Legislative Update: Arkansas and Georgia Pass FY10 Budgets

While there is no question that the economic recession has taken a toll on states' fiscal conditions, the degree by which states are affected can vary widely from one state to another, as evidenced most recently in Arkansas and Georgia. In Arkansas, legislators wrapped up their 2009 session with a plan to distribute a $300 million surplus, while the budget agreement made in Georgia would cut spending by $1.6 billion in the coming year. The following overview provides an outline of legislative actions affecting the two states' programs that support tech-based economic development efforts.

Arkansas
Operating with a nearly $300 million surplus, lawmakers passed a spending plan last week that authorizes funds for several economic development projects, including $50 million for Gov. Mike Beebe's Quick Action Closing Fund to attract new businesses to the state. 

Act 1415, approved by the legislature, authorizes up to $9.7 million for the Arkansas Science and Technology Authority in FY10. Additional funds for Science and Technology Authority projects are included in the General Improvement Fund (GIF) bill, which allocates surplus funds that may be distributed to the following projects at the governor's discretion:

• $7.3 million for maintenance and operations of the Cyberinfrastructure Center for Applied Technology;
• $5 million to the Arkansas Research Infrastructure Fund for grants for research, research infrastructure and researchers;
• $3 million for Research Matching Grants to provide state matching funds to leverage federal funds;
• $3 million for Centers for Applied Technology Grants to support allied technology in areas of advanced materials and manufacturing systems, agriculture, food sciences, environmental sciences, biotechnology, bioengineering, life sciences and information technology;
• $3 million to the Arkansas Risk Capital Matching Fund for technology validation and enterprise development investments;
• $2 million for Basic Research Grants to fund original innovative investigators for the advancement of scientific or technical knowledge;
• $1 million for Seed Capital Investments in early-stage companies in Arkansas; and,
• $500,000 for Post-Doctoral Scientist and Engineering Grants to Arkansas companies that employ qualifying graduates.

Another $3 million is included for the Innovate Arkansas Fund to provide assistance to startup technology companies and $500,000 is authorized for activities associated with the implementation of the governor's strategic plan for economic development. To finance various projects of the House and Senate, the GIF authorizes $30 million from the surplus to each chamber. Legislators agreed to use $100 million in surplus funds to fill budget gaps in FY10.

The legislature also passed a bill creating the Technology Acceleration Fund for investment by the Arkansas Economic Development Commission, the Arkansas Science and Technology Authority, and the Arkansas Development Finance Authority to provide incentives to enhance the state's economy through technology development. Another bill passed by lawmakers reduces the sales tax on manufacturers' utilities from 3.875 percent to 3.125 percent.

Georgia
Funding for several Georgia Research Consortium projects is reduced in FY10 following the passage of the budget last week. Reductions to TBED initiatives in the conference committee bill approved by the General Assembly are, in some cases, less severe than the proposed cuts in Gov. Sonny Perdue's executive budget (see the Jan. 28, 2009 issue of the Digest).

The Research Consortium is slated to receive $26.3 million in FY10, an increase of $3.6 million over the governor's recommendation, but down $5.9 million from FY09. Funding for the Traditional Industries Program will be reduced by $1.5 million. Gov. Perdue's budget would have eliminated $3.1 million from the program. Additionally, lawmakers restored $200,000 of the proposed $400,000 reduction for the Bio-Refinery.

Rather than reducing funds for specific programs within the Georgia Research Alliance (GRA), lawmakers included language in the conference committee report that allows for a discretionary reduction of $1.7 million in FY10.

The Advanced Technology Development Center (ATDC) is slated to receive $24.8 million in total funds, down from $30.9 million last year. This includes a reduction of $5 million from ATDC's seed capital fund.

Lawmakers also restored partial funding to science, technology, engineering and mathematics (STEM) initiatives within the Department of Education. Slated for elimination in the executive budget, the Georgia Youth Science and Technology program, which offers educational programming that increases interest and enthusiasm in math and science, would receive $250,000 in FY10, the same as last year. Partial funding of $500,000 is restored in the conference committee report for the National Science Center and Foundation, which reflects a $250,000 reduction.

Two noteworthy bond issues approved in the budget include $10 million over five years to GRA to fund equipment for research and development infrastructure for science-based economic development, and $3 million over five years to fund science equipment and other technology to be matched by private funds at University System institutions statewide.

The conference committee report for HB 119 is available at: http://www.legis.state.ga.us/legis/2009_10/pdf/hb119.pdf