SSTI Digest

The U.S. Department of Treasury has announced approval of $635.6 million in State Small Business Credit Initiative (SSBCI) funding for Texas and Washington. The addition of these two states means 48 states and three territories have had their SSBCI programs approved.

As governors continue to roll out their State-of-the State addresses in the month of February, we continue to see a heavy focus on recovering from the pandemic. Given most state’s fiscal condition, governors have been generally hesitant to roll out new initiatives during this time, although broadband continues to receive attention, especially with the renewed attention surrounding its importance during the pandemic. Some states, like Maryland and West Virginia, who are emerging from the pandemic on a better footing than they perhaps anticipated, are ready to forge ahead with tax cuts in an effort to attract business and new residents. Other states, like Illinois, are grappling with projected deficits while trying to maintain services. And a new bond proposal in Maine could help connect workers to jobs in high-growth industries while also spurring development in the state’s industries. This week we catch up with those governors who gave their addresses during these first weeks of February and review each of them for news or initiatives relating to their state’s innovation economy.

In general, the effect of the pandemic on states’ budgets due to the wave of business, retail, and commerce shutdowns, as well as other reduced economic activity across the nation, is not entirely known, or too early to forecast; however, a number of states are beginning to experience the initial impacts of a substantial downturn. With several states having already enacted their 2020-21 budgets, special sessions are expected later this year to deal with declining revenues. Others ended sessions early without a new fiscal year spending plan in place. Many are also acting quickly to help mitigate the effects of lost revenues and an increased demand for services. Some of the states’ impacts and actions are outlined below.

Universities frequently play an integral role in providing activities, research, and products that positively affect or support local, regional, state and national economic development or strategic goals.  In higher-education’s efforts to align its participation in innovation and entrepreneurship systems, universities’ incubators, accelerators and fund programs are essential in assisting their faculty, staff, or students in the services and support needed to create startups, bring products to market, or provide critically needed funding. Following on our recent review of research universities and their partnerships with industry, as well as our ongoing review of state activities in 2019 (see our stories on higher education and commercialization programs, free tuition offerings, climate change, clean energy, and broadband), this week we report on new university incubators, accelerators and funds launched in 2019.

Democrats made some gains in Virginia’s Legislature, and in Kentucky, the governor’s seat looks to be turning over to a Democrat, but the current Republican is requesting a recanvass in the close race. If those results hold, Democratic challenger and current Attorney General Andy Beshear will take the seat from incumbent Gov. Matt Bevin, ending the state’s Republican trifecta (where one party holds the governorship and both chambers of the legislature). Mississippi’s gubernatorial seat remained in Republican control, while the gubernatorial election in Louisiana takes place on Nov. 16, and the incumbent Democratic governor there is seeking another term. Following Tuesday’s elections, the divided government in Virginia turned into a Democratic trifecta in Virginia, as Republicans lost their hold in both the House and Senate. Those outcomes and results from several state legislative elections, along with the results of several innovation-related initiatives, are highlighted below.

As voters head to the polls next week, some will be deciding the fate of innovation and development-related initiatives, while voters in Kentucky, Louisiana and Mississippi will be voting in gubernatorial elections. The initiatives include a possible additional $3 billion in Texas for cancer research. And in Louisiana, Mississippi, New Jersey and Virginia, legislative chambers are holding regular elections. Those races and initiatives are covered below.

The circular economy, a phrase meant to redefine economic growth beyond the current “take-make-waste” extractive industrial model, is gaining attention around the world as a way to produce more positive environmental and social benefits. Over the past few months, three cities have announced efforts to promote circular economy startups. In New York City, a contest will offer a $500,000 prize to the best idea and business plan that seeks to repurpose the city’s recyclables and manufacture a product to sell to the local market. The City of Phoenix and Arizona State University announced four companies will participate in an incubator affiliated with the Resource Innovation and Solutions Network (RISN). Last fall, public sector partners and the university-based Austin Technology Incubator (ATI) collaborated to launch a new Circular Economy Incubator in the region.

The ability of states to deliver the services promised to its residents relies on their fiscal soundness. With most states beginning their fiscal year in July, SSTI has reviewed the current fiscal standing for each state and here presents a snapshot of our findings.

Most states ended their fiscal year with a surplus and continue to recover from the Great Recession, with a growing economy and job gains. However, they face continuing demands on their budgets, with expanded Medicaid payments and the growing opioid crisis confronting nearly every state. Such decisions affect the state’s ability to fund innovation efforts, from the amount of support available for higher education and STEM programs, to funding for entrepreneurship, and forging public private partnerships to strengthen innovation programming that the private sector cannot fully support.

Our analysis found that some states that rely on the energy sector to fund their spending priorities continue to struggle, while others are already factoring in anticipated revenues as a result of new Supreme Court rulings involving gaming and online sales tax collections.

Low-income students in the Dallas County Community College District (DCCCD) will be among the first allowed to use federal student aid to enroll in programs offered by nontraditional educational providers. The providers — including coding bootcamps, online courses, and employer organizations — are partnering with accredited colleges or universities through an experimental program called Educational Quality through Innovation Partnerships (EQUIP). The U.S. Department of Education has announced that Brookhaven College is the first program to receive final approval.

May 1 marks the deadline to choose a school for students considering their college options. A new tool developed by the University of Texas system and the U.S. Census Bureau can give a real sense of what students graduating from that system can expect to earn as well as the average debt graduates carry. The tool, seekUT, reveals the average earnings from each of the majors at the different schools and branch campuses one, five and 10 years after graduation. Where there is sufficient data, the tool shows results for both in-state and national jobs.

The state budget process is winding down across the country and SSTI continues to review the final budgets for funding for innovation-based programs. This week, we found level funding for South Carolina programs including MEP and regional-based economic development efforts, while university programs in Texas are taking a hit, and in West Virginia Gov. Jim Justice refused to sign the state budget although he will allow the legislatively approved measure to become law. Unless otherwise noted, the figures below represent level funding from the previous budgets.

With the latest round of state of the state or budget addresses, the states’ governors focused on their states’ financial situation. Education and economic development were still on the minds of leaders in Maine, Maryland, and Texas. With this fifth installment, less than 10 governors have yet to deliver their addresses in the coming weeks or months.