KY, MO, NY, VT state budget proposals reveal cautious approach

Governors continue to be cautious in their budget proposals, with many TBED programs seeing level funding or modest increases and cuts in some states while few new programs are being introduced. Kentucky is transferring one program to economic development, while at the same time reducing its funding. Missouri is proposing short-term benefits that may impact longer-term growth, while New York is looking to fund its life sciences initiative announced last year and Vermont is proposing an increase for its growth and innovation pilot project.

Kentucky

Kentucky Gov. Matt Bevin released his FY 2019-20 Biennial Budget Proposal, which would eliminate approximately 70 programs and cut spending at many state agencies by 6.25 percent, according to the Lexington Herald Leader. Bevin proposes a transfer of the Kentucky’s Science and Technology Funding program to the Cabinet for Economic Development (from the Council on Postsecondary Education), which would result in a transfer of $5.1 million to the cabinet to support the Science and Technology Funding program (down from $5.7 million in FY 2018). This would result in total general revenue funding of $28.4 million for the Cabinet for Economic Development in FY 2019 and increasing in FY 2020 to $29.4 million. Included in the increase for the Cabinet for Economic Development, the Bluegrass State Skills Corporation would receive $4 million in both fiscal years – an annual increase of $1.7 from FY 2018 (74 percent increase).

Bevin proposes $100 million in new bond financing for the second round of the Workforce Development Construction Pool to finance, in whole or in part, capital investments in workforce development education and training facilities that align with the needs of industry in key technology areas. The Education and Workforce Development Cabinet would administer the pool of money.

The Local Government Economic Development (LGED) Fund would receive $16.4 million in both years of the biennium, an increase of $5 million (56.1 percent increase) from FY 2018 estimates. The LGED fund supports economic diversification projects using the revenue from taxes on the coal industry.

Missouri

Gov. Eric Greitens proposed an FY 2019 budget that  includes $800 million in tax cuts financed through a nearly 2 percent increase in state revenues. Economic development would see $190 million invested in infrastructure initiatives while Missouri Tech Corp. (MTC), the state’s innovation office, would see a 10 percent reduction on top of last year’s 90 percent cut. Similarly, Greitens proposed to spend $6.5 million more on state college scholarships while cutting $76 million from universities, $15 million from community colleges and a complete elimination of $10 million  in FY 2018 funding for targeted higher education initiatives including STEM programs.

These proposals come against recent support from the St. Louis Regional Chamber of Commerce for a statewide investment fund first proposed by the governor’s innovation task force. The Chamber’s presentation of that proposal seems to include accepting the elimination of MTC, which has provided a mix of early stage grants and investments, in favor of a larger, later-stage fund backed by bonds and state revenues. This proposal is not reflected in Greitens’ budget and legislative support is uncertain.

New York

New York Gov. Andrew Cuomo released his $150 billion FY 2019 Budget Proposal that is highlighted by $600 million in funding to support construction of a life sciences public health laboratory in the Capital District of the state. The laboratory is intended to promote collaborative public/private R&D partnerships and is in line with a 10-year state-wide life sciences strategy announced last year. Other key highlights include:

• $118 million (27 percent decrease from FY 2018) to support an estimated 27,000 students as part of the Second Phase of the Excelsior Free Tuition Program. For the 2018-19 academic year, the Excelsior Scholarship income eligibility threshold will increase, New Yorkers with household incomes up to $110,000 to be eligible.
• $30 million to create the Photonics Attraction Fund in Rochester, administered through the Finger Lakes Regional Economic Development Council, to attract integrated photonics companies to set up their manufacturing operations in the greater Rochester area.
• $6 million to create the Smart Start program – an effort to expand computer science and engineering education at the K-12 level. Grants would support teachers with resources and professional development opportunities, and would further expose students to computer science and engineering curricula. 

Vermont

In his FY 2019 Budget Proposal, Vermont Gov. Phillip Scott proposes $400,000 in new funding for the ThinkVermont Growth and Innovation Pilot Project including:

• $300,000 for competitive grants to support economic development projects;
• $50,000 to develop a small business accelerator initiative;
• $25,000 to partner with capital providers to create a money map that guides entrepreneurs and small businesses to strategies for and sources of capital at various stages of their evolution and development; and,
• $25,000 to develop the state’s aerospace sector/supply chain clusters.

ThinkVermont was launched in October of 2017 to connect existing and prospective Vermont businesses and workers to the resources and information to grow the state’s economy.