As State Revenues Recede, Some S&T Cuts Made

The latest semi-annual state fiscal survey, released jointly this week by the National Association of State Budget Officers and the National Governors' Association, reconfirms the increasing pressure on state coffers found six months ago. Slowing revenues and increasing Medicare and health care costs have resulted in 16 states reducing expenditures in the current fiscal year by $1.6 billion. Eleven states also are reducing their FY 2002 revenue projections. An average of only 1.3 percent growth in state revenues is estimated from 2001 to 2002. Budget officials in seven states are preparing for declining expenditures in FY 2002.



The survey can be downloaded at http://www.nasbo.org/Publications/PDFs/FSJUN2001.pdf

The impact of state fiscal matters on funding for tech-based economic development initiatives and investments in university research varies dramatically. Big winners capture Digest headlines, such as the Pennsylvania story this week and the June 15 article on Texas’s $800 million spree.



Many states, because of tight budgets, are expecting zero-growth for FY 2002 or only modest cost-of-living increases. A couple of notable exceptions – each facing 20 percent cuts next year – have surfaced in two Midwestern states:



Michigan — Crain’s Detroit Business reports that the state’s investment in its life science corridor will be cut by 20 percent next year. Slated to receive $50 million annually when created last year, the life science program — which is supported by tobacco settlement funds — will receive $40 million next year. The program, administered by the Michigan Economic Development Corporation, supports basic and applied research and development at universities and the commercialization of life science technologies.

Ohio — Ohio’s Thomas Edison Program is preparing to take a 20 percent reduction of $10 million for the biennium beginning next week. Also, opportunities for companies to take advantage of the state’s research and development tax credit, including the start date for the credit, have been delayed.



And in Alaska, the fiscal situation for the Alaska Science & Technology Foundation (ASTF) is less-than-rosy but for different reasons. ASTF is financed by revenues earned from investments of a permanent trust fund. The Anchorage Daily News reported Wednesday that losses on the stock market have reduced revenues by nearly 50 percent from $10.3 million to $5.5 million. Since $3.1 million is reserved each year for the University of Alaska - Fairbanks and the Alaska Aerospace Development Corporation, only $2.4 million is left for ASTF administration and grants.