Nebraska Governor Seeks Funding for Innovation Agenda

Climbing back from a deep recession without over burdening taxpayers is a main focus of this year's legislative session for many states, leaving little room for bold initiatives needed to position state and regional economies for future growth. Nebraska Gov. Dave Heineman, however, is asking lawmakers to look beyond the state's current conditions and invest in economic sectors he says are likely to create high-quality jobs and enhance the state's "economic momentum."

The governor unveiled this week a series of legislative proposals to fund a four-part Talent & Innovation Initiative based on recommendations from a 2010 review of Nebraska's economy by the Battelle Technology Partnership Practice. The plan calls for providing competitive grants for private sector research, technical assistance in new product development and testing, and helping to expand small business and entrepreneur outreach efforts. SBIR programs also would be expanded to offer grants for application development and funding for prototype development, commercialization and applied research at Nebraska institutions. A combination of $5.5 million in new funds and $1.5 million in redirected funds would pay for the proposed Business Innovation Act (LB 387).

Establishing an angel investment tax credit (LB 389) to provide incentives for investment in high-tech startups follows existing policies of regional neighbors Wisconsin and Minnesota where angel tax credits recently were enacted or expanded (see the May 19, 2010 and March 31, 2010 issue of the Digest). The program would be capped at $5 million annually, with $3 million coming from redirected funds and $2 million in new funding. The minimum investment is $25,000 for individuals and $50,000 for investment funds.

Rounding out the four-part plan is an internship program matching college students with businesses (LB 386) and the creation of a fund to increase the number of commercial sites available for business development (LB 388).

The two-year budget plan unveiled last week includes a one-time $25 million appropriation to expand the University of Nebraska's Innovation Campus, whose mission is to develop public-private partnerships to encourage and incentivize research and economic development. Higher education funding, including community colleges, would see no funding reductions under the governor's plan.

The state is facing an estimated deficit of just under $1 billion, which the governor proposes to close through targeted cuts to agencies and a transfer of $130 million from the cash reserve fund to the general fund in both fiscal years.

Executive budget documents are available at: http://budget.ne.gov/das_budget/budget11/20112013.htm.