CO, MN, NM, OK state budgets take hit in innovation funding

As governors and state legislatures continue their negotiations over state budgets, SSTI has reviewed the latest to be signed. The process has proved difficult in more than a few states, with New Mexico having to overcome several stalemates and still facing shortages while in Oklahoma three-fourths of the state agencies are seeing decreased funding due to the state’s $900 million shortfall.

Colorado

Gov. John Hickenlooper signed Colorado’s FY 2018 budget. While the state increased spending by 4 percent overall, few of the state’s investments for innovation were adjusted from the previous year. The Colorado Office of Economic Development and International Trade received a substantial cut of $8 million, leaving the office with $51.0 million for FY 2018. Within the office, the advanced industries incentive programs received approval to spend up to $14 million (reduction of $1.5 million) pending the availability of funds, while small business development centers ($94,144), Leading Edge grants ($75,976) and Rural Jump Start ($80,983) all received level funding.

Other innovation-related programs also mostly received level funding, with the exception of $1.8 million in new funds made available for an Institute of Cannabis Research at CSU-Pueblo. The Higher Education Competitive Research Authority ($2.8 million pending the availability of funds), Colorado First Customized Job Training ($4.5 million), innovation industry internship program ($0.6 million) and Skilled Worker Outreach, Recruitment and Key (WORK) Training program ($3.4 million) received funding consistent with FY 2017 levels.

Minnesota

Appropriations bills passed by the Minnesota state legislature and signed by Gov. Mark Dayton include funding for broadband, workforce development, and entrepreneurial and small business support. Notably, the state’s lawmakers did not fund the Angel Investment Tax Credit program, which was previously funded at $15 million in calendar years 2015 and 2016 and $10 million in calendar year 2017.

The state also modified its research and development tax credit. Previously, the credit was valued at 10 percent of qualifying research expenses up to $2 million claim, and 2.5 percent for expenses beyond that. The second-tier credit is now valued at 4.0 percent.

The Department of Employment and Economic Development (DEED), will receive $145.4 million in FY 2018 and $119.5 million in FY 2019,  an increase over the $105.5 million the department received in FY 2017. Within DEED, the following programs will receive funding:

• $20.3 million in FY 2018 for the Office of Broadband Development;
• $1.4 million in each year to support the Minnesota High Tech Association’s SciTechsperience program, which supports internship opportunities in STEM-fields;
• $4.2 million in each year of the biennium for the Minnesota Job Skills Partnership Program;
• $1.2 million each year for a grant to the Metropolitan Economic Development Association (MEDA) to provide business development and assistance services, with an emphasis on minority-owned businesses and businesses that have the potential to create job opportunities for the unemployed and underemployed;
• $876,000 in FY 2017 and $500,000 in FY 2018 for the Minnesota emerging entrepreneur loan program; and,
• $750,000 in each year of the biennium for the Neighborhood Development Center to support small businesses and entrepreneurship.

Additionally, Enterprise Minnesota, the state’s Manufacturing Extension Partnership center, would receive two grants through DEED’s funding: $875,000 in each year for the small business growth acceleration program to support technology investments at manufacturers; and, $300,000 in each year of the biennium for a grant related to workforce development.

The budget also includes considerable funding for R&D activities around health and life sciences. For example,

• The University of MN and Mayo Foundation partnership will receive nearly $8.0 million per year for regenerative medicine research.
• The MnDrive Cancer Clinical Trials Network will receive $8.0 million to create a network of hubs across the state focused on cancer research.
• The Spinal Cord Injury and Tramautic Brain Injury Research Grant Program will receive $3.0 million in each year of the biennium.
• To promote research that does not include the use of fetal tissue, the state will provide $2.5 million in one-time funding for Biomedicine and Bioethics Innovation Grants.

New Mexico

After an unusually lengthy and contentious process, New Mexico passed its FY 2018 budget last week. Confronted with significant budget shortfalls, most spending throughout state government was cut. The New Mexico Economic Development Department received a cut of more than 8 percent to $4.1 million in funding for FY 2018. On the other hand, the state’s spaceport authority received a 25 percent increase to $5.7 million in total state funding.

Most higher education-based research and economic development initiatives were cut by 6 percent, including (all figures FY 2018 funding levels, reductions of 6.0 percent from FY 2017 except where noted):

• University of New Mexico — Southwest Research Center ($1.0 million) and manufacturing engineering program ($0.5 million);
• New Mexico State University — Minority STEM programs ($0.3 million), manufacturing sector development program ($0.5 million) and Arrowhead Center for business development ($0.3 million, 52 percent reduction);
• New Mexico Institute of Mining and Technology (NMIMT) — Petroleum recovery research center ($3.1 million, 4 percent reduction), science and engineering fair ($0.2 million) and Institute for Complex Additive Systems Analysis ($0.9 million, 5 percent reduction);
• North New Mexico College — STEM program ($0.1 million); and,
• Santa Fe Community College — small business development centers ($4.1 million).

Not all university-based research initiatives received cuts. NMSU’s agricultural research center ($24.2 million in FY 2018) received a 26 percent increase, and the Carlsbad campus received funding for a manufacturing sector development program ($0.2 million) that was not present the previous year. At NMIMT, both the Geophysical Research Center ($3.4 million, 33 percent increase) and Energetic Materials Research Center ($7.7 million, 5 percent increase) received more funding in FY 2018.

Oklahoma

Oklahoma Gov. Mary Fallin last week signed a $6.8 billion FY 2018 budget that includes little in the way of new funding with the state facing a nearly $900 million budget shortfall. More than three-fourths of the state’s agencies received reduced funding. Among those, Oklahoma’s tech-based economic development agency, the Oklahoma Center for the Advancement of Science and Technology (OCAST), would receive $13.4 million under the proposal, a $700,000 (5 percent) reduction from the previous fiscal year. Of that amount, $5.4 million will go toward the Research Support Revolving Fund and $3.0 million to the Seed-Capital Revolving Fund.