A report released today by the National Conference of State Legislatures (NCSL) says the days of rapid revenue declines is nearing an end for most states, a little under two years since the fall of Lehman Brothers and the beginning of the Great Recession. NCSL joins a host of state and local government fiscal observers in welcoming the revenue plateaus, but express caution over the end of Recovery Act funds, changes brought by health care reform and bleaker long-term forecasts.

According to NCSL’s State Budget Update: July 2010, this economic recession has been characterized by rapid declines in the revenue trifecta: sales, personal income and corporate income taxes.

These taxes have continually come in under target in a majority of states surveyed, leading many states to tinker with other forms of taxes, including oil and gas production, real estate transfers, tobacco production, hotels, and extending or increasing sales taxes on alcohol, soda and candy products.

“The recent state fiscal crisis has been almost entirely about revenues – or lack thereof,” the report said.

Chief among the tax shortfalls, and a testament to the depth/breadth of economic decline, was personal income, a source that accounts for nearly 35 percent of state own-source revenues. According to the 45-state survey, twenty states said that personal income tax collections were below the latest target – even after state budget-makers have had almost three years of practice in declining revenue estimates.

But NCSL says that “while revenues continue to underperform in some states, the declines have begun to soften,” and a, “number of states are beginning to see some signs of improvement.” General sales taxes and corporate income taxes appear to be on the mend in many states, and new budgeting cycles have pared spending down to pre-recession (and in some cases pre-2000) levels in many areas.

Despite the $787 billion stimulus package, year-over-year spending in FY 2010 was down in 34 states. This is because state and local government spending has contracted an estimated $43.1 billion since the start of the recession. Without the stimulus funds, overall government spending would have dropped much more dramatically. But those Recovery Act funds will end in 2012, leaving most fiscal officials to brace for a perpetuation of problems.Projected spending in 2011 will go up in thirty states, the NCSL report said, with a majority of the others expecting flat or slight declines in spending.

More than two-thirds (33) states project budget gaps in 2012, tallying over $72 billion. Though, this compares to nearly $84 billion in FY 2011 shortfalls facing 41 states during the compiling of their budgets this year.

“While many states appear to be in a more stable situation – the revenue freefall has abated – they are far from clearing the hurdles wrought by the recession,” the report continues. Many states predict revenue increases, but they also predict new and structural budget gaps extending beyond FY 2013.

Worries over the extension of enhanced Federal Medicaid Assistance Percentages (FMAP) and changes brought by federal healthcare reform are expected to create new gaps over the course of the next twelve months, officials indicated in their survey responses. And according to a recent report by the Rockefeller Institute, local governments’ revenue lifeline, property taxes, have begun showing signs of instability. Local governments reported declines in property tax revenue during the first quarter of 2010 for the first time since the start of the recession – adding to fears that local government have yet to hit bottom.

“FY 2011 may turn out to be the calm before the next fiscal tempest,” the report concludes.

And they’re off!

State and local tax revenues are off to positive start for the first time since Q3 2008. The first quarter of 2010 saw state collections growing on a year-over-year basis, but according to the Rockefeller Institute of Government, there is little cause for celebration.

In the latest State Revenue Report from the Rockefeller Institute, the states’ revenue growth of 2.5 percent for Q1 was largely due to legislated tax increases in only two states: California and New York. State and local tax collections are still down 9.3 percent from prerecession levels, the report indicated, so disregarding those two states, tax revenues in the remaining 48 have declined by 1.5 percent.

Report co-authors Lucy Dadayan and Donald Boyd indicated that state collections remain fragile in the wake of record tax declines in 2009. In other words, this may be a short bounce off the cavern floor after slamming into it last year.

“Even if the economic recovery is as rapid as those from prior recessions, it would likely take state tax revenue several years to recover to its previous peak,” Dadayan and Boyd wrote in the report. The authors also said that little has changed to sway the assumption that slow economic recovery awaits most state treasuries.

