Legislative Wrap-up: Massachusetts, New Jersey, Oklahoma, and Rhode Island Pass FY10 Budgets

Over the past few months, several states have enacted spending plans for the upcoming fiscal year and passed legislation to support renewable energy initiatives and tax credits for R&D. While some TBED programs will face dramatic cuts in FY10, others are slated for slight decreases or will receive level funding. The following synopsis provides an overview of the 2009 legislative sessions across the following states:

Massachusetts
Lawmakers rejected Gov. Deval Patrick's amendment to the state budget aimed at securing funding for the Massachusetts Life Sciences Center (MLSC) in the upcoming year.

Although the enacted budget includes $10 million for grants, loans and investments through the MLSC, the appropriation is contingent on a consolidated net surplus for FY09, which currently reflects a zero balance, according to the state's projected financial statement released on June 29. Shortly after the budget was passed, Gov. Patrick asked the legislature to provide $20 million for MLSC outside of the surplus. The legislature rejected the Governor's proposal, and as a result, the original language in the budget was signed into law, meaning MLSC is unlikely to receive any funding for FY10.

When signed into law last year, the life sciences bill was structured so that the MLSC would receive $25 million each year from the state's consolidated net surplus (see the June 18, 2008 issue of the Digest). Because of the state's financial situation, however, the FY09 appropriation was reduced to $15 million and the FY10 appropriation was reduced to $10 million contingent on a consolidated net surplus for FY09. The additional capital components and $25 million in tax credits associated with the legislation are still in place.

The FY10 enacted budget is available at: http://www.mass.gov/bb/gaa/fy2010/.

New Jersey
The $29 billion FY10 spending plan signed into law in June cuts spending, increases taxes, and relies on $2 billion in federal stimulus funds. It was referred to by Gov. Jon Corzine as a "bare-bones appropriations act." Shortly after the budget was signed, the Office of Legislative Services released a report indicating that New Jersey faces a projected budget deficit of $8 billion in its next fiscal year and a shortfall of $2 billion in its unemployment compensation fund, reports the Courier Post.

Funding for New Jersey Commission on Science and Technology grants was reduced to $10 million in FY10, down $10.3 million from FY09 adjusted. The Commission administers grant programs focused on commercializing new technologies, developing early-stage growth companies and business incubators, and enhancing New Jersey's stem cell research capability.

The enacted budget fully funds Invest NJ in FY10, providing $25 million for job credits and $8.2 million for capital credits. Gov. Corzine signed legislation last December establishing the program within the New Jersey Economic Development Authority (EDA) and authorizing $120 million in grants over a two-year period. The program consists of two components, including grants to New Jersey businesses for new job creation and grants to businesses for qualifying capital investments.

Gov. Corzine also signed legislation establishing an Economic Redevelopment and Growth program (S-2299/A-4048). The New Jersey EDA will provide incentive grants to developers who will reimburse a portion of taxes generated through the project, according to the governor's office. In addition, the measure revises the Technology Business Tax Certificate Program, increasing the transferability and amounts of the new or expanding emerging technology and biotechnology companies' R&D tax credits and net operating losses. These changes include an increase in the maximum lifetime benefit per business from $10 million to $15 million.

Oklahoma
The Oklahoma Center for the Advancement of Science and Technology will receive $22 million in FY10, slightly less than last year's appropriation of $22.45 million. Most agencies, including the House, Senate and governor's office received a 7 percent cut in the enacted budget. Higher education will see about a 2 percent increase compared to last fiscal year, which should prevent the need for increased tuition, according to the governor's office.

The Oklahoma Space Industry Development Authority is slated to receive $493,215 in the upcoming year, down from $530,340 last year.

No funding was included for the BioEnergy Center, which was established in 2007 to advance the development of a commercial biofuels industry in Oklahoma (see the June 6, 2007 issue of the Digest). Gov. Henry recommended $3.5 million for the Center in FY10.

Legislation to earmark various state interest and investment earnings, including a portion of the oil and gas gross production taxes as a permanent funding source for the Economic Development Generating Excellence (EDGE) initiative, failed to pass in the legislature. The endowment, which was created in 2003 to help boost research projects in the state, currently contains $150 million, which is far short of the $1 billion goal. This is the second year Gov. Henry submitted a proposal to create a permanent funding source for the endowment (see the April 30, 2008 issue of the Digest).

Rhode Island
Lawmakers will consider a measure to overhaul the Rhode Island Economic Development Corporation (RIEDC) when they return in September. SB 945 would expand the agency's board from 8 members to 13 and allow Gov. Carcieri to dismiss current members beginning in February, reports the Providence Journal. The legislation also would grant a three-year contract to the agency's executive director and make the executive director position part of the governor's cabinet.

The FY10 budget signed by the governor in June provides $7.8 billion for FY10 operating expenses and fills a $590 million deficit. The Department of Administration's budget is $602 million for FY10, down $22.6 million from the FY09 revised appropriation. This includes $4.6 million for RIEDC, $650,000 less than last year. The Slater Technology Fund will receive $2 million in FY10, down $1 million from FY09. The Slater Fund invests at the inception stage in the development of a new venture, often based upon ideas and technologies originating in academic institutions, government research laboratories or commercial enterprises located within the region.

Gov. Carcieri also signed legislation requiring the state's largest electricity utility to enter into long-term contracts to purchase power from renewable energy producers in the state. The long-term contracting bill is expected to help large-scale renewable energy projects in Rhode Island attract the private financing they need by guaranteeing there will be a market for the energy they produce, according to a news release.