Federal Stimulus Supplementing State TBED in Governors' Budget Proposals

For many states facing a challenging budget year, level funding for science and technology is welcome news to the tech-based economic development (TBED) community. With the passage of the American Recovery and Reinvestment Act earlier this year, governors are seeking solutions to stimulate their respective states' economies through new and expanded programs within specific priority areas. The following states recently unveiled budget proposals that would continue or grow TBED investments using a combination of federal stimulus money and state and local funds.

Illinois
Gov. Pat Quinn unveiled a $26 billion capital plan that includes investments in energy and the environment and access to capital programs to boost job creation and retention. The Illinois Jobs Now initiative would be financed in part with federal stimulus funds. More than $1 billion in federal recovery money would be directed to the Department of Commerce and Economic Opportunity (DCEO) for programs promoting renewable energy, energy efficiency, clean coal technology, broadband deployment, electric grid expansion, and science and technology research.

Highlights of the proposed FY10 Capital Budget include:

• $450 million for a Community Revitalization program to provide funds for governmental entities and nonprofits for access to capital aimed at promoting the creation and retention of jobs, business development, economic development, and commercial revitalization within communities;
• $95 million used in cooperation with the National Science Foundation to create a next-generation supercomputing facility at the University of Illinois. These funds, along with federal matching funds, will be used to assist Illinois businesses, universities and research centers in creating innovative technologies;
• $75 million for research and development of new energy technologies;
• $17 million for Fermi National Accelerator Laboratory to match federal funds to assist in construction of laboratory and office space at the Illinois Accelerator Research Center; and,
• $13 million for Argonne National Laboratory toward the construction of the Advanced Protein Crystallization Facility.

Gov. Quinn is seeking a tax hike for individuals and corporations to balance the budget. His proposal would raise the individual tax rate from 3 percent to 4.5 percent and the corporate rate would jump from 4.8 percent to 7.2 percent, reports the Chicago Tribune.

Operating and Capital Budget documents are available at: http://budget.illinois.gov/.

Louisiana
To lessen the impact of steep budget cuts on higher education institutions, Gov. Bobby Jindal proposed using $218.7 million in federal stimulus funds to offset a decrease of $431.6 million in general funds for higher education in FY09-10. Within the higher education budget, the governor recommends $6.5 million in one-time funding for endowed chairs and professorships. This funding, along with $5.9 million from the Louisiana Quality Education Support Fund, would be used to match private donations. Lawmakers provided $8 million in one-time funds for endowed chairs last year (see the July 2, 2008 issue of the Digest).

The FY10 proposed budget is 14.7 percent less than the existing budget, and a total $1.75 billion in savings is needed to balance the FY10 budget, according to the governor's office. Proposals for savings include eliminating Louisiana Economic Development's traditional workforce development and training program at a cost savings of $2.5 million in statutory dedications. Budget documents note that with the creation of the Fast Start program, the traditional activity was found to be duplicative. Additionally, the Louisiana Workforce Commission, formerly the Department of Labor, would eliminate the remainder of its $3.6 million in general funds for the upcoming year.

Within the Department of Economic Development, Gov. Jindal recommends:

• $27 million for the Governor's Economic Development Rapid Response program to provide for industrial or business development projects that promote cluster economic development;
• $3.4 million for Fast Start ($400,000 more than last fiscal year) for comprehensive workforce training;
• $2.8 million for the Louisiana Small Business Loan program for the venture capital program, business and industrial development corporation program, micro loan program, and the contract loan program;
• $2.65 million from the Louisiana Economic Development Fund to support operating expenses for the state's three life science incubators;
• $1.9 million for a state economic competitiveness, benchmarking, planning and research initiative;
• $800,000 for technical assistance to small and emerging businesses, including managerial and development assistance and entrepreneurial training;
• $500,000 for operational expenses of the National Center for Advanced Manufacturing facility and development of new undergraduate and graduate courses in advanced manufacturing; and,
• $400,000 to support Louisiana business incubators.

Another $10 million in recurring funds is recommended for workforce training in high-demand fields through the Louisiana Community and Technical College System, an initiative established last session by lawmakers.

The FY09-10 Executive Budget documents are available at: http://doa.louisiana.gov/opb/pub/FY10/FY10ExecBudget.htm.

North Carolina
Gov. Bev Perdue's proposed 2009-11 biennial budget invests heavily in science and technology priority areas for the state.

The governor's budget seeks to close a cumulative $6.4 billion gap - a far cry from last year when lawmakers dedicated a portion of surplus funds to university projects and Small Business Innovation Research (SBIR) grants (see the July 16, 2008 issue of the Digest).

To continue development of the biofuels industry, foster green building industry programs, and leverage private sector investments in clean technology and renewable energy, the governor recommends $5 million in federal stimulus funds for the NC Green Business Fund. The executive budget also includes $2 million in special funds for the effort - the same as last year.

With an unemployment rate of more than 8.7 percent in North Carolina, Gov. Perdue announced a plan to train workers for 21st century jobs aligned with the state's needs through the community college system. Specifically, the budget proposal includes $3 million in federal stimulus funds to provide grants to 20 community colleges for technical education programs in transportation, industrial, military, and green technology sectors.

The initiative, dubbed Jobs Now, hopes to address the reluctance of colleges to start new programs due to a lack of startup funds. The governor's budget also recommends a recurring $5 million for equipment and technology needs at community colleges to reduce program waiting lists. Additionally, these funds could be leveraged with funds from the Golden LEAF Foundation for technical education and equipment training.

For the Department of Commerce, Gov. Perdue recommends $48.5 million, including:

• $15.4 million for the NC Biotechnology Center ($4 million less than last year);
• $2 million to the NC Small Business Fund to increase the state's competitiveness in attracting and leveraging SBIR grant funding;
• $1.5 million (the same as last year) for the Defense and Security Technology Accelerator, focusing on opportunities in industries related to homeland security and national defense;
• $370,952 (the same as last year) for the North Carolina Board of Science and Technology; and,
• $250,000 for the North Carolina Aerospace Alliance to help leverage additional funding from the Golden LEAF Foundation to expand and grow the state's aerospace industry.

No additional funding is recommended for the Biofuels Center of North Carolina, which received an initial $5 million appropriation in 2007-08.

The e-NC Authority - a statewide broadband initiative - would receive $495,000 in recurring funding, the same as last year. The General Assembly also will consider legislation for additional operating funds for the authority and a proposal to provide additional funds for incentive deployment, infrastructure refurbishment in public access centers, and incentive funds for matching federal stimulus monies.

The capital budget includes $10 million for the University of North Carolina-Chapel Hill Biomedical Research Imaging Center. A total of $20.5 million has been committed for the center and an additional $229.5 million is needed for later phases of the project, which is scheduled for completion in 2013. The governor intends to finance the completion of the project using bonded indebtedness beginning in 2010-11, and according to budget documents, repayment would be shared with UNC-Chapel Hill, UNC hospitals, and the general fund.

The governor's 2009-11 proposed budget is available at: http://www.osbm.state.nc.us/ncosbm/osbm_library/superpubs/bgt0911.shtm.