The alphabet soup of economic development agencies in state government will likely get a new recipe this session as lawmakers look to consolidate the system to make it more inviting to businesses.
And many officials say the process is long overdue.
Gov. Dannel Malloy’s transition team has issued a report that said 33 state agencies, boards and commissions are involved in economic development, a situation that has led to a fragmented delivery of services.
With job creation a top priority, the system must become more consumer friendly, officials said.
“It’s not really apparent to small business owners what these agencies do or that they are even out there,” said Andrew Markowski, Connecticut director of the National Federation of Independent Business. “We need a centralized place where businesses can have access to all those services.”
Malloy has expressed support for consolidating economic development agencies, but his official proposal won’t be released until his budget is finalized next month.
Malloy’s transition team has already recommended creating a “Jobs and Development” cabinet that would prioritize state resources on the creation of jobs. Such a cabinet would include the commissioners of economic development, transportation, education, environmental protection and agriculture, among others, who would identify and then expedite approvals on high priority projects.
Currently, the state’s lead economic development agency is the Department of Economic and Community Development (DECD), which implements most policies and programs designed to enhance business and housing.
Connecticut Innovations (CI) and the Connecticut Development Authority (CDA) also play key roles as investment arms for venture funding and state-backed loans.
The Connecticut Commission on Culture and Tourism (CCCT) is the lead marketing arm for the state, and many other state agencies — like the departments of labor (DOL) and environmental protection (DEP) — are also sought to play key roles in business development.
Bipartisan support has existed in the legislature in recent years for streamlining economic agencies, but nothing has come to fruition. Reforming the system is complex, especially with so many different groups involved in the process, lawmakers said.
Creating a one-stop shop for businesses, where information would be available on permitting, financing, regulations, and other government resources seems to be gaining widespread support.
Other proposals have been kicked around recently.
In 2009, for example, then Gov. M. Jodi Rell proposed merging CCCT and the state’s Office of Workforce Competitiveness with DECD, and combining CDA and CI.
Another recent proposal called for the creation of a single quasi-public agency that combines DECD, CDA, CI, and Connecticut Housing Finance Authority.
Sen. Gary LeBeau, a Democrat from East Hartford who co-chairs the commerce committee, said Malloy will ultimately lead the way in deciding how consolidation works.
LeBeau said the current system lacks direction and agencies haven’t been aggressive enough. He also said there’s been too much focus in recent years on large companies instead of concentrating on growing smaller businesses.
“They’ve concentrated on trying to hit the home run instead of hitting a bunch of singles,” LeBeau said. “The occasional big deal will happen, but you need to chase smaller deals because there could be a lot more payoff down the road.”
LeBeau said he supports a one-stop shopping concept that would include one agency with quasi-public braches including CDA, DECD, CI, CCCT, and possibly pieces of the Department of Labor.
“Whatever we do, it needs to be faster, smarter, and quicker,” LeBeau said.
Sen. Scott Frantz, a Republican from Greenwich who is the ranking member of the commerce committee, agrees that change is needed. Frantz said he believes CDA is one of the most effective development agencies because of its independent governance model. And more agencies, especially ones that deal with business, need that independence.
Frantz said CDA should be left as a standalone entity, while parts of DECD should be rolled into a quasi public agency, giving it more freedom.
“CDA is a very functional and effective group that could carry out a mission of economic development larger than DECD,” Frantz said.
Of course, any effort to consolidate agencies can lead to turf wars and concerns that certain functions will be performed by the wrong organization.
“You have to be careful what you do because you don’t want some agencies run with the same philosophy,” said Dale Kroop, president of the Connecticut Economic Development Association, which represents cities and towns.
CDA and CI, for example, require fast decision making when it comes to investments or loans, so sticking them somewhere where there is a big bureaucracy wouldn’t work, Kroop said.
“Consolidation will not be effective if DECD tries to run CI or CDA,” Kroop said. “Those agencies need to be run like a bank.”
For some, the rearrangement of the alphabet soup is not the important thing. It’s having a substantive, long-term plan that provides direction to where the state is going in the future. That would also make it easier, proponents say, to define what agencies are needed for the 21st century economy and what their role should be.
“The real challenge is developing and vigorously implementing an economic development strategy, one to which all of the agencies involved in economic development support aggressively and effectively,” said Fred Carstensen, director of the Connecticut Center for Economic Analysis.
Carstensen said the state lacked a long-term plan under the Rell administration.
Of course there is also a question of who will lead economic development in the state. Acting DECD Commissioner Joan McDonald was a Rell appointee and is moving on to a job in New York State.
Malloy said he is conducting a national search for the position, but a few names have surfaced as potential frontrunners.
They include Ronald Angelo Jr., the deputy commissioner of DECD, and Michael W. Freimuth, who served as Stamford’s economic development head when Malloy was mayor. Freimuth is working as the commissioner of development in New Rochelle, N.Y.
State Sen. Gary LeBeau, a Democrat from East Hartford who co-chairs the commerce committee, likely will be at the center of any plan to reshape economic development agencies.
