CHRIS PAPPAS, New Hampshire
ANGIE CRAIG, Minnesota
HARLEY ROUDA, California
------
Subcommittee on Economic Development, Public Buildings, and Emergency
Management
DINA TITUS, Nevada, Chair
DEBBIE MUCARSEL-POWELL, Florida MARK MEADOWS, North Carolina
SHARICE DAVIDS, Kansas GARY J. PALMER, Alabama
ELEANOR HOLMES NORTON, JENNIFFER GONZALEZ-COLON,
District of Columbia Puerto Rico
HENRY C. ``HANK'' JOHNSON, Jr., CAROL D. MILLER, West Virginia
Georgia GREG PENCE, Indiana
JOHN GARAMENDI, California SAM GRAVES, Missouri (Ex Officio)
ANTHONY G. BROWN, Maryland
LIZZIE FLETCHER, Texas, Vice Chair
PETER A. DeFAZIO, Oregon (Ex
Officio)
CONTENTS
Page
Summary of Subject Matter........................................ iv
STATEMENTS OF MEMBERS OF CONGRESS
Hon. Dina Titus, a Representative in Congress from the State of
Nevada, and Chair, Subcommittee on Economic Development, Public
Buildings, and Emergency Management:
Opening statement............................................ 1
Prepared statement........................................... 3
Hon. Mark Meadows, a Representative in Congress from the State of
North Carolina, and Ranking Member, Subcommittee on Economic
Development, Public Buildings, and Emergency Management:
Opening statement............................................ 4
Prepared statement........................................... 6
Hon. Peter A. DeFazio, a Representative in Congress from the
State of Oregon, and Chair, Committee on Transportation and
Infrastructure:
Opening statement............................................ 7
Prepared statement........................................... 8
WITNESSES
Panel 1
Hon. John C. Fleming, M.D., Assistant Secretary of Commerce for
Economic Development, Economic Development Administration, U.S.
Department of Commerce:
Oral statement............................................... 9
Prepared statement........................................... 10
Panel 2
Kevin Byrd, Executive Director, New River Valley Regional
Commission, on behalf of the National Association of
Development Organizations:
Oral statement............................................... 27
Prepared statement........................................... 29
Hon. John Messner, Vice Chairperson, District 1 Commissioner,
Gunnison County, Colorado, Board of Commissioners, on behalf of
the National Association of Counties:
Oral statement............................................... 32
Prepared statement........................................... 33
Mark Muro, Policy Director and Senior Fellow, Brookings
Institution:
Oral statement............................................... 36
Prepared statement........................................... 38
Rodrick T. Miller, Chief Executive Officer, Invest Puerto Rico,
on behalf of the International Economic Development Council:
Oral statement............................................... 47
Prepared statement........................................... 49
APPENDIX
Questions from Hon. Peter A. DeFazio for Hon. John C. Fleming,
M.D., Assistant Secretary of Commerce for Economic Development,
Economic Development Administration, U.S. Department of
Commerce....................................................... 57
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
April 4, 2019
SUMMARY OF SUBJECT MATTER
TO: Members, Committee on Transportation and
Infrastructure
FROM: Staff, Subcommittee on Economic Development, Public
Buildings, and Emergency Management
RE: Subcommittee Hearing on ``Building Prosperity:
EDA's Role in Economic Development and Recovery''
----------
The Subcommittee on Economic Development, Public Buildings,
and Emergency Management will meet on Tuesday, April 9, 2019,
at 2:00 p.m., in room 2253 of the Rayburn House Office Building
to hold a hearing titled, ``Building Prosperity: EDA's Role in
Economic Development and Recovery.''
The purpose of the hearing is to hear from stakeholders on
the importance of reauthorizing the Economic Development
Administration (EDA), its programs and activities supporting
economic growth in distressed communities, and the role EDA
plays in disaster recovery. The Subcommittee will hear
testimony from the Economic Development Administration, New
River Valley (VA) Regional Commission, Gunnison County (CO)
Commission, the Brookings Institution, and Invest Puerto Rico.
I. INTRODUCTION
The Subcommittee has jurisdiction over economic development
issues and federal agencies created to promote economic
development in communities suffering economic distress.
Specifically, the Subcommittee has jurisdiction over EDA (an
agency within the Department of Commerce). A Senate-confirmed
Assistant Secretary for Economic Development heads the EDA. The
United States Senate confirmed Dr. John Fleming, a former
Member of Congress from Louisiana's 4th congressional district,
to that position on March 7, 2019.
In its Fiscal Year (FY) 2020 budget request, the
Administration proposed to eliminate almost all funding for the
EDA as part of a 6-year agency closure plan. In each of the
past three budgets, the Administration has proposed elimination
of the EDA, although Congress has continued to provide
appropriations to fund EDA programs.
FY19 enacted FY20 proposed
EDA programs------$304 million----------------$30 million---------------
II. OVERVIEW OF THE PROGRAMS
The EDA was established in 1965 upon enactment of the
Public Works and Economic Development Act (P.L. 89-136) to
alleviate conditions of substantial and persistent unemployment
in economically distressed areas. The current mission of EDA is
``to lead the federal economic development agenda by promoting
innovation and competitiveness, preparing American regions for
growth and success in the worldwide economy.'' In particular,
EDA programs are intended to help local communities attract
private sector investment to maximize job creation primarily by
leveraging non-Federal investments. For example, EDA's public
works program often provides the remaining infrastructure
funding needed for a local community to attract a manufacturing
facility to its area. As a result, EDA's grants are used in
conjunction with private and local dollars to generate economic
growth and create jobs. In fact, EDA requires substantial local
match--oftentimes 50% or greater--for most grant recipients.
The EDA provides grants for projects through a variety of
programs, including planning, technical assistance, public
works, economic adjustment, trade adjustment assistance, and
research and evaluation. Projects funded by EDA are generally
located in areas exhibiting economic distress. In addition, all
public works and economic adjustment projects must be
consistent with an EDA-approved Comprehensive Economic
Development Strategy (CEDS).
Between FY2012 and FY2017, EDA invested nearly $1.6 billion
in 4,058 projects. Of that total, 789 projects, totaling $975.4
million, are expected to create and/or retain 277,163 jobs and
attract over $39 billion in private investment.\1\
Historically, about two-thirds of EDA funding has been awarded
to rural areas and one-third to urban areas.
---------------------------------------------------------------------------
\1\ EDA Performance Measurement and Program Evaluation, Website,
Accessed April 1, 2019, https://www.eda.gov/performance/.
---------------------------------------------------------------------------
EDA administers its programs through six regional offices
located in Atlanta, Austin, Chicago, Denver, Philadelphia, and
Seattle. The Atlantic Territories of Puerto Rico and the U.S.
Virgin Islands are administered through the Philadelphia
Regional Office. The Pacific Territories of American Samoa,
Guam, Marshall Islands, Micronesia, Republic of Palau, and the
Northern Mariana Islands are administered through the Seattle
Regional Office. A map of EDA regional offices is included as
Appendix 1.
1. KEY GRANT PROGRAMS
Planning grants: Planning grants support the design and
implementation of effective economic development policies and
plans by local organizations.
Public works: Public works grants provide for
infrastructure projects that foster the establishment or
expansion of industrial and commercial businesses in
communities experiencing high unemployment, underemployment,
low per-capita income, or out-migration.
Economic Adjustment: Economic adjustment investments
provide various types of assistance, including planning,
technical assistance, revolving loan funds and infrastructure
development, to help communities experiencing either a gradual
erosion of or a sudden dislocation of local industry caused by
natural disasters, international trade competition, or major
plant closings.
Trade Adjustment: Trade adjustment assistance provides
technical assistance, through a national network of 12 Trade
Adjustment Assistance Centers, to certify U.S. manufacturing
firms and industries economically injured as the result of
international trade competition.
Disaster Recovery: When funded for this purpose, EDA
facilitates delivery of Federal economic development assistance
to local governments for long-term community economic recovery
planning, reconstruction, redevelopment and resiliency after a
disaster.
2. EDA AUTHORIZATION HISTORY
The first authorization of EDA in 1965 expired in 1970.
From 1970 through 1980, EDA continued to operate without an
authorization, although Congress provided funding, including $6
billion for public works projects in 1976 and 1977. In 1980,
EDA's programs were reauthorized; however, that authorization
expired in 1982, and until 1998, EDA continued without an
authorization.
The Economic Development Administration and Appalachian
Regional Development Reform Act of 1998 (P.L. 105-393)
reauthorized EDA for a period of five years, and authorized
funding levels that progressively declined from an initial
amount of $398 million for fiscal year FY1999 to $335 million
in FY2003. Additionally, this reauthorization put into place a
number of management and administrative reforms, including
efforts to target the most distressed areas. The Economic
Development Administration Reauthorization Act of 2004 (P.L.
108-373) reauthorized EDA for a period of five years, through
FY 2008. Since that time, Congress has not reauthorized the
EDA.
3. STUDIES OF EDA PROGRAMS
In 2008, EDA contracted with Grant Thornton to study the
costs and economic impact of EDA's construction investments.
This study was similar in content to a study conducted by
Rutgers University in 1997. The Grant Thornton study surveyed
over 40 Federal programs and concluded that EDA investments in
rural areas have a significant impact on employment levels,
generating between 2.2 and 5.0 jobs per $10,000 in EDA funding,
at a cost per job of between $2,001 and $4,611. The study
further concluded that EDA's investment in business incubators
was worthwhile and generated significant impacts in communities
where the investment was made.\2\
---------------------------------------------------------------------------
\2\ Arena, P., Adams, J.A., Noyes, K., Rhody, S. & Noonan, M.
(2008). Construction Grants Program Impact Assessment Report: Volume 1
Report on Investigation and Results. Grant Thornton research report
with ASR Analytics
---------------------------------------------------------------------------
4. EDA DISASTER RESPONSE
The Bipartisan Budget Act of 2018 (P.L. 115-123)
appropriated $600 million in funding to the EDA for additional
Economic Adjustment Assistance Program activities. These
resources are designated for disaster relief and recovery
following Hurricanes Harvey, Irma, and Maria, as well as
wildfires and other calendar year 2017 disasters. Eligible
entities impacted by a federal-declared disaster occurring in
calendar year 2017 can apply for funding under a Notice of
Funding Opportunity issued on April 10, 2018.\3\
---------------------------------------------------------------------------
\3\ EDA-2018-Disaster: FY 2018 EDA Disaster Supplemental, Website,
Accessed April 1, 2019, https://www.grants.gov/web/grants/view-
opportunity.html?oppId=302953.
---------------------------------------------------------------------------
Funding was distributed across the six regional offices
based on a multi-factor calculation including impact and
distress. To date, $153.6 million of the $587 million made
available has been obligated with more awards to be announced
in the near future. EDA has also reserved two percent of
appropriated resources to cover salaries and expenses related
to program administration and oversight.
Region FY 18 Disaster Funding Allocation
Atlanta Regional Office--------------------------$147,362,000---------------------------------------------------
Austin Regional Office $129,119,000
Chicago Regional Office $8,005,000
Denver Regional Office $17,435,000
Philadelphia Regional Office $191,269,000
Seattle Regional Office $93,810,000
WITNESS LIST
PANEL I
The Honorable (Dr.) John Fleming, Assistant
Secretary of Commerce for Economic Development, U.S. Department
of Commerce
PANEL II
Mr. Kevin Byrd, Executive Director, New River
Valley Regional Commission, On Behalf of the National
Association of Development Organizations
The Honorable John Messner, Vice-Chairperson,
District 1 Commissioner, Gunnison County, Colorado Board of
Commissioners, On Behalf of the National Association of
Counties
Mr. Mark Muro, Policy Director and Senior Fellow,
Brookings Institution
Mr. Rodrick T. Miller, Chief Executive Officer,
Invest Puerto Rico, On Behalf of the International Economic
Development Council
Appendix 1: EDA Regional Offices
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Economic Development Administration
BUILDING PROSPERITY: EDA'S ROLE IN ECONOMIC DEVELOPMENT AND RECOVERY
----------
TUESDAY, APRIL 9, 2019
House of Representatives,
Subcommittee on Economic Development,
Public Buildings, and Emergency Management,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 3:19 p.m., in
room 2253, Rayburn House Office Building, Hon. Dina Titus
(Chairwoman of the subcommittee) presiding.
Ms. Titus. The subcommittee will come to order.
First, let me thank you for your patience. I know we were
supposed to have started about an hour ago, and voting and
other things came in the way. So thank you for bearing with us
and waiting because we really do want to hear your testimony.
I will start with an opening statement, and then we will
recognize the ranking member, and then the chairman of the full
committee is with us here today.
The hearing today is entitled ``Building Prosperity: EDA's
Role in Economic Development and Recovery.'' I want to extend a
warm welcome to our ranking member, even though he was a little
late, Mr. Meadows, and the new members of the subcommittee. I
am very optimistic about working with Ranking Member Meadows
and Members on both sides of the aisle on the many issues that
we have before this subcommittee.
Additionally, I want to acknowledge Dr. John Fleming,
Assistant Secretary of Commerce for Economic Development.
Dr. Fleming, congratulations on your recent confirmation,
and welcome to the EDA [Economic Development Administration]
and back to the House. I am glad to have you on board. We are
looking forward to working with you.
Today's hearing will take a closer look into kind of a
little known and underrecognized and appreciated Federal agency
that delivers one of the greatest returns on investment to the
American taxpayer, and that is the Economic Development
Administration. Our witnesses today are going to highlight some
local examples of how EDA's grant programs have facilitated
large-scale economic revitalization and transition in
communities that have been in distress. Further, we will
explore EDA's important role in disaster recovery and look
ahead to how EDA can respond to emerging technological changes
in our country's workforce.
Created in 1965 by the Public Works and Economic
Development Act, EDA has for the last 54 years been the only
Federal agency specifically dedicated to local and regional
economic development. It serves as a clearinghouse for economic
development in the Federal Government and plays a critical role
in coordinating Federal economic development programs.
With a wide variety of grant programs, including planning,
public works, trade assistance, economic adjustment and
innovation, EDA provides needed funding to economically
distressed communities to strengthen their local business
environment, ensure job creation, and fuel sustainable economic
growth.
In both its application process and the annual reports to
Congress, EDA prioritizes job retention and creation, as well
as private-sector leveraging, to ensure the greatest return on
investment to the American taxpayer.
Despite a comparatively small, $300 million annual budget,
EDA has helped create and retain more than 275,000 private-
sector jobs and attracted more than $39 billion in private
investment in the last 6 years alone. I want to repeat that. A
$300 million investment has resulted in $39 billion from the
private sector.
These grants, which are awarded only to communities facing
significant economic distress, are a lifeline, and they
oftentimes are the only source of economic development funding
that is available. EDA grants provide additional capacity,
technical and strategic expertise, and targeted infrastructure
investments that are guaranteed to preserve or attract new
jobs.
EDA has been front and center in responding to massive
economic changes brought on by industry failure, trade
competition, and persistent unemployment.
With funds specifically dedicated to help coal communities,
for example, transition their economies, EDA has helped to
bring new hope to communities devastated by the loss of mines
that has provided generations of residents with stable and
well-paying jobs that are no longer there.
Through its Trade Adjustment Assistance for Firms program,
EDA works with U.S. manufacturing, production, and service
firms to help modernize work practices or business models to
stay competitive in global markets.
Public works grants help communities make targeted
infrastructure investments like sewer or water access, rail
spurs, and roadways to prepare sites for new industry or
expanded industry operations.
In addition to its foundational economic development
mission, EDA also plays an integral role in helping communities
recover from disasters. Fires, floods, hurricanes, and winter
storms are enormously disruptive events that continue to have
an impact well after the storm has passed and the debris has
been cleared.
Congress, realizing the EDA's record of success in spurring
revitalization and economic recovery, has routinely provided
sizeable appropriations to EDA for disaster recovery. Most
recently, Congress appropriated $600 million in disaster
recovery funding in the 2018 disaster supplemental to respond
to Hurricanes Harvey, Irma, and Maria, as well as for wildfires
and other disasters in 2017.
These resources provide some of the only critical economic
development disaster funding that is available. After the first
responders have left, EDA is still there.
So if you look at their website, you can see countless
stories about EDA's success. Every disaster is different, but
they are there to bring prosperity and recovery to communities
hardest hit. Their disaster role is central to their new
mission that is continually being challenged.
I hope after today's hearing you will all agree with me in
seeing the vitality and importance of the EDA, as it promotes
our country's efforts to have prosperity.
I intend to advance an EDA reauthorization bill, and I hope
that you will help me in doing that in a way that will make the
program work even better. So I look forward to the discussion.
And I would now recognize the ranking member, Mr. Meadows.
[Ms. Titus's prepared statement follows:]
Prepared Statement of Hon. Dina Titus, a Representative in Congress
from the State of Nevada, and Chair, Subcommittee on Economic
Development, Public Buildings, and Emergency Management
Good afternoon. I want to welcome everyone to the first hearing of
the Economic Development, Public Buildings, and Emergency Management
Subcommittee in the 116th Congress. This hearing is entitled:
``Building Prosperity: EDA's Role in Economic Development and
Recovery''.
I want to recognize the ranking member, Mark Meadows, and the
welcome all the new members of the subcommittee. I look forward to
working with Ranking Member Meadows and members on both sides of the
aisle on the many issues we have before this subcommittee.
Additionally, I want to welcome back Dr. John Fleming, Assistant
Secretary of Commerce for Economic Development. Dr. Fleming served in
this body and I want to congratulate you on your recent confirmation
and welcome to the EDA.
Today's hearing will take a closer look at a federal agency that
delivers one of the greatest returns on investment to the American
taxpayer: the Economic Development Administration.
Our witnesses today will highlight some local examples of how EDA's
grant programs have facilitated large-scale economic revitalization and
transition in communities that have been in distress. Further, we will
explore EDA's important role in disaster recovery and look ahead to how
EDA can respond to emerging changes in our country's workforce.
Created in 1965 by the Public Works and Economic Development Act,
the EDA has, for the last 54 years, been the only federal agency
specifically dedicated to local and regional economic development.
The EDA serves as a clearinghouse for economic development in the
federal government and plays a critical role in coordinating federal
economic development programs.
With a wide variety of grant programs including planning, public
works, trade assistance, economic adjustment, and innovation, EDA
provides needed funding to economically distressed communities to
strengthen their local business environment, ensure job creation, and
fuel sustainable economic growth.
In both its application process and annual reports to Congress, EDA
prioritizes job retention and creation as well as private sector
leveraging to ensure the greatest return on investment to the American
taxpayer.
Despite a comparatively small $300 million annual budget, EDA has
helped create or retain more than 275,000 private sector jobs and
attract more than $39 billion in private investment in the past six
years alone.
These grants, which are awarded only to communities facing
significant economic distress, are a lifeline and oftentimes the only
source of economic development funding available. EDA grants provide
additional capacity, technical and strategic expertise, and targeted
infrastructure investments that are guaranteed to preserve or attract
new jobs.
EDA has been front and center in responding to massive economic
changes brought on by industry failure, trade competition, and
persistent unemployment.
Through its trade adjustment assistance for firms program, EDA
works with U.S. manufacturing, production, and service firms to help
modernize work practices or business models to stay competitive in
global markets.
Public Works grants help communities make targeted infrastructure
investments like sewer or water access, rail spurs, and roadways to
prepare sites for new industry or expanded industry operations.
In addition to its foundational economic development mission, EDA
plays an integral role in helping communities recover from disasters.
Fires, floods, hurricanes, and winter storms are enormously disruptive
events that continue to have an impact well after the storm has passed
and debris has been cleared.
Congress, realizing the EDA's record of success in spurring
revitalization and economic recovery, has routinely provided sizable
appropriations to EDA for disaster recovery. Most recently, Congress
appropriated $600 million in disaster recovery funding in the 2018
Disaster Supplemental to respond to Hurricanes Harvey, Irma, and Maria
as well as wildfires and other federally declared disasters in 2017.
These resources provide some of the only economic development
focused disaster assistance and are crucial to helping communities
return to normal after a major event.
After the first responders have left, EDA stays on the ground to
help put together the pieces of an economy fractured by natural or
other disasters. It helps create economic development plans, provides
revolving loans, and fortifies infrastructure to ensure that companies
wiped out by disaster return to their communities and are resilient to
future disaster events.
Each disaster is different and the needs following disasters are
equally diverse. Fortunately, EDA funds are flexible enough within
their mission driven purpose to apply to the unique circumstances each
community has faced.
Whether it is protecting a manufacturing facility from flooding,
creating a small business development center in a fire-ravaged town, or
rebuilding a boat manufacturer following a tornado, EDA grants have
brought prosperity and recovery to communities hardest hit by natural
disasters.
The disaster recovery role, while funded through sporadic
appropriations, is just as central to the EDA's mission as its
continually-appropriated programs.
I hope that after today's hearing, you will join me in seeing the
vitality and importance of the Economic Development Administration in
our country's efforts to promote prosperity.
Despite its sterling record of accomplishment, the EDA has been
operating for the last eleven years on expired authorization. Even
worse, this Administration has proposed in each of its last three
budgets to eliminate the EDA altogether.
Congress' failure to reauthorize the EDA means we have missed the
opportunity to strengthen programs, increase funding to better meet
needs, and expand EDA's mission to respond to a changing economy.
This Congress, I intend to advance an EDA reauthorization that will
provide certainty to the communities we are elected to serve that the
federal government will remain a committed partner in the pursuit of
economic growth.
I look forward to furthering that discussion in today's hearing and
learning from our witnesses. I now recognize the ranking member, Mr.
Meadows, for an opening statement.
Mr. Meadows. Thank you, Madam Chair, and congratulations on
this new position. And I want to just start out by saying thank
you for being very inclusive in not only our agenda as we have
laid it out, but it has been so refreshing to work with you and
your staff in a way that I would love to say is my expertise,
but it is actually my staff director's expertise. But as we
work together, I look forward to advancing this.
And since you mentioned it, in terms of a reauthorization,
I know sometimes Presidential budgets set out a particular
direction, and yet Congress certainly has its own agenda. And
so in doing that, we are not trying to put you between what may
be in the President's budget and where we are in Congress.
But I would agree with the chairwoman that we do need to
look at reauthorization with reforms and how we can make sure
that the American taxpayers' dollars actually get and do the
best that we can. And so we look forward to working with you in
a bipartisan manner and advancing that.
