PENNSYLVANIA GOVERNOR PUSHES TECHNOLOGY INITIATIVES, TAX CUTS

In the state that created the Ben Franklin Centers in the early 1980s - models for several states’ first forays into S&T - Governor Tom Ridge has proposed a wide range of new initiatives to promote R&D investment, technology development, and commercialization within Pennsylvania.

Governor Ridge’s budget request for 1999-2000 identifies $35.5 million for tax cuts expected to benefit start-up technology firms, a new $18.2 million program for high-tech investments, $6.7 million of state funding to leverage private venture capital investments, a SciTech Scholars Program, and $37 million for the state’s "traditional" technology and manufacturing programs: the Ben Franklin Partnership, Industrial Resource Centers, PENNTAP, and incubators.

The tax cut is a doubling of the current annual cap on net operating loss deductions to $2 million. The cut is expected to be especially attractive or beneficial to high tech start-ups with long product-development times that often see income losses for the first few years of business.

Governor Ridge also proposes creating the Pennsylvania Technology Investment Authority (PTIA), a multi-phase program to address financing needs of the state’s technology firms. PTIA will include development over five years of a $50 million fund to provide equity, phantom stock and mezzanine financing to small and medium-sized technology firms. Regional technology investment portfolios, prioritizing key markets and investment initiatives in each region, will be developed by the PTIA coordinators and Ben Franklin and Industrial Resource Centers.

With authority status, PTIA will have the flexibility to offer a variety of financial tools not available to the state economic development agencies. Of the 1999-2000 PTIA appropriation, $5 million will match current federal research center funding for strategic investments in university-based research.

Other PTIA projects will include a $1.75 million fund to support community Internet initiatives and electronic tourism, marketing and business development efforts. One million dollars will be distributed to the state Small Business Development Centers, Local Development Districts, Ben Franklin and Industrial Resource Centers to assist businesses in developing electronic commerce.

The existing Catalyst Stage Fund would receive $6.7 million over the biennium to support venture capital financing. It is estimated the state funding would leverage $50 million to $70 million in private capital for Pennsylvania companies.

In an attempt to reverse the nation’s greatest out-migration of science and engineering graduates (according to National Science Foundation statistics and a Southern Technology Council study), Governor Ridge is proposing creating the SciTech Scholars Program. SciTech would provide up to $9,000 to any qualified Pennsylvania student studying technology at Pennsylvania colleges and universities that commits to working in Pennsylvania for up to three years upon graduation. To qualify, students would have to maintain a 3.0 GPA, complete an internship in an technology-intensive Pennsylvania company, and work in the state at least one year for each year of scholarship assistance.

Under a "GI Bill for the New Economy," an additional 8,500 students may receive new scholarships of up to $1,000 per year for technology-based studies at community colleges and two-year technical schools. More information on Governor Ridge’s budget proposals can be found on the web at http://www.state.pa.us/PA_Exec/Governor/budgetadd.html