• Save the date for SSTI's 2024 Annual Conference

    Join us December 10-12 in Arizona to connect with and learn from your peers working around the country to strengthen their regional innovation economies. Visit ssticonference.org for more information and sign up to receive updates.

  • Become an SSTI Member

    As the most comprehensive resource available for those involved in technology-based economic development, SSTI offers the services that are needed to help build tech-based economies.  Learn more about membership...

  • Subscribe to the SSTI Weekly Digest

    Each week, the SSTI Weekly Digest delivers the latest breaking news and expert analysis of critical issues affecting the tech-based economic development community. Subscribe today!

PRESIDENT’S FY2000 BUDGET: AN S&T OVERVIEW

February 05, 1999

The Clinton Administration FY2000 budget proposal, submitted to Congress on Monday, calls for a 2.5% increase in civilian R&D spending. Total R&D spending, however, would decline by 1.3% to $78.24 billion, due to a proposed 5.8% drop in defense-related R&D. For comparison, the Consumer Price Index for last year was approximately 1.6%.

The 21st Century Research Fund remains the centerpiece of the Administration’s R&D investment strategy, representing $38 billion and nearly half of the federal government’s total FY2000 R&D budget request. The Fund, a packaging of several existing and new R&D initiatives, would grow by 3% over the FY1999 total of $36 billion.

While total R&D spending would increase, the news is mixed for technology-based economic development programs. The Manufacturing Extension Partnership would be cut by $8.1 million; the Experimental Program to Stimulate Competitive Technology (EPSCoT) would have no funds available to make awards in FY2000; and, most of the National Science Foundation’s centers programs would increase except for the State/Industry University Cooperative Research Center program, which is being phased out.

Please review these associated tables on the SSTI website:

Federal Research and Development Spending

http://www.ssti.org/Digest/Tables/Federal.htm

Selected Federal Cooperative Technology Programs

http://www.ssti.org/Digest/Tables/Federal2.htm

The following is an overview of the Clinton Administration’s proposed spending levels for selected initiatives:

INTERAGENCY INITIATIVES

*Information Technology for the 21st Century (IT2),  a $366 million initiative (28% increase over FY 1999) led by the National Science Foundation ($146 million) and supported by Defense ($100 million), Energy ($70 million), NASA ($38 million), NIH ($6 million) and NOAA ($6 million) to fund long-term information technology research, advanced computing for science and engineering, and research into the social and economic implications of the Information Revolution. As much as 60% of the funding would support university-based research.

*Climate Change Technology Initiative, $1.77 billion (34% increase) including $1.37 billion for R&D and $400 million in tax credits for the adoption of energy efficiency technologies.

*U.S. Global Change Research Program,  $1.79 billion (6% increase), $828 million of which is for research, $958 million is for NASA satellite development activities. Federal agencies involved and their portion of the budget request include: NASA ($1.2 billion), NSF ($187 million), Energy ($125 million), USDA (88 million), Commerce ($70 million), HHS ($40 million), Interior ($27 million), EPA ($23 million), and the Smithsonian Inst. ($7 million).

*High Performance Computing and Communications, funded at $1.46 billion, an 11% increase over FY 1999. Seven agencies are involved in this initiative: Energy ($659 million), NSF ($314 million), Defense ($207 million), NASA ($136 million), Health ($115 million), Commerce ($27 million), and EPA ($4 million)

*Partnership for a New Generation of Vehicles, a cost-shared industry partnership led by Commerce and funded at $264 million (10% increase over FY 1999) across the following agencies: Energy ($143.1 million) and NSF ($51 million). [Note: Distribution of the remaining funds was unavailable at press time.]

USDA: GOOD TIMES FOR AG R&D

The overall FY2000 budget request for the U.S. Department of Agriculture reflects a decreases of more than 4% over FY 1999, yet nearly every USDA science, research or economic development grant or loan program could see additional funding in FY 2000 — some quite significant. Selected highlights include:

*Distance Learning & Telemedicine Loans and Grants, $220 million (up $58 million) to provide up to 800 grants and 40 loans for schools and health care facilities.

*National Research Initiative, $200 million (up $81 million), competitive grants for water quality, a new small farms initiative, food safety, pesticide impact assessment, risk mitigation, methyl bromide transitions and food security.