I would like to welcome my good friend, Dr. Fleming. It is
interesting, on this particular subject, I have probably
learned more about it from him than I knew, and the passion
that he had, not just in serving in this capacity, but really
the passion for communities that can best utilize the
assistance of this particular program.
So, welcome. Having been sworn in just a month ago, I know
some things--well, there are two ways things happen in
Washington, DC--slow and never. And so for you, it was just
slow. And we are glad that you are here, and certainly look
forward to working with you and this committee as we look to
examine the role of the EDA in the Federal economic development
programs.
Today there are dozens of economic development programs
scattered throughout the Federal Government. And for me, one of
the things I would love to do--and I am sure that the chairman
of the full committee would agree--as we start to consolidate
and reform, let's make sure that we are most effective with
that. And this is one of those programs where I think that we
can put really the greatest emphasis on the target and how we
actually help communities, both urban and rural communities,
with Federal assistance.
So as we look to examine that, I look forward to hearing
your testimony, not just from this panel, but from the second
panel. But ensuring that Federal funds are strategically
targeted--and I want to stress strategically targeted--and
effectively used is not just critical for the taxpayers, but
for those distressed communities as well.
One of the big frustrations that we have found is that when
Chair Titus and I find that bipartisan sweet spot where we vote
for something and actually appropriate it, and then to have
those Federal dollars sit there and not be deployed, or not to
be deployed effectively, it is just extremely frustrating.
And so, as we look at that, I think that we can do a whole
lot. Just left the House floor where I was talking with someone
from the other side of the aisle on other areas that we can
streamline and work with the chairwoman on that particular
issue as well.
So as we look at this in conducting proper oversight, we
are going to count on you to help us with that oversight and
making sure that we are effective with those programs.
Also, what I would love to see is a matrix, where we can
look at that matrix and say, we are being effective here, here
is how we know. You don't know whether you are getting an ``A''
unless you have something to measure it by.
And so as we work together to set that up, I am hopeful
that we can have, really, a dashboard that gives you the way to
say, all right, here is how we know we are doing a good job.
What it does is that becomes our ability to actually share it
with this administration and future administrations as we work
to try to show how we are helping communities.
And the chairwoman actually mentioned about the role in
disaster recovery, but it is not just there. EDA serves as a
coordinating agency on behalf of the Department of Commerce for
FEMA's economic recovery support function. And when you are
doing that, what we need is one set of questions that actually
coordinate where you don't have communities having to fill out
questionnaires and answer different questions.
We have had two hurricanes that have hit the eastern part
of our State, and the big frustration I have had is I will get
calls from local city council people that have filled out
paperwork, only to find out that they have got to fill it out
again and again and again. And I know the chairwoman has worked
with us in advancing legislation already that hopefully will
start to streamline that.
As was mentioned last year, the EDA received $600 million
in supplemental funding for the 2017 disasters, and while there
is often a focus, rightfully so, on ensuring disaster survivors
can rebuild their homes and communities, a critical part of
recovery is also bringing back those jobs and making sure that
the communities have those jobs and the infrastructure there.
Because sometimes manufacturing and other businesses, once a
disaster hits, they just leave, instead of coming back to the
very community where they long served a vibrant part of those
communities.
So the effective management of those funds and coordination
is really what I look forward to. I look forward to hearing
from our witnesses.
And I yield back the balance of my time.
[Mr. Meadows's prepared statement follows:]
Prepared Statement of Hon. Mark Meadows, a Representative in Congress
from the State of North Carolina, and Ranking Member, Subcommittee on
Economic Development, Public Buildings, and Emergency Management
Today is our first subcommittee hearing this Congress. I look
forward to working with the chairwoman on critical issues within our
subcommittee and continuing the tradition of this subcommittee's
ability to work in a bipartisan fashion.
I also want to thank my good friend and former colleague Dr.
Fleming and the other witnesses here with us today. Dr. Fleming was
sworn in as Assistant Secretary of Commerce for Economic Development
just last month. I look forward to working with him as we examine the
role of the EDA and federal economic development programs.
Today, there are dozens of economic development programs scattered
across the federal government. It is important as we examine EDA's role
to also evaluate any overlaps and ensure there is coordination,
accountability, and transparency.
Ensuring that federal funds are strategically targeted and
effectively used is critical not just for the federal taxpayer but for
the distressed communities for which these programs were created. As we
conduct oversight and consider potential legislation, we should look at
what reforms may be needed to improve and streamline these programs.
And, we should identify the best metrics to evaluate the effectiveness
of these programs.
EDA also has a role in disaster recovery. EDA serves as the
Coordinating Agency on behalf of the Department of Commerce for FEMA's
Economic Recovery Support Function. In that function, EDA not only has
the responsibility to manage its own activities and funds, but to
ensure coordination with other departments and agencies with related
programs.
Last year, EDA received $600 million in supplemental funding to
help in the economic recovery from the 2017 disasters. While there is
often focus--and rightfully so--on ensuring disaster survivors can
rebuild their homes and communities--a critical part of recovery is
bringing back jobs and businesses. Effective management of these funds
and coordination across agencies is critical to helping communities
recover from disasters.
I look forward to hearing from our witnesses today on these and
other issues.
Ms. Titus. Well, thank you, and thank the ranking member.
And we would now like to recognize Mr. DeFazio, who is the
chair of the Transportation and Infrastructure Committee.
Mr. DeFazio. Madam Chair [handing Congresswoman Titus a
box].
Ms. Titus. Oh, thank you. How nice. It is not even my
birthday. Wow.
Mr. DeFazio. This would be her first official--this is the
first time the subcommittee's met with you as chair?
Ms. Titus. Yes, it is.
Mr. DeFazio. It is. OK. That is what I thought. It is a
little commemorative gavel.
Ms. Titus. How nice. Well, thank you, Mr. Chairman.
Mr. DeFazio. Yes. I mean, this one is more effective, but
yeah.
Ms. Titus. This is great. Thank you.
Mr. DeFazio. I am pleased to be here to support the EDA.
You know, there are certainly many programs of the Federal
Government that impact or try to incent economic development
from the private sector. But EDA is the only Government agency
focused solely on economic development.
And they have a key role. We have already heard about--
Representative Meadows talks about disasters. There are other--
foreign competition, communities devastated in that way,
factory closures, military base closings, natural resource
depletion, prolonged unemployment, natural disaster.
It is really a critical agency. And I will use one example
because I like to localize things. There is a city called Coos
Bay in my district. It has been, because of cutbacks in the
logging industry and the loss of paper mills to China, just
north of town, and some other things, it has been economically
devastated.
And we will have a curtailed fishing season this year
because of problems originating in California. We are just far
enough north that we get restricted on certain kinds of fish
when they have problems down there.
So it is a community that wants to do better, wants to keep
their kids home, but most kids end up moving somewhere else
after they graduate school, because there is not a lot of
opportunity.
And in one particular area there is a looming, as there is
in many places in America, but even worse there, a looming
crisis in healthcare. We have a great community college, and
they have a very small nursing program. And people will apply 4
years in a row to try and get in the program--who are totally
qualified--because the program is so limited by local
circumstances.
So back in 2013 they began a very ambitious program to
build a new health technology center and dramatically increase
the size of the nursing program, something that they need,
something my State needs, something the country needs. And
they, in a depressed area, raised an impressive amount of
money, but they are coming up a little short. And it was a lot
of questions about, OK, how can we get more money, how can we
move forward? And they got a $3 million EDA grant, and the
project is going forward.
So that is just one very concrete example of the benefits
of this program leveraging charitable donations in a depressed
community to make a very needed investment and create jobs.
Generally, EDA creates around three to four jobs per
$10,000 in funding. That is a pretty darn good investment and
better than a lot of other ways that we spend money, I will
tell you. So I look forward to the reauthorization process and
working with the chair and the ranking member.
With that, I yield back the balance of my time.
[Mr. DeFazio's prepared statement follows:]
Prepared Statement of Hon. Peter A. DeFazio, a Representative in
Congress from the State of Oregon, and Chair, Committee on
Transportation and Infrastructure
Thank you Chairwoman Titus. This is the first time in several years
that this committee has met to look specifically at the Economic
Development Administration (EDA), and I believe it is long overdue. EDA
is the only agency in the federal government focused exclusively on
economic development, but it is often unheralded for the important work
that it does.
Operating in communities devastated by foreign competition, factory
closure, military base closure, natural resource depletion, prolonged
unemployment, or natural disaster, the EDA is truly an economic
lifeline. This is particularly true for the city of Coos Bay in my
district.
The loss of the logging industry on federal forestland and
declining fishery stocks have plagued large swaths of my southwestern
Oregon district. Once thriving towns are struggling to hold on, and
young people who can get out are leaving their childhood homes. Aging
populations with few options are stuck in place, largely isolated from
the urban centers in the northern Willamette Valley.
Consequently, an emerging crisis on the southern Oregon coast is a
nursing and doctor shortage. Nearly one in three health care workers in
Coos and adjoining Curry counties are over the age of 55, and there are
limited training programs in the area.
Southwest Oregon Community College in Coos Bay has a nursing
program, but its growth and modernization has been limited by
antiquated and undersized facilities lacking modern lab space and room
to grow.
In 2013, the college began fundraising and planning for a new
science and health technology center that will allow it to increase its
enrollment by nearly 50% immediately and eventually nearly triple the
program size over time.
The college spent several years fundraising and received more
private donations than anyone expected possible in such a small and
economically distressed community. However, despite their best efforts,
the college still did not have enough funding to build its new health
and technology center. Just as administrators were preparing to give
up, the EDA awarded the college a $3 million grant to get the project
over the finish line.
The EDA grant provided the absolute last dollars needed to fund the
project that had been fundraising for six years. Without this funding,
the college was unsure if or how the project would move forward and the
residents of Coos County would suffer the consequences.
This story is exemplary of the work that EDA does. They come into
communities that are barely hanging on and provide a lifeline to help
turn the local economy around. EDA provides hope where there has
otherwise been little cause for optimism. Much of EDA's work occurs in
rural areas. In fact, historically, about two-thirds of EDA funding has
been awarded to rural areas.
For this reason, I find it perplexing that the Trump Administration
proposed in each of its last three budgets to eliminate the EDA. It is
unfathomable to me that the President would want to eliminate the only
federal agency that is specifically focused on local and regional
economic development. Moreover, EDA grants and loans produce a great
return on investment. EDA investments generate between 2.2 and 5 jobs
per $10,000 in funding.
Cutting the EDA is counterproductive and disproportionately hurts
private sector job growth and small, rural communities. Instead, we
should be working to reauthorize and provide more funding for the
agency.
That is why I look forward to working with Chair Titus and my
colleagues across the aisle on a comprehensive reauthorization of the
EDA.
I thank our witnesses for taking time out of their busy schedules
to appear before our committee to discuss this often over looked, but
promising agency. I yield back the balance of my time.
Ms. Titus. Thank you very much, Mr. Chairman. Thank you for
your comments, and thank you very much for the gavel.
At this time, I would like to welcome our first witness for
this panel, the Honorable Dr. John Fleming, who is Assistant
Secretary of Commerce for Economic Development.
We want to thank you for being here today. We look forward
to hearing from you.
Without objection, our witness' full statement will be
included in the record.
Since your written testimony has been made a part of the
record, the subcommittee requests that you limit your oral
testimony to 5 minutes, and we look forward to hearing from
you. You may proceed.
TESTIMONY OF HON. JOHN C. FLEMING, M.D., ASSISTANT SECRETARY OF
COMMERCE FOR ECONOMIC DEVELOPMENT, ECONOMIC DEVELOPMENT
ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE
Dr. Fleming. Well, thank you, Madam Chairwoman, and thank
you so much for inviting me here today, and certainly the
ranking member, my good friend, Mark Meadows, and Chairman
DeFazio.
And, in fact, it is good to be here with my current
friends, but my former colleagues. And as I was telling someone
a little earlier, it is very nostalgic. I spent my last 2 years
here in this very building, and many fond memories of those
days. And so it is just great to be able to be back here once
again.
Chairwoman Titus, Ranking Member Meadows, and members of
the subcommittee, it is a pleasure and a privilege to appear
before you today to testify on behalf of the Economic
Development Administration, which is in the Department of
Commerce. EDA welcomes this hearing as an opportunity to
discuss the role of the Department and the Federal Government
in supporting economic development in economically distressed
areas of this country.
President Trump has made restoring economic prosperity to
all parts of this great Nation a priority, and under his
direction, we have seen manufacturing jobs return and
employment increase to levels not seen in decades.
A strong economy is critical to helping communities hit by
natural disasters get back on their feet, and the President's
policies on trade, tax reform, and regulatory streamlining are
helpful and are helping to ensure that the economic outlook
continues to improve.
As I embrace the role of Assistant Secretary, I am proud of
the agency's reputation of fostering sustainable economic
growth, cultivating job creation, and encouraging innovative
solutions that improve local and regional economic development
outcomes.
EDA facilitates long-term growth strategies for communities
and businesses through collaboration, providing a framework for
discussion among all stakeholders. This collaboration helps
regions assess their competitive strengths, design a strategy
to bring together the technology, the human capital, and the
financial capital it will take to compete and provide seed
money for turning a region's unique strategy into reality.
EDA's role in disaster recovery is to facilitate the timely
and effective delivery of Federal economic development,
assistance to support long-term community economic recovery
planning, and project implementation, redevelopment, and
resiliency.
In fiscal year 2018, EDA made $587 million available to
eligible grantees, communities where a Presidential declaration
was issued due to natural disasters in 2017.
One of the administration's key areas of focus that EDA
helps support are Opportunity Zones, which were created as part
of the Tax Cuts and Jobs Act. Opportunity Zones are a powerful
vehicle for bringing economic growth and development creation
to the American communities that need them the most.
Recognizing the importance of this powerful new economic
development tool, EDA was quick to act and made it as easy as
possible for applicants within qualified Opportunity Zones to
apply for EDA funding.
As a result, EDA has already seen communities across the
country utilize the eligibility category when applying for EDA
grants. Since fiscal year 2018, EDA invested close to $7.3
million in 16 projects in Opportunity Zones to help communities
and regions build the capacity for economic development.
One of EDA's key investment priorities under this
administration is projects that support the planning and
implementation of infrastructure for skills training and
related facilities that address the hiring needs of the
business community, particularly in the manufacturing sector.
This focus leads to investments in job training facilities and
innovation centers in areas experiencing rapid economic
transition in their economies, such as coal-impacted
communities.
Finally, I want to highlight EDA's Regional Innovation
Strategies program. This program helps build regional capacity
to translate ideas and inventions into products, services, and
companies, as well as jobs, through increased access to capital
and entrepreneurial support, ultimately increasing a region's
economic competitiveness.
To date, RIS has awarded $78 million in Federal funds and
attracted an additional $89 million in local matching funds
across 180 projects in 5 grant competitions.
Members of the subcommittee, thank you for the opportunity
to address EDA's efforts to enhance the global competitiveness
of America's regions. I look forward to answering any questions
you may have today.
[Dr. Fleming's prepared statement follows:]
Prepared Statement of Hon. John C. Fleming, M.D., Assistant Secretary
of Commerce for Economic Development, Economic Development
Administration, U.S. Department of Commerce
Chairwoman Titus, Ranking Member Meadows, and members of the
Subcommittee, it is a pleasure and a privilege to appear before you
today to testify on behalf of the Economic Development Administration
(EDA) in the Department of Commerce. EDA welcomes this hearing as an
opportunity to discuss the role of the Department and the Federal
Government in supporting economic development in economically
distressed areas of this country.
President Trump has made restoring economic prosperity to all parts
of this great Nation a priority, and under his direction we have seen
manufacturing jobs return and employment increase to levels not seen in
decades. A strong economy is critical to helping communities hit by
natural disasters get back on their feet, and the President's policies
on trade, tax reform, and regulatory streamlining are helping to ensure
that economic outlook continues to improve. However, even with a strong
economy the Federal budget is not unlimited, and every administration
is faced with difficult decisions about how to address the numerous
spending demands presented each year. To present a responsible budget
that addresses the highest priorities, the President has recommended
the elimination of numerous programs and a reduction in funding for
others. As you all know, one of the programs recommended for
elimination is the EDA, and I am confident that the Administration can
continue to provide necessary Federal support for communities through
other federal agencies and in conjunction with State agencies.
However, EDA is presently operating under funding provided by
Congress for the remainder of this fiscal year. As I embrace the role
of Assistant Secretary, I am proud of the agency's reputation of
fostering sustainable economic growth, cultivating job creation and
encouraging innovative solutions that improve local and regional
economic development outcomes. My focus as Assistant Secretary will be
the continued fostering of economic growth by supporting job creation
efforts, harnessing innovation and increasing capital investments in
economically distressed areas, and preparing the agency to wind down
operations and transition of its authorities within the Department of
Commerce when the President's budget is approved.
eda's response to trends and priorities
EDA has been an integral part of the Administration's efforts to
implement a new national innovation policy. We facilitate long-term
growth strategies for communities and businesses through collaboration,
providing a framework for discussion among all stakeholders. This
collaboration will help regions assess their competitive strengths,
design a strategy to bring together the technology, the human capital,
and the financial capital it will take to compete, and to provide seed
money for turning a region's unique strategy into reality. To highlight
this work, the following program areas are our focus:
Disaster Recovery
EDA's role in disaster recovery is to facilitate the timely and
effective delivery of Federal economic development assistance to
support long-term community economic recovery planning and project
implementation, redevelopment and resiliency. EDA coordinates regional
disaster recovery efforts in partnership with an extensive network of
391 Economic Development Districts (EDDs), 52 Tribal Partnership
Planning organizations, University Centers, institutions of higher
education and other partners in designated impact areas. In FY 2018,
EDA made $587 million available to eligible grantees in communities
where a Presidential declaration of a major disaster was issued under
the Stafford Act as a result of Hurricanes Harvey, Irma, and Maria,
wildfires and other natural disasters in 2017. Towards that end, EDA
has awarded over 71 grants totaling $162.8 million to communities
across the country that have been impacted by natural disasters. EDA
continues to expeditiously evaluate proposals of qualifying
communities.
Building off its key integration role, EDA, on behalf of the
Department, also plays a crucial role as the designated Coordinating
Agency of the Economic Recovery Support Function (ERSF) under the
Federal Government's Natural Disaster Recovery Framework. In this
capacity, EDA provides leadership and coordination for primary and
support agencies, all of which share a role in the provision of grants,
loans, training and other forms of assistance to support economic
recovery efforts in disaster-impacted communities and regions.
Opportunity Zones
One of the Administration's key areas of focus that EDA helps
support are Opportunity Zones, which were created as part of the Tax
Cuts and Jobs Act. The Opportunity Zone incentive is designed to
support new and small businesses, the development of blighted
properties, investment in key local infrastructure projects, financing
for facility construction or refurbishment, and a number of other
activities. Opportunity Zones are a powerful vehicle for bringing
economic growth and job creation to the American communities that need
them the most. Secretary of the Treasury Steven T. Mnuchin has stated
that it is anticipated that $100 billion in private capital will be
dedicated towards creating jobs and economic development in Opportunity
Zones.
Recognizing the importance of this powerful new economic
development tool, EDA was quick to act and made it as easy as possible
for applicants within qualified Opportunity Zones to apply for EDA
funding. As a result, EDA has already seen communities across the
country utilize this eligibility category when applying for EDA grants.
EDA's grants serve a critical function in Opportunity Zones, ensuring
that communities have plans in place to direct investments
strategically and facilitating the conditions that lead to economic
success by building the basic infrastructure (e.g., sewer, water, road,
broadband) that must be present before a company locates new jobs in
the community. Since FY 2018, EDA invested close to $7.3 million in 16
projects in Opportunity Zones to help communities and regions build the
capacity for economic development. These included $794,420 in three
projects that, according to recipient estimates, are expected to create
400 jobs and attract $19.6 million in private investment.
Advanced Manufacturing and Workforce Development
One of EDA's key investment priorities under this Administration is
projects that support the planning and implementation of infrastructure
for skills-training and related facilities that address the hiring
needs of the business community--particularly in the manufacturing
sector. This focus leads to investments in job-training facilities and
innovations centers, particularly in areas experiencing rapid economic
transition in their economies, such as coal-impacted communities. EDA
also is focusing attention on emerging areas such as space commerce by
building the basic infrastructure and skills-base that these industries
need to thrive.
Regional Innovation Strategies
Finally, understanding that innovation is the backbone of our
economy and that all citizens should be empowered to pursue the dream
of entrepreneurship and be enabled to carve their own paths to
prosperity, I want to end by mentioning EDA's Regional Innovation
Strategies (RIS) program. This program allows EDA to award funds to a
broad range of communities and entities to develop and strengthen high-
growth, innovation-based regional economies. The program helps build
regional capacity to translate ideas and inventions into products,
services, companies, and jobs, through increased access to capital and
entrepreneurial support, ultimately increasing regions' economic
competitiveness. To date, RIS has awarded $78 million in Federal funds
and attracted an additional $89 million in local matching funds across
180 projects in five grant competitions. As of March 2018, RIS projects
have created or retained more than 8,200 jobs and attracted more than
$1 billion in follow-on startup capital.
conclusion
Members of the Subcommittee, thank you for the opportunity to
address EDA's efforts to enhance the global competitiveness of
America's regions. I am proud of the agency's long history and its
critical role in supporting communities needing to make long-term
investments following natural disasters. I look forward to answering
any questions you may have.
Ms. Titus. Well, thank you, Mr. Secretary.
We will now move to questions from the Members. Each Member
will be recognized for 5 minutes to ask the Secretary
questions, and I will begin by recognizing myself.
We might as well just get right to it, Dr. Fleming. In your
previous service as a Member of Congress, you voted to
eliminate the EDA. Furthermore, the President, though, as you
mentioned, is encouraging development, he has proposed
eliminating the agency in his 2020 budget.
I wonder if your opinion about the agency has changed, why
has it changed, and what assurances can you give us that you
really are making this a priority.
Dr. Fleming. Madam Chairwoman, thank you for that question.
You are not the first to ask that question, by the way.
Ms. Titus. I can imagine.
Dr. Fleming. Certainly, in my confirmation hearings, I got
that question as well.
I actually voted twice against the EDA, not because I had
certainly anything against EDA, but I was sent by my
constituents to Washington to cut spending, with a concern
about a deficit, which, as you know, still has not come under
control.
