1 Economic Development Issues for Rural Alabama Joe A. Sumners, Ph.D. Director Economic Development Institute Auburn University

2 Economic Development “Economic development is a process by which a community creates, retains and reinvests wealth and improves the quality of life.” – David Dodson, MDC Inc., Chapel Hill, NC

3 Economic Development Principles 1) The ultimate goal of economic development is to improve the quality of life in the community. – Businesses are attracted to communities that are good places to live, work and conduct business.

4 Economic Development Principles 2) A strong economy requires a strong community. Economic development requires a foundation upon which to build. Roads, water, gas, electricity and sewers are necessary for economic growth – physical infrastructure. At least as important is the community’s civic infrastructure of strong local leadership, vital community institutions, public involvement, and a community mindset of pride and optimism.

5 Economic Development Principles 3) Successful communities are developed from within. Control of a community’s future is in the hands of its residents. Only they can decide where they want to go and then take the actions necessary to turn vision into reality. Sustainable economic development occurs in a community that develops its own capacities instead of relying on others to do it for them.

6 Rural Distress in Alabama Alabama Commerce Commission: “Clearly, there are two Alabamas, one urban and one rural. The first is enjoying relative success, although there are deeply distressed pockets within our urban areas. The second, for the most part, is making little or no progress and continues to keep Alabama from being recognized as a successful competitor.”

7 Alabama Rural Distress County June ‘03 Unemployment 1. Washington17.4% 2. Wilcox15.4% 3. Lowndes13.8% 4. Dallas13.7% 5. Sumter12.9% 6. Greene12.7% 7. Bullock12.5% 8. Choctaw12.0% 9. Perry11.7% 10. Lamar10.9% 11. Hale10.5% 12. Butler10.1% 13. Randolph10.0% County % Over Covington17.9% 2. Crenshaw17.1% 3. Tallapoosa16.6% 4. Clay16.5% 5. Henry16.4% 6. Geneva16.3% 7. Fayette16.1% 8. Etowah16.0% 9. Lamar15.9% 9. Randolph15.9% 9. Cherokee15.9 %

8 Alabama Rural Distress County Lowest SAT Scores 1. Bullock 1. Macon 1. Perry 1. Sumter 2. Barbour 2. Greene 2. Lowndes 2. Wilcox 3. Marengo 4. Butler 4. Coosa 4. Pike 4. Russell 5. Chambers 5. Clarke County Median Family Income 1. Wilcox $22, Sumter $23, Bullock $23, Greene $24, Perry $26, Macon $28, Lowndes $28, Dallas $29, Butler $30, Crenshaw $31,724

9 History of Economic Development in Alabama Throughout the 20th Century, Alabama’s economic development strategy was built on low taxes and unskilled, low-cost labor. In the later 20th Century, the U.S began to export low wage, polluting industries; new focus on high technology. Alabama was poorly positioned to compete when question became not “what does labor cost” but “what does labor know.”

10 “The State of the South 2002: Shadows in the Sunbelt Revisited” (MDC, Inc.)  “National recovery won’t bring jobs back to the rural South. Production has moved to other countries with lower wages, or plants have substituted technologically advanced machines for people. Tens of thousands of jobs are not coming back.”  Gone forever is the kind of economic development strategy that Alabama and other Southern states used for decades to lure industry: “Enticing companies from afar to relocate with the bait of cheap land, low taxes and a surplus of hardworking but undereducated workers. That old recipe no longer works.”

11 Tax Burden TOTAL PER CAPITA STATE AND LOCAL TAX REVENUE (FY 2000) STATE TAXESNAT. RANK 1. Georgia $2, North Carolina 2, Florida 2, Kentucky 2, Louisiana 2, South Carolina 2, Arkansas 2, Mississippi 2, Tennessee 2, Alabama 2, National Average $3,100 Alabama: 68% of Nat. avg; 75% of Georgia’s tax burden

12 Property Tax Revenue 2002 (Per Capita) PROPERTY TAX REVENUE PER CAPITA (FY 2000) STATE PROP TAXES NAT. RANK 1. Florida $ Georgia South Carolina North Carolina Mississippi Tennessee Kentucky Louisiana Arkansas Alabama National Average 885 Alabama: 34% of Nat. avg.; 54% of other southern state avg. ($561)

13 Education Spending EDUCATION SPENDING PER K-12 PUPIL ( ) STATE SPENDING NAT. RANK 1. Georgia $7, Kentucky 7, South Carolina 7, North Carolina 6, Florida 6, Louisiana 6, Mississippi 5, Tennessee 5, Arkansas 5, Alabama 5, National Average $7,463 Alabama: 70% of national average; 82% of other southern state avg.

14 Rural Schools Local funding for education in Alabama’s rural school systems is only 57% of the local support provided to school systems in the state’s metropolitan areas. County and city school systems in Alabama’s 45 rural counties average $793 per student in local support. County and city school systems in the state’s 22 counties located in metropolitan statistical areas average $1,386 per student – a difference of $593 per student. (Source: Public Affairs Research Council of Alabama, Samford University, “Local Support for Public Schools: Tax Rates and Revenues Per Student, 1999”).

15 Economic Growth ECONOMIC GROWTH (% change in employment ) STATE NAT. RANK 1. Florida 4 2. Tennessee Mississippi Arkansas Louisiana Georgia Kentucky South Carolina North Carolina Alabama 41

16 Economic Growth INDEX OF STATE ECONOMIC MOMENTUM (September 2002) STATE NAT. RANK 1. Florida 5 2. Tennessee South Carolina Georgia Arkansas Kentucky Mississippi North Carolina Louisiana Alabama 38 The Index looks at one-year changes in: 1) employment, 2) personal income, and 3) population

17 “But this I say, he who sows sparingly will also reap sparingly, and he who sows bountifully will also reap bountifully.” 2 Corinthians 9:6 (NKJV) or “You get what you pay for”

18 Beyond the Interstate: The Crisis in Rural Alabama 1. State Leadership and Commitment 2. Statewide Coordination 3. Regional Strategies and Collaboration 4. Improved Quality of Life in Rural Communities 5. Rural Leadership Development and Capacity Building 6. Diverse and Innovative Rural Development Strategies