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Reductions to Current, Funding for New Programs Outlined in PA Budget

March 16, 2011

Gov. Tom Corbett's budget proposal for the upcoming fiscal year funds many of Pennsylvania's longstanding efforts to grow a technology-based economy, but at a reduced level. At the same time, the governor outlined new initiatives and investments centered on a restructured Department of Community and Economic Development (DCED) that he says will eliminate duplicative programs and better position the state to attract businesses for job creation.

DCED's budget would be cut by 32 percent, or $114 million, and the number of programs would be reduced to 56 from 127 under the governor's proposal to streamline the state's economic development efforts. The Ben Franklin Technology Development Authority would receive $14.6 million in FY12, down from $16.8 million in FY11 available funds. The authority funds the Ben Franklin Technology Partners (BFTP), one of the nation's longest running and most successful TBED programs. Through its four regional networks, BFTP provides access to capital and entrepreneurial support services to promising tech-based companies throughout the state.

The governor unveiled a new initiative to help entrepreneurs connect with state resources to grow their businesses in the state and create jobs. The DCED budget includes $10 million for the Discovered in PA, Developed in PA program. Regional experts would proactively seek out small- and medium-sized high-growth businesses and help them identify and access services and financing, according to budget documents. Additionally, the program aims to simplify and increase access to the regional economic development provider networks and would utilize the Governor's Action Team, a group of seasoned economic development professionals.

Established to help small- and medium-sized manufacturing enterprises respond to changing markets and new technologies in the global economy, the Industrial Resource Centers (IRCs) program would be consolidated, along with three other programs, into a new Partnerships for Regional Economic Performance (PREP) initiative. The budget includes $12 million for PREP grants to be awarded on a competitive basis with the most developed partnerships receiving the funding necessary to support their efforts. The new program also would create a public-private advisory board to define a comprehensive economic development approach and quantitative metrics to assess performance. Together, the four programs slated for consolidation received $15.5 million in FY11, of which $6.9 million was appropriated for the IRCs.

The governor recommends $3 million in FY12 (the same as last year) for the Life Sciences Greenhouse Initiative, which supports early stage life sciences risk capital. While the initiative was formerly funded through tobacco settlement funds, the budget recommends depositing this money into the general fund for direct appropriation in the coming year.

To facilitate the expansion of research and job creation, the budget increases the R&D tax credit to $55 million from $40 million.

Colleges and universities are among the hardest hit in the proposed budget. State spending would be reduced to 2008-09 levels with funds for four state-related universities cut in half, reports The Chronicle of Higher Education. The State System of Higher Education, which includes 14 universities and multiple campuses of Pennsylvania State University, also would absorb a 50 percent cut in state funds, the article states.

In his budget address last week, Gov. Corbett announced his intentions to convene a task force to examine potential public-private partnerships for government agencies, although he did not mention specifically what agencies would be studied.

The FY12 general fund budget outlined by the governor totals $27.3 billion, 3.1 percent less than last fiscal year. Pennsylvania's projected budget deficit is $4 billion. View the budget: http://www.portal.state.pa.us/portal/server.pt/document/1049028/2011-12_budget_document_pdf

Pennsylvaniastate budget, state tbed, manufacturing, r&d tax credits, higher ed, bio