I do support the President's priorities, I support his
budget, and that does include the elimination of EDA.
Having said that, however, I have become a huge supporter
in terms of the work done and accomplished, a fan, in fact, of
the many good things that EDA has done since 1965 and what it
continues to do in terms of being, I think it has already been
said today, the only agency that is committed to local economic
development.
And what is really so effective about it is the return on
investment, the fact that for every Federal dollar spent, we
get $15 of private investment in turn.
So for that reason, as I say, I have become very
enthusiastic. And in answer to your question, I am fully
committed to supporting all the work and the mission of EDA as
long as it remains in existence.
Ms. Titus. Have you shared that with the President?
Dr. Fleming. Madam Chairwoman, I have not had a
conversation with the President on this or anything else, but I
do appreciate the suggestion.
Ms. Titus. Thank you.
I also want to ask you about Opportunity Zones. You said in
the testimony that EDA has made it as easy as possible for
applicants with qualified Opportunity Zones to apply for EDA
funding, this is a big part of the tax bill. You describe it as
an eligibility category. Well, can you tell us under what
authority the EDA has to include this as an eligibility
category?
Dr. Fleming. Sure.
Ms. Titus. It is not that they would be excluded, but I
want to make sure they are not getting special treatment,
because in the statute, as originally written, Opportunity
Zones are not considered part of eligibility.
Dr. Fleming. Yes, that is correct, Madam Chairwoman.
First of all, we have basically three areas that we are
able to consider eligible. One is areas of significant or
substantial economic distress, communities that are in that
category.
The other is where unemployment is quite high. And we have
our own internal criteria for that, which we can get into at
some point if you like.
But then there is a third, is a special category, which
would include, for instance, Tribal communities that may be
under severe distress, and certainly disaster recovery, which
has already been mentioned, $600 million.
But we have been able to include Opportunity Zones, over, I
think, 8,700 of them now that have been declared, as also
eligible. Now, that does not mean that that is the lone
criteria, because in some cases it may not be competitive with
the distress in other areas. However, a census tract that is
identified as a qualified Opportunity Zone is eligible for
application for economic assistance.
Ms. Titus. I think that is fine. I think they should be
eligible. But I don't think they should be their own category
and have preferential treatment, because if you look at some of
those zones--I know in Nevada, some meet the need criteria,
others don't.
Dr. Fleming. Right. If I could, I would like to point out
that the advantage of this is that because of the tax-favored
treatment of that capital, the ability to go from a 15-to-1
return on investment can actually go much higher, many times
higher, a force multiplier effect, because remember that
Opportunity Zones bring in, by way of delay and deference of
capital gains tax, will bring in private investors' private
capital, which will make what we do multiply many times over.
But as you point out, just because a census tract is an
Opportunity Zone does not mean that it automatically gets
funding through the EDA.
Ms. Titus. Thank you.
I want to come back to some staffing questions, but my time
is up, and I will do that later.
We would now turn to the Ranking Member Meadows, but he has
allowed Mrs. Miller to ask questions next.
Mrs. Miller. Thank you, Dr. Fleming, for being here today.
In 2017, the Economic Development Administration awarded
over $11 million in funding in West Virginia. Given the closure
of so many mines since 2009, promoting access to new
opportunities for my constituents is key.
Funding from public-private partnerships is crucial to
fostering a market within my State. The EDA is one of the
economic development agencies that provides oversight and
service.
I would like to focus on how we can improve economic
programs across Government. How can we focus on fine-tuning
these critical programs to remove redundancies and best promote
best practices?
Dr. Fleming. Yes. Well, thank you for that question,
Congresswoman.
The coal communities across 15 States have been hit very
hard, as you say. For the last 2 fiscal years, we have been
appropriated $30 million per year to provide assistance, job
training assistance, to companies and communities to retool
towards some other type of business concerns that may develop
there. And we are committed to supporting our coal communities,
which are in transition, as you point out, and certainly need
assistance wherever possible.
Mrs. Miller. Again, I was wondering about programs, how we
can improve them so that we aren't redundant, so that we can
use our money wisely.
Dr. Fleming. Oh, I am sorry. So your question really has to
do more with redundancy, overlapping, and that concern.
Mrs. Miller. Yes.
Dr. Fleming. There has been a concern about that. The GAO
looked into that, issued a report in 2012, and there was not
duplication, but some overlap.
And so the OMB actually gave authority to EDA to create the
EDI, which is Economic Development Integration, which is now a
part of our agency. And not only do we have members on board
within our office here in DC, but we have one in each district
that serves in that office as well.
That person has the responsibility to integrate, to make
sure there isn't overlapping and duplication, and they are in
contact with our sister agencies outside of our department,
which is HUD and USDA and others. So that has been improved.
However, I will also note for you that in the President's
21st-century reorganization plan, it is recommended that we
should consider something else that would be under the
Department of Commerce, which would be the Bureau of Economic
Growth, which would actually continue the grant
responsibilities that we have today, but pull other grantors
from other agencies, such again as HUD, USDA, and so forth.
So we have already been identified as the integrator for
these services, but we also see the potential that we could
actually achieve more economies of scale, if you will, where we
could do more with what we have in place, perhaps with a slight
step up in staffing and so forth, to accommodate many more
grant activities, if Congress chooses to do that.
And then I would add to that, remember that, apart from our
300-or-so million dollars per year that we are appropriated, in
2018 we had a disaster supplemental of $600 million, and we
have 2 percent of that which is dedicated towards salaries and
expenses. We are able to scale up to that very easily and
accommodate that pipeline even though that is essentially
doubling the amount of grants that we normally have.
So our capacity to develop into this Bureau of Economic
Growth, if that is what is chosen by the administration or
Congress, is really we are quite well positioned. We have the
backbone, the back office, and the expertise that can do this
very quickly and very easily.
Mrs. Miller. Great. In your opinion, what are some of the
ways in which we can promote resources and information for
small communities? How can Congress help facilitate that
coordination? Sort of that question was led by your past
statement.
Dr. Fleming. Right. Well, that is a good point. I must
admit that when I came to Congress 10 years ago, I knew
virtually nothing about the EDA. Perhaps I should have known
more when I came, but there are so many different parts of
Government, as we learn when we are sworn in.
But we actually have a big presence out there across the
country and in the Territories. We have six district offices.
And then we have, like, almost 400 district offices underneath
that. So we are spread out, we are very much public facing in
our activities.
And certainly we could do more, Congresswoman, to get the
word out, but we are also very connected with the private
sector that is involved in economic development as well. The
chambers of commerce, I am already interacting with them. I
have already traveled across the country, just in the 3 weeks I
have been in the office. So there is a lot going on out there
among the business folk, but a lot of times we in political
office are not as aware.
But certainly we are dedicated to doing more, and we will
work with you in the future to give you all the information
necessary.
Mrs. Miller. Thank you.
Ms. Titus. Our next questions will come from Ms. Mucarsel-
Powell.
Ms. Mucarsel-Powell. Thank you, Madam Chair.
And thank you, Dr. Fleming.
I am a new freshman Member in Congress, representing
Florida's 26th District, and we have been a recipient of some
significant funding from the EDA. Just last fall, we received a
$32 million grant that provides the Florida Department of
Economic Opportunity, intended to boost the State's revolving
loan fund program to help with recovery of Hurricane Irma. So I
am very concerned by this administration's decision to
terminate the EDA, which is the only agency that provides
funding, grants, for business innovation, for disaster relief
recovery, for economic development in some of these areas.
And you mentioned in your opening statement that you are
very concerned about the deficit and that you support the
President's budget. But as you recall, in the last Congress, we
last Congress approved a tax bill that added more than $1.5
trillion to the deficit.
So I am a little confused. And maybe, as a young Member of
Congress, you can explain to me how that fits into the overall
goal of reducing the deficit, the tax bill, but then cutting an
agency that provides such needed funding in some of the rural
areas, some in my district, but across the country--Flint,
Michigan--some of the coal-affected communities, manufacturing
communities, where the President said that he wanted to invest
and help these workers.
I am concerned. I am confused. If you can just talk a
little bit about that.
Dr. Fleming. Sure, I would be happy to.
Congresswoman, budgets are about priorities, and this
administration has a different set of priorities than the last
one, which had a different set than the one before.
A big priority, which I totally agree with, is the need for
security, whether it is military security or border security. I
was here during the Budget Control Act of 2011, which ended up
gutting our military. My Air Force base, Barksdale Air Force
Base in Louisiana, found that 50 percent of the crews were not
ready and not nuclear certified for B-52s. So these are all
things that are having to be addressed.
And, look, I don't have all the answers to those questions.
All I can say to you is that certainly tough decisions are
having to be made.
There is no question about it, EDA does fantastic work, and
I will be 110 percent committed to its success, efficacy, and
efficiency while I am leading it and while it is funded. But,
ultimately, the funding is really the purse strings, is really
here in Congress. So I don't really have a say anymore. That is
now your job. As a freshman, welcome to the job. And I know it
is a tough one.
Ms. Mucarsel-Powell. It is.
Dr. Fleming. Because I had to go through it as well. And I
am sure that you will do well at that.
Ms. Mucarsel-Powell. Thank you so much.
Just another question. If the EDA were to be closed and
terminated, you did say that you are confident that the
administration can continue to provide necessary Federal
support for communities through other Federal agencies and in
conjunction with State agencies.
So eliminating a $304 million per year agency is no small
task. How can you ensure that the services will continue
without having the Economic Development Administration? And who
will be coordinating these efforts?
Dr. Fleming. Congresswoman, the details I don't have, but
here is what I can tell you. The drawdown would take 6 years,
or that is the plan under the budget. It would require scaling
down the personnel over time. So it wouldn't, per se, end
everything immediately. It would have to scale down over time.
Much of the work would have to remain under the Department of
Commerce and would be disbursed under the Secretary himself or
herself, whoever is in at that time going forward.
So there are contingencies for that, but I don't have
details, because, again, until such time as the appropriations
end, it is impossible to execute on that. But there are
provisions made on that.
And, again, I would circle back to you another approach
which has been suggested by this administration in the
reorganization plan, would be to actually create a new agency,
the Bureau of Economic Growth, that would actually take what is
done here and incorporate similar items, grant-producing
economic development items, from other sister agencies and
departments, such as HUD and USDA and others, so that it could
consolidate and actually be more cost-effective.
So that is another approach, but that is not really in the
budget. That is only in the reorganization plan.
Ms. Mucarsel-Powell. Thank you, Dr. Fleming. I welcome more
conversations with you in the future about this. Thank you.
Dr. Fleming. Absolutely.
Ms. Titus. Thank you.
Now, we will go to Mr. Palmer.
Mr. Palmer. Thank you, Madam Chair.
Dr. Fleming, it is good to see you. You actually look
younger. I mean, do you recommend getting out of Congress?
Dr. Fleming. No comment, no comment.
Mr. Palmer. You don't have to answer that. I will leave it
at that.
Dr. Fleming. But, let me congratulate you on your work,
Congressman Palmer.
And Gary is a good friend of mine, a policy director.
So congratulations on that, and enjoyed working with you
many years on many tough issues.
Mr. Palmer. Well, thank you.
I do want to ask some questions. There are probably 80
other programs that do things similar to what EDA does. And I
realize that you have a different perspective, having worked
there, and I am not making a judgment on the work that EDA
does. But one of my colleagues made a statement that the tax
cuts that we passed added $1 trillion to the deficit. Actually,
it was less than that. I think maybe meant the debt.
But the real issue is not tax cuts, is it? I mean, we are
trying to put more money in people's pockets so they can make a
decision on how they spend it, rather than give it to the
Federal Government. Shouldn't we be reducing Federal spending
and letting people keep more of their money?
Dr. Fleming. Yes, sir, I certainly agree with that, with
this caveat. One thing that, again, I have come to appreciate
about EDA is that this is not a straight unmatched grant
program. The grant is made to a local community, which is
matched usually at least 50-50, 1 to 1. And then that draws in
private capital.
And so we get, for every Federal dollar, we get $15 of
private investment in return. That doesn't count local
community match. And what is exciting about all of this is, to
your point, keeping more dollars in your pocket.
The Opportunity Zone, which really is a Jack Kemp, I
believe, idea, something he promoted decades ago, has now
finally come to fruition. And so it gives you the opportunity
to not necessarily keep the money in your pocket, but to put it
in an account that you are going to see grow, and that is with
some reduction in the taxation of the capital gain from that
account.
And so what we want to do is to be a coordinating agency so
that we work with our private partners, public-private
partnership, to make sure that not only do we build jobs, grow
jobs, and goods and services, but we improve blighted
communities.
So in my view, as a conservative, as you are, that is much
better than just spending, laying Federal dollars down without
any match and without any private capital.
Mr. Palmer. My colleague, Miss Gonzalez-Colon, is all teed
up to ask questions. I am going to get a little ahead of her
here on this.
My concern is you have got all these agencies, doing all
this at the community level, and I can't dispute the investment
from the private sector and certainly from local government as
well, but when you have situations like you have got in Puerto
Rico and you have got in Florida and Georgia and south Alabama
with storms, there needs to be some issues addressed here and
what you use this money for in terms of resiliency for storm
mitigation.
Some of my colleagues are rightly concerned over climate
change, and I share some of their concerns in that respect,
that whatever we are investing in, we need to take that into
account.
The thing that bothers me, Dr. Fleming, about this is that
we have got all these agencies running all these programs, they
are spending all this money in administrative costs, when I
think we need to be thinking about the fiscal future of the
country, as well as other issues related to climate change and
whatever else they want to talk about.
And I understand the President is trying to eliminate the
funding for the EDA. It seems to me it makes sense to look at a
way to consolidate these agencies and not have to spend as much
money and get more bang for the buck. Do you want to comment on
that?
Dr. Fleming. Yes, thank you.
Again, just speaking from the 3, 4 weeks I have been on
service and what I see, and the capacity and the expertise and
the professionalism of the people that actually do this work--
and I have been out in the field already, I visited with those
who are actually in the local areas--the capacity and the
ability to do this and to scale up, so for, perhaps, a marginal
increase in Federal dollars for salaries and expense we can
accommodate a lot more than what we do.
And so that is where this idea of Bureau of Economic
Growth, which is not part of the budget, but it is a part of
the reorganization plan, may be something of interest to you,
because that is where you get more bang for the buck.
Mr. Palmer. I would be interested in that.
I see we have a new chair.
Ms. Mucarsel-Powell [presiding]. I got a promotion.
Mr. Palmer. You got a promotion?
Ms. Mucarsel-Powell. Very quickly.
Mr. Palmer. Did they give you a gavel?
Mr. Meadows. Yeah, she did.
Ms. Mucarsel-Powell. I will use it while I am here. So the
gentleman is out of time.
Mr. Palmer. I thank the gentlelady.
Ms. Mucarsel-Powell. I now recognize Delegate Holmes Norton
from DC.
Ms. Norton. Thank you very much, Madam Chair.
And I appreciate your testimony, Mr. Fleming.
I note that your budget is $304 million, and for next year
it is proposed to be $30 million. Apparently, this is part of a
shutdown of the agency.
Now, you have testified that there is a 15-to-1 return for
the taxpayers on what your agency does. With that kind of
return, one wonders whether you can tell this committee that
there will be in place an institution of some kind that will
continue to render the service and will get that kind of
return, or will there just be nothing left in its place?
Dr. Fleming. Well, I would like to thank you,
Congresswoman, for that question. That is a very good question,
and I think it is important, relevant to the Washington, DC,
area, for instance. I will note that the Secretary, who is also
very excited about Opportunity Zones, was asking me just the
last week, he wanted to know about the Opportunity Zones in the
District of Columbia. He is very interested in that, and I
think there are great opportunities there.
But if the elimination occurs--and as I said, it would have
to be a gradual reduction over a 6-year period--the work would
have to be farmed out, if you will, to other agencies within
Commerce. I don't know what they would be. It would be under
the Secretary's direction. As I say, I don't have details on
how that would work.
Ms. Norton. Mr. Fleming, let me ask you this. Would you
provide for the chairman of this committee the information I am
requesting?
If they are going to phase it and distribute it--they have
got an agency now, they are cutting budgets, that gives us 15
to 1 on the return. Have you had an increase in your budget
over the past couple years?
Dr. Fleming. Apart from the supplemental, basically no----
Ms. Norton. So even without an increase, you are still
getting----
Dr. Fleming. Right. Sure.
Ms. Norton. I don't know how I could name another agency
that shows that kind of return.
So we would like you to provide--the administration to
provide through you--an analysis of whether or not that kind of
return is going to be built into whoever gets your function.
And we would like to see an outline of how these, the
functions--very small agency you have--will be distributed and
some analysis that it will be as efficient as this very small
agency has been. So I am saying that for the record and for, I
am sure, the chairman.
This is a period of--I just came from a hearing on climate
change. It is very frightening. We are not talking about
something to come. We are talking about something that is being
felt, especially in some Members' districts.
How does the EDA help communities plan for those kinds of
disruptions? They are very much greater than, let us say, even
10 years ago or even last year. Are you in on the planning
process, so before somebody gets hit, for example, in the
panhandle, EDA, as small as it is, has been able to be helpful?
Dr. Fleming. That is a great question, Congresswoman, and
here is what we do. We focus in on weather events rather than
climate. So as we improve and renew, we mitigate for
resiliency.
Ms. Norton. Can you do that ahead of time?
Dr. Fleming. Well, sometimes we do, but more often than
not, because there are more dollars involved and it is more of
a crisis--let's say that a water system is flooded. Then when
there are dollars used to replace that water system, it is
rebuilt perhaps at a higher level or away from--so that with
the next storm, it is not going to be affected.
Perhaps power lines or telephone lines that may be taken
down with a storm, we push towards putting them underground, so
that with the next disaster, that doesn't happen.
But I can't say, per se, and perhaps----
Ms. Norton. Of course that may be a little more costly.
Dr. Fleming. Oh, absolutely, no question. But then you
always have to apply that to over time, some places get hit
three or four times over a decade.
Ms. Norton. So the cost-benefit would probably be worth it.
Dr. Fleming. Exactly. Yes.
Ms. Norton. Thank you very much, Madam Chair.
Ms. Titus [presiding]. Thank you.
We will now go to Miss Gonzalez-Colon.
Miss Gonzalez-Colon. Thank you. Thank you, Madam Chair.
First of all I want to say thank you, Mr. Fleming--and I
don't know what is happening with the sound here, but----
Dr. Fleming. Welcome to Congress.
Miss Gonzalez-Colon. I want to say thank you to Secretary
Ross as well. I mean----
Mr. Meadows. Let's have you move over to Mrs. Miller's
seat.
Miss Gonzalez-Colon. Don't count my minutes. I did learn
that in the State house. I was speaker of the house for a
little bit.
Ms. Titus. Reset the clock, like in a basketball game.
Miss Gonzalez-Colon. Thank you.
Secretary Ross, every time we got hit by the hurricane we
received his call and he was eager to----
Dr. Fleming. I can hear you, if you want to----
Miss Gonzalez-Colon. OK, yeah, but the recording is the
situation.
He was eager to ask us about the different programs about
EDA on the island. And in the case of Puerto Rico, $19 million
are being allocated.
And many people may not understand many of those programs,
but CDBG funds are for many of those infrastructure for the
Government. But the private areas, universities in the case of
Puerto Rico, for research facilities, creative industries,
incubators, creating jobs directly, in the case of Aeronautical
and Aerospace Institute, public works.
In the case of the island, 40 percent of our economy is
just manufacturing industries. Pharmaceuticals. So that means
that we do need to have a lot of research, scientific areas.
So having the different kind of industries, like the Puerto
Rico Manufacturing Extension, the Foundation for Puerto Rico, a
lot of NGOs, the Puerto Rico Chamber of Commerce, retailers,
the Puerto Rico Trade and Export Company, among many others--I
am not going to list all of them--were instrumental to receive
the backup in this award of EDA. So I want to say that, because
they were kind of first responders.
Dr. Fleming. Yeah.
Miss Gonzalez-Colon. And sometimes a lot of Federal
agencies still have not disbursed the Federal funds, but that
is not the case with the Department of Commerce, and that is
not the case with your agencies. And I want to say that. So
having said that--I don't know what happened with the
microphone.
Mr. Meadows. Can we get some EDA money for new microphones?
Miss Gonzalez-Colon. So having said that, I do know that
making the tracking of the data is important. Making the
accountability is critical to ensuring that all those Federal
programs are efficient and effective, and I do support that. So
how can we track all those programs, all those funds that are
allocated for all those grants for, for example, universities,
and creating those incentives for incubators, research, those
technical assistance, and at the same time creating the jobs
and seeing the whole picture in areas of disaster?
You were talking a few minutes ago about Opportunity Zones,
and I am very proud to manage that in the case of Puerto Rico
more than 94 percent of the island is an Opportunity Zone.
Actually, I am trying to get that extended to the whole island.
That should be a great opportunity. Combine that with the HOPE
zones, which will provide another opportunity to combine
different kind of programs, to allow Territories, in our case,
that were hit to try to recover faster.
So I do believe in the agency and combining those kind of
programs. So tell us how we can provide more assistance, or how
can we put that data tracking, the accountability, in order to
make those kind of programs react or be more effective.
Dr. Fleming. Yes. Great question, Congresswoman.
First of all, let me say that Puerto Rico has really had
two major disasters. One was the economic disaster, followed
by, I guess, two hurricanes, right? One followed after the
other, destroying as much as 80 percent of the island.
We have currently obligated $19.9 million to nine projects,
and I am sure there are going to be more, but we have got a
lot----
Miss Gonzalez-Colon. I am very happy to hear that.
Dr. Fleming. OK, good. So Puerto Rico needs help, and we
are happy to do it.
Your other question seemed to surround around the metrics,
about measurement. I am a physician. I come from working in
retail as far as business creation and business ownership. To
me, when it comes to that, continuous quality improvement and
other things, I think it is important to be data-driven.
And EDA is already very data-driven. For instance, you
heard me say that our return on investment, Federal dollars to
private dollars, is 15 to 1, $15 private to $1 Federal. That is
a look back over 10 to 11 years. We earmark that 3, 6, and 9
years, and we follow that. So that is very important to us. We
don't make this up. It is not based on projections. We also
measure the cost of it per job, sustainable job, $13,500 per
job.