The Rocky Mountain region saw the biggest declines in year-over-year revenues, due to a coming-down-to-Earth of oil prices. Wyoming, who was a revenue-making machine last year saw a decline of 30.2 percent, meanwhile Louisiana (another oil hotspot) reported a 24.6 percent drop. Areas in the far West and New England regions buoyed the country with tax revenue increases in California and New York of $3.5 and $2.3 billion, respectively. These increases are credited to legislative changes in these two states’ tax rates on personal income and sales taxes. Enacted tax changes nationwide increased state revenue by an estimated net of $4.9 billion compared to the same time in 2009, the report said.

While local tax collectors fared better than state coffers, ominous downward movements were seen in property taxes – a key revenue stream for local governments. According to the Rockefeller report, this has caused local governments to report declines in property taxes for the first time since the start of the recession. Adding to the 1.1 percent decline in local taxes is a poor showing in corporate income taxes.

“While we are beginning to see some positive figures in various economic indicators, the national economic picture remains mixed,” Boyd and Dadayan said in the study. “Analyses of some of the numbers in terms of longer-term perspective indicate that states will face a long and bumpy road to fiscal recovery.”

One of those numbers is retail sales data, which according to a another report released yesterday indicates more struggles for state tax collections.

“When compared with the previous month rather than a year ago, retail sales are down now for a second month in a row after having risen sharply for about a year: the incipient economic recovery has weakened,” Boyd wrote separately in the Data Alert.

While tax revenues have stopped falling off the cliff, Boyd concludes, state’s face a new cliff in the dissipating of federal stimulus funds and state fiscal problems are far from over.

Alabama Governor Bob Riley is headed to the Farnborough International Air Show in the UK next week to court an agreement with an unnamed aerospace company, in the hopes that they’ll bring jobs to the state. If successful, Alabama is expected to break ground on a new aerospace production plant by the end of the year.

The state is working to increase its budding aerospace industry which currently represents about $8 billion of Alabama’s economy. As part of the air show effort, nearly 60 officials, chamber of commerce members and economic developers are expected to attend with the Governor. Riley is also meeting with Boeing, GKN and EADS which already have interests in the state.

In addition to the air show, the Governor is working with officials from Mississippi, Louisiana and Florida to continue to develop the Aerospace Alliance – a group created to make the Gulf Cost an aerospace hub. One of the goals for the group is to secure the KC-45 aerial refueling tanker project for the region. The project is expected to create nearly 48,000 jobs. If the Aerospace Alliance is successful, the KC-45 will be assembled in Mobile, Alabama.

“I’m very optimistic the result of this economic development mission will be new jobs for Alabamians. We continue working hard to bring new jobs to our state, and we will go anywhere to show companies that we have the skilled workforce they need to make their companies successful,” said Governor Riley.

For forward-thinking governors, the post-Great Recession era will be marked by innovation and opportunity, says Accenture’s Steven J. Rohleder. In this edition of CivSource’s The Gallery, Mr. Rohleder writes that fresh approaches to revenue generation, fiscal management and public assistance are within reach for incoming governors.

On Nov. 2, voters in 37 states will elect the governors they hope can lead them out of the worst fiscal crisis in generations. It is likely to be a thankless job as incumbents and new officeholders will continue to face unprecedented state budget deficits. According to the Center on Budget and Policy Priorities, states could face total shortfalls of as much as $260 billion through FY2012.

While federal support is at an all-time high, many states are currently suffering from fiscal paralysis because of a lack of information about the extent of federal assistance in the years to come, coupled with their own inability to accurately assess the full impact of the recession on state revenues.

Another complicating factor is health care reform, which has eclipsed education and infrastructure as the paramount fiscal challenge going forward. The extent to which the costs of health care reform will be supported by the federal government still remains to be seen.

These issues together cast a pall over gubernatorial candidates. They are unable to make pronouncements during campaign or state-of-the-state speeches with any degree of confidence, particularly with regard to state fiscal affairs. The great fear in state government – now more than ever – is that costs may be underestimated and revenues overestimated. The political rhetoric, “cut – cut – cut,” wears thin when it comes time to execute and manage.

