NY Governor Wants to Create Regional Councils, Consolidate NYSTAR

February 09, 2011

Gov. Andrew Cuomo announced plans to direct $200 million in existing funds to establish 10 regional economic development councils to allocate funds and provide business assistance programs across the state. At the same time, the governor would consolidate programs supporting high-tech companies currently administered by the New York State Foundation for Science, Technology and Innovation (NYSTAR) with the Empire State Development Corporation (ESDC) — a move he says will eliminate duplicative functions and save the state $1.9 million in the coming year.

A majority of the funds slated for the councils ($130.6 million) would come from reprioritizing and redirecting existing economic development funds for competitively determined project grants, according to budget documents. The councils, made up of state government, business, community, and academic leaders, would compete for the funds based on economic development plans. Another $70 million would be provided in tax credits through the enhanced Excelsior Jobs Program.

The FY12 executive budget recommends $310.8 million for ESDC, which includes funding for programs currently administered by NYSTAR. The High Technology Program would receive $35.9 million for its university-based matching grant programs, including the state's six Centers of Excellence, and other high technology and R&D programs. Level funding is recommended for the Research Development Program ($343,000) and the Regional Technology Development Center ($3.8 million).

NYSTAR received $68.2 million in FY11, which included $29.5 million in additional funds for Innovation Economy Matching Grants (see the June 30, 2010 issue of the Digest). Under the new economic development plan, NYSTAR grants would be subject to "review by the regional councils to ensure consistency with regional plans," according to the governor's briefing as reported in Crain's New York Business. NYSTAR is one of 11 state agencies slated for consolidation in the budget, which also calls for agencies to reduce spending by 10 percent in order to address a $10 billion deficit. Budget documents are available at: http://publications.budget.state.ny.us/eBudget1112/ExecutiveBudget.html.

The governor's proposal is on trend with a handful of other states exploring regional approaches to economic development, including Colorado and Michigan. Last month, Colorado Gov. John Hickenlooper issued an executive order implementing a statewide economic development strategy to identify the needs, strengths, weaknesses, and priorities of each county. The assessments will be incorporated into 64 economic development plans tailored to each county, which then will be combined into 14 regional plans. The Governor's Office of Economic Development and International Trade is tasked with organizing regional meetings and presenting a plan to the governor.

In Michigan, plans to distribute "significant" funding to the state's 15 regional economic development groups, called SmartZones, were announced by Michael Finney, CEO of the Michigan Economic Development Corporation. SmartZones are located throughout the state and incorporate technology business accelerators that provide services to help facilitate technology commercialization from university and private industry research. Details on the funding distribution have yet to be announced.

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