States scramble to negotiate final budgets; DE, LA, ME, MO, NH, VT and WA reviewed for innovation funding

With a July 1 start to the fiscal year in most states, several states that were at an impasse over their budget faced at least partial shutdowns. Last minute negotiations restarted services in both Maine and New Jersey, while Illinois, which has been operating without a budget since 2015, faces threats of a downgrade in their credit rating if a deal cannot be reached. This week we present our findings of innovation funding from seven states, including $2 million in funding for a new public-private economic development organization in Delaware, an increase in funding in Louisiana for the state’s scholarship program for higher ed, and cuts to higher ed funding in Missouri, which also saw a severe drop in its funding to the Missouri Technology Corporation. Efforts in Maine, New Hampshire, Vermont and Washington are also detailed below.

Delaware

The FY 2018 budget passed by the Delaware legislature and signed by Gov. Jay Carney would allocate up to $2.0 million for the Delaware Prosperity Partnership, a new public-private economic development organization. As described in a April 2017 Digest article, the Delaware Prosperity Partnership is tasked with functions including, but not limited to: business marketing and attraction statewide; supporting an innovation-based economy; partnering with employers, the K-12 education system and other workforce related organizations to identify and address the workforce needs of Delaware; and, conducting industry-specific analysis that could impact Delaware’s economy. A board with public and private sector representatives will govern the partnership, which also will receive $1 million in annual funding from private businesses. The Delaware Economic Development Office and the Delaware Center for Global Trade in the Department of State previously assumed these functions.

A new division of the Secretary of State’s office will be responsible for supporting small businesses through the state’s established economic development incentive programs. This division will receive $2.8 million to conduct initiatives such as the Delaware Strategic Fund, the Main Street program, and the Blue Collar Workforce Training grant program.

The budget would also include funding for several programs related to technology-based economic development:

• $2.5 million for the National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL), a Manufacturing USA institute that focuses on bringing safe drugs to market faster and developing workforce training around the biopharmaceutical industry;
• $1.5 million for the Fraunhofer Center for Molecular Biotechnology (CMB) Vaccine Development, which is intended to create high‐tech, high‐impact jobs, spin‐off businesses, new partnerships and alliances and enable CMB to commercialize technologies;
• $1.0 million for the final year of a five‐year commitment to the Center for Clinical and Translational Research (DE‐CTR) initiative, which would enable partner institutions (University of Delaware, Christiana Care and Nemours) to develop new methods to translate research discoveries to community health settings and will leverage $20 million in funding from the National Institutes of Health;
• $1.0 million in state match for the fourth year of a five‐year commitment to the IDeA Network of Biomedical Research Excellence, which is designed to build statewide infrastructure for research into cancer, neuroscience and cardiovascular diseases;
• $1.0 million for the Bioscience Center for Advanced Technology, which fosters industry research partnerships to support local bioscience businesses; and,
• $800,000 for the final year of a five‐year commitment for the Experimental Program to Stimulate Competitive Research ‐ Research Infrastructure Improvement (EPSCoR‐RII) initiative.

Louisiana

Louisiana Gov. John Bel Edwards signed the state budget (HB10) for FY 2017-2018 into law with limited line-item vetoes. In his budget proposal, Edwards wanted to make access to higher education a key element of future economic growth by calling for $209.4 million for the TOPS program (Taylor Opportunity Program for Students)  –  a program of state scholarships for Louisiana residents who attend any of the Louisiana public colleges and universities or the Louisiana Community and Technical College system. If approved, it would have restored the TOPS program to full-funding. The state budget, however, provides $81.9 million in funding for the TOPS program (a 13.9 percent increase from FY 2016-2017).

Through the Louisiana Department of Economic Development’s (LED) Office of Business Development, the state will commit up to $34.7 million (14.5 percent increase) to support statewide economic development through several activities including:

• State Small Business Credit Initiative (SSBCI) program – to fund the Small Business Loan Guarantee and Louisiana Seed Capital programs and support small business lending;
• Louisiana Business Incubation Support program - to support incubators in their mission of creating, developing and mentoring small businesses in the state;
• Small and Emerging Business Development – to provide funds for managerial and/or developmental assistance and technical assistance as well as entrepreneurial training and other specialized assistance to businesses; and,
• Small Business Development Centers (SBDC).

Maine

The FY 2018-2019 biennial budget passed by the Maine legislature and signed by Gov. Paul LePage holds most technology-based economic development funding steady. The budget funds the Maine Economic Improvement Fund within the University of Maine System at $17.4 million in each year of the biennium (no change from the previous biennium).  This fund provides university researchers with capital to leverage federal and private sector research grants and contracts.

The Office of Innovation within the state’s Department of Economic and Community Development will receive $7.1 million in both years of the biennium. This office promotes research and development in the state and, in addition to funding technology transfer activities and inter-institutional research efforts, supports the Maine Technology Institute and its startup assistance programs. The signed budget will eliminate the Applied Technology Development Center System, a network of business incubators that had received $178,838 in each year of the previous biennium.  In a January Maine Startup Insider article, a spokesman for Gov. Lepage implied that the Maine Technology Institute could eventually take over support for these incubators.

Missouri

Several years after following Kansas’s lead and cutting taxes, Missouri is beginning to face the budget challenges that drove its neighbor to seek additional tax revenue this year. The Missouri Technology Corporation, which manages seed investments, provides funding for the state’s Manufacturing Extension Partnership center and coordinates a network of innovation centers, had its budget cut from $22.9 million to $2.5 million.

The state’s universities lost $13 million from their primary line items (funding for FY 2018 of $776.8 million) and more in special programs and initiatives. Missouri Gov. Eric Greitens was forced to cut $250 million from the FY 2018 budget deal, including an additional $11 million from the University of Missouri. Community colleges were cut by $2.0 million to $149.9 million. Among specific higher education projects, a Harris-Stowe State University STEM project was reduced by 50 percent to $250,000 and a joint Missouri State University-Missouri University of Science & Technology program to expand engineering was funded at $1 million.

New Hampshire

The New Hampshire budget for FY 2018-2019 provides limited direct funding for innovation activities. The state removed more than $1 million in matching funds for a defunct U.S. Department of Education STEM program; $375,000 has been invested in a new robotics education fund, but no other revenue appears to be placed into state-led STEM initiatives. The New Hampshire Innovation Research Center is receiving level funding of $275,000 per year.

Vermont

Vermont Gov. Phil Scott signed the new state budget (HB 542) into law with only three days before the start of the new fiscal year. While Scott had previously vetoed a budget proposal, he and state lawmakers were able to reach a compromise. Efforts to support the state’s innovation economy include level funding for:

• $427,898 to the Vermont Manufacturing Extension Center;
• $200,000 for the Vermont Center for Emerging Technologies at the University of Vermont – the center supports patent development and commercialization of technology as well as enhance the development of high technology businesses; and,
• $150,000 for the Vermont Small Business Development Center.

Washington

The FY 2018-2019 budget for Washington state made few changes to its existing innovation programs. The budget provides funding to sector-based economic development strategies ($700,000 each year, no change). State funds can be awarded to regional organizations working with tourism, agriculture or wood products or clean tech and energy and must be 100 percent matched by the grantee. The state’s joint center for aerospace innovation is receiving $3 million to support its activities (no change), while the Walla Walla Community College’s water and environmental center is receiving $375,000 per year (a 50 percent reduction).