So all of this is important to us. But we think there needs
to be even more data collection. There need to be more things
that we can do. So we are in the process of looking at that
process in order to do just that.
The taxpayers deserve to know the performance of the
agencies that provide assistance, how can we do better with
less, how can we streamline what we do, because we want as much
money on target benefitting the people as possible, not paying
salaries. Not that our employees don't deserve good salaries,
they do, but we want to make sure not a cent of the taxpayer
money is wasted in that.
Miss Gonzalez-Colon. Thank you. I yield back.
Ms. Titus. I think the more they know, the more they will
be impressed, so I am glad you are doing that.
Dr. Fleming. Well, thank you, Madam Chairwoman. And also we
may need to do a better job of being transparent about it,
being sure it is on the website. It is to some extent now. We
are going to do more work on that.
Ms. Titus. Thank you.
Mr. Johnson.
Mr. Johnson. Thank you, Madam Chair. Thank you, Madam Chair
and Ranking Member Meadows, for hosting this hearing today.
And thank you, Assistant Secretary Fleming, for lending
your time and testimony to this discussion.
The Economic Development Administration is key to reviving
communities under economic stress and creating durable regional
economies throughout the United States and I am particularly
concerned about President Trump's attempt to curb funding for
the EDA.
It is true that the administration has called for reduced
funding to the Economic Development Administration in its 2020
budget request. Is that correct?
Dr. Fleming. That is correct.
Mr. Johnson. And despite EDA's success at helping American
workers transition between careers, the Trump administration
has called for draconian cuts to the EDA. I find this
unsettling, because it is the security of our economy and job
system that makes our country the land of the American Dream.
How does a robust EDA help the American economy to
flourish?
Dr. Fleming. Well, thank you for that question. And you may
recall we served together on the House Armed Services Committee
for years and enjoyed spending all night passing the NDAA each
year.
Mr. Johnson. Yeah, we are coming back up on that time of
year again.
Dr. Fleming. Pretty soon. I can imagine. That is all right,
I will be in bed asleep while you are awake.
Mr. Johnson. I transitioned to T&I from HASC.
Dr. Fleming. Oh, did you?
Mr. Johnson. And I miss it. Maybe I will pick it up as a
third committee at some point. But I don't miss those late
nights.
Dr. Fleming. Yes, indeed.
Well, I mean, I, in my personal opinion, in my observation,
in the measurements that we make here, there is no question
that what we do at EDA helps the American people. It helps
enterprise. It helps commerce.
And again, what appeals to me is the fact that most of the
dollars spent are by the local community and private
individuals. That is really exciting to me, coming from a
conservative, business-oriented background.
But having said that, tough decisions have to be made. As I
said before, each President has his or her own priorities in
their budget, and certainly I support our President in his
priorities.
But to the extent that it is funded, and of course Congress
controls the funding primarily to all agencies, we will be
efficacious and efficient in spending every dime that is
allowed.
Mr. Johnson. Thank you. Well, it was once upon a time that
Congress did have authority over our appropriations process,
but it is being--it is under severe threat right now. But do
you believe that the EDA should be fully funded?
Dr. Fleming. Well, Congressman, again, I do support the
President's budget, and I certainly bend to the will of
Congress, whatever Congress decides in association with the
President. I mean, ultimately even though the appropriations
come from Congress, the President has to sign it for it to go
into law. So if you appropriate the money, and the President
agrees and signs to it, again, we will continue our operations
efficaciously and efficiently utilizing the taxpayers' money
for their good.
Mr. Johnson. And there is no line item veto that exists at
this point, so if we did plus up EDA, well, I would not expect
that there would be an insistence that that appropriation not
go through.
Mr. Fleming, as fossil fuels become more expensive,
innovators in our country are looking for new ways to power
American transportation and technology. According to Forbes,
more than half a million jobs around the world were created in
the renewable energy sector in 2017. And as these new
alternative fuel sources are incorporated into our
infrastructure, the EDA will serve a vital role to help workers
transition in our flourishing economy. Are you aware that
renewable energy is creating jobs 12 times faster than the rest
of the economy?
Dr. Fleming. Congressman, to be honest with with you, that
is not really in my wheelhouse. I haven't studied that. I
pretty much rely on the experts, and I can't claim any real
expertise in that area frankly.
Mr. Johnson. But you do agree that it would be important
that Americans are skilled in renewable energy jobs to keep up
with the sector's growth in the rest of the world?
Dr. Fleming. Well, I think it is a good thing that we have
jobs available for Americans. As you know, unemployability
levels are at historic lows today, not least of which is
because of the deregulation and the reduction in taxes that
have so much stimulated the economy.
And I come from an area where natural gas has been very
successful, so whatever types of energy we use, we want it to
be the cleanest and the most cost effective possible, and we
are always happy when it creates jobs.
Mr. Johnson. Well, you are a true gentleman and a scholar,
and I have enjoyed our discourse today.
Dr. Fleming. Yeah. Thank you.
Mr. Johnson. And I long for the time when we can have this
kind of discourse with all members of the administration as
opposed to obfuscation and evasion and outright sometimes
deception and lies. But thank you for your testimony today.
Dr. Fleming. Thank you, sir.
Mr. Johnson. And with that, I yield back.
Ms. Titus. Thank you, Mr. Johnson.
Before I yield to the ranking member, I just want to point
out there have been a number of comments about the what if
scenario about reorganizing or dissolving or spreading out the
programs among other agencies. Know that there is no real
appetite from this chair to move in that direction. We are much
more interested in reauthorizing, improving, strengthening, and
if anything, bringing some of those other grant programs under
this umbrella. So just to be sure that we are clear there. Now
I recognize the ranking member.
Mr. Meadows. Thank you, Madam Chair.
And so Dr. Fleming, let me kind of pick up where she just
left off. I spoke to Ms. Norton as she was leaving, and I know
she asked you to get to this committee how you would actually
go through devolving and actually closing down, and I asked her
if it was all right with her, and I would assume with the
chairman as well, if it is all right with her if we go the
other way.
Here is what I would like to ask you to do. Instead of
coming up with plan on how you won't exist, would you be
willing to work with this committee and come up with a plan how
to reform, expand, and consolidate some of those other
programs? And I think that would be real helpful as we look at
that if you are OK with that Madam Chair?
Ms. Titus. That is exactly the point I was trying to make.
Dr. Fleming. I would be very happy to. We would welcome
that. As you know, our staff across the board, 200 of them,
career staff who are very dedicated to the work that we do,
they get up every morning looking for ways to do a better job,
so we would be happy to work with you on that.
Mr. Meadows. Well, I know that they don't know this, but I
know that you have been bragging about them behind their backs,
you know, just how unbelievably professional. And I didn't
realize how disperse they were across the country. I mean,
there was--and this is my fourth term, and you would have
thought that I would have picked up on that just in the air,
but thank you for pointing that out. Here is what I would ask,
then. If you could work with your team to do that.
The second part of it is I can't imagine any scenario where
you do not get at least the same level of funding that you have
gotten, you know. Unless things are going to take a huge U-
turn, you and I both know that the chances--while I applaud the
fact that you are saying you are supportive of the President's
budget and his initiative, I also know that the chances of
their being no appropriations or a reduction are slim to none,
you know.
Candidly, I think if we look at that, and hopefully that is
good news to the employees that work for you, and I am not
asking you to comment on that. But as we look at this, here is
what would be extremely helpful to me is I mentioned it in my
opening remarks, a matrix on how we are successful. For me, I
want to measure, and if I can measure and Chairwoman Titus can
measure, then all of a sudden we can take that, regardless of
who is in the White House and say here is why it is successful.
Not just in generic terms in terms of a reform, but if you can
help us come up with a matrix on how you are successful, are
you willing to do that and get that to the committee?
Dr. Fleming. Yes, sir. Not only are we willing, but we are
capable, and again, we have a lot of data to show. Again, we
are data-driven, so we don't want to talk in blue sky. We want
to talk about what we are capable of doing as proof by history.
So we would be, you know, excited to work with you on that.
Mr. Meadows. One of the other areas I would ask you to look
at, if you would, for us, is with regards to USDA which is
obviously a different agency. When you think of economic
development, all of a sudden what happens, it gets very gray
when it gets to our congressional districts. I am in a rural
part of North Carolina, as you know, but it can be an EDA
grant, or it can be a USDA grant or a USDA loan.
And, candidly, I get more calls about this particular
project, and it could be a WRDA project. It could be--there are
just so many different, and yet in the minds of local county
commissioners and city officials, they see it as economic
development. I mean, pure and simple.
So if you can identify those areas that perhaps are not
under the purview of the Commerce Department and how we could
potentially identify those, that gets a much--it is much more
difficult legislatively than just a reauthorization, but we
would love to work with OMB to see how we can do that and
streamline that so that it is a one-size-fits-all.
I mean, when the Congresswoman was talking about the fact
that she didn't have a problem with Commerce in terms of the
distribution of money when all I have heard are about problems
in Puerto Rico, I mean, you get an A. The rest get an F. And so
what I want to do is take the good practices that you and a lot
of your colleagues right behind you are having. If you can help
us do that as well, are you willing to do that with this
committee?
Dr. Fleming. Yes.
Mr. Meadows. Yes.
Dr. Fleming. Very much so.
Mr. Meadows. All right. With that, I yield back.
Ms. Titus. Thank you.
As you put together that data, would you include in there
some of the staffing issues because I know you have only
granted out about a quarter of the amount of money that was
appropriated for disasters, and I think part of that may be
because of lack of staffing, so that would be important
information for us to have. I know some of the other agencies
have special hiring authorities. EDA doesn't, but maybe as we
reauthorize, that would be something to look at.
Dr. Fleming. I would be happy to work with you on that.
Ms. Titus. Thank you.
Are there any other questions for this witness from the
Members? If not, well, we thank you very much, Dr. Fleming, for
being here, and we look forward to working you to save and
improve this agency, not dissolve it.
Dr. Fleming. Thank you very, very much, Chairwoman Titus,
and Ranking Member Meadows. And again, I miss you guys. I wish
I could be back on the floor voting with you, but I am having a
lot of fun here at EDA as well.
Mr. Meadows. You were about to say you are having a better
time.
Dr. Fleming. You know me too well, Mark.
Ms. Titus. I won't tell Mr. Johnson that. Thank you.
We will ask for the second panel to please join us at the
table. Thank you very much.
Welcome to the subcommittee hearing. We would like to
introduce the members of our second panel. Mr. Kevin Byrd,
executive director for the New River Valley Regional Commission
who is here on behalf of the National Association of
Development Organizations. Welcome.
The Honorable John Messner who is vice chairperson,
District 1 commissioner, Gunnison County, Colorado, Board of
Commissioners. Our commissioner is here on behalf of NACo,
National Association of Counties.
Mr. Mark Muro, policy director and senior fellow at
Brookings, and Mr. Rodrick Miller, chief executive officer,
Invest Puerto Rico, on behalf of the International Economic
Development Council. Thank you all very much. We look forward
to hearing from you.
Without objection, our witnesses' full statements will be
included in the record. And as with the previous panel, since
your written testimony is part of the record, we would ask that
you limit your oral testimony to just 5 minutes and kind of sum
up for us.
Before we hear from you all, I would like to recognize the
gentlelady from Puerto Rico, Miss Gonzalez-Colon, to further
introduce Mr. Miller.
Miss Gonzalez-Colon. Thank you, Madam Chair, and I will say
that I don't mind if the microphone gets bad because I just get
upgraded here.
I want to just extend--thank you for extending me the honor
of introducing Mr. Rodrick Miller. He is the chief executive
officer of Invest Puerto Rico. He is charged with carrying out
a nonprofit mission to attract new businesses and investment
capital to the island. This is basically a new job he just got
after Act 13-2017 provided in Puerto Rico to have Invest Puerto
Rico which is a nonprofit organization created to promote
Puerto Rico as a competitive investment jurisdiction and to
attract new businesses and capital investment to the island.
Mr. Miller has recently joined this team after working as
the president and CEO of the Detroit Economic Growth
Corporation. He has also worked for the New Orleans Business
Alliance for Economic Development, the Baton Rouge Area
Chamber, the Greater Phoenix Economic Council, and was the
economic development administrator of the city of Glendale,
California.
During his career, Mr. Miller has played a leading role in
a diversity of projects ranging from the attraction of
Microsoft regional headquarters to Detroit, helping structure
transaction leading to significant real estate development such
as the Outlets at the Riverwalk in New Orleans, and Coyotes
Stadium in Phoenix, Arizona. I want to thank him for such an
important task and I look forward to hearing his vision for
Puerto Rico.
And thank you for coming for the committee, and Madam
Chair, for allowing me to introduce him.
Ms. Titus. Well, thank you for that introduction.
Mr. Miller, first Katrina, now Puerto Rico. You are just a
storm follower; is that what you are? Thank you for being here.
Mr. Meadows. He may be the causal effect of that.
Ms. Titus. We will start with you, Mr. Byrd. Thank you.
TESTIMONY OF KEVIN BYRD, EXECUTIVE DIRECTOR, NEW RIVER VALLEY
REGIONAL COMMISSION, ON BEHALF OF THE NATIONAL ASSOCIATION OF
DEVELOPMENT ORGANIZATIONS; HON. JOHN MESSNER, VICE CHAIRPERSON,
DISTRICT 1 COMMISSIONER, GUNNISON COUNTY, COLORADO, BOARD OF
COMMISSIONERS, ON BEHALF OF THE NATIONAL ASSOCIATION OF
COUNTIES; MARK MURO, POLICY DIRECTOR AND SENIOR FELLOW,
BROOKINGS INSTITUTION; AND RODRICK T. MILLER, CHIEF EXECUTIVE
OFFICER, INVEST PUERTO RICO, ON BEHALF OF THE INTERNATIONAL
ECONOMIC DEVELOPMENT COUNCIL
Mr. Byrd. Good afternoon, Madam Chairwoman Titus, and
Ranking Member Meadows and members of the committee. I really
appreciate the opportunity to join you today and testify on
behalf of the importance of the Economic Development
Administration in my community, my region, and our Nation.
My name is Kevin Byrd. I am the executive director of the
New River Valley Regional Commission. We are based in Radford,
Virginia. We are a governmental agency that is dedicated to
facilitating economic and community development and regional
collaboration.
My professional experience includes more than 15 years in
community development and over 9 years in my current role. I
also serve on the board for the National Association of
Development Organizations known as NADO. NADO is an association
that represents hundreds of other regional development
organizations like mine across the country. These organizations
serve as catalysts for regional economic development, public-
private partnerships, and strategic initiatives designed to
fulfill locally identified priorities.
Today I will address four key issues pertaining to the
Economic Development Administration. First, I will explain the
significance of EDA to my community and my region. Second, I
will highlight the significance of EDA's national impact.
Third, I will reiterate the importance of EDA's planning grants
to economically distressed regions. And finally, I will
underscore the importance of reauthorizing EDA and recommend
opportunities for reforms and enhancements of EDA.
So I will begin by highlighting the significance of EDA to
my community and my region. My organization is comprised of 13
local governments and 3 institutions of higher education. We
act as a convener across all sectors in four counties and the
city in southwest Virginia.
EDA investments have had a tremendous impact on my region
as they supported many successful government economic
development projects, including one that I will highlight for
you today. That is Virginia Tech Corporate Research Center.
EDA made one of the first investments in the Virginia Tech
Corporate Research Center which specializes in technology
transfer from university research. EDA invested $600,000 in the
late 1980s and also invested $2 million in 2009 to support a
second phase of development. Today the Corporate Research
Center is comprised of more than 180 high-tech firms and
research centers and employs more than 3,000 people.
In my role as first vice president of NADO's board, I work
with the executive directors of similar organizations, across
the country, who have regions that have benefitted immensely
from job growth brought about by EDA investments.
This brings me to my second core topic I would like to
highlight for you today, the significance of EDA's national
impact on economic growth. Between fiscal year 2012 and fiscal
year 2017, EDA has invested over $1.6 billion in 4,058 projects
to help communities and regions build capacity for economic
development. In return for this investment, it is anticipated
277,163 jobs will be created or retained, and more than $39
billion in private investment will be attracted, according to
recipient estimates. EDA's portfolio of programs allow
communities to apply for assistance as a tailored fit to meet
their unique needs.
I also want to emphasize that EDA is the only Federal
agency with the sole mission of helping to create high-quality
jobs in the United States. EDA already has in place an Economic
Development Integration team that works across the Federal
Government to align and strengthen programs.
Another important component of EDA, the partnership
planning grants awarded to economic development districts.
These grants serve as essential building blocks. They are the
backbone of successful projects that guide local, State, and
Federal investments which directly lead to job creation and
retention.
EDA and its network of regional offices, integrators, and
economic development districts across the country are well
positioned to help communities navigate and take advantage of
the opportunities in this program.
Finally, I will ask you to take advantage of some
opportunities for reforms and enhancements of EDA. I also
encourage you to increase EDA's annual authorized funding
level. I urge you to support a modernization of EDA's role and
encourage you to elevate EDA as the key Federal partner helping
economically distressed and rural communities keep pace with
the technological advancement, automation, and economic shifts
that occur as a result.
EDA has been a key partner in helping communities develop
comprehensive economic development strategies that facilitate a
process of assessing distressed regions' changing economic
drivers and helping them refocus their efforts on promising
investments.
I also want to highlight the importance of the loan
services EDA offers for small businesses through the revolving
loan fund program. The reporting requirements associated with
it are particularly burdensome. Currently. RLF awards stay in
Federal control in perpetuity. RLFs should be fully transferred
to the local intermediary within a specified number of years
after final disbursement of a grant, 7 years is our suggested
duration. This is standard protocol by which other Federal
agencies operate their RLF programs. I encourage the committee
to support efforts to reform EDA's RLF in this manner.
So in closing, EDA has a record of success and is an
essential partner. Therefore, I encourage you to support
reauthorization and continued funding for the agency. Thank you
again for the opportunity to address you today, and I look
forward to answering your questions.
[Mr. Byrd's prepared statement follows:]
Prepared Statement of Kevin Byrd, Executive Director, New River Valley
Regional Commission, on behalf of the National Association of
Development Organizations
Chairwoman Titus, Ranking Member Meadows, and members of the
subcommittee, thank you for the opportunity to testify today on the
importance of the Economic Development Administration (EDA) to my
community, my region, and our nation.
My name is Kevin Byrd, and I am the executive director of the New
River Valley Regional Commission in Radford, Virginia. We are a public
government entity dedicated to facilitating economic and community
development and regional collaboration. My professional experience
includes more than 15 years in community development, including 9 years
in my current position.
I also serve as a board member of the National Association of
Development Organizations, known as NADO. NADO is an association that
represents hundreds of other Regional Development Organizations like
mine across the country. These organizations serve as catalysts for
regional economic development, urban and rural planning, public-private
partnerships, and strategic initiatives designed to fulfill locally-
identified priorities. They also collectively assist thousands of
cities and counties across the country with economic development,
workforce training, transportation planning, public infrastructure,
affordable housing, disaster prevention, public health, and other
community services.
Today, I will address four core issues pertaining to the Economic
Development Administration:
1. First, I will explain the significance of EDA to my community
and my region.
2. Second, I will highlight the significance of EDA's national
impact on regional development, job creation, and economic growth and
competitiveness in communities across the country.
3. Third, I will reiterate the importance of EDA's planning grants
to economically-distressed regions; and,
4. Finally, I will underscore the importance of reauthorizing the
EDA, and I will recommend opportunities for reforms and enhancement of
the EDA that could be accomplished via reauthorization.
I will begin by highlighting the significance of EDA to my
community and my region. My organization, the New River Valley Regional
Commission, is comprised of 13 local governments and three institutions
of higher education. My organization acts as a convener of local and
state elected officials, economic development practitioners, business
leaders, non-profit organizations, educators, and other stakeholders
within a defined region that includes four counties and the city of
Radford, Virginia. We serve the region by providing needed services and
technical assistance, such as strategic planning, project development
and implementation, and access to capital. We also help deploy needed
federal, state, and local funds into the region, and we help to ensure
compliance, accountability, and the timely implementation of projects.
EDA investments have had a tremendous impact on my region, as they
have supported many successful economic development projects, including
two that I will highlight today: the Virginia Tech Corporate Research
Center, and the New River Valley Commerce Park.
EDA made one of the first investments into the Virginia
Tech Corporate Research Center which specializes in technology transfer
from University research. EDA invested $600,000 in the late 1980's, and
also invested $2 million in 2009 to support a second phase of
development. Today, the Virginia Tech Corporate Research Center is
comprised of more than 180 private high-technology companies and
research centers and employs more than 3,000 people. There are 35
buildings currently in the park, with room for an additional 16
buildings.
Additionally, the New River Valley Commerce Park is a
1,000+ acre, publicly-owned industrial site located in Pulaski County,
Virginia just 30 minutes from Virginia Tech. A $3 million investment
from EDA, along with local matching dollars from eleven local
governments helped provide a water line, pump station upgrades, and
other infrastructure ultimately allowing one million gallons of water
per day to be delivered to the site. The first tenant of the New River
Valley Commerce Park is Red Sun Farms, the largest producer of organic
tomatoes on the east coast. Today, Red Sun Farms employs more than 100
employees at an average wage of $13.36 per hour, with a nearly $23
million capital investment to date at the Commerce Park location.
Currently, three new international prospects are considering the site.
EDA's success stories extend far beyond my region. In my role as
First Vice President on NADO's board, I work with the executive
directors of similar organizations across the country whose regions
have also benefitted immensely from job growth and community
development brought about by EDA investments. Particularly in
economically distressed areas of the country, EDA investments are
essential.
This brings me to the second core topic I'd like to highlight for
you today: the significance of EDA's national impact on regional
development, job creation, and economic growth and competitiveness in
communities across the country.
Between FY 2012 and FY 2017, EDA invested over $1.6 billion in
4,058 projects to help communities and regions build capacity for
economic development. In return for this investment, it is anticipated
that 277,163 jobs will be created or retained, and more than $39
billion in private investment will be attracted, according to recipient
estimates.
EDA's portfolio of public works, economic adjustment, strategy
development, business finance, technical assistance, and research and
evaluation programs allow communities to apply for assistance tailored
to fit their unique needs. EDA has developed a strong record in
assisting communities struggling to overcome both long-term economic
challenges (such as persistent poverty) as well as sudden severe
economic adversities (such as plant closures and industry loss).