*Initiative for Future Agriculture & Food Systems, $120 million (new) for competitive grants for research, extension and education to address critical issues related to food production, environmental quality, natural resources and enhanced economic viability of smaller-scale farmers.

*Fund for Rural America, $60 Million (unfunded for the past two fiscal years). At least $20 million will support rural development activities; actual distribution of the funds among authorized activities has not been developed.

*Rural Business Enterprise Grants, $36 million (down $1 million) to fund non-profit and public efforts to support small and emerging businesses outside urbanized areas.

*Alternative Agriculture Research & Commercialization Corporation, a government-owned venture capital fund to commercialize bio-based industrial products (non-food, non-feed) from agricultural and forestry materials and animal byproducts, $10 million (increase of $6 million)

*Rural Business Opportunity Grants, $5 million (unfunded last year) to support technical assistance and planning activities within non-profit and public organizations to improve economic conditions in rural areas.

COMMERCE: NO NEW AWARDS FOR EPSCoT; OTHERS MIXED

R&D spending request within the Department of Commerce is 8% higher than FY1999; however, several programs are slated for cuts as agency resources are focused on the 2000 census. Selected highlights include:

*Experimental Program to Stimulate Competitive Technology (EPSCoT) — no new EPSCoT awards will be made in FY2000. The budget request indicates that the results of the program will be evaluated in FY2000 based on the awards made in FY1998 and FY1999. Many of those awards will not be completed until after FY2000.

*Advanced Technology Program (ATP), $239 million (up $36 million), allowing $73 million to be awarded to new projects through a general competition.

*Manufacturing Extension Partnership (MEP), $99.8 million (down $8.1 million). The drop is described as a one-time cut to reflect the decrease in the federal share of the program’s operating costs; the number of centers is not expected to change

*Defense Economic Adjustment, $64.8 million (down $20 million). The decrease reflects an anticipated decline in demand and need for funding.

*Economic Adjustment Assistance Program, $51.2 million (up $20 million). The increase is to assist communities in the Northeast affected by federal restrictions on the fisheries industries.

*Telecommunications and Information Infrastructure Assistance Program (TIIAP), $20.1 million (up $2.1 million), permitting $17 million in new grants to demonstrate Next Generation Internet capabilities in the public and non-profit sectors. Award emphasis will be placed on multi-state and regional projects.

*Community Economic Adjustment, $12.0 million (up $2.5 million) to address the growing need of communities negatively impacted by international trade.

DEFENSE: SELECTED S&T HOLD OWN

The Defense R&D investment, while slated to decrease by 5.8%, still represents 49% of the total federal R&D investment. From the vast DOD R&D budget, two programs of particular interest are:

*Dual Use Science & Technology (DUST) Program, approximately $55 million, (83 % increase) to competitively fund joint projects with industry for the development of technology with both military and commercial applications.

*Commercial Operations and Support Savings Initiative (COSSI), funded in FY2000 with approximately $94 million (no change), COSSI is designed to upgrade existing weapons systems and components with commercial goods and services.

ENERGY: FOCUSES ON THE FUTURE

Proposed R&D expenditures within the Department of Energy are to grow 3.1% to a total of $7.5 billion. Selected highlights include:

*Solar and Renewable Resources Technologies is projected to rise to $398 million (up 16.2%).

*By using a carryover of $11 million from FY1999, the request for Fossil Energy Research and Development is to decline by 5.2%. Actual expenditures of $375 million are projected to be only 2.4% lower than FY1999 appropriation, however.

*Energy Conservation is to increase by 33.4% to a total of $252 million.

*Experimental Program to Stimulate Competitive Research (EPSCoR) is to remain constant at $6.8 million.

ENVIRONMENTAL PROTECTION AGENCY: TOUGH TIMES FOR R&D

The total budget for EPA is to see a decrease of approximately $400 million in FY2000. R&D expenditures within the agency, excluding the Climate Change Technology Initiative, are to drop 4% or $24 million to $645 million.

HEALTH: NIH R&D LEVELS OFF

After last year’s dramatic funding increase, the National Institutes of Health are recommended to receive a 2.1% or $320 million rise for research. If the request is approved, NIH anticipates being able to support 7,617 competing research project grants. The R&D budget request within HHS as a whole is to rise only 1%.

