U.S. Senate Committee on Environment & Public Works
U.S. Senate Committee on Environment & Public Works
Hearing Statements
Date:   04/29/2004
Statement of Senator Max Baucus
Reauthorization of the Economic Development Administration

Mr. Chairman, thank you for convening this hearing. As you know, I am a big supporter of the Economic Development Administration. This agency has been a major contributor to the development of Montana’s economy over the years and has been a solid partner in state and local efforts to move our state’s economy forward. My support for EDA comes from first-hand experience in working with EDA on virtually every major economic development project and initiative over the past dozen years or more.

I also have first-hand experience in EDA’s reauthorization, as former Chairman and ranking member of the Environment and Public Works Committee. In 1998, I sponsored S.2364 along with my original co-sponsor, Senator Snowe. The bill eventually attracted co-sponsorship of more than 60 Senators. That bill was unanimously reported out of this committee and passed under unanimous consent in the Senate. Later that year, the House of Representatives passed S. 2364 unanimously and it was signed into law. This marked the first passage of an EDA reauthorization bill since 1980, a period of 18 years.

That bill not only reauthorized EDA, but significantly improved EDA’s authority to advance this nation’s efforts in improving the economies of economically distressed communities. I am the first to admit, however, that we cannot rest on our laurels. There is a need for constant improvement. That improvement should be accomplished with a recognition of the core mission of EDA and should recognize its strengths while identifying ways to increase its effectiveness.

With this in mind, I feel that we should identify some of EDA’s key strengths. First and foremost is this agency’s efforts at the state and local level. It is widely recognized that economic development is inherently locally driven. That is, economic development is only effective when state and local leaders engage the private sector to realize economic development goals and objectives. EDA’s strength is that it is built on this premise.

A critical component in local economic development, for example, is the Comprehensive Economic Development Strategy, or CEDS. These strategies, a key requirement for investment, provides the basis for consensus among local government and business leaders as they plan for critical infrastructure improvements, public-private partnerships and investment strategies that are needed to support economic growth and job creation. In addition, EDA’s assistance programs engage key partners at the state and local level. These include state and local government, economic development districts, local development organizations, university centers, and tribal governments. Consensus is created before a project is designed, much less implemented.

The effective word here is “Partner”. EDA’s programs do not operate in a vacuum, directed by Washington bureaucrats. Instead, assistance is directed by local and regional planning, with EDA staff at the local level providing technical assistance where it is needed most ---- on the ground, where the action is! EDA operates as an active partner, working with state agencies and other federal agencies to make a difference at the local level. This important partnership is greatly enhanced by the actions of the Economic Development Representative. I have witnessed first hand in Montana on many, many occasions the excellent working relationship between the EDR and many Montana entities. This is a core strength that we need to enhance. I will be interested to hear Dr. Sampson’s ideas regarding how we can augment this important component of how EDA programs are delivered at the state, regional and local level.

A major factor contributing to the success of EDA is its ability to maintain its local partnerships over many years, ensuring continuity and stability as economically distressed areas struggle to make lasting economic improvements. A prime example is EDA’s support for economic development districts. Montana currently has four economic development districts, providing economic and community development planning and assistance to communities in 22 of Montana’s 56 counties. The planning grants provided by EDA have allowed these districts to develop and maintain critical expertise to assist communities in addressing their needs. However, funding for economic development districts literally has not increased for more than 30 years. In fact, it has diminished over that time. In addition, Montana has four economic development districts that have been designated by EDA but do not receive any planning funds. This means that the remaining 34 Montana counties do not receive the substantial benefits of EDA’s planning grant program.

In addition to economic development districts, some Indian Tribes within Montana only receive $35,000 to support their economic development planning efforts. Indian reservations are some of the most economically distressed areas of this country. Quite frankly, I do not know how we can expect advancements in the economic development of our reservations with such limited resources. I would be particularly interested in hearing Dr. Sampson’s ideas for increasing funding for economic development districts and Indian Tribes.

In my state, we also have an EDA-funded University Center. The University Technical Assistance Program (UTAP) provides critical technical assistance to small manufacturers using engineering students from Montana State University. I cannot think of a more cost effective way to provide valuable “hands-on” technical assistance to small manufacturers than UTAP does. In fact, this program eventually lead to the formation of the Montana Manufacturing Extension Center (MMEC). These services are critically needed at this particular moment in time, when manufacturers are moving jobs overseas. I would be interested to know how EDA will strengthen its commitment to organizations such as UTAP.

Another critical component in EDA’s “tool box” of programs is the successful Revolving Loan Fund program. In Montana, we have realized significant private investment in our communities because this program was available to economic development districts and local development corporations. The program is responsible for literally thousands of jobs retained or created in Montana communities. We need to build on this program to ensure its effectiveness in combating low per capita income, high unemployment, and high out-migration rates in our distressed communities. Montana’s EDA Districts, local development organizations and other political entities have utilized the RLF program in many innovative ways to leverage millions of dollars of local, state and private sector funds to create significant employment opportunities.

EDA’s programs have proven to be effective in addressing local economic development needs. These programs avoid duplication of other federal programs while providing assistance that complement other federal, state, and local efforts to create lasting improvements in economically distressed areas.

In summary, I would like to stress that the success of EDA in carrying out its mission is dependent on its partnership at the state and local level. Assistance that is based on locally-driven planning through the Comprehensive Economic Development Strategy process, coupled with adequate funding of our economic development districts, tribal economic development programs, University Centers and the Revolving Loan Fund program is the key to EDA’s future success.