State, Local, and Federal Economic Development Policies: New Federal Patterns, Chaos, or What?

Abstract

Federal economic development policies and those of state and local governments are potentially complementary, but they are not necessarily consistent in practice. Increasing emphasis on these policies by state and local government, coupled with potential changes in federal tax and spending strategies, provide considerable potential for conflict. State and local economic development policies have a momentum of their own, but many are dependent on aspects of federal tax and spending policy. Industrial revenue bonds and tax-exempt financing of infrastructure are threatened by potential changes in federal tax law. Local development efforts have depended heavily on financing from federal programs such as community development block grants and urban development action grants-programs potentially threatened by attempts to cut the federal deficit. The Reagan administration's major economic development initiative, enterprise zones, has languished in Congress, but many states have adopted the concept. While federal, state, and local officials will probably continue to clash over some development policies, some interesting possibilities for cooperation exist.