The House Committee on Economic & Small Business Development has published its interim report to the 86th Legislature.
The report discusses issues such as Hurricane Harvey’s economic impact, high-growth high-tech start ups, workforce needs, economic development incentives, the aviation and defense manufacturing industry, and agency operations under the committee’s jurisdiction. For full details and conclusions of the committee, please see the complete report.
Spotlight on Recommendations
Charge 1. Hurricane Harvey’s economic impact – Examine Hurricane Harvey’s economic and workforce impact on the state and private sector. Analyze the effects and efficiency of state resources available to assist in job training and the recovery of the state’s workforce.
- The extent and cost of Harvey’s destruction were significant. Our state continues to learn from the past as we try to prepare for future emergency needs. Every natural disaster poses unique challenges to overcome. The dissemination of accurate information was identified as a challenge during recovery. We need to continue to improve on making sure those in need are aware of the resources that are available and how to obtain them.
- Our state’s economy was temporarily impacted by indirect damages caused by the interruption of business activity. However, Texas has built a diverse and resilient economy and because of this, while some industries struggled more in the wake of the storm, Hurricane Harvey’s long-term effects on the Texas economy will be minimal.
- Moving forward we must make sure we adopt policies that are appealing to all types of businesses. Making sure the Texas economy is diverse will help keep our economy strong even when faced with unexpected challenges that temporarily hit a specific region or industry.
Charge 2. High-growth, high-tech start ups – Study the state’s effectiveness in developing and growing high-growth, high-tech start ups. Review current regulations and determine if barriers exist that potentially impede investment and growth. Evaluate the concept of a “sandbox” as a regulatory approach for enabling innovation and the feasibility of implementing such an approach in Texas.
- The state should adopt a resolution endorsing Economically Targeted Initiatives (ETIs). If a state pension fund faces two investment opportunities with equal expected returns, then the tiebreaker rules should state that the investment should go to the one that provides some additional economic benefit to the state.
- As technologies continue to grow more sophisticated and emerging industries become more
- high-tech, universities have become important players in the processes of invention, innovation, and commercialization. We must make sure our universities are strong. One key step in doing this is to adequately fund higher education including health-related institutions. Additionally, the state should explore ways to further support the commercialization of university innovation. We currently invest heavily in the front end of the process using tools such as the Governor’s University Research Initiative to recruit distinguished researchers from around the world to the state. We need to take our efforts a step further and make sure that invention, innovation, and commercialization continue to thrive in Texas.
Charge 3. Workforce needs – Evaluate the ongoing and long-term workforce needs of the state’s business and industries. Determine whether state resources are adequate to address shortages and assist with closing the existing or future gaps in workforce readiness and skills to ensure the continued economic security or utilization of incentives.
- The state should encourage local economic development professionals and businesses to work closely with public schools and community colleges. Additional tools focused on the development of interpersonal skills necessary to obtain and maintain employment should be explored.
- To ensure the state’s workforce is able to meet the demands of the growing technology innovation and IT markets, higher education institutions and public schools should work with private employers to craft, adopt, and promote IT certifications for students and workers.
- An example of this collaboration is evidenced in the California Cloud Workforce Project or “CA Cloud,” which is comprised of 19 Los Angeles area community colleges and their local high school partners. They recently announced a collaboration with Amazon Web Services (AWS) to offer a regionally-recognized cloud computing certificate. This inter-system education collaboration aligns local talent development systems, K-12 institutions, workforce boards, community colleges, and four-year universities with the future labor needs of key industries.
- Another state that is taking a step toward ensuring their workforce can meet the demand for employers seeking applicants with cloud computing skills is Virginia with the Northern Virginia Community College. Their program, called NOVA, recently announced a cloud computing specialization as part of its Information Systems Technology (IST) Associate of Applied Science degree starting in fall 2018. The program will be one of the first cloud computing degrees in the nation offered by a community college.
Charge 4. Economic development incentives – Analyze current data on the distribution of state economic development incentives across the state. Identify advantages or qualities, if any, possessed by the regions frequently awarded state incentives. Accordingly, identify resources available to underserved regions to increase awareness or utilization of incentives.
- The size and diversity found in the state of Texas is one of our greatest economic assets. Maintaining a diverse economy is key to economic longevity. Keeping this is mind, we can not have a one incentive fits all approach to economic development. It is vital to have balance. Incentive programs like the Texas Enterprise Fund offer large sums to big companies that historically locate in urban areas. Additionally, it is important to maintain the tools that smaller communities use including the Property Tax Abatement Act in tax code Chapter 312 and the Texas Economic Development Act found in Chapter 313. Many cities have successfully adopted a Type A or Type B sales tax and consider it vital to their economic development pursuits. Heritage tourism allows a rural community to be successful for embracing their history and culture. The committee recommends maintaining a comprehensive approach to the states’ economic development strategy and looking for ways to help enhance or highlight the attributes individual regions possess.
Charge 5. Aviation, aerospace, & defense manufacturing industry – Study the economic impact of the aviation, aerospace, & defense manufacturing industry in Texas and the state’s ability to facilitate industry job growth and investment. Review the relationship between the economic vitality of industry and military veterans transitioning into the workforce. Determine existing and potential barriers to the retention and expansion of the manufacturing industry in the state and the broader economic implications it may have on workforce readiness, as well as veteran employment and support services. (Joint charge with the House Committee on Defense & Veterans’ Affairs)
- The Legislature should adopt policy to conform the Texas franchise tax deductions for the aviation, aerospace, and defense manufacturing industry to the costs definitions contained in the Federal Acquisition Regulations (FAR), which more accurately reflect the actual costs incurred by these companies.
Charge 6. Agency oversight – Monitor the agencies and programs under the Committee’s jurisdiction and oversee the implementation of relevant legislation passed by the 85th Legislature.
- Continue to explore ways we can ensure the Skills Development Fund remains a useful and beneficial tool for employers. Explore the increased use of the Skills Development Fund for training in interpersonal or “soft skills.” Continue to examine the state’s economic development policies and their ability to maintain and enhance our diverse economy.