States warm up to cooperation in the economy; Ohio, Michigan governors cite need to work together
BYLINE: JOE VARDON BLADE STAFF WRITER
A joint economic development zone shared by Toledo and southeast Michigan might create jobs, but it could lessen the competition for big business between Ohio and its northern neighbor.
Depending on who you ask, less competition can be a good or bad thing.
John Austin, a nonresident senior fellow with the Brookings Institution, a liberal think tank in Washington, said states need to get past "this zero-sum game" of economic competition and focus more on strengthening an entire region.
"The economy really has nothing to do with state and even national boundaries anymore," said Mr. Austin, who is also the vice president for the Michigan State Board of Education. "It would be great if a region gets new business, enterprising business, because it often steps across state borders."
On the other hand, there are those who think competition for economic development is good for all parties involved.
David Hansen, president of the conservative Buckeye Institute for Public Policy Solutions, is a believer in a free market.
"Competition between states is a good thing," Mr. Hansen said. "Some people view the economic development battles and the tax giveaways to be disconcerting. We like the competition."
In yesterday's editions of The Blade, development and economic experts, as well as government officials from Ohio and Michigan, discussed the idea of a business venture that could positively affect both states.
The suggestion before them was to consider some sort of joint economic development zone in Toledo north of Alexis Road between Telegraph Road and I-75 and including the eastern portion of Bedford township and the southern portion of Erie Township - all supported by Toledo utilities.
The idea would be to attract jobs and commerce in an area of the country hit hard by the declining auto industry.
Many issues would need to be to worked out, chief among them how to share the tax revenues generated in this hypothetical district.
While discussing these topics with The Blade last week, Ohio Gov. Ted Strickland said a compact between Ohio and Michigan required more research, but he also said the notion "felt like it made sense."
Mr. Strickland said he tried to promote a regional economic approach among Ohio, Kentucky, and West Virginia in his previous job as a U.S. representative.
"I've always believed in regional cooperation," he said. "There will always be competition between states, but sometimes it can have a negative result. Trying to encourage collaboration in cases where competition can be disruptive makes sense."
The possibility of cooperation between Ohio and Michigan has grown even stronger, he said, because of a budding alliance between himself and Michigan Gov. Jennifer Granholm.
The two were recently paired together as mentor and protege by the National Governors Association, and Mr. Strickland said he and Ms. Granholm are "in sync politically and philosophically."
Ms. Granholm's press secretary, Liz Boyd, said Friday the two governors have discussed regional trade policies, and the Michigan governor is looking forward to more efforts of economic collaboration with Mr. Strickland.
The Brookings Institution's Mr. Austin said it is this type of cooperation, and not competing with other states for every last tax dollar, that will help struggling economies to rebound.
"Taxes are not as important right now as research and development," Mr. Austin said. "Those kinds of things give a region the political power and impact it takes to attract some of these big firms.
'It's a big change'
"Then you take the tax revenues and spread them across the region. But it's a difficult thing to sell politically because it's a big change."
Article I, Section 10 of the U.S. Constitution says, in part, that "no state shall, without the consent of Congress, enter into any agreement or compact with another state."
But according to a 1997 report completed by the Council of State Governments, the Supreme Court ruled in 1893 that not all compacts require congressional approval, and Congress now usually gets involved only when the compact has federal implications.
Author Joseph Zimmerman, whose 2002 book Interstate Cooperation: Compacts and Administrative Agreements, wrote that interstate compacts generally involve "negotiations reaching an agreement on a tentative compact," "enactment of the compact by the concerned state legislators," and "consent of Congress if the compact is political in nature."
Mr. Zimmerman also wrote that such compacts "[establish] the equivalent of a uniform law in all or part" of the zone created by the states' agreement.
At the bare minimum, each state legislature must adopt identical legislation to create an interstate compact, which itself would be no small feat of collaboration.
It sounds like at least some elected officials from Ohio and Michigan could be willing to join hands, and this list stretches beyond the two governors.
Michigan Sen. Randy Richardville (R., Monroe) said last week that he recognizes job creation is an important issue in both states, and he is in support of a regional effort to boost employment.
"This is something I would certainly be willing to talk about with my friends in the Ohio legislature," Mr. Richardville said. "We're in need of some new thoughts, new ideas. Because of the financial issues in both states, we need to be looking for some longer-term economic development items."
Kaptur in favor
Congressman Marcy Kaptur (D., Toledo) told The Blade she supported the idea of a joint economic development zone, adding that the issue merits further study to decide how the zone could be structured among state, federal, and private entities.
"Anything that builds cooperation around Lake Erie is a good thing," she said. "If we look at the combined bonding authority along the lake, it's a very powerful instrument."
Congressman John Dingell (D., Dearborn) said he would work with Miss Kaptur, and he urged Ms. Granholm and Mr. Strickland to work together to meet their states' economic needs.
"I have complete faith in them to do what these important industrial states need and to do it well," Mr. Dingell said.
Mark Barbash, the economic development director for the Ohio Department of Development, which is not an elected position, echoed Mr. Strickland's comments about the need for regional cooperation.
But Mr. Barbash also said for a joint economic development zone between Toledo and the Michigan townships near its border to really work, the most cooperation would need to come from the communities that would be directly involved.
"The state can help facilitate, but from a development standpoint, it would be critical for the local communities to get behind it," he said. "We can't force anything on them.''
Staff writers Joshua Boak and Jim Provance contributed to this report.
Contact Joe Vardon at:
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