Incoming governors, however, will have the opportunity to implement new ideas and fresh approaches to fiscal decision-making, particularly around three critical areas that must be addressed:

Revenue Generation: The fact is that historical revenue models are failing. The ability to predict state income through taxes and fees must be modernized or states will continue to see declines every budget cycle. Collections are down, and fraud and abuse continue to rise because of the poor economy. Meanwhile businesses and individuals use technology and loopholes to stay one step ahead of the tax collector. In response, states need to implement:

• Analytics and tools to better predict future revenues, and to model the effect of tax and fee changes that must be enacted during a governor’s term in office
• Improved collection strategies; and
• Fraud and abuse strategies.

Strategic Fiscal Management: At the same time governors are getting the revenue side of the books in order, they must also control spending. Admittedly it is difficult to make cuts in education, public safety and the economic safety nets that citizens require in these challenging times. However, rapid cost reductions can be achieved in several major areas:

• Strategic sourcing, in which state agencies consolidate their spending to drive down the cost of goods and services they purchase
• Cross-jurisdiction consolidation, such as combining multiple school districts’ financial, payroll and student administration systems, rather than each district operating their own systems
• Sharing services of back-office functions such as HR, finance and payroll across multiple agencies; and
• Eliminating redundant layers of management or canceling unnecessary projects.

Public Assistance and Support: While state governments are struggling economically, citizens and businesses are being challenged to an even greater degree. Incoming governors may address revenues and cost controls, but they must also improve and target the delivery of services to those who need it most. Most states’ human services and employment systems are decades-old, operate in silos, and focus only on process, policy and procedure — rather than outcomes. By modernizing these systems, states can:

• Put families first, which means truly integrating the delivery of services that address each family’s needs, whether it is food, shelter, health services, or job training
• Use analytics to determine what citizens require now and in the future, especially (though not limited to) focusing on child welfare, to identify the needs of our most vulnerable citizens; and
• Understand the skills of the unemployed and underemployed, and match those skills quickly and effectively with available jobs in each state.

Newly elected governors will be taking office at a critical juncture in the history of their states, shaping the post-Great Recession era. They will have a tremendous opportunity to lead their states through this fiscal crisis and create a new foundation that will last for the next generation.

Stephen J. Rohleder is group chief executive of Accenture’s Health & Public Service operating group

As budget shortfalls continue to plague states across the country, several are being forced to close offices and agencies which provide services to the public. Today, the state of Washington announced that it will be closing a significant number of state offices as a result of budget shortfalls. Employees working at these offices will also be faced with extended unpaid leave. Approximately 35,000 people will be out of work as a result of the closures.

The closures cover all facets of government and public service. We’ve included a partial list with some of the more high profile closures a full list is available here.

• Agriculture
• Commerce
• Conservation Commission
• Corrections
• Council for Children and Families
• Criminal Justice Training Commission
• Early Learning
• Employment Security (local WorkSource offices and the unemployment claims call center will remain open)
• Financial Management
• Governor
• Health Care Authority
• Information Services
• Labor and Industries
• Licensing
• Liquor Control Board (liquor stores open)
• Personnel
• Sentencing Guidelines Commission
• Social and Health Services
• State Patrol
• Traffic Safety Commission
• Utilities and Transportation Commission
• Workforce Training and Education Coordinating Board

A storm has been brewing between state and local tax officials and the online travel industry for the last several years over hotel occupancy taxes. From New York to San Francisco, Washington to Georgia, states and cities have taken companies like Orbitz, Travelocity and Expedia to court for what has been characterized as stealing, tax fraud, and dishonest business practices.

Amid a growing rash of courtroom struggles in the last five years, a body of evidence has revealed how online travel companies make their profits and conduct their business. State and local officials believe they are being short-changed on hotel occupancy taxes, but they are working with outdated ordinances and ambiguous definitions with which to force full payment.

States and cities are now considering alternatives to their hotel tax laws to be inline with the Internet age. Definitions on “room remarketers” and “accommodations intermediaries” are being written into the new laws, but online travel companies are moving to counter these changes with federal legislation.

Under the terms of draft legislation, companies like Priceline.com and Hotwire would be exempt from paying their share of taxes on the retail rate of hotel room bookings. State and local officials say the exemption would be a preemption of their rights and question why this industry should be allowed to set its own tax base. Hotels, meanwhile, benefit from bookings made through companies like Expedia, but are strongly opposed to federal legislation for fear of being left with the state and local tax tab.

