Bold (and/or Misguided?) Predictions for 2019

For some reasons, I’ve decided to take a chance and make some predictions for what might happen in economic development policy discussions this year.  Given our current volatile political climate, this task is somewhat risky, but I’m still giving it a shot.  Below, you can see my take on some policy issues and debates that I expect to heat up this year.  Feel free to share your reactions or your ideas as well.

• Second Thoughts on Opportunity Zones?

Opportunity Zones have received a lot of hype this year and rightfully so.  They have the potential to bring significant new investments to many distressed communities.  I want this program to succeed, but I still remain nervous about its prospects.  I have little doubt that investors are flocking to these funds, which offer generous tax breaks.  I’m less certain that catalytic investments will reach areas that really need it.   The jury is still out on the program, so I’ll remain optimistic for now.  But, I do see an increasing potential for an opportunity zone backlash to emerge, especially if the heavily hyped benefits of zones are slow to emerge.  (One example:  Here’s a recent piece that refers to “Trump’s gentrification scheme.”   This pushback may also be melded into wider critiques of the Trump tax cut plan (which included the original Opportunity Zones language) and wider concerns about the overuse of economic development incentive programs.

• Rural Housing Gets Attention

We’ve heard a steady refrain from employers for at least ten years:  “I can’t find workers with needed skills or work ethic.”   I still hear this complaint, but now I also hear: “Even if I find workers, they have no place to live in our community.”   Housing affordability and availability has been a huge problem in hot urban markets for some time.  It’s now recognized that similar problems exist in rural regions where housing for families or professional workers is in short supply.  At present, there appears to be little White House interest in tackling these issues, but I do expect more public debate and discussion on the role of housing as a key driver for economic in rural communities.  We can also expect housing (in all communities) to be an important agenda item for the 2020 elections.

• Occupational Licensing Debates

There continues to be a lot of bipartisan support for cutting back on occupational licensing rules, which are deemed by many as a bureaucratic obstacle for many budding business owners.   We hear lots of horror stories about long and costly licensing procedures for massage therapists, manicurists, and the like, but we also know that there is voluminous evidence that shows that credentials and accreditations offer a huge lift for disadvantaged workers seeking better paying jobs and careers.  While it’s unlikely that the US Congress will make licensing reform a priority this year, we can expect that state legislatures will continue to work on these issues.  If you want to track these efforts, I highly recommend the National Conference on State Legislatures Occupational Licensing web portal.

• New Federal Program Opportunities

Ongoing political turmoil in Washington means that the potential for new federal programs is pretty limited.  But, there are two areas where I expect we’ll see some activity or even some new funding opportunities.  The newly enacted Farm Bill includes a new Rural Innovation Stronger Economy (RISE) grant program that could provide new funds ($500,000 to $2 million) for “rural jobs accelerator partnerships” that focus on supporting innovation and entrepreneurship in rural areas.  This program will need to be further developed in 2019, but it offers potential.  A second opportunity focuses on defense-related manufacturing.  The FY2019 Defense Authorization bill includes provisions for a Defense Manufacturing Communities program, somewhat similar to an earlier Investing in Manufacturing Communities Program (IMCP).   Funding and program design questions are still being debated, but I expect to see some new defense manufacturing-related investment programs in 2019.