NASA: S&T TAKES A HIT

The total NASA budget is to decline by almost $100 million and S&T is not spared. A modest (less than 1%) increase is requested for the agency’s R&D budget — not keeping pace with inflation. Budget growth appears limited to the space station, space science and earth science research. Initiatives of interest include:

*National Space Grant College Program, $13.5 million (drop of 26.4%). The program had grown to 52 university based consortia. The agency anticipates the proposed funding level "will result in a decrease in award amounts" for the consortia.

*Technology Transfer Agents including the National Technology Transfer Center, $5.8 million (a 20 % drop).  NASA"will be assessing NTTC’s performance and capabilities... to determine the requirements and appropriate contractual funding instrument for the planned continuation of the program in FY2000 and beyond." NASA hopes to "foster the privatization of the NTTC."

*Experimental Program to Stimulate Competitive Research (EPSCoR), $4.6 million (a drop of 54 %). Historically 10 states received NASA EPSCoR funding. The agency states the budget request will result in "a reduction in the number of NASA EPSCoR states receiving funding."

NATIONAL SCIENCE FOUNDATION: HEALTHY GROWTH IN FY2000

NSF’s R&D activities are to receive a 6.9% funding increase over FY1999. Selected highlights include:

*Experimental Program to Stimulate Competitive Research (EPSCoR),  $63 million: $48 million direct (no chance from FY 1999) and an additional $15 million committed for EPSCoR states from other unspecified NSF-supported research activities.

Engineering Research Centers(ERCs), $60 million (up $6 million) to fund 22-25 ERCs, including three additional centers in engineering micro-systems, scalable enterprise systems, and biosystems at thenano-scale.

*Science & Technology Centers (STCs), $54 million (up $1 million) to support 10 new STCs. Funding for the first class of STCs expires in FY1999.

*Materials Research Science Engineering Centers (MRS&ECs), $51.6 million (up $4.5 million) to support up to four new centers.

*Centers for Research Excellence in Science & Technology, $8.8 million (no change) to fund up to ten sites.

*Earthquake Engineering Research Centers, $6 million (no change) to continue to fund three centers.

*Industry/University Cooperative Research Centers (I/UCRCs), $5.2 million (a $200,000 increase) to support 55 I/UCRCs.

*State/Industry/University Cooperative Research Centers (S/I/UCRCs), $0.9 million (down $0.9 million) for the continued phase out of the program and to support 3 S/I/UCRCs.

SBA: NEW INVESTMENTS FOR UNDER-SERVED COMMUNITIES

In the FY2000 budget request, the Small Business Administration calls for a 21% increase. Most of the additional funding would support two new initiatives to support underserved rural communities and inner city neighborhoods. Selected highlights include:

*Small Business Investment Companies, $800 million in participating securities and $640 million in debentures would expand equity assistance to $2.3 billion.

*New Markets Venture Capital, $100 million for investments and $30 million for grants to the NMVC participants, a new initiative. Funds are to be used in distressed rural communities and innercity neighborhoods.

*American Private Investment Companies, $37 million requested through HUD (new joint HUD/SBA initiative) to provide up to $1 billion in government backed private loans to targeted communities and inner city neighborhoods.

TRANSPORTATION: R&D UP 38%

The Department of Transportation’s R&D programs is the biggest winner in the Administration’s FY2000 budget proposal with a 38% increase in funding. Most of this growth is because of a $322 million increase for initiatives toward intelligent transportation systems and highway research & deployment. Selected highlights include:

*University Transportation Centers Grants Program, $33 million for 33 university-based centers of excellence conducting multi-disciplinary programs for transportation education, research and technology transfer (change from FY1999 not available).

*National Research and Technology Program within the Federal Transit Administration, $51 million for R&D and deployment of technologies focusing on accessibility for the disabled, air quality, traffic congestion, fuel cells, propulsion systems and improvements in transit safety, service and operations (change from FY1999 not available).

OTHER BUDGET HIGHLIGHTS

The R&E Tax Credit would be extended until June 30, 2000 (cost: $2.4 billion). Also proposed is a new incentive, the New Markets Tax Credits, worth up to 25% for investments in a wide range of investment vehicles serving under-served rural communities and targeted inner-city neighborhoods.