This tête à tête between local government officials and the online travel industry is nearly a decade old with hundreds of millions of dollars at stake. Hotel occupancy taxes, also known as transient occupancy taxes, are a major source of revenue for local governments. According to a 2008 hotel industry economic impact report, from American Economics Group, Inc, nearly $12.5 billion in occupancy and related sales taxes were collected that year. And a large portion of that money is redirected to fund tourism costs, such as convention centers, historic preservation, and visitor centers. The report also estimates 25 percent of all hotel taxes go directly to tourism marketing efforts, which can have powerful multiplier effects on a region’s economy.

“Hotel taxes…provide state and local governments with a reliable and necessary funding source,” reads a letter from a coalition of public sector advocacy groups to the Senate Finance Committee in January 2010 (more on the nature of this letter in part two of this series).

That funding source, as it turns out, could be millions short of what is owed. State and local government officials argue there is a gap between taxes owed and the actual amount being remitted by online travel companies, or OTCs.

First defined in 2000, OTCs use what is referred to as “the merchant business model.” According to a June 2000 Securities and Exchange Commission filing from Expedia, the company “acquires inventory at discounted wholesale prices from preferred suppliers and then determines the retail price.” OTCs then collect all funds from the consumers at the time rooms are booked, including taxes and fees. But they only remit taxes based on what it owes the hotel, rather than what it collected from the consumer.

A typical example involves a $100 hotel room and a 10 percent occupancy tax. If the room is bought through the Sheraton’s website, the traveler pays $110, $10 of which is remitted to the government as the hotel tax. But if the room is bought through Travelocity, for example, and the wholesale rate was set at $80, the customer still pays $110, but only $8 is sent to government, leaving Travelocity with $22 in profit.

The remittance gap is the central point of conflict between governments, nationwide, and the online travel industry. This gap could be worth as much as $258 million to state and local governments per year, says one report by the Center on Budget and Policy Priorities.

This issue began reaching critical mass around 2008 with suits being filed by hundreds of cities in Ohio, Texas, California, Kentucky, New York, Washington, New Mexico, Illinois and elsewhere. In most of the lawsuits, governments were trying to obtain back-taxes to the tune of millions. Many of the cases resulted in dismissals because most hotel tax laws and ordinances were adopted before the advent of the Internet. OTCs have been characterized in court as intermediaries or remarketers of hotel rooms, so they fall in a grey area and are not liable to collect taxes, many courts have ruled.

In what some perceive as a landmark case – or at least a deviation from dozens of other cases – San Antonio, Texas led a 172-city strong class action suit requiring a jury to consider whether OTCs were “controlling hotels” under the Cities’ hotel occupancy tax ordinance. Past cases usually relied upon the court to make that decision. In October 2009, the jury concluded that the answer was yes, and ordered Expedia, Orbitz, Travelocity and Priceline.com to pay over $20 million in back taxes. A similar ruling was made last year in Anaheim, California who won $21.3 million in back taxes, interest and penalties – though it has since been overturned by an appeal.

The fight made national headlines in 2009 when Columbus, Georgia – home of Aflac Insurance and the Army’s Fort Benning – successfully won its case against OTCs in the state’s Supreme Court. But as the Wall Street Journal and USA Today reported, Columbus, GA then found itself “delisted” from major OTC search results. Instead, travelers who wished to stay in the Georgia border town were pushed across state lines to look for lodgings in Phenix City, Alabama. Expedia vice president Brent Thompson said the local government in Columbus did it to themselves, telling the WSJ, “They have forced themselves out of the largest travel channel in the world.” This example has since been portrayed as a warning to small(er) towns who dare to go at OTCs on their own.

Given the mixed track record of relying on outdated ordinances and to bring hotels into the conversation, some cities are trying to craft new ones.

