Gov. John Carney (D) is ready to hand Delaware’s Economic Development Office a pink slip.
Carney’s proposal would trade in parts of the 36-year-old DEDO for a public-private partnership. It would be made up of a 15-member board filled with business leaders, nonprofit heads and university researchers.
“The heart of it is going to be in an innovation, entrepreneurial, startup economy so we need a more entrepreneurial approach to compete, in my view, and in the view of a lot of the business leaders in our state,” he said.
Taxpayers would cover $2 million in operating costs, requiring private businesses kick in another $1 million to bankroll the public-private partnership.
Carney says the current economic development strategies haven’t been ambitious or hungry enough.
“We kind of sit back in our offices now, in some ways, wait for business. All you’ve got to do is look at our travel budgets,” he said.
“[This partnership will be] much more aggressively going out. Then it’s going to look, in some ways, very similar. The key is to make sure there’s a seamlessness, again, with the incentive side of it.”
Officials with the Department of State would still oversee the incentive side, continuing in the form of loans and tax credits.
And that department will also absorb 27 DEDO positions currently overseeing tourism promotion, and small business development.
14 other people working for DEDO will have the option to apply for positions with the new partnership, find a new job within state government or move to the private sector.
A working group made up of business leaders, lawmakers and others suggested most of these changes to Carney last month.
Rep. Bryon Short (D-Brandywine Hundred), who chairs the House Economic Development Committee, was one of them.
He says the state needs to find a new way to link up with businesses and help reshape Delaware’s economy, but adds there needs to be strict transparency to keep the public’s trust.
“It’s something that I stressed, I believe, in every single one of the task force meetings we had, and if we don’t get to that level, it will undermine the effort,” Short said.
And Carney says that’s at the top of his mind too.
The governor would co-chair the new partnership to help oversee that all business is done above board.
“People will have to recuse themselves. It’ll be obvious, in my view, when they have to recuse themselves, when they have conflicts and that will be written into our bylaws,” Carney said.
For some people, that’s not good enough.
One of the ideas from the working group would be to have board members pay for their own seats.
Rep. John Kowalko (D-Newark South) says that would give them outsized influence when it comes to recommending how to dole out millions in public dollars.
“They may not have a say over disbursement of taxpayer money, but once they pay a fee to get engaged in that they’re going to have influence, whether or it’s direct or indirect,” Kowalko said.
Instead, he wants to see a smaller version of the current economic development office focused on growing existing businesses.
That he says should involve tax credits only instead of handing out cash up front – like the kinds of deals that led to the state losing $21.5 million from the bankrupt Fisker Automotive.
The proposal is getting accolades from people outside state government.
William Latham leads University of Delaware’s Center for Applied Business and Economic Research and was an economic advisor to former Gov. Pete DuPont (R).
“I’ve always thought that the economic development activity has suffered because the people tend to be, mainly, government type people,” Latham said.
He notes lifelong public servants or those with business degrees who went straight to work for state government don’t necessarily have the right perspective needed to lure companies here.
“When you have business people that know how business works taking a look at some of these proposals they may be able to see something that elected officials or bureaucrats don’t necessarily see,” said state Sen. Brian Pettyjohn (R-Georgetown), who also served on the task force.
Latham applauds Carney for putting economic development at the top of his priority list.
Now, he says the governor needs to avoid selecting people for the 15-member board for political reasons.
“I would be looking more at the kinds of backgrounds that the individuals have to make a judgment about whether they can contribute,” Latham said.
It’s still unclear how people will be chosen for a board seat or what the overall mix of industries will look like.
All these issues need legislative approval.
Carney hopes to have the new partnership running by early next year.