Through its full range of program tools, the agency is positioned to
help areas recover from economic downturns, industry and military base
closures and realignments, natural disasters, and declines in resource-
based industries like coal, fisheries, and timber.
I also want to emphasize that EDA is the only federal agency with
the sole mission of helping create high-quality jobs in the United
States. And EDA investments are successful in fostering collaborations
with the business leaders, and public-private partnerships with
industry stakeholders. For these reasons, EDA is uniquely suited to be
the lead federal agency driving economic development. EDA has in place
the policy, program, and partnership framework necessary to drive
federal economic development efforts forward in a strategic,
coordinated, and efficient manner. Furthermore, EDA already has in
place an ``Economic Development Integration'' (EDI) team that works
across the federal government to align and strengthen programs, and to
reduce duplication of federal programs and planning processes. EDA's
integration team also helps to break through bureaucratic red tape and
make the most of taxpayer money. EDA's integration team is yet another
example of how EDA is already serving to lead economic development
efforts across the federal government. I encourage this committee to
support efforts to continue to elevate EDA as the lead agency
coordinating all economic development efforts at the federal level.
Another important component of EDA's investment at the local and
regional levels is the Partnership Planning grants given to economic
development districts. These grants serve as essential building blocks
that are the backbone of successful investment projects, which
ultimately lead to job creation and retention in our communities. The
products of the planning process also serve as guiding documents for
local and state investment. EDA's network of hundreds Economic
Development Districts (EDDs) across the country have decades of
experience in implementing strategic economic development planning.
Furthermore, EDA and its network of regional offices, integrators, and
EDDs across the country are well-positioned to help communities
navigate and take advantage of the Opportunity Zones program, along
with other new economic development resources, investments, and
opportunities as they become available.
Finally, for all these reasons, I stand before you today to
encourage you to reauthorize the EDA. In doing so, I ask that you to
take advantage of some opportunities for reforms and enhancement of the
EDA's programs and impact that could be accomplished via EDA
reauthorization.
EDA was originally created by the Public Works and Economic
Development Act of 1965. EDA continues to operate from year-to-year
through the annual congressional appropriations process, but its last
authorization lapsed in 2008. I stand before you today to encourage the
committee to support a reauthorization of EDA that would further EDA's
role as a key driver of long-term economic development and growth in
communities across the country. I also encourage you to support an
increase in EDA's annual authorized funding level.
In tandem with a reauthorization of EDA, I also urge you to support
a modernization of EDA's role in helping to bring economically
distressed communities into the 21st century. I encourage you to
elevate EDA as the key federal partner helping economically distressed
and rural communities keep pace with technological advancement,
automation, and the economic shifts that occur as a result. Although we
all know that technological innovation helps move our nation forward
and creates economic prosperity, we also know that these trends are
leaving some parts of the country behind and are having a negative
impact on many rural and economically distressed communities. EDA has
been a key partner in helping these communities develop Comprehensive
Economic Development Strategies (CEDS) that facilitate a process of
assessing distressed regions' changing economic drivers and helping
them refocus their efforts on investing in industries and workforce
training efforts that help expand learning pathways and upskill workers
to compete in the national economy.
I also want to highlight the importance of the loan services EDA
offers for small businesses. EDA's Revolving Loan Fund (RLF) program
supports small businesses and entrepreneurs by providing gap financing
at or below market rates. The RLF program is particularly beneficial to
businesses that might not otherwise be able to borrow capital.
While the EDA RLF program is important and highly beneficial to
communities across the country, the reporting requirements associated
with it are particularly burdensome. Currently, EDA RLF awards stay in
federal control in perpetuity. As a result, recipients are required to
comply with extensive federal reporting and audit requirements
indefinitely, even if those funds were first capitalized decades
earlier. In order to remedy this issue, ownership of EDA RLFs should be
fully transferred to the local intermediary within a specified number
of years after final disbursement of the grant (seven years is the
suggested duration). This is a standard protocol by which other federal
agencies' RLF programs operate. I encourage the committee to support
efforts to reform EDA's RLF in this manner.
As Congress considers proposals to rebuild our nation's
infrastructure, support economically distressed and rural communities,
facilitate disaster recovery, and invest in drivers of economic growth,
EDA remains a strong resource to assist in these endeavors. EDA has a
strong record of success and has been an essential partner, and I
encourage you to support reauthorization and continued funding for the
agency.
Thank you again for the opportunity to address the subcommittee
today, and I look forward to answering your questions.
Ms. Titus. Thank you very much, Mr. Byrd.
Mr. Messner.
Mr. Messner. Chairwoman Titus, Ranking Member Meadows,
distinguished members of the subcommittee, thank you for the
invitation to testify today on EDA's role in economic
development and recovery.
My name is John Messner, and I am a commissioner from
Gunnison County, Colorado. Today I am also representing the
National Association of Counties, or NACo, which represents all
of the Nation's 3,069 counties.
Counties play a major role in financing, administering, and
coordinating Federal workforce and economic development
programs. This includes EDA, a key pillar of the Federal,
State, and local partnership. EDA programs and grants are a
catalyst to spur recovery and innovation in communities
throughout the country, and they are uniquely tailored to meet
local and regional needs and conditions.
The bottom line is that EDA is a program that works on the
ground. It is essential to helping communities transition from
one economy to the next and helps to broaden local economic
development efforts. It is successful because it gives us, the
local communities, the tools and knowledge to help ourselves.
Counties strongly believe the program should continue to be
authorized and continuously funded. I have seen firsthand the
difference the EDA can make in mitigating the economic downturn
and in supporting efforts to create a stable and diversified
county in Gunnison County. We simply did not have the resources
to pursue such a transformational initiative without the
assistance of the EDA.
As a bit of a background, Gunnison County is a rural county
with a population of just 16,000 residents on the western slope
of the Rockies. The county encompasses 3,200 square miles, and
78 percent of the county is considered public lands. We have
long relied on a few key industries for our economic stability
including coal mining, oil and gas production, and outdoor
recreation.
Unfortunately, both Gunnison and Delta Counties have
recently faced a significant negative impact due to coal mine
closures. Ten years ago, there were 4 operating coal mines in
Gunnison and Delta Counties, employing over 2,000 workers. Now
there is just 1 left which employs only 250 workers.
Our communities, economies, and residents have struggled as
these closures have limited job opportunities in the region.
Gunnison County has worked to respond to these economic changes
and diversify our economy, and without assistance provided by
the EDA, we would still be facing intense economic
difficulties. EDA's engagement, financing, and support have
been critical to our economic revitalization following the coal
mining industry downturn.
In September of 2016, EDA awarded a $650,000 grant to
Gunnison and Delta Counties to create a collaborative
multiagency innovation center and laboratory called the
Innovation, Creativity, and Entrepreneurship Lab or ICE Lab for
short. In addition to the EDA funding, the project leveraged
other State and local funding opportunities and partnered with
Western Colorado University.
The ICE Lab serves as a coworking space, a business
incubator, and a business accelerator for local businesses.
Most importantly, it has allowed entrepreneurs a place to
access capital, resources, and other startups, incentivizing
them to stay and grow in Gunnison County rather than moving
elsewhere. This includes retaining recent graduates of Western
Colorado University.
The ICE Lab has contributed to the significant success of
many businesses, several of which have expanded in just 2
years. Most importantly, these businesses operate in an
extremely diverse set of industries from construction to
manufacturing to food and beverage industries. These businesses
have created new jobs and diversified our economy and filled a
gap, providing job opportunities for those who lost them due to
changes in the energy industry.
As I said earlier, without EDA's assistance, these changes
and the ICE Lab would not have been possible. EDA and the ICE
Lab have been the catalyst for this economic revival. Moving
forward through partnerships with the Outdoor Industry
Association and with other private nonprofit State and local
partners, our county will remain a catalyst for industry and
economic growth.
Chairwoman Titus, Ranking Member Meadows, thank you for
having me here today. Counties across the country urge your
continued support for the Economic Development Administration
which helps us build prosperity from the ground up at the
local, regional, and national levels. Thank you again for the
opportunity to testify today on behalf of NACo. We look forward
to partnering with Congress moving forward. I would be happy to
answer any questions. Thank you.
[Mr. Messner's prepared statement follows:]
Prepared Statement of Hon. John Messner, Vice Chairperson, District 1
Commissioner, Gunnison County, Colorado, Board of Commissioners, on
behalf of the National Association of Counties
Chairwoman Titus, Ranking Member Meadows and distinguished members
of the subcommittee, thank you for the opportunity to testify on
``Building Prosperity: EDA's Role in Economic Development and
Recovery.'' The U.S. Department of Commerce Economic Development
Administration (EDA) and its programs are vital for economic recovery,
expansion and job creation to counties across the country, facilitating
economic and job growth at both the local and regional levels.
My name is John Messner and I am a commissioner from Gunnison
County, Colorado. I am in my third year as county commissioner and
prior to that had been a member of the Gunnison County Planning
Commission for six years during a period of both economic uncertainty
and great opportunity. I also serve on the National Association of
Counties (NACo) Environment, Energy and Land Use Policy Steering
Committee, and I am glad to be representing NACo here today.
about america's counties
Counties are highly diverse, not only in my state of Colorado, but
across the nation, and vary immensely in natural resources, social and
political systems, cultural, economic and structural circumstances, and
public health and environmental responsibilities. Counties range in
size from 26 square miles to 87,860 square miles and have populations
varying from just under 100 residents to close to ten million people.
As we like to say, if you've seen one county, you've seen one county.
Meanwhile, our responsibilities are often mandated by both the
states and federal government. In many states, we are responsible for
public health, child welfare, consumer protection, economic
development, employment and workforce training, emergency management,
land use planning, zoning and environmental protection.
A key component of these responsibilities is local and regional
economic and workforce development. Every day, we are tackling
challenges such as unemployment and underemployment and we develop
local economic growth strategies. In fact, according to a 2014 NACo
workforce survey, 84 percent of counties have formed workforce training
partnerships with local chambers of commerce, cities, state governments
or regional economic development organizations. The same survey showed
that more than 90 percent of counties participate in economic
development activities, including workforce development, business
recruitment and retention, regional marketing, small business support
and infrastructure investments.
Counties also play a major role in financing, administering and
coordinating federal workforce and economic development programs. This
includes EDA, a key pillar of the federal, state and local partnership.
about gunnison county, colo.
Gunnison County is a rural county with a population of just over
16,000 residents in the southwest part of Colorado, about 200 miles
from Denver. The county encompasses 3,200 square miles--it is one of
the largest in the state--and 78 percent of the county is considered
public lands. The county has long relied on a few key industries for
economic stability, including coal mining, oil and gas production,
outdoor recreation, tourism and timber development. The county also has
a ski resort and a university, Western Colorado University, which is an
integral part of our workforce development initiatives.
economic downturn in gunnison county, colo.
Both Gunnison County and our neighboring county, Delta County, were
heavily reliant on the coal mining industry and have faced significant
negative economic impacts due to coal mine closures. In fact, the
region has lost 75 percent of the mining jobs in the area in just the
past few years. Ten years ago, there were four operating coal mines in
the North Fork region of Gunnison and Delta Counties, which employed
over 2,000 workers. Now, there is just one operating coal mine left,
and even it has significantly reduced operations and workforce
opportunities to the point where it is only employing approximately 250
individuals. We estimate that over the last ten years our two counties
have lost over 1,700 well-paying jobs, significantly impacting the
families and the communities in which these workers lived. The closures
of these mines occurred for several reasons, but primarily it was due
to the competition with natural gas production which in current markets
has been used as a less expensive resource for electricity generation.
These closures have also negatively impacted tax revenues, which in
turn impact the county's ability to advance an economic development
strategy for the region. Following the closures, many of the residents
struggled to find new job opportunities matching their career skills.
We worked to respond to these economic changes by developing a more
diversified economy. The county needed a stable and high-wage
alternative to the mining industry that had previously dominated the
area. However, we faced resource constraints at both the county and
regional level. Without the assistance provided by EDA, Gunnison County
would still be facing intense economic difficulties.
eda grant project in gunnison county, colo.
EDA's engagement, financing and support have been integral to our
economic revitalization following the coal mining industry downturn.
Realizing the need to diversify and stabilize our economy in order to
ensure resiliency moving forward, the county engaged a process called
the One Valley Prosperity Project, with the goal to identify strategies
and funding mechanisms to engage in economic gardening and build upon
the entrepreneurial spirit we knew was inherent in our community. In
September 2016, EDA awarded a $650,000 grant to Gunnison County and
City to create a collaborative, multi-agency innovation center and
laboratory, called ``The ICELab'' (Innovation, Creativity,
Entrepreneurship Lab), on the campus of Western Colorado University.
Through the ICELab, local businesses and entrepreneurs would have a
space to collaborate, compete for funding and have access to a work
space, allowing local businesses to grow and create new jobs in the
region. The ICELab was specifically funded through EDA's Partnerships
for Opportunity and Workforce and Economic Revitalization (POWER)
Initiative. POWER is a coordinated effort, involving multiple federal
agencies, with the goal of aligning federal economic and workforce
development programs with local resources to assist communities
negatively impacted by changes in the coal industry and power sectors.
Additional partners were brought on to leverage the grant provided
by the EDA, including the state of Colorado, Western Colorado
University, both Gunnison and Delta Counties, the City of Gunnison and
the Gunnison/Crested Butte Tourism Association.
The ICELab operates as a three-prong initiative by providing:
A coworking space, which provides opportunities for
people with different skills and expertise to work together in a shared
space
A business incubator, where different entrepreneurs and
businesses can rent space and receive business coaching and resources,
bringing together people with entrepreneurial ideas in a collaborative
environment, and
An accelerator program, where four to six organizations
compete for a grant to participate in a twelve-week intensive training
program for businesses that want to take their ideas to the next level
and build their profile.
Businesses within the ICELab are in all stages of development. Many
are up and running and starting expansion after more than two years
with the ICELab, growing their local economic footprint and adding new
jobs in the process. Additionally, many entrepreneurs are generating
business venture ideas, which have enticed young adults and college
students to stay in the region following their graduation. Western
Colorado University also plays an integral role in providing workforce
development and education opportunities by coordinating with
organizations throughout the region to bolster small business growth.
In just two years, the ICELab has already generated several
entrepreneurial success stories, helping boost new companies and expand
existing businesses in a variety of sectors. The lab helped grow a
local company developing hardware equipment for the fire-fighting
industry and furthered the development of an invention that automates
irrigation water pipelines on farms. The ICELab's success also extends
to the food and beverage industry, as a hand-crafted coffee business
headquartered in Gunnison County significantly expanded its regional
reach by engaging with the lab's services and opportunities.
Another outgrowth of the business incubator is the development of a
second incubator in the region, in partnership with the Outdoor
Industry Association and AIM Media, focused specifically on outdoor
recreation. This has both enhanced entrepreneurial interests in the
region and spurred different businesses to consider locating branches
or headquarters in the region. In fact, through the EDA grant, Gunnison
County and the broader region have now developed a robust pipeline of
business start-ups and private sector investments by fostering
collaborative innovation projects.
We simply did not have the resources to pursue this type of
transformational initiative and economic development without the
assistance of EDA. EDA investments in our region, coupled with local
and state funds, launched a robust economic recovery and job expansion
in our community.
eda programs benefit counties across the country
Since 1965, EDA has worked with local and regional stakeholders to
address the fundamental building blocks for economic growth:
infrastructure investment, business development, loans and financing,
regional innovation strategies and public-private partnerships.
Counties strongly support EDA because the program focuses
investments in the nation's most distressed areas, especially those
suffering sudden or severe economic downturns. EDA's grants are
particularly critical for rural areas, where resources for economic
development can be scarce. Grants are awarded on a competitive basis,
based on regional comprehensive economic development strategies (CEDs),
and are developed and prioritized by local communities. This helps
ensure that projects have significant local support and are part of a
broader regional plan, rather than isolated, uncoordinated local
projects. Through local and regional partnerships, counties and EDA are
well-positioned to collaborate to address economic challenges impacting
communities.
One major use of EDA grants for counties is for water and
infrastructure projects. In one instance, McDowell County, West
Virginia received an EDA award of $1.75 million to the McDowell County
Public Service District to support the replacement of antiquated water
systems installed in the early 1900s. Prior to the EDA grant, water
access and quality had been a major concern for the county of 27,000
people, and the new project will benefit residents, several commercial
businesses and government offices in the area that currently rely on an
inadequate and unsafe water supply. The system replacement will serve
as the catalyst for development and economic diversification in a
region also severely impacted by the decline in the coal industry by
supporting job retention, creating new employment opportunities and
attracting private investments to the area. The county estimates that
these investments will help create 99 jobs, save 65 additional jobs and
leverage $1 million in private investment.
EDA also has a long history of successfully supporting disaster
recovery and resiliency efforts by facilitating the timely and
effective delivery of federal economic development assistance to
recovery planning, redevelopment and resiliency. EDA is uniquely
positioned to coordinate regional disaster recovery efforts in
partnership with its extensive network of Economic Development
Districts (EDDs), university centers, institutions of higher education
and other partners in designated impact areas.
For example, following Hurricane Irma in 2017, EDA awarded $80,000
in 2018 Disaster Supplemental funds to Hendry County, Florida to fund
the Hendry County Community Fiber Optic broadband study, which will
eventually provide fiber optic broadband infrastructure across the
county. Results of this study will provide essential information to
support the region's effort in building a broadband system, which will
help to both diversify the Hendry County economy and increase its
resiliency against future natural disasters. This resiliency also helps
ensure businesses remain in the county and continue to grow throughout
the region.
in conclusion
EDA is proven to be an effective program for counties, communities
and regions to aid in economic development and job creation. EDA
programs and grants are a catalyst to spur recovery and innovation in
communities, and they are uniquely tailored to meet local and regional
needs and conditions. I have seen firsthand the difference EDA can make
in mitigating economic downturns and in supporting our efforts to
create a stable and diversified economy in Gunnison County.
EDA is a program that works on the ground, is essential to helping
communities transition from one economy to the next and helps to
broaden local economic development efforts. It is successful because it
gives us, the local communities, the tools and knowledge to help
ourselves, and counties strongly believe the program should continue to
be reauthorized and continuously funded.
Chairwoman Titus and Ranking Member Meadows--thank you for having
me here today. We appreciate your attention to this vital program, and
I urge your continued support for the Economic Development
Administration which helps build prosperity from the ground up at the
local, regional and national levels.
Thank you again for the opportunity to testify today on behalf of
America's 3,069 counties. I would be happy to answer any questions.
resources
https://www.eda.gov/annual-reports/fy2016/states/co.htm
http://crestedbuttenews.com/2019/03/icelab-accelerator-
goes-national/
https://icelab.co/
Ms. Titus. Thank you, Mr. Messner.
Mr. Muro.
Mr. Muro. Chair Titus, Ranking Member Meadows, members of
the committee, thanks so much for having me here to testify
today on the continuing importance of the EDA and especially on
an important new possible role that it needs to shoulder.
As it stands, the agency plays an essential role in
supporting economic adjustment as we have heard today and
resilience at local places large and small, urban and rural,
amid constantly changing conditions. For that reason, it not
only merits reauthorization but its budget needs to be
increased, I would say, and yet, while the Commerce
Department's EDA remains invaluable in its current mission, it
is my view that the agency's reach and responsibilities also
need to grow in response to a new issue, the opportunities and
challenges for people and places associated with the spread of
powerful new technologies, especially automation and increasing
artificial intelligence.
That is why I want to argue that in reauthorizing the
agency, policymakers should also broaden the EDA's mission and
budget to include a concern about the impact of automation on
local communities. The need for EDA attention to automation and
AI follows from the breadth of these technologies' reach
combined with their uneven impact which stem from the tendency
to amplify the productivity of skilled work and substitute,
that is, do away with, rote or routine work. These uneven
effects across work and tasks also lead to uneven effects
across places, and in many ways, share a lot in common with
foreign competition, factory shutdowns, and corporate
restructuring, other threats to communities that are part of
the EDA's recognized mission.
How this is playing out specifically in places is something
we have looked at at Brookings with a recent research report
called ``Automation and Artificial Intelligence: How Machines
are Affecting People and Places.'' It shows we look both
backwards and forwards in our research. What do we find? We
have overall found that the future shouldn't be cataclysmic in
aggregate. Only about one-quarter of people's jobs may be
threatened and face high exposure. However, that is 36 million
jobs that could be jeopardized. And meanwhile, there is a lot
of dislocation associated with this, and that dislocation will
frequently be in the kinds of places that EDA currently serves.
Specifically, our work looks at the geography of where
these impacts will hit hard, and we see special impacts in
heartland States, smaller cities and towns, and in rural
America. We find specifically that the automation exposure
tasks reaches or achieves 50 percent of all the work in no less
than 43 of the Nation's metropolitan areas in some 560 rural
counties. Please check out my written testimony for maps and
statistical detail on this including data cut to your own
district so you can take a look at how this is playing out
there.
The upshot is that while technology will surely benefit the
Nation in aggregate and in its best educated urban centers, its
disparate local effects will likely hit home in disruptive,
locally varied ways that may disrupt labor markets, could
depress hiring, and necessitate arduous community transitions
in our smaller communities.
So how should you as members of this committee think about
this? A few things come to mind. To begin with, the EDA should
be reauthorized, and it should be significantly expanded, so
making that major commitment is critical.
But a few other things. I recommend that the
reauthorization explicitly name automation as an economic
disruption eligible for EDA economic adjusted assistance.
A few other things. Reaffirm the EDA's commitment to
regional full employment, especially to facilitate worker
adjustment in hard-hit communities. Require the CEDS
[Comprehensive Economic Development Strategy] plans.
Incorporate analysis of emerging technologies' impacts on local
people, firms, and economy. This is an important thing for
communities to be thinking about looking forward. Empower EDA
to launch or participate in an interagency program to help
communities implement these kinds of strategies, and even
expand the scope of the Trade Adjustment Assistance for Firms
program to help companies adapt.
Chair Titus, Ranking Member Meadows, EDA has steadily
evolved over the years to respond to a steady series of
unfolding national concerns. Now automation inroads are hitting
home with special force among many of the EDA's historic
partners in heartland America.
Likewise, many of the agency's existing tools are highly
relevant for helping such communities. Given that, the upcoming
reauthorization holds out a great opportunity for Congress to
help America's people and places contend with a very tricky
issue that is a great challenge for regions. Thank you so much
for having me.