In 2009, New York City passed an ordinance that forces OTCs to collect occupancy taxes on the full amount paid by consumers. The new law adds definitions to the existing law to include “room remarketers”, “net rent” and “additional rent.” Additionally, it makes room remarketers collect taxes based on the additional rent and remit those taxes to the Commissioner of Finance – a move that ensures only OTCs are responsible for the taxes above the hotel contract rate (the $22 in the earlier example). The NYC ordinance has served as a guide for other jurisdictions, but it also illuminated the strength and organization of the OTCs’ industry trade group, the Interactive Travel Services Association.

According to a source with the American Hotel & Lodging Association – the national organization for hoteliers – hotels are worried about additional tax burdens, but they are also worried that OTCs can use their rooms against them. When rumor spread about NYC amending its hotel tax ordinance, the ITSA circulated form letters indicating their displeasure with NYC’s proposed ordinance change. They drafted the letter, from a hotel manager’s perspective, asking them to sign it and send it to their councilmember. There is nothing particularly unusual about this practice, the source said. But the ITSA also included a note, which indicated they were keeping track of which hotel managers passed along the note and which ones did not.

“There is a perception from hoteliers that they better comply or else a 3rd party can come in trying to bludgeon them with their rooms, over someone else’s actions,” the source said.

After the ordinance passed city council and was signed by Mayor Bloomberg, NYC was sued by several OTCs in late 2009 on constitutional grounds. The case is still pending.

Washington, D.C., is mirroring the NYC example on proposed legislation. Introduced by Councilmembers Michael Brown, Jack Evans, Kwame Brown and Chairman Vincent Gray, the bill would mandate that online travel companies pay the full amount of tax “on the amount paid by the occupant” of a hotel room.

States join the fray

Individual cities and counties are not the only ones waging battles against OTCs, there is a small, but growing, amount of state-level action. In fact, given the vulnerability of smaller cities and towns, some believe that state legislation could be a more effective tool. Last year, Florida’s Attorney General decided to voyage down the road of litigation, meanwhile members of the Florida House attempted to pass their own version of exemption legislation. The bill has since stalled and the lawsuit is pending decision.

But in North Carolina, industry and government advocates alike are waiting to see how a newly enacted budget bill will be handled come January 2011. Yesterday, July 6, N. Carolina enacted an appropriations bill, which contained several provisions relevant to OTCs. Under the new rules, room “facilitators” (OTCs) are responsible for remitting taxes based on the sales price of a room, which includes, “facilitation fees and any other charges necessary to complete the rental.” According to the budget bill’s provisions,  OTCs are required to comply beginning January 1, 2011. The state estimates a revenue increase of $1.7 million, given these new changes.

The Commonwealth of Virginia has also made some headway in addressing the issue. Companion bills were unveiled this year by Sen. Mary Margaret Whipple and Del. Robert Brink in the Senate and the Assembly. The bills would largely adopt similar concepts, differentiating between hotels and OTCs by introducing new definitions and allowing all cities and counties within the Commonwealth to do what NYC and the District are attempting. Although the House bill failed soon after its introduction, SB 452 passed the Senate unanimously last spring, and received a unanimous vote in a House Finance Subcommittee before being considered by the full Finance Committee.

According to Sen. Whipple and several sources familiar with SB 452, the legislation had been well received by others when time was allocated to understand the complex issue. But after learning about the Senate bill’s quick and unanimous passage, the ITSA dispatched one of its chief lobbyists to Richmond to quell action in the House. Questions of “unintended consequences” – especially for smaller hotels in resort towns – were raised after a weekend break allowed the OTC lobby to advocate their position. But according to Sen. Whipple, the legislation had been crafted with them specifically in mind and she said the hotel industry had voiced their support for changes.

SB 452 was tabled by the full committee and is currently being studied by the Department of Taxation – a move designed to give some deference to the subcommittee who voted unanimously to pass it.

Moving forward, advocates for hotel occupancy tax changes argue a strong need for hotel industry involvement. Hotels largely reject the idea of federal legislation, but they fear that state and local governments, due to the harsh economic conditions of the last two years, will pursue these taxes at any cost – sticking hotels with the bill if necessary. And they have good reason to worry.

