Over the past five years, the report adds, Fairfax County outpaced Montgomery in adding research jobs in life sciences — an industry that Montgomery has long touted as a cornerstone of its economic development strategy.
To reverse course, the report proposes the formation of a $275 million job creation fund that would offer grants and other perks to companies willing to set up shop or expand operations in the Maryland suburb of 1 million people. The District and Northern Virginia have unveiled similar incentive programs in recent months, but it is unclear whether officials in liberal Montgomery, who have been focused on supporting vulnerable residents hit hardest by the pandemic, will be receptive to the idea.
“Everything in the budget competes with compensation for county employees and programs for residents who are in need,” said Jacob Sesker, an economic consultant and former council budget analyst who wrote the report. “It’s hard, given pressures like those, to make room for improving the business climate.”
“But the lights that used to be blinking yellow are now blinking red,” Sesker continued. “Like it or not, the data indicates that Montgomery’s economy is facing some serious problems.”
By comparing the county’s share of the regional economy in 2007 and 2019, Sesker said, he found that over 12 years, Montgomery lost 14,000 jobs in high-paying industries like finance and information technology to neighboring jurisdictions. It also lost real estate investment amounting to about 32 buildings and 3.3 million square feet of office space.
This “economic underperformance,” he wrote, led to the county forgoing up to $275 million in tax revenue.
“The pandemic can either exacerbate existing trends or create an opportunity,” said Charlie Nulsen, president of the Washington Property Company and co-founder of Empower Montgomery, the nonprofit that commissioned the report.
Many companies in the Washington region are now deciding how to manage their post-vaccine workplaces, Nulsen said, including by introducing a hybrid model, creating smaller offices or relocating their headquarters away from downtown D.C.
Whether they land in Montgomery or go elsewhere could depend on what local governments offer.
Nulsen said he thinks the county has focused too narrowly in recent months on its short-term recovery from the coronavirus crisis and “social safety net issues” like rent relief and tax credits for low-income families. Such programs provide only a temporary reprieve, he said, calling them “one-shot solutions.”
County officials recently passed a $5.96 billion operating budget that boosted funding for schools and social services, including food distribution hubs and mental health crisis counselors — resources that community leaders and advocates say are badly needed.
But without deeper investment in the county’s long-term economic trajectory, Nulsen argues, Montgomery’s overall tax base will not be able to accommodate those needs on a long-term basis.
“The county can walk and chew gum at the same time. . . . It can and it should do both,” said Steve Silverman, a co-founder of Empower Montgomery and former county council member.
With a year left before the county’s primary elections, he said, business leaders hope candidates will take up the idea of a job creation fund or come up with proposals of their own. Many eyes are on the three candidates for county executive: incumbent Marc Elrich (D), council member Hans Riemer (D-At Large) and businessman David Blair.
All three have said they intend to make economic development a central part of their campaigns. Elrich is pushing to establish a life sciences and tech campus in White Flint; Blair said he wants to restore “financial discipline” to county spending; and Riemer said he’ll make it a priority to spur development along the light-rail Purple Line.
County council member Andrew Friedson (D-District 1), who received an early copy of the report and has positioned himself as an ally to the business community, said a job creation fund is a “serious proposal to consider.” But he also said he doesn’t think any single measure can serve as a silver bullet to the county’s lagging growth.
“Individual grants to individual businesses, while important, is not an economic development strategy,” Friedson said.
He disagreed with Nulsen’s remarks that officials have not taken bold steps to drive job growth, citing the recent government-backed push to establish a “Global Pandemic Center” in the county and a tax credit approved by the council last year to encourage the construction of high-rise buildings above Metro stations. The county has also worked to attract biotech companies by cutting down on bureaucratic red tape and offering training for entry-level biotech jobs.
“One of the big strengths of Montgomery’s economy is biotechnology, and the county leadership has made great strides to capitalize on that strength,” said Paul DesJardin, director of community planning and services for the Metropolitan Washington Council of Governments.
Nulsen and Sesker, however, say Montgomery has relied too heavily on a belief in the life sciences industry, along with federal government agencies, to drive economic growth. Life sciences is “having a moment” because of the pandemic, Sesker said, but it hasn’t fulfilled its touted potential over the past two decades of revitalizing Montgomery’s economy.
“It has been raining technology jobs in the region,” Nulsen said, citing Amazon’s campus in Arlington, Microsoft’s presence in Loudoun County and Facebook’s office in D.C. “The question we need to ask is: Why haven’t they decided to land in Montgomery County?”