States Pass Innovation-Focused Legislation

March 26, 2014

Investments and policy to support innovation-focused agendas have flourished with the close of the 2014 legislative sessions in several states. Crowdfunding legislation, incentives for attracting talent, higher education affordability, punishing patent trolls, and encouraging greater accountability are some of the areas where lawmakers focused their efforts.

States Support Crowdfunding Laws
Two states passed legislation to amend state securities laws in order to allow entrepreneurs to raise capital through crowdfunding platforms. Maine passed LD 1512 last month (see related Digest article) and more recently, a measure (HB 2023) was passed in Washington that enables businesses to raise up to $1 million through crowdfunding websites. The law stipulates that contributions must come from residents and businesses in the state. At least five other states have passed similar laws, and a related bill is making its way through the Alabama legislature.

Enhancing Incentives for