In April 2010, the San Francisco Treasurer & Tax Collector sent a letter to area hotels, making them jointly responsible for the full amount that hotel guests pay to the OTCs. The AHLA fear this will happen in many cities, counties and states if federal legislation is enacted.

In the second piece of this series, CivSource will look at proposed federal exemption legislation, its history and the likelihood of future passage.

Last Friday, Texas Gov. Rick Perry announced that his state was going to invest $1.125 million in Frito-Lay North America to create 125 jobs in North Texas and generate more than $50 million in business infrastructure.

Frito-Lay North America will use the funds to implement SAP business management software and other IT system upgrades, the Gov. said. And they will be tapping the Texas Enterprise Fund (TEF) to implement the project in Plano, Tx.

PepsiCo, Frito-Lay’s parent company, is implementing a multi-year business project that includes an enterprise resource planning (ERP) application and the ability to consolidate its SAP business management software conversion team in Plano. Funds will go towards this project and support future PepsiCo projects in the area.

TEF is an incentive tool to foster business growth in Texas, and lure companies away from competing states. According to the governor’s office, the fund has become one of the state’s most important tools to recruit and retain business in the state. First started in 2003, TEF projects must be approved by the governor, lieutenant governor and speaker of the House. A statement released with the announcement says $392 million in projects has generated more than 52,800 new jobs and more than $14.36 billion in capital investment in the state through TEF.

“The City of Plano is very pleased to be involved in this exciting partnership with PepsiCo, Frito-Lay and the State of Texas,” Plano Mayor Phil Dyer said in a statement. “The City of Plano’s Economic Development Incentive Fund was an important component of the company’s decision to expand here.”

Rhode Island signed into law several pieces of legislation designed to make the state more friendly to business yesterday. The bills are the result of the Governor’s work with several groups focused on small business and economic development and are designed to address a range of issues including regulatory reform, workforce development and access to capital.

In August of 2009, Governor Carcieri created a Regulatory Review Task Force designed to identify the regulatory challenges faced by small business and make recommendations on how to improve or remove those challenges. Since then, the Governor’s Office has been working with the House Committee on Small Business, the Senate’s Small Business Task Force, RI Economic Development Corporation, RI Department of Labor and Training, the CCRI 21st Century Workforce Commission, and the Governor’s Regulatory Review Task Force on a collaborative effort working toward this package of legislation. The changes include:

• allocation of up to $250,000 in the state budget towards creatng a single statewide web-based application system that will provide information and populate all of the necessary forms state agencies currently require of small businesses;
• updates to the notification timeline for license or occupational license applications with the Business Fast Start Office;
• a reduction in the approval timeline for fire alarm, smoke detection and carbon monoxide plans from 90 days to 15 days;
• naming a small business representative to the state Apprenticeship Council form current employer representatives;
• establishing a simultaneous review and approval process with all state agencies that have regulatory or permitting authority;
• the appointment of four small business representatives to the Rhode Island Economic Development Corporation’s board of directors;
• establishing an Office of Regulatory Reform within the Economic Development Corporation to continue reviewing the state’s regulatory processes with the goal of streamlining the process for businesses of all sizes.

In addition to these measures, the state is pushing forward with several plans for workforce development which are designed to align workforce skills and training with current economic demand. The state’s General Assembly appropriated $240,000 for funding the Community College of Rhode Island (CCRI) to strengthen its workforce development efforts, and passed legislation to statutorily redefine the mission of CCRI to include workforce development. The new legislation will change the purpose of CCRI to a “workforce development center.”

Rhode Island has also increased business’ access to capital with landmark measures designed to make up for the gaps in bank funding currently faced by business. The Industrial Recreation Building Act (IRBA) which provides loan money for businesses was increased from $20 million to $60 million as a result of the still tight credit market. The IRBA has been previously funded up to $80 million but that ceiling was lowered in before the recession due to lack of demand.

The RIEDC will also back $125 million in loans through the Jobs Guaranty Program, a program designed to provide loans backed by the state for the creation of permanent full-time jobs that pay at least 250% of minimum wage and offer benefits. In conjunction with the Jobs Guaranty Program, RIEDC will also create a Procurement Assistance Program to make the state more competitive in winning federal, state and local government contracts.

