Innovative Economic Development a Priority in PA, NC Budget Proposals

March 05, 2015

Several governors released their proposed budgets over the last two weeks, and while some states continue to deal with budget shortfalls that prevent many new initiatives from coming into fruition, governors in Pennsylvania and North Carolina included numerous proposals focused on innovation and economic development. Additionally, governors in Louisiana and Massachusetts highlighted new workforce development proposals. 

Pennsylvania

Pennsylvania Gov. Tom Wolf’s proposed $33.8 billion fiscal year 2015-16 budget prioritizes strengthening the commonwealth’s middle class, allocating funds to a variety of workforce, economic development, and education initiatives. To enhance Pennsylvania’s business friendliness, Gov. Wolf proposes lowering the Corporate Net Income Tax (CNIT) from 9.99 percent to 5.99 percent, improving the commonwealth’s ranking from second-highest to fourteenth-lowest. For technology-based economic development, Gov. Wolf proposes an increase of $100 million for the Ben Franklin Technology Development Authority Fund, meant to support entrepreneurs, established companies, and manufacturing innovation. This increase would be contingent on the sale of $100 million in Innovate PA Tax Credits.

With the goal of encouraging growth in the commonwealth’s manufacturing sector, the budget proposes $5 million for a tax credit that offers manufacturing companies that create full-time jobs paying above the average county wage cash payments up to 5 percent of new taxable payroll. An additional $5 million would be allocated for a new initiative that focuses on the commercialization of advanced manufacturing technologies that stem from the state’s Industrial Resource Centers and higher education institutions. The budget also provides a $10 million increase to the Pennsylvania Industry Partnerships program that enables companies in the same industry cluster to identify common skill needs and develop training programs to meet those needs.

In the proposed budget, the state would provide $15 million for workforce development programs that allow students at Career and Technical Education (CTE) centers, higher education institutions, and school districts to earn college credit and industry credentials by participating in work-based learning. CTEs also would receive $5 million in grants for education equipment, with priority given to those that are able to gather in-kind contributions.

As the state works to achieve its goal of 60 percent of residents with a degree or high-value certificate by 2025, Pennsylvania’s community colleges would receive a $15.1 million (7 percent) increase and the Pennsylvania State System of Higher Education (PSSHE) would receive a $45.3 million (11 percent) increase. Also included in the proposal is a recommendation that the Pennsylvania Higher Education Assistance Agency provide $7.5 million in scholarships for students to pursue STEM fields. To encourage innovation and the translation of research into job creation, the budget also would provide an $80.9 million increase to Penn State University, the University of Pittsburgh, Temple University, and Lincoln University.  

The newly elected governor, who ran his campaign on increasing state funding for education, calls for increasing K-12 funding by $400 million, a 7 percent increase, and special education funding by $100 million, a 9.6 percent increase. The proposed budget also would enact a severance tax on natural gas drilling that would provide additional funds for K-12 education.

North Carolina

Noting that the state has “no higher priority than promoting job creation,” North Carolina Gov. Pat McCrory’s $50.9 billion proposed FY 2015-17 biennial budget includes several economic development and higher education initiatives.

Gov. McCrory proposes $5 million for the One North Carolina Small Business Program to provide early stage funding for small, high-growth and high-tech businesses across the state. In each year of the biennium, the governor would invest $15 million in the Venture Multiplier Fund, to be invested alongside private sector dollars in early stage commercial ventures. Similarly, Gov. McCrory proposes the establishment of the University Innovation Commercialization investment program, funded at $7.5 million over the biennium, to utilize the state’s industry and commercialization experts to make technologies more attractive to investors, and $2.5 million in recurring appropriations for the Rallying Investors and Skilled Entrepreneurs for NC (NC RISE) program that helps develop and leverage the state’s entrepreneurial management talent. 

Community colleges would receive $5 million over the biennium to purchase modern technology and equipment that can better prepare students for STEM careers. For K-12 education, Gov. McCrory proposes allocating an increase of $235 million (2.8 percent) compared to the previous biennium, with an emphasis on teacher pay and instructional resources.

Louisiana

Facing a $1.6 billion revenue shortfall., Gov. Bobby Jindal’s proposed $24.5 billion fiscal year 2015-16 budget seeks to heavily scale back several of the state’s refundable tax credits, eliminate more than 700 government jobs, and decrease funding to higher education by $143 million. The proposed budget provides $30 million for the Workforce and Innovation for a Stronger Economy (WISE) fund, with $5.7 million in general funds. The WISE program, which received $40 million last year when it was created at the governor's urging, pays for college programs that fill high-demand jobs in the state and was hailed as critical to both higher education and the state's workforce needs. The proposal also includes $8.5 million for the Louisiana FastStart Program, a workforce development program that provides comprehensive employee training services to assist businesses seeking to relocate or expand in Louisiana.

For small and emerging businesses, Gov. Jindal proposes $735,540 in funding to provide technical assistance for small and emerging business development, and $1 million to support the state’s Small Business Development Centers.

Massachusetts

Gov. Charlie Baker’s proposed $38.1 billion fiscal year 2016 budget includes no new taxes or fees, reduced spending in a variety of programs, such as health care for the poor, disabled, and state employees, and increased funding to priority areas such as higher education and local aid to cities and towns. While the proposed budget announces few economic development measures, especially those related to technology and innovation, the governor and his administration recently announced the creation of a Workforce Skills Cabinet, which is set to implement a new strategy to develop workforce skills that meet the varying needs of employers throughout Massachusetts. The University of Massachusetts system, state universities, and community colleges would receive an average increase of 3 percent to their campus budgets.

 

Louisiana, Massachusetts, North Carolina, Pennsylvaniastate budget