[Mr. Muro's prepared statement follows:]
Prepared Statement of Mark Muro, Policy Director and Senior Fellow,
Brookings Institution
promoting resilience: how the economic development administration can
help communities make the best of automation
Chairman DeFazio, Ranking Member Graves, and Members of the
Committee:
Thank you for inviting me to testify today on the continuing
importance of the Economic Development Administration (EDA) and,
especially, on an important new role that it needs to shoulder.
As it stands, the agency plays an essential role supporting
economic adjustment and resilience in local places large and small,
urban and rural, and amidst constantly changing conditions. And yet,
while the Commerce Department's EDA remains invaluable in its current
mission, it is my view that the agency's reach and responsibilities
need to now grow to encompass the opportunities and challenges for
people and places associated with the spread of powerful new
technologies--particularly, automation and, increasingly, artificial
intelligence.
While local economic disruption is what the agency addresses, it is
not now formally tasked to support communities being affected by
technology-based disruption, which is now being recognized as one of
the most significant sources of current and future community distress.
Along these lines, my testimony--based on new research from my
group at Brookings--initially affirms the importance of the EDA before
turning to the new issue of automation. At that point, my narrative
focuses on:
The nature and spread of automation
The particular geographical stamp of its impacts
The relevance of a modernized EDA in mitigating some of
the most troublesome local side-effects of these technologies.
Overall, I argue that in reauthorizing the agency, policymakers
should broaden the EDA's mission to include a concern about the impact
of automation on local communities. More specifically, I suggest that
the reauthorization explicitly name automation as an economic
disruption eligible for economic adjustment assistance.
The remainder of this testimony elaborates on these conclusions and
related points. I also am attaching our recent comprehensive study of
recent and near-future automation trends and needed responses, as well
as data on the significant levels of projected automation-related task
disruption expected in committee members' districts.
introduction
Even as it is currently charged and operating the EDA has a
compelling mission that is only getting more important--and that merits
reauthorization.
As the only federal government agency focused exclusively on
regional economic development, the agency plays a critical role in
fostering economic resilience in communities in an era of disruption.
In this respect, the EDA has for 54 years endeavored to help local
communities alleviate conditions of economic distress by providing
public works investment, planning grants, technical assistance,
adjustment aid, and other supports.\1\
---------------------------------------------------------------------------
\1\ Ernest Boyd, ``Economic Development Administration: A Review of
Elements of Its Statutory History.'' (Washington: Congressional
Research Service, 2011).
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As such, the agency--while constantly under-funded and facing
uncertainty about its future--has been on the front lines of deploying
a flexible set of tools to respond to an intensifying proliferation of
economic challenges in communities, including foreign competition,
factory shutdowns, corporate restructuring, base closures, natural
resource depletion, changes in energy markets, and natural disasters.
In this way, the EDA has become the nation's principal government
resource for supporting community adjustment in an era of dislocation.
Yet there is now evidence that the amount of distress that
confronts the EDA is growing--and changing. The recent Great Recession
was the most dire and prolonged economic crisis for smaller cities,
towns, and rural areas since the Depression. And the number and scale
of weather-induced natural disasters appear to be increasing, with
catastrophic implications for regions.\2\
---------------------------------------------------------------------------
\2\ See Brian C. Thiede and Shannon M. Monnat, ``The Great
Recession and America's Geography of Unemployment,'' Demographic
Research, 2016; USGCRP, Climate Science Special Report: Fourth National
Climate Assessment, Volume I, (Washington, DC: U.S. Global Change
Research Program, 2017).
---------------------------------------------------------------------------
And beyond that, a significant body of research literature--
including my own at Brookings--suggests that emerging digital
technologies, including various forms of automation and artificial
intelligence (AI), have introduced a new type of disruption into the
nation's economic geography.\3\
---------------------------------------------------------------------------
\3\ Mark Muro, ``Countering the Geographical Impacts of Automation:
Computers, AI, and Place Disparities.'' (Washington, DC: February 14,
2019). See also Mark Muro, Rob Maxim, and Jacob Whiton, ``Automation
and Artificial Intelligence: How Machines are Affecting People and
Places.'' (Washington, DC: Brookings Institution, 2019); Clara
Hendrickson, Mark Muro, and William Galston: ``Counter the Geography of
Discontent: Strategies for Left-Behind Places.'' (Washington, DC:
Brookings Institution, 2018); and Paul Beaudry, Mark Doms, and Ethan
Lewis, ``The IT Revolution at the City Level: Testing a Model of
Endogenous Biased Technology Adoption,'' NBER Working Paper No. 12521.
---------------------------------------------------------------------------
Most evident to date have been machine-driven dynamics that amplify
the ability of skilled workers to add value, substitute for rote work,
and inject winner-take-most--or ``superstar''--dynamics into
markets.\4\ These trends have brought about growth surges in big, techy
cities with the ``right'' skills and industries (think of New York,
Washington, and the Bay Area) that have been accompanied by drift
elsewhere. As a result, rising superstar places are now pulling away
from the rest of America, leaving many smaller or rural communities
with the ``wrong'' industries and skills in distress.
---------------------------------------------------------------------------
\4\ See Enrico Moretti, The New Geography of Jobs, (New York, NY:
Houghton Mifflin Harcourt, 2013) as well as Richard Florida, The New
Urban Crisis, (New York, NY: Basic Books, 2017). See also Mark Muro,
Jacob Whiton, and Sifan Liu, ``Online giants must accept responsibility
for impacts on the physical world,'' The Avenue, January 8, 2018; Clara
Hendrickson, Mark Muro, and Bill Galston, ``Mitigating the geography of
discontent,'' LSE Business Review, December 10, 2018; David H. Autor,
Frank Levy, and Richard J. Murnane, ``The Skill Content of Recent
Technological Change: An Empirical Exploration,'' The Quarterly Journal
of Economics, 2003; James Manyika, Sree Ramaswamy, Jacques Bughin,
Jonathan Woetzel, Michael Birshan, and Zubin Nagpal, `` `Superstars:'
The Dynamics of Firms, Sectors, and Cities Leading the Global
Economy.'' McKinsey Global Institute Discussion Paper, October, 2018;
Sherwin Rosen, ``The Economics of Superstars,'' The American Economic
Review, 1981.
---------------------------------------------------------------------------
Central to these dynamics, including the problems of the ``places
left behind,'' are the disruptive impacts of automation, which boosted
star places but hit smaller, less-educated Heartland communities hard.
All of which suggests the need to add another item to the list of
local economic dislocations that the EDA addresses: the fact that
automation and AI, for all of their positive benefits for some, are
injecting quantifiable negative impacts into many other, often-smaller,
local communities. Pushing back against this challenge needs to become
a new, explicit priority of the EDA as it continues to evolve with the
economy and American communities.
the automation challenge
The need for EDA attention to automation and AI follows from the
breadth of the technologies' reach combined with their uneven impacts,
which in turn stem from their tendency to amplify the productivity of
skilled work and ``substitute'' for rote or ``routine'' work.\5\ These
uneven effects across tasks, occupations, workers, and industries have
hit home in disparate ways across communities in very much the same way
as have such recognized EDA concerns as foreign competition, factory
shutdowns, or corporate restructuring.
---------------------------------------------------------------------------
\5\ Muro, Maxim, and Whiton, ``Automation and Artificial
Intelligence.''
---------------------------------------------------------------------------
How is this playing out specifically, in places? Brookings' recent
research and policy report ``Automation and Artificial Intelligence:
How Machines Are Affecting People and Places'' shows how with both a
``backward-looking'' analysis of national occupational trends in the
``IT'' era of automation from 1980 to now and a ``forward-looking''
analysis of the coming ``AI'' phase of automation.\6\
---------------------------------------------------------------------------
\6\ Ibid.
---------------------------------------------------------------------------
Informed by data and procedures derived from those of MIT economist
David Autor, our backward-looking research suggests that while the
first era of digital automation from 1980 until now did not bring mass
unemployment (in fact 54 million new jobs were created) it did bring
traumatic dislocation as well as wider job gains.
Most notably, the period brought a painful ``hollowing out'' of the
labor market, which resulted from reduced demand for ``mid-skill,''
``routine,'' or repetitive work given machine substitution for such
tasks.
As the chart below suggests, in fact, it is very clear that the
rapid adoption of automation throughout the economy caused both
employment growth and wage progress to slump or cease in the middle of
the skill distribution for middle-wage occupations like production and
clerical workers. Only at the high and low ends of the skill
distribution did employment and wages grow. Our research confirms,
then, that the expansion of IT-powered automation in the decades after
1980 helped disrupt millions of ``routine'' middle-skill jobs, forcing
large shifts of workers into low-wage service employment as robots and
computers substituted for factory and clerical work even as it
supported gains at the top and bottom.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Nor were these effects evenly dispersed across the country. By
mapping the local incidence of ``routine'' or repetitive work in 1980
we are able to depict the geography of automation disruption as it
played out over the last four decades.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The map is clear. Whereas routine work was spread widely throughout
the country at the onset of the automation era, it was not spread
evenly.
And so what has followed in the last 35 years has also been uneven.
With widespread adoption of industrial robots and the personal computer
(PC) came a traumatic, locally variable disruption of middle-wage
employment combined with a massive shift of middle-skilled, often non-
college-educated workers into lower-wage service activities. Notably,
manufacturing and office administration-oriented regions--areas of the
Midwest, Northeast, South, and West Coast with the highest
concentrations of routine employment--were also the places that saw the
largest shift to low-wage service employment in the information age.
In sum, the first era of digital automation has not been spatially
neutral. The places with the largest exposure to routine work--such as
Detroit with its auto factories or New York with its millions of
clerical workers--saw some of the greatest increases of lower-skill
service employment in the IT era. Their relatively large routine,
middle-skill workforces came under special pressure from automation.
Conversely, metro areas with lower shares of routine employment--like
Raleigh, North Carolina, with its universities and hospitals--saw less
dramatic labor market transitions.
But that's the initial IT era of automation. Now the IT era is
transforming into an AI era pervaded by more powerful digital
technologies such as machine learning and other forms of artificial
intelligence.\7\ Which raises the question: What will the next phase of
the interplay between automation and employment look like?
---------------------------------------------------------------------------
\7\ See, for example, Darrell West and John Allen, ``How Artificial
Intelligence is Transforming the World.'' (Washington: Brookings
Institution, 2018) and Chris Meserole, ``What Is Machine Learning?''
(Washington: Brookings Institution, 2018).
---------------------------------------------------------------------------
To shed some light on this, my group worked further with economist
Ian Hathaway--a Brookings non-resident senior fellow--to analyze future
trends in the AI phase of automation using estimates provided by the
McKinsey Global Institute of occupational susceptibility to automation
over the next few decades. (For more on our method see our paper).\8\
---------------------------------------------------------------------------
\8\ Muro, Maxim, and Whiton, ``Automation and Artificial
Intelligence.''
---------------------------------------------------------------------------
Once again, we linked national information on automation's
projected impact on task types and occupations to information on the
occupational mix of local geographies to assess potential employment
outcomes in states and metropolitan areas.
What did we find? Looking at data that incorporates projections of
AI's influence, the picture of future impact on occupation--and, in
turn, on geography--appears a bit different from that of the earlier
period.
To be sure, the overall effects of automation we anticipate look
set to again be wrenching but not cataclysmic in aggregate. That only
25 percent of U.S. employment will face ``high'' exposure to automation
(with 70 percent of current tasks at risk of substitution in the next
few decades) seems manageable in aggregate. Likewise, it is reassuring
that only about 6 percent of workers with a bachelor's degree face high
automation threats in the coming decades. All of which leaves aside the
likely creation of many new jobs supported by new productivity.
However, even the 25 percent total job disruption figure amounts to
36 million jobs that will incur significant upheaval in the coming
years. Furthermore, our calculations suggest that significant
occupational and geographical variation lies beneath the relatively
manageable aggregate figures.
At the national level, a curve describing occupations' current
automation potential (with exposure rising up the vertical axis) has a
distinct new look, in that it reports the highest exposure for roles
with the lowest wages (those to the left on the horizontal axis) with
reduced automation exposure the more wages rise (to the right of the
figure):
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
This curve looks different from the earlier one plotting wage and
employment growth against wage levels so as to suggest automation
pressure. Whereas before routine task content below the 20th wage
percentile was low, here the highest potential for future automation of
current tasks is concentrated among the lowest-wage earners. This
reflects in part a dramatically increased projected inroads of
automation into the service sector thanks to coming AI applications for
food-service operations and office administration. Task-level
automation potential, meanwhile, falls steadily as average wages rise.
Higher earners generally continue to face low automation threats based
on current task content--though that could change as AI begins to put
pressure on some higher-wage ``non-routine'' jobs.
Turning now to the geography of these trends, we see again that
while automation risk will be felt everywhere, its inroads in the AI
era will continue to be felt differently across place (though now, the
pattern is a little different given the broad new vulnerability of
lower-end services).
Along these lines, the data for automation exposure in the AI era
show that automation impacts will be most disruptive in Heartland
states, counties, and cities. Many of these are the same regions hit
hardest by IT-era changes but now the impacts will extend into lower-
skill service occupations.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Along these lines, less-educated Heartland states and counties
specialized in manufacturing and low-end service industries could be
especially hard-hit by automation in the AI era, whereas well-educated
states and counties along the Boston-Washington corridor and on the
West Coast appear less exposed.
In parallel fashion, smaller, less-educated communities will
struggle relatively more with AI-phase automation, while larger,
better-educated cities will experience less disruption and be more
resilient. Here's how that looks:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
According to the map, more than 50 percent of all workers' current
employment-weighted tasks are potentially automatable in small
metropolitan areas like Kokomo, Indiana and Hickory, North Carolina. In
fact, the automation exposure of work tasks reaches or exceeds 50
percent in no less than 43 of the nation's 382 metropolitan areas and
in some 562 out of 1,974 rural counties. By contrast, the shares of
vulnerable work in highly educated, highly digital metros like San
Jose, California and the District of Columbia are just 40 percent and
39 percent, respectively. Overall, these variations owe heavily to
variations in local skill and education levels. Higher education levels
can serve as a stay against AI-phase automation while lower, more
``routine'' skills are more vulnerable to machine substitution.
In sum, the spread of AI-era automation--like the earlier IT
phase--appears likely to have significant and varied local impacts on
exactly the kind of communities that the EDA serves. While the
technology will surely benefit the nation in aggregate and in its best-
educated urban centers, its disparate local effects will likely hit
home in disruptive, locally varied ways that roil local labor markets,
depress hiring, or necessitate arduous community transitions. These
likely local effects need to be recognized and addressed--and the EDA
is better positioned than any other federal agency to take them on.
promoting resilience: how the economic development administration can
help communities make the best of automation
Without a doubt the full needed federal response to automation and
AI is significant and multi-dimensional--far beyond the purview and
capacity of even a robustly modernized and expanded EDA.
For that reason, our recent report provides more than 20 pages of
policy recommendations covering five major strategies aimed at multiple
federal agencies as well as state and local government, business,
educators, and the civic sector. These recommendations call on
government to work with the private sector to embrace growth and
technology so as to maintain or increase hiring and capitalize on the
power of automation to foster productivity and create new work.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
In addition, Brookings' agenda challenges all parties to invest
more thought and effort into ensuring that the labor market works
better for all people. To that end, all actors need to promote a
constant learning mindset, facilitate smoother transitions, reduce
hardships for individuals whose jobs are being restructured, and help
communities that are being heavily impacted.
In this regard, it is both the first and the last challenges--of
helping places make the most of emerging technologies while mitigating
harsh local impacts--that calls upon this committee to articulate an
important new responsibility for EDA.
As I have implied, any comprehensive strategy for making sure
automation and AI work for people and places will need to help places
absorb automation for their economic good while specifically addressing
the hardships of local communities that are especially disrupted. In
keeping with that, an overarching new commitment for the EDA is in
order, as are several more particular strategies.
To begin with, the scale of the new needs highlighted here
recommends not just that the EDA be reauthorized but that it be
significant expanded. Along those lines our research suggests that that
the reauthorization should:
Make a major, comprehensive investment in the EDA to
raise the agency's authorized funding level significantly so as to
increase its ability to support communities' efforts to build strong
economies. This testimony has noted that more communities have more to
lose in an increasingly ``winner-take-most'' economy. Given that, this
is clearly the time to double down on the nation's investment in the
EDA and to raise the agencies authorized funding level. That the
agency's 1978 funding level exceeded $3.5 million (equivalent to about
$14 billion in today's dollars) argues for significant multiplication
of the agency's current $300 million authorization.
In addition, our research suggests that Congress should broaden the
EDA's mission to include a concern about the impact of automation on
local communities. Specifically, I recommend that the reauthorization:
Explicitly name automation as an economic disruption
eligible for EDA economic adjustment assistance. Notwithstanding
perennial concerns about the agency's broad targeting, the committee
should specifically and prominently call out automation-related
dislocation as an important source of community economic distress that
qualifies for EDA assistance. Automation is already arguably as
significant a challenge for local communities as such accepted shocks
as factory shutdowns, foreign competition, and the loss of
manufacturing jobs. Not to acknowledge such dynamics seems arbitrary.
What's more, the current silence implicitly limits and tilts the EDA's
responses. Without an explicit naming of automation EDA responses will
continue to flow toward a relatively narrow swath of trade, defense,
natural disaster, and energy production industries when the true range
of local distress is wider and includes significant dislocation in the
service sector. With automation more prominently named the agency would
be more likely to respond to on-the-ground conditions in a more
relevant way through the use of its main tools, including adjustment
assistance, planning assistance, technical assistance, research and
evaluation, or adjustment for firms.
Beyond that, several other recommendations appear appropriate and
call on the committee to:
Reaffirm the EDA's commitment to regional full
employment, especially to facilitate worker-adjustment in hard-hit
communities. On this point, numerous analysts agree that one of the
most fundamental policy responses in the automation era must be to run
a full-employment economy, with special attention paid to struggling
localities.\9\ This consensus reflects the fact that in conditions of
widespread hiring workers will have an easier time maintaining
employment or transitioning from one job to another--a critical need
given the disruptions of automation. Given that, the EDA should do more
going forward to promote full-employment in the nation's local
communities. Specifically, the committee should approve, as it has
approved before, the use of EDA funds as a locally targeted anti-
recessionary or full-employment measure.\10\ Such targeting might even
include providing standby authority to the President to be used to
allow the EDA to allocate direct additional funds for public works
projects aimed at boosting job-creation through public investment in
areas of drastic need such as infrastructure, broadband, or housing.
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\9\ See, for example, Jared Bernstein, ``The Importance of Strong
Labor Demand'' (Washington: The Hamilton Project, 2018); Josh Bivens,
``Recommendations for Creating Jobs and Economic Security in the U.S.''
(Washington: Economic Policy Institute, 2018); and Robert Atkinson,
``Technological Innovation, Employment, and Workforce Adjustment
Policies'' (Washington: Information Technology and Innovation
Foundation, 2018).
\10\ Boyd, ``Economic Development Administration.''
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Expand support for community adjustment in regions
experiencing harsh local impacts from automation and AI. Finally,
Congress should not only officially empower the EDA to address
automation fall-out and opportunities but bolster its budget so as to
make a difference on this topic. The preceding discussion suggests the
breadth and multifaceted nature of the issue. Therefore, Congress
should increase the agency's ability to deploy its relevant programs
and tools to help communities contending with the side-effects of
automation-related job losses and labor-market dislocation. In this
regard, virtually all of EDA's current programs appear highly relevant
to helping rural and urban communities manage automation-related
transitions so as to become more resilient. Public Works and Economic
Development Assistance can help communities develop physical
infrastructure such as technology-based facilities for utilizing
distance learning for worker skill upgrading. Economic Adjustment
Assistance could be deployed to support ``bottom-up'' local initiatives
to mitigate dislocation and improve resilience, as with local
retraining, technology adoption, and community adjustment strategies.
Economic Development Planning Assistance could be leveraged to help
states, counties, cities, and other planning regions incorporate
automation issues into regional strategic initiatives. And for that
matter the agency's Technical Assistance program can help communities
promote resilience and address under- and unemployment by accessing
expertise, data, reporting, and forecasts on automation trends across
occupational groups, industries, and geographies.
Require all funded Comprehensive Economic Development
Strategy (CEDS) plans to incorporate analysis of emerging technologies'
impacts on local people, firms, and economy to set strategies to pro-
actively embrace new trends. CEDS are strategy-driven plans for
regional economic development, which regions must update at least every
five years to qualify for EDA assistance. These plans help communities
assess their economic conditions and build regional capacity, and as
such they can nudge communities toward embracing new technologies while
working to mitigate their harshest impacts. For example, a CEDS plan
must contain a strengths, weaknesses, opportunities, and threats (SWOT)
analysis, in which communities assess the effects of a wide variety of
regional dynamics, such as international trade and investment,
workforce preparedness, and natural hazards. In that vein, communities
should likewise be encouraged to assess the impacts of emerging
technologies--both opportunities for new economic activity, as well as
areas of risk. CEDS also require communities to incorporate the concept
of ``economic resilience,'' or a community's ability to recover from
major shocks such as economic shifts or natural disasters. Here too,
communities should consider their resilience in the face of disruptions
caused by automation and other emerging technologies.
Empower EDA to launch an interagency program to help
communities implement strategies for automation, AI, and emerging
technology adoption, with a focus on modernizing services and
maximizing co-work with new technologies. Triage, mitigation, and
defensiveness, meanwhile, should not be the sole response to automation
of the EDA. In the long run embracing these new technologies will for
many communities be the most effective way to maintain economic growth
and provide struggling areas an opportunity to revitalize their
economies. And so the EDA should support resilience by supporting
communities' work to embrace technology and digital skills as a way to
embrace change. However, the nation and its communities will be unable
to achieve its full economic potential without better coordination
across the multiple agencies of government tasked with supporting
workers, firms, and communities. Accordingly, the EDA should lead in
the creation of a robust interagency push for region future-proofing
through technology. Among the relevant agencies are NIST's
Manufacturing Extension Partnership; the Department of Labor's
Employment and Training Administration; the Department of Education's
Office of Career, Technical, and Adult Education; the Appalachian
Regional Commission and Delta Regional Authority; the Small Business
Administration; and the Manufacturing USA Institutes housed under
multiple Executive Branch departments. Such a push, what's more, will
need cohesion and funding.