The District of Columbia’s artists, designers and other creative talents are a vital component to the economic stability and growth of the city, says a new study.

How vital?

According to an eighteen-month joint study between the DC Office of Planning and the Washington DC Economic Partnership, more than 75,000 jobs, which generate over $5 billion in annual income, can be attributed to the District’s creatives.

The study also acknowledges the creative community’s importance in “softer” revitalization efforts in underserved neighborhoods. Through arts and creative urbanism residents, visitors and city officials are able to further a “sense of place” with positive outcomes for city planning, public education and workforce development initiatives, the study said. Specific areas such as U and 14th Street, Anacostia and others mentioned as section of the District that have become vibrant through the help of artists, musicians and other creatives.

“This study puts the District in a new light – we are truly a creative city, where creativity and talent combine to enliven our community and enhance our competitiveness,” Harriet Tregoning, Director of the DC Office of Planning, said about the report. “The creative economy is also helping to reconnect and revitalize emerging areas of the city and helping neighborhoods develop an even more distinctive sense of place.”

In conjunction with these findings, Mayor Adrian Fenty announced the release of his administration’s Creative DC Action Agenda. Spanning the design, media, performing and visual arts sectors, as well as the museum, heritage, and culinary industries, the Creative DC Action Agenda outlines a plan to support and grow the District’s creative economy.

As part of the Action Agenda, the city will make available its economic, asset, and land use review practices to strengthen the District’s creative economy. Some of the components of the plan included:

• Defining and categorizing the District’s creative assets
• Assessing the economic significance of the District’s economic competitiveness
• Assessing opportunities associated with creative economy support systems, like education, funding, facilities, land use and other infrastructure
• Developing a set of actions and recommendations

But the report also found that, “While there is a strong support system that underlies the creative economy, its effectiveness has been somewhat constrained by a lack of effective coordination and leadership and limited cross-segment and cross-generational network.”

One way the District’s creatives and the city government are working to address this known shortfall is through Digital Capital Week, the District’s first ever digital arts and technology festival. DC WEEK has held events in nearly every corner of the city, garnering attention from all levels of government and private industry.

The 75-page report outlines not just how to support the creative community that exists, it seeks to cultivate the District’s creative economy over the long-term through arts education – using public schools and philanthropic education – internships, creative job banks and defining creative career paths.

Governor John E. Baldacci unveiled a new Foreign Direct Investment initiative at the 30th Maine International Trade Day event held at the Samoset Resort earlier this month. The governor hopes that by pushing green exports to Europe, the state can build off successful efforts in 2009.

The initiative will focus on increasing investments in Maine’s renewable energy and advanced materials fields, as well as enhancing Maine’s capacity to be a center of excellence in wind energy, composites and advanced materials. The initiative hopes to attract investments in business and R&D, to bolster the state’s export economy and university programs.

“We have an exciting opportunity in Maine to build on our core strengths in the renewable energy and composites technologies sectors,” said Governor Baldacci. “The trade mission I led last year to Germany and Spain emphasized and reinforced that Maine as a desirable place to invest in the energy sector. Europe showed a lot of interest in Maine in these fields, and several investment groups have visited Maine since last September as a result of the mission. The Direct Foreign Investment initiative builds on this momentum.”

The Maine International Trade Center (MITC) will manage the program, which will include:

• Increasing outreach in international markets through trade shows, trade missions and investment seminars in targeted areas;
• Developing international relationships in the renewable and advanced materials areas; and
• Hiring a Foreign Investment Attaché to work on targeted markets in Europe and Asia to bring foreign investment and joint ventures into the State of Maine.

Maine, like other states, saw a decrease in trade during 2009. Overall figures showed $2.2 billion in export, a loss of 24% coming off of four years of steady growth. 2010 looks to be better with initial figures up 20% in the first quarter. Currently paper, pulp and semiconductors drive export in Maine but the state hopes to diversify its export base going forward.

In 2009, $148 billion was invested in the U.S. by foreign companies, and 5.5 million American workers are employed by foreign firms. In Maine, more than 24,000 workers are employed by foreign companies, with $6.2 billion invested in property and equipment.