States, Metros Turning to Ballot Initiatives to Strengthen Economies, According to Brookings

A growing number of states and localities, stymied by conventional budgetary processes, are seeking financial support for economic development initiatives through alternative means, according to a new report from the Brookings Institution. Many regions are instead turning to legislative referendums and citizen-driven ballot initiatives to support large-scale economic initiatives. Authors Jessica A. Lee, Mark Muro and Bruce Katz offer several recent examples of state innovation, education and infrastructure projects funded through ballot measures. The researchers only recommend this approach in cases where traditional funding mechanisms have failed.

The shift toward citizen-driven ballot initiatives reflects two ongoing trends: one unfortunate, one more encouraging. First, at the federal, state and metropolitan levels, conventional budget processes have become increasingly contentious and ill-suited toward investment in economic initiatives with mid- to long-term goals. Federal assistance for regional initiatives remains limited, and state and local tax revenues have been slow to rebound to pre-recession levels. Few governments are able to make the kind of economy-shaping investments that lead to vibrant, innovative economies years down the road.

At the same time, there is a growing awareness on the part of the public that investments in innovation and entrepreneurship are vital to increasing employment, incomes and regional competitiveness. Thus, ballot measures have emerged as a promising approach to capitalize on public enthusiasm and circumvent the sometimes poisonous budget negotiation process.

The Brookings authors highlight a few of the more prominent statewide ballot initiatives that have led to investments in scientific research and technology businesses. These include California's 2004 Stem Cell Research and Cures Initiative and 2012 Income Tax Increase for Multistate Businesses Initiative, as well as Ohio's 2005 Third Frontier initiative (later expanded in 2010). Public support for large-scale initiatives such as these indicates that technology and innovation-related efforts are often broadly popular, particularly when paired with evidence of economic results. In cases where budgetary and legislative obstacles prevent sensible economic development investments, ballot initiatives can be used to translate support into funding.

The authors, however, caution that these initiatives should only be pursued in cases where conventional processes have failed, and where the political climate lends itself to a successful campaign and effective implementation. Ballot initiative campaigns are often expensive and only 24 states allow citizen-initiated measures. Still, in difficult budgetary and legislative times, this approach offers an important option in shaping competitive economies.

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