Currently the disparate relevant offices and agencies operate
with only limited coordination. And many of them, like EDA, are under
the constant threat of extinction. Congress, therefore, should not only
ensure a predictable, multi-year stream of funding for each of these
agencies, but should also mandate that they enhance their cross-agency
cooperation and align their missions to help communities embrace
emerging technologies for growth. As the only federal government agency
focused exclusively on economic development, EDA would be well
positioned to lead such an effort.
Expand the scope of the Trade Adjustment Assistance (TAA)
for Firms program to help companies adapt to disruptive new
technologies. Finally, the EDA should move to update its dealings with
firms given the emergence of new technologies such as AI. Government
policies to embrace the transformative power of emerging technologies
will have significant impacts on firms across the country--creating
both ``winners and losers.'' Some firms, particularly those who have
the capacity to be early adopters of new technologies, will see a boost
to their production and sales. However, others will be forced to
contract, merge, or go out of business when exposed to these new
technologies--threatening the livelihood of the workers they employ.
The EDA's TAA for Firms program helps firms affected by the disruptive
impacts of international competition restructure their business
operations, in order to minimize layoffs and boost production and
sales. However, the program is narrow in scope (helping only those
firms disrupted by trade), and grossly underfunded. Congress should
therefore look at reorienting TAA for Firms to help companies adapt to
the disruptive effects of both trade and technology, and should expand
its budget to allow it to meet the full scope of forthcoming
challenges.
In sum, expanding the EDA's budget to deliver of these activities
in automation-impacted regions would enable the EDA to continue
evolving its work of helping communities retain existing jobs and
generate new ones in the age of automation and AI.
conclusion
Chairman DeFazio, Ranking Member Graves, members of the committee:
The EDA has steadily evolved during its lifespan to respond to an
evolving series of national concerns ranging from the problems of
depressed rural communities and the well-being of people in urban
poverty to the local impacts of outmigration, military base closures,
natural disasters, trade disruptions, and the sudden loss of
manufacturing jobs. Now, it is time for Congress to acknowledge and
respond to the pervasive, but also locally specific, side-effects and
opportunities associated with automation and AI.
Automation's inroads are hitting home with special force among many
of the EDA's historic partners in the Heartland of America. Likewise,
many of the agency's existing tools are highly relevant to helping such
communities respond.
Given that, the upcoming reauthorization of the EDA holds out a
signal opportunity for Congress to help America's people and places
contend with the challenges of automation in local labor markets and
employ these powerful technologies in ways that support prosperity.
Thank you again for inviting me. I look forward to addressing these
issues with you.
The author would like to thank Rob Maxim, Jacob Whiton, and Anthony
Fiano for help with preparing this testimony.
The views expressed in these written remarks are those of the
author alone and do not necessarily represent those of the staff,
officers, or trustees of the Brookings Institution.
For additional information, including an appendix of automation
exposure by state, county, metropolitan area, and Committee Member
districts, and a full copy of the report ``Automation and Artificial
Intelligence: How machines are affecting people and places,'' see
electronic version of submitted testimony.
Ms. Titus. Thank you.
Mr. Miller.
Mr. Miller. Good afternoon, Chair Titus, Ranking Member
Meadows, and members of the committee. My name is Rodrick
Miller. I am CEO of Invest Puerto Rico, an independent, not-
for-profit, nonpartisan, private-sector driven investment
promotion engine in charge of promoting Puerto Rico as a
competitive jurisdiction to attract new businesses and capital
investments to the island.
I am here today on behalf of the International Economic
Development Council, the world's largest professional trade
association representing economic developers in the practice of
economic development. I would like to thank you for this
opportunity to provide testimony on the important issue of
economic prosperity post-disaster and the role that the
Economic Development Administration has in its recovery
efforts.
I would also like to extend congratulations to Dr. Fleming.
I know he had to leave, but as someone who has recently
transitioned into a new role, I wish him well and offer our
support.
My first interaction with the EDA was post-Hurricane
Katrina through the New Orleans Business Alliance where I
served as the chief executive officer. Hurricane Katrina was
one of the worst disasters our country had seen. In New
Orleans, the EDA made several strategic multiyear investments
in the creation of the New Orleans Business Alliance and a
variety of other entities.
The New Orleans Business Alliance, which is a public-
private partnership, is the lead economic development
organization for the city of New Orleans, and it is a full-
service economic development organization which means it
engages in many core functions ranging from business retention
and expansion, credit analysis and finance, real estate
development, marketing and attraction, and many other
activities. Through the critical investment of Federal funds
from the EDA and the activities of the New Orleans Business
Alliance, the city has been able to rebuild and thrive.
From the perspective of economic developers, the post-
disaster environment is not unlike that of other professions.
It involves assessment, planning, and execution. The process is
like most of our work. It is a collaborative process. We engage
with elected officials, business and civic leaders. We often
act as conveners to advance programs, policies, and projects
that will lead to the retention and creation of jobs in our
communities.
While healthcare, safety, and welfare action must come
first following a disaster, economic developers are hard at
work, sometimes behind the scenes, enabling economic recovery.
Economic needs following disaster can take many forms. From
homeowners to business owners, there is an abundance of need,
and unfortunately, much of it goes unmet for too long.
From the perspective of economic developers, economic
recovery is no different. The practice areas that economic
developers operate in, business retention and expansion and
infrastructure development, marketing attraction, and so on, it
isn't hard to see that the need is both great and it is varied.
Does the community have a current economic development
strategy? Do we have the resources to connect with our
businesses and aid them in the short, medium, and long term?
How can we move economically critical infrastructure projects
forward like sewer systems and broadband and ports and so on
that are not part of initial response but are essential to
recovery? What projects have we been putting off due to the
lack of resources that are now vital to restarting the economic
engine of the community? Where would the resources for this
come from?
This is where the EDA comes in. EDA has invested nearly $20
million in disaster supplemental funding in Puerto Rico, and
that is just the beginning. The project supports myriad
components of our economy through a combination of technical
assistance and infrastructure work. From supporting local
retail to building facilities to house incubators, the EDA is
helping to create a stronger, more resilient economy in Puerto
Rico.
The EDA also supports the work of organizations like the
International Economic Development Council. IEDC has, for many
years now, participated in recovery efforts including providing
technical assistance and training as well as marshalling
volunteer economic developers like myself who are eager to go
to disaster-impacted areas to help their counterparts rebuild.
The EDA, like organizations such as Invest Puerto Rico,
can't do it alone. We need sustained, consistent input and
support from our elected officials and from our businesses and
from those living in our community. Economic development
doesn't happen in a vacuum, and it really succeeds when
everyone participates. Thank you.
[Mr. Miller's prepared statement follows:]
Prepared Statement of Rodrick T. Miller, Chief Executive Officer,
Invest Puerto Rico, on behalf of the International Economic Development
Council
Chairman Titus, Ranking Member Meadows, Members of the Committee:
Good morning. My name is Rodrick Miller. I am CEO of Invest Puerto
Rico, an independent, not-for-profit, non-partisan, private sector-
driven investment promotion engine charged with promoting Puerto Rico
as a competitive jurisdiction to attract new businesses and capital
investments to the Island. I am here today on behalf of the
International Economic Development Council, the world's largest
professional trade association representing economic developers and the
practice of economic development. I would like to thank you for this
opportunity to provide testimony on the important issue of economic
prosperity post-disaster and the role the Economic Development
Administration has in recovery efforts. I would also like to extend our
congratulations to Dr. Fleming on his recent confirmation. As someone
who has also recently transitioned into a new role, I wish him well and
offer our support.
My first interaction with the Economic Development Administration
(EDA) was post-Hurricane Katrina through the New Orleans Business
Alliance for Economic Development, where I served as Chief Executive
Officer. Hurricane Katrina decimated the city physically, emotionally
and economically. At the time, Hurricane Katrina was one of the worst
disasters our country had seen. In New Orleans, EDA made a strategic,
multi-year investment in the creation of the New Orleans Business
Alliance for Economic Development. This organization, which is a
public-private partnership, is the lead economic development
organization for the City of New Orleans. The New Orleans Business
Alliance is a full-service economic development organization (EDO),
which means it engages in many core economic development functions,
such as business retention and expansion, credit analysis and finance,
real estate development, marketing and attraction, among many other
activities. Through the critical investment from the EDA and the
activities of the New Orleans Business Alliance for Economic
Development, the city has been able to rebuild and thrive.
From the perspective of economic developers, the post-disaster
environment is not unlike that of other professions. It involves
assessment, planning, and execution. The process is like most of our
work: collaborative. We engage with elected officials, business and
civic leaders. We often act as conveners to advance programs, policies,
and projects that will lead to the retention and creation of jobs in
our communities. While healthcare, safety, and welfare action must come
first following a disaster, economic developers are hard at work
sometimes behind the scenes preparing for economic recovery.
Economic need following disasters can take many forms. From
homeowners to business owners, there is an abundance of need, and
unfortunately, much of it goes unmet for too long. From the perspective
of economic developers, economic recovery need is no different.
Considering the practice areas economic developers operate in--business
retention and expansion, infrastructure, marketing and attraction, and
so on--it isn't hard to see that need is both great and varied. Does
the community have a current economic development strategy? Do we have
the resources to connect with our businesses and aid them in the short,
medium and long-term? How can we move economically critical
infrastructure projects forward--sewer systems, broadband, ports, and
so on--that are not part of the initial response, but are essential to
economic recovery? What projects have we been putting off due to lack
of resources that are now vital to restarting the economy's engine?
Where will the resources come from to do all of this?
This is where the EDA comes in. EDA has invested nearly $20 million
in disaster supplemental funding in Puerto Rico, and this is just the
beginning. The projects support myriad components of our economy
through a combination of technical assistance and infrastructure work.
From supporting local retail to building facilities to house
incubators, EDA is helping to create a stronger, more resilient economy
in Puerto Rico. EDA also supports the work of organizations like the
International Economic Development Council. IEDC has for many years now
participated in recovery efforts, including providing technical
assistance and training, as well as marshalling volunteer economic
developers like myself, who are eager to go to disaster impacted areas
to help their counterparts rebuild. EDA, like organizations such as
Invest Puerto Rico, can't do it alone. We need sustained, consistent
input and support from our elected officials, from our businesses, and
from those living in our communities. Economic development doesn't
happen in a vacuum and succeeds most when everyone participates.
EDA has been a leader in economic recovery since the creation of
the agency in 1965. It has aided communities in rural and urban
settings with targeted investments that can be tailored to meet the
specific needs of that community. It has worked in collaboration with
other federal programs, like those at the Department of Housing and
Urban Development, Department of Agriculture, Small Business
Administration, Department of Labor, Delta Regional Authority and
Appalachian Regional Commission, bringing their specific and unique
expertise in economic development to leverage resources for better
outcomes. These collaborations at the federal level are quite similar
to those practiced by economic developers at the local level. We, too,
work with partners in our city planning offices, our state housing
authorities, our local workforce boards, our utilities, our educators,
and anyone else that has a role to play in economic well-being.
EDA is an agency that, as its primary purpose, helps communities
recover from economic distress. They are the experts in economic
recovery and resiliency at the federal level. As this body considers
both future disaster roles and statutory reauthorization of the agency,
I encourage you to engage with the economic developers in your
communities. Hear from them about how EDA's investments have worked.
Hear also from them how EDA can do more--from defederalizing Revolving
Loan Funds to supporting greater integration and collaboration across
federal agencies. Given the tools and support necessary, the EDA can
play a larger role in assisting communities recovering from disasters
and economic distress and allow our country to build back a stronger,
more resilient economy. I am confident that you will hear that my
experience in New Orleans, and now Puerto Rico, is not unique and that
EDA is more than worthy of your continued support.
Thank you.
Ms. Titus. Thank you. Well, I thank all the witnesses. You
have done a good job of not only giving us examples of success
for the EDA but offering some very constructive suggestions as
we move forward with the reauthorization. The 7-year suggestion
for the RLF is something that we certainly take note of that is
worthwhile.
And I want to talk some more about the automation. You say
that 25 percent of U.S. employment will be challenged by the
threat of automation?
Mr. Muro. Yeah. And that doesn't mean that their jobs will
disappear. This doesn't mean wholesale, one-quarter of the
population out of work, but it means that each of those workers
will confront substantial change and perhaps temporary job
loss, you know, all kinds of challenges and maybe the need to
completely retrain. So it is that ongoing change that is--so
the measure is, really, I think about disruptive changes in
workers' lives.
Ms. Titus. It certainly seems to fit under the eligibility
requirement if we make it a little more specific. You know, I
represent Las Vegas where it is all about the service industry,
and you would think you need people to perform those jobs, but
that is not the case. You are moving to robots. You are moving
to automated luggage systems. All sorts of things that are in
automation and artificial intelligence are affecting even the
hospitality industry.
Mr. Muro. Yeah. This is one of the things that has come
into focus in just the last few years that accommodations,
hotel-restaurant could be much more exposed than we think.
Ideally, this will lead to better jobs for some of these
people, but there is no doubt that there will be a lot of
transition and dislocation as you try and get ahead of some of
that.
Ms. Titus. I also noticed you mentioned that the districts
where you see this most affected are small towns, the
heartland, and rural America. That tends to kind of correlate
with red districts politically, so that would make it easier
for us to work across the aisle to try to shore up some of
these projects for the EDA because it is not just big cities or
Las Vegas losing jobs. It is those kind of areas too that will
be greatly affected by automation.
Mr. Muro. I would say, you know, that this, though, does
cross across all kinds of lines and that what you say is
somewhat true, but it is also true that there are a lot of blue
places that will be affected as well.
Another telling thing is recent opinion polling is showing,
though, equal degrees of concern across that line of party. So
I think this is something that is affecting a lot of people in
a lot of places. I think this is something they are talking
about over dinner at night, you know. It is something that is
just on the radar of communities out there.
Ms. Titus. If we were to expand the eligibility of the
Economic Development Administration to include the problems
caused by automation, just give us kind of an example of a
scenario, of a situation where somebody might apply for a
grant, and what would that grant be to do?
Mr. Muro. Well, first, you know, right off, these are the
results of capital investments. It is not that different from
things that the agency is already looking at. It is not unlike
a plant closure. Usually, it is the result of a defined
investment, so this could be identified.
And certainly at the local level, there are places--you
know, it is easily--you could also use the occupational
categories to declare a particular occupation as at risk. I
think that is another way to think about it.
Ms. Titus. Can you help us define that if we want to put
that in the reauthorization?
Mr. Muro. Pardon?
Ms. Titus. Can you help work with us to define that and
make it more specific if we want to put that in the
reauthorization?
Mr. Muro. Absolutely. Absolutely. One of the strengths is
there is now a growing body of work that is pointing in similar
directions, not just from Brookings but others, and this is a
researchable topic. So there is now a good body of research
that is pointing similar directions at a very specific level
for particular occupations.
Ms. Titus. Thank you.
Mr. Miller, of the $191 million that has been allocated for
Puerto Rico, they have only gotten about $20 million. Can you
address that? Do you see some of the problems that we might be
able to identify with getting the money out? Is it with
staffing? Is it with the application process, redtape, lack of
knowledge? How would you explain that, and how can we improve
it?
Mr. Miller. So I think there are a couple of things. One
is, whenever these kind of disasters hit, you know, there is a
pressure to get money out quickly. And I think it really has to
be, in some respects, staged in order to actually have the
impacts and be as strategic as possible. So I think that is a
delicate dance between, you know, how quickly the money is
disbursed and how it is disbursed.
I would say, you know, there was a lot in that question. I
think one of the things is that we see that there is tremendous
momentum in Puerto Rico. When I look at the situation on the
ground in Puerto Rico, when I look at New Orleans, when I look
in Detroit, all the markets that received EDA funding, I
wouldn't say that Puerto Rico is more challenged in terms of
how they are disbursing that than other markets. I think the
reality is there are a variety of challenges that have to be
confronted, and so they are really trying to figure out how to
do it. There has been major motion to kind of make it much more
effective, for example, the establishment of Invest Puerto Rico
as the economic development agency taking away the bureaucracy
and the thing around how companies are brought to the island is
a major step in the right direction. There is the Green Energy
Act that just passed. There are Opportunity Zones, so there are
a variety of things that have been done to kind of move us down
the path.
But I think it is an ongoing relationship development to
try and figure out how to get the money. And one of the things
that is really important about the EDA is that the EDA's
dollars are very targeted, very specific. So we are going
through these processes to get moneys from a variety of Federal
pools, but the EDA has historically, in my experience, been one
of the most effective at getting the money out and actually
making sure that it is very targeted. It never seems to be
quite enough to get all the way to where you want to go but
enough to kind of get the momentum moving and actually
incentivize and encourage the private sector to add additional
dollars to projects.
Ms. Titus. Thank you.
Miss Gonzalez-Colon?
Miss Gonzalez-Colon. Thank you, and thank you Mr. Meadows,
for referring.
Mr. Miller, I have plenty of questions, and I just have 5
minutes, so I will submit some for the record afterwards. But
my first question will be with all your experience dealing with
disasters before, and you just said about the laws that are in
place on the island and how we can combine the Opportunity
Zones that are now in place and the Federal funds that are in
the island.
And one of my concerns is if we got the local regulations
and how to deal with permits to make a lot of that private
investment on the island. And being in the State house for 14
years, I know that is one of the biggest issues. Another one is
energy, the cost of energy on the island as well.
Mr. Fleming a few minutes ago just said in his testimony
that Secretary of Treasury Mnuchin estimated $100 billion in
private capital, but of those, just 17 projects are underway,
none of those in Puerto Rico yet. Do we need to have a local
law to get Opportunity Zones launched on the island?
Mr. Miller. No. I don't think we need a local law to get
Opportunity Zones launched on the island. I think, you know, we
are still waiting for the Federal rules to be finalized. What I
would say is that the big piece of this is really about how
these dollars shift the competitiveness. And so whereas there
are other investments that basically say we are going to get
things back up and running, or we are going to put dollars in
this so that we, you know, fix this problem.
The EDA dollars are particularly important because the
reason why communities such as Puerto Rico or Detroit, or New
Orleans have such a hard time bouncing back is because there
has been a lack of investment for so long and a lack of
opportunity to make these kind of strategic shifts. And what
these EDA dollars do post-disaster is actually allow the
communities not to rebuild themselves but to actually reinvent
themselves.
So whereas HUD and some of the other dollars are really
about kind of how do you kind of get back to where you were,
the EDA dollars are really catalytic in terms of shifting the
conversations. How do we make Puerto Rico a more competitive
place for investment over the long term? How do we make it a
more sustainable economy, a more resilient economy?
So the idea is that, you know, we need to cut redtape in
Puerto Rico. We need to figure out how we articulate our story
better. We need to be very clear about where we are going, but
we really just need more support and kind of----
Miss Gonzalez-Colon. In your experience, this is a very
personal way. I mean, you have more than 20, 25 codels in the
last few years, and we got a lot of NGOs coming, more than 20
universities coming from the mainland to the island, a lot of
people interested in helping now, and I really appreciate that.
But you know, with all the Federal agencies on the island,
every time we met with communities and everybody, there is a
lot of research, studies, waiting for those studies to be
released, and how long those studies will take? It will take 1
year, 2 years, 4 years, 5 years, 10 years. And in that term, a
lot of communities get--you know, feel that there is no sense
of urgency in resolving those problems.
And there is rain, and there is a lot of flooding again,
and you see the problems with the Corps of Engineers. And I
will never--you know, I will never say any bad word about the
Corps of Engineers because they are investing in the island.
Actually, they are doing $2.5 billion investment, and I will
say that that is the best agency working there. But again,
there is a lot of concern in terms of what is going to be
happening? It is going to be--how long will it take? It will
take 10 years, 5, 7?
So in your experience, working with Katrina, working in
areas, depressed areas like Detroit, how long it will take to
have a full recovery on the island? It will be just the
reconstruction, the recovery? Are we talking about just
infrastructure or the jobs and the socioeconomic areas?
Mr. Miller. And so I think that the answer to that question
is multifaceted. One is that a full and robust recovery is
going to take a lot greater coordination between the Federal
Government and the island government, the local municipalities,
the nonprofit sector, and the private sector. No one entity, no
one piece of that puzzle has all of the keys to it, so there
has to be an integrated approach to recovery. And so that is
one of the first things that I would say is absolutely
critical, that there is a partnership. The Federal Government
can't pay for it all. The private sector can't pay for it all.
It has to be a coordinated effort.
The second thing that I would say about it is that, you
know, Puerto Rico--and don't tell anybody. I know nobody's
really listening. New Orleans was cool. Detroit is cool. New
Orleans and Detroit were both cool. I think Puerto Rico
actually has a cool factor that, you know, it hasn't been able
to articulate. And one of the things, I think, that we are
trying to do in Invest Puerto Rico is really articulate a value
proposition around why Puerto Rico is a place where companies
are going to make more money if they come there, where young
people can do good and do well if they come there.
And so that is the opportunity that Puerto Rico has in
front of it. To actually tell a very nuanced story of a
community at the center of the Americas in the Caribbean and
that really has a value proposition that is unique. And so one
of the things that will be essential to the comeback and the
reinvention of Puerto Rico is going to be not only rebuilding
the physical infrastructure but also reversing the population
trend. The number-one driver of investment decisions is people.
Can you get people that are smart and talented, and I think
Puerto Rico is well on its way to doing that.
So if all of those factors come together, I think we can be
stable, and you know, you have got 3 to 5 years where you have
got kind of the attention at the national level. If all those
factors come together within 5 to 7 years, we could be kind of
on a completely different trajectory. And our goal at Invest
Puerto Rico isn't just to try and figure out how to bring in
jobs today and jobs tomorrow, a shot in the arm, but it is
really how to fundamentally shift the economy in Puerto Rico so
it will be sustainable for 20, 30, 40, 50 years from now.
Miss Gonzalez-Colon. Thank you.
Ms. Titus. Mr. Meadows?
Mr. Meadows. Madam Chair, just because of the lateness of
the hour, I am going to give my questions to all of you and let
you respond back to the committee instead of taking any time,
so I will yield back the balance of my time.
Ms. Titus. Well, thank you very much. And so we will take
those questions and get them to you.
Just briefly, one thing that was mentioned, I think, Mr.
Messner, you mentioned about universities. I think we need to
look at how to make universities better partners in these
incubators and things like that. So we will take that into
account too.
So any further questions?
Miss Gonzalez-Colon?
OK. Well seeing none,I will thank you all for waiting so
late and giving us such great testimony. It has been very
helpful, and we will be calling on you again, I am sure.
I ask unanimous consent that the record of today's hearing
remain open until such time as our witnesses have provided
answers to any questions that may be submitted to them in
writing and unanimous consent that the record remain open for
15 days for any additional comments and information submitted
by the Members or witnesses to be included in the record for
today's hearing.
Without objection, so ordered.
No other Members have anything to add?
The subcommittee stands adjourned. Thank you very much.
[Whereupon, at 5:08 p.m., the subcommittee was adjourned.]
Appendix
----------
Questions from Hon. Peter A. DeFazio for Hon. John C. Fleming, M.D.,
Assistant Secretary of Commerce for Economic Development, Economic
Development Administration, U.S. Department of Commerce
Question 1. What positions are currently vacant that are funded by
the disaster supplemental and in which region are the vacancies
located? Is there a hiring plan to fill these positions? What is the
state of the hiring process (i.e. Applications under review,
interviews, etc. . . . )?
Answer.
FY 2019 Vacancies
Economic Development AdministrationPAs of 15 May 2019
------------------------------------------------------------------------
Permanent or Status of Hiring
Disaster Office No. Position Title Process
------------------------------------------------------------------------
Disaster ATRO \\ 1 Civil Engineer Recruitment on hold
pending
reassessment of
need
------------------------------------------------------------------------
Disaster ARO 2 Civil Engineer Posted 4/25, Closed
5/9 (Position
Discussion)
------------------------------------------------------------------------
Disaster PRO 3 Economic Certs issued on 4/3
Development
Representative
------------------------------------------------------------------------
Disaster PRO 4 Economic Certs issued on 3/
Development 29
Representative
------------------------------------------------------------------------
Disaster PRO 5 Economic Certs issued 4/11
Development
Specialist
------------------------------------------------------------------------
Disaster PRO 6 Environmental Certs issued 5/9
Protection
Specialist
------------------------------------------------------------------------
Disaster PRO 7 Management YRCI Developing Job
Analyst Opportunity
Announcement (JOA)
4/12
------------------------------------------------------------------------
Disaster SRO 8 Economic Certs issued on 3/
Development 29
Representative
------------------------------------------------------------------------
Disaster SRO 9 Economic Certs issued on 3/
Development 29
Representative
------------------------------------------------------------------------
Disaster SRO 10 Economic Selection made
Development pending security
Specialist
------------------------------------------------------------------------
Disaster SRO 11 Economic Pending re-
Development advertisement
Specialist
------------------------------------------------------------------------
Disaster SRO 12 Environmental Certs issued on 5/9
Protection
Specialist
------------------------------------------------------------------------
Disaster OCC 13 Attorney Recruitment on hold
pending
reassessment of
need
------------------------------------------------------------------------
Disaster OFMS 14 Administrative Certs issued 5/10
Officer
------------------------------------------------------------------------
Disaster OFMS 15 Budget Analyst Certs returned to
be audited on 3/27
(Resubmit package
for recruiting)
------------------------------------------------------------------------
Disaster OEA 16 Management and Selection made
Program Analyst pending security
------------------------------------------------------------------------
Disaster OEA 17 Management and Selection made
Program Analyst pending security
------------------------------------------------------------------------
Disaster OEA 18 Public Affairs Vacancy closed
Specialist pending issuance
of certificate by
5/24
------------------------------------------------------------------------
Disaster ORA 19 Program Analyst Recruitment package
(Student Intern) to be submitted
------------------------------------------------------------------------
Disaster PNP 20 Program Analyst- Selection made
Performance Data pending security
------------------------------------------------------------------------
Disaster PNP 21 Program Analyst- Salary/incentive
Performance Data negotiation as of
3/22/4/30,
Selectee declined
position, Will re-
advertise
------------------------------------------------------------------------
\\ (Note: YRCI has been contracted by the DOC to assist in processing
human resources transaction. ATRO: Atlanta Regional Office, ARO:
Austin Regional Office, PRO: Philadelphia Regional Office, SRO:
Seattle Regional Office, OCC: Office of the Chief Counsel, OFMS:
Office of Financial Management Services, OEA: Office of Extramural
Affairs, ORA: Office or Regional Affairs, PNP: Performance and
National Programs.)
Question 2. How much disaster supplemental funding has been
allocated to each region and, for each region, what percentage has been
obligated?
Answer. Of the $600.0 million appropriated, EDA allocated $587.0
million to the regions for making grants, $1.0 million to the
Department's Office of the Inspector General, and set aside $12.0
million for salaries and expenses for administering the grants. The
allocation of the $587.0 million for grants is shown in the second
column for the table below. Overall, as of June 11, 2019, EDA is 33.6
percent obligated. The amounts in the disaster table are cumulative and
include both FY18 and FY19.
------------------------------------------------------------------------
Percent
TOTAL FUNDS Obligations Annual
Region AVAILABLE 26- as of 11-Jun- Obligated 11-
Oct-18 19 Jun-19
------------------------------------------------------------------------
Philadelphia (01) 191,269,000 55,005,700 28.8%
------------------------------------------------------------------------
Atlanta (04) 147,362,000 65,612,968 44.5%
------------------------------------------------------------------------
Denver (05) 17,435,000 5,596,000 32.1%
------------------------------------------------------------------------
Chicago (06) 8,005,000 8,005,000 100.0%
------------------------------------------------------------------------
Seattle (07) 93,811,000 16,615,886 17.7%
------------------------------------------------------------------------
Austin (08) 129,118,000 46,558,000 36.1%
------------------------------------------------------------------------
Headquarters (99) -- -- 0.0%
========================================================================
587,000,000 197,393,554 33.6%
------------------------------------------------------------------------
Question 3. How did EDA calculate the regional allocations of
disaster funding that was distributed in the FY18 Disaster
Supplemental? Are these numbers subject to change, and if so, what
would trigger a re-allocation?
Answer. EDA's calculations for regional allocations of disaster
funding depend on the unique circumstances of the particular disasters.
Historically this has involved such factors as Congressional direction/
intent, the level of impact in terms of counties and population
affected, and economic vulnerability factors such as unemployment and
per capita income in impacted counties. For the FY18 Disaster
Supplemental, EDA started its analysis by allocating approximately two-
thirds of the funding to the Regional Offices overseeing disaster
recovery in areas affected by Hurricanes Irma, Harvey, and Maria, and
the California wildfires. This approach was taken in recognition of the
severity of these specific disaster events; Congressional intent to
focus recovery assistance in those areas; requests from Governors and
Congressional delegations from Florida, Texas, Puerto Rico, Virgin
Islands and California; a recognition of the unique challenges facing
Puerto Rico and the Virgin Islands because they were hit by successive
storms, and EDA's prior experience with disasters of this scale. The
remaining funds were allocated by formula to all of EDA's Regional
Offices based on the percent of disaster-impacted populations, percent
of disaster-impacted counties, and per capita income in impacted
counties.
EDA may exercise its discretion to adjust the allocations to the
Regional Offices based on its experience in administering disaster
supplemental appropriations to ensure the funds are used to maximum
effect or to adjust for unforeseen changes in recovery efforts.
Question 4. Many other agencies conduct disaster recovery functions
including FEMA and the Small Business Administration. How does EDA
coordinate with these other agencies? Are there opportunities to better
synchronize disaster recovery efforts across multiple agencies?
Answer. In the disaster recovery framework, EDA coordinates with
other federal agencies in two main ways that vary somewhat by whether
EDA is working exclusively in the context of the National Disaster
Recovery Framework (NDRF) or also under the auspices of a supplemental
disaster appropriation. These two contexts overlap in some respects
because an EDA deployment under the NDRF typically precedes EDA's
receipt of disaster supplemental appropriations.
Initially, in the Recovery Support Function (RSF) context, EDA
works to coordinate with other federal agencies in the Joint Field
Office (JFO) in disaster locations, and at the headquarters and
regional levels, to determine where other agency missions and funding
streams may complement EDA's priorities. EDA also manages the
interagency Economic Recovery Support Function (ERSF) Working Group,
which includes the Small Business Administration, U.S. Department of
Agriculture, Federal Emergency Management Agency (FEMA), Department of
Housing and Urban Development (HUD), Environmental Protection Agency,
Department of Labor, Internal Revenue Service, Department of Treasury,
and other Department of Commerce (DOC) bureaus, to share information
and to facilitate interagency coordination. Later, in disaster
locations, whether under the ERSF or acting pursuant to a supplemental
disaster appropriation, EDA coordinates with other agencies at the JFO,
including inviting diverse federal agencies to participate in EDA
organized economic recovery workshops and assisting communities to
navigate multiple federal resources at once. EDA initiates individual
conversations with federal agencies about specific issues of
overlapping interest, including complementary funding streams and
specific projects of mutual interest. EDA is an active participant in
the interagency Recovery Support Function Leadership Group (RSFLG),
managed by FEMA. The RSFLG is led by six Recovery Support Functions
(RSFs), which are coordinated by a lead agency and supported by other
federal agencies: Economic (coordinated by DOC/EDA); Housing
(coordinated by HUD); Infrastructure (coordinated by the U.S. Army
Corps of Engineers), Natural and Cultural Resources (coordinated by the
Department of Interior); Health and Social Services (coordinated by the
Department of Health and Human Services); and Community Planning and
Capacity Building (coordinated by FEMA).
Commerce/EDA reports general supplemental funding data to FEMA
through its participation in the RSFLG's Program Management Office
(PMO). The PMO tracks all supplemental funding, which was a result of
the historic 2017 hurricane season and subsequent major disasters (such
as the California Wildfires) of 2018. The PMO has a public facing
website, which displays supplemental funding for over 20 other federal
agencies. The website is https://recovery.fema.gov/.
Question 5. How does EDA track and determine the return on
investment of its grants? What metrics does the administration use, and
can you please share with us the results of those performance metrics?
Specifically, can you talk about jobs created, return on investment,
and private investment that has been leveraged through EDA grants?
Answer. EDA collects and analyzes performance measures in
compliance with the Government Performance and Results Act (GPRA), as
amended by the Government Performance and Results Act Modernization Act
of 2010 (GPRAMA). EDA primarily focuses on two performance goals: (1)
promoting private investment and job creation in economically
distressed communities and regions through infrastructure investments
and (2) building community capacity to achieve and sustain regional
competitiveness and economic growth through non-infrastructure
investments.
For its infrastructure investments, EDA's primary return on
investment (ROI) data sources are grantee-provided reports of jobs
created or retained and private investment leveraged. Each fiscal year
(FY), EDA sets performance targets based on several factors \1\.
Grantees report actual data three, six, and nine years after award.\2\
Six-year infrastructure reporting data \3\ follow:
---------------------------------------------------------------------------
\1\ These factors include regular Public Works, Economic Adjustment
Assistance infrastructure, and Revolving Loan Fund appropriation
levels; targets are inflation adjusted based on the Bureau of Labor
Statistics Consumer Price Index. Currently, EDA is developing through a
research cooperative agreement with the Urban Institute a more robust
methodology for estimating outcomes of and setting targets for its
investments.
\2\ EDA analyzes and validates the reported numbers by directly
following-up with the grantees at three, six, and nine-year intervals
from the investment award. EDA also conducts a limited number of annual
site visits. The chart contains the most recently available data for
the six-year results. These data were collected and analyzed in FY2018
and are thus the most up-to-date. The response rate at six years is the
highest and most reliable.
\3\ EDA has found that the data collected at the six-year mark best
capture ROI and have the highest response rate. These data are
unrevised as of their time of analysis. Typically, the analysis of six-
year reporting data for grants made in FY x (i.e., the data reported at
FY x + 6) occurs during the budget formulation process for FY x + 8.
------------------------------------------------------------------------
Jobs Created or Private
Retained Investment
------------------- Leveraged
FY (millions of USD)
Reported ------------------
Target @ FY+6 Reported
Target @ FY+6
------------------------------------------------------------------------
2002 28,900 30,719 $970 $1,393
------------------------------------------------------------------------
2003 22,900 24,533 $810 $855
------------------------------------------------------------------------
2004 22,427 26,695 $824 $2,281
------------------------------------------------------------------------
2005 18,193 26,416 $674 $1,617
------------------------------------------------------------------------
2006 17,548 36,046 $662 $2,402
------------------------------------------------------------------------
2007 16,570 12,685 $647 $2,063
------------------------------------------------------------------------
2008 15,640 12,486 $612 $1,744
------------------------------------------------------------------------
2009 27,958 19,526 $1,093 $2,118
------------------------------------------------------------------------
2010 15,834 24,101 $652 $1,003
------------------------------------------------------------------------
2011 13,392 18,114 $561 $199
------------------------------------------------------------------------
2012 12,348 36,456 $525 $3,226
------------------------------------------------------------------------
EDA is developing innovative metrics to better measure the impact
of its non-infrastructure investments \4\, which it makes through its
EAA, Regional Innovation Strategies, Local Technical Assistance,
Partnership Planning, and Research and National Technical Assistance
programs. The projected launch of these new metrics is Q3 of FY2020.
---------------------------------------------------------------------------
\4\ EDA tracks and measures its non-infrastructure investments'
activities and outcomes, such as:
percentage of Districts Organizations and Indian Tribes
implementing economic development initiatives from the Comprehensive
Economic Development Strategy (CEDS) process that lead to private
investment and job creation and retention; and
percentage of sub-state jurisdiction members actively
participating in the Economic Development District (EDD) activities.
---------------------------------------------------------------------------
For more information on how EDA conducts performance measurement,
please visit https://www.eda.gov/performance/.
Question 6. Are EDA grants oversubscribed? If so, by how much?
Please provide data for each grant program that EDA administers.
Answer. EDA grants are oversubscribed; i.e., EDA receives more
proposals/applications than it can fund with its annual appropriations.
In FY 2018, EDA received requests for funding that totaled more than
double its annual appropriation for its primary implementation
programs: Public Works (PW) and Economic Adjustment Assistance (EAA).
Additionally, for its Regional Innovation Strategies (RIS) program, EDA
received requests for funding in FY 2018 that totaled more than 5.5
times its annual Regional Innovation (RI) program \5\ appropriation,
through which the RIS program is funded.
---------------------------------------------------------------------------
\5\ The RI program is authorized by the Stevenson-Wydler Technology
Innovation Act of 1980 Sec. 27, 15 U.S.C. Sec. 3722 (2015)
(originally enacted as the America COMPETES Reauthorization Act of
2010, Pub. L. No. 111-358, sec. 603, Sec. 27, 124 Stat. 3982, 4030-37
(2011) and subsequently amended by the Revitalize American
Manufacturing and Innovation Act of 2014, Pub. L. No. 113-235, sec.
705, Sec. 27, 128 Stat. 2130, 2231-34 (2014))
----------------------------------------------------------------------------------------------------------------
Proposals/ IRCed Grants\7\ Oversubscription \8\
Applications Applications\6\ ---------------------- ---------------------
Program -------------------------------------------- Appropriation
# $ # $ # $ % (#) % ($)
----------------------------------------------------------------------------------------------------------------
PW 170 $280,450,093 107 $151,215,237 93 $136,236,119 $117,500,000 183% 239%
----------------------------------------------------------------------------------------------------------------
EAA \9\ 158 $113,886,803 106 $72,105,620 93 $64,450,067 $67,000,000 170% 170%
================================================================================================================
PW+ 328 $394,336,896 213 $223,320,857 186 $200,686,186 $184,500,000 176% 214%
EAA
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
RIS \10\ 233 $120,474,506 n/a n/a 40 $20,836,841 $21,000,000 583% 574%
----------------------------------------------------------------------------------------------------------------
Question 7. As EDA\\ plays an increasingly\\ consistent role\\ in
disaster recovery, what changes in current authorization can be made to
facilitate expedited mobilization and grant execution?
---------------------------------------------------------------------------
\6\ EDA considers PW and EAA projects that are evaluated by EDA
Investment Review Committees (IRCs) to be highly competitive and takes
this data into account when evaluating its proposal/application
pipeline and demand. EDA operates the RIS program differently; there is
no analogous phase in RIS program application evaluation.
\7\ Grant $ (i.e., obligations) may exceed appropriations because
EDA re-obligates de-obligated or otherwise recovered prior-year funds.
\8\ Oversubscription by # is calculated by (Proposals/Applications
#) (Grants #); oversubscription by $ is calculated by (Proposals/
Applications $) (Appropriation).
\9\ EAA data includes both regular EAA proposals and appropriations
as well as EAA proposals and appropriations regarding Assistance to
Coal Communities. See, e.g., 164 Cong. Rec. No. 50--Book II at H2084
(Mar. 22, 2018).
\10\ EDA obligated its FY18 RI program appropriation through the
RIS program in FY19.
---------------------------------------------------------------------------
Answer. Expedited mobilization and grant execution is a high
priority for EDA. During FY 2019, EDA is recruiting up to 39 term-
limited staff to support its Disaster Recovery work and is currently
soliciting applications for Economic Development Integrators in the
Denver and Chicago regional offices. EDA has also reached out to FEMA,
SBA, and HHS to more fully understand the authorities granted to those
agencies for disaster-related hiring. EDA will work with the Department
and OPM to continue to bring maximum effort to the responsible
mobilization of disaster resources.
These additional staff can help implement EDA's role in the RSFLG
referenced above, along with its interagency role in leading
coordination of the RSF and in a supporting role to the CPCB RSF.
Question 8. EDA has played a key role in responding to major
economic disruption caused by economic factors, natural disaster, or
other causes. How does EDA help communities plan for these types of
disruptions? What role does economic resilience play in EDA's programs
and planning processes?
Answer. EDA is a strong proponent of the concept that a community
or region cannot effectively build the capacity for economic
development and prepare for potential economic disruptions unless that
community or region has an asset-based plan that clearly defines
community strengths and vulnerabilities. EDA's Partnership Planning
program helps communities and regions with their long-term economic
development planning efforts, supporting a national network of 391
Economic Development Districts (EDDs), which are EDA designated areas
(i.e., mostly county groupings) that have self-identified as economic
regions based on shared economic goals and assets. EDA's support helps
each EDD develop and implement a Comprehensive Economic Development
Strategy (CEDS) which is an economic development blueprint for that
region based on a collaborative, regionally-driven planning process.
Going further, EDA is also a supporting agency to FEMA's Community
Planning and Capacity Building (CPCB) RSF, which plays a key role in
these efforts before, during, and after a disaster.
All CEDS must incorporate the concept of economic resilience, which
EDA defines as the ability of a community or region to withstand or
quickly recover from major disruptions-or shocks-to its underlying
economic base. As a baseline, EDA recommends a two-pronged approach for
regions to approach resilience within their CEDS: 1) implement goals or
specific actions to bolster the long-term durability of the region, and
2) establish information networks among the various stakeholders in the
region to facilitate active and regular communication between all
sectors to collaborate on existing and future challenges. In addition
to playing a prominent role in EDA's economic development planning
process, the concept of resilience is highly-visible as an EDA
Investment Priority (an initial evaluation requirement within EDA's
grant application review process), and as a key factor in grant awards
made under EDA's FY 2018 Supplemental Appropriation for Natural
Disasters.
Question 9. In his testimony, Dr. Fleming suggested EDA can help
improve coordination of federal economic development programs. What can
EDA do to achieve this within its current authorization? What
additional authority would EDA need to fully achieve this goal?
Answer. Under its current authorization, EDA has successfully
established an Economic Development Integration (EDI) team. New,
additional authorities are not necessary for EDA to accomplish this
work. However, its capacity to provide integrated support for economic
development priorities (local, regional, and Federal) is currently
constrained by the total number of vacant EDA staff positions, both in
the regions and at EDA HQ, which EDA is addressing through an
aggressive hiring and recruitment effort. EDA has posted advertisements
for specific vacancies (Denver, Chicago, and EDA HQ) to USA Jobs. Once
certification lists have been established, EDA will be able to commence
the interview process to identify candidates to fill these vacancies.
EDI personnel work with their EDA colleagues and other federal
peers to identify opportunities for greater interagency collaboration
and to facilitate the coordinated and effective investment of federal
economic development resources. In addition to four EDI positions at
EDA HQ, Regional Integrators work in each of EDA's six regional offices
(Atlanta, GA, Austin, TX, Chicago, IL, Denver, CO, Philadelphia, PA,
and Seattle, WA) to further enhance EDA's capacity to support local and
regional economic development projects. Through EDI, EDA works in
partnership with other federal agencies to implement policies and
procedures that:
Increase Access: Ensuring that local and regional
applicants can easily identify and apply for the federal economic
development resources that can best support their local priorities and
objectives.
Enhance Collaboration: Facilitating coordination among
multiple partners and stakeholders (federal and non-federal, public and
private) to promote multiple, strategic investments in support of local
priorities that can contribute to sustainable economic growth,
especially for distressed communities.
Reduce Administrative Burdens: Working with federal
interagency partners on guidance tools to help applicants navigate and
possibly consolidate different administrative requirements that are
triggered by each individual award of federal assistance (e.g.,
strategic planning, reporting).
EDA also deploys its EDI capacities to support critical Federal
priorities, including economic recovery in disaster areas, and
Opportunity Zones.
Fundamental statutory changes, however, are likely necessary if
Congress wants to address integration on a government-wide basis. The
Administration's reorganization proposals submitted to Congress in
accordance with Executive Order 13781, ``Comprehensive Plan for
Reorganizing the Executive Branch,'' which seek to stream-line
government, creating economies of scale and reducing overlap and
fragmentation. For EDA, this includes consolidating EDA into the Bureau
of Economic Growth along with the Department of Housing and Urban
Development's Community Development Block Grant program and rural
business and community facility grants from the Department of
Agriculture, among other changes. The Bureau of Economic Growth would
consolidate existing economic development programs to provide a central
place for grants and technical assistance to communities and
entrepreneurs focused on job creation, business growth, and
strengthening local economies. EDA also stands ready to work with
Congress and other Federal agencies to identify the various statutory
differences in eligibility, unique definitions, differing program
requirements for similar activities, etc. that are the root cause of
many of the difficulties agencies have had in effectively coordinating
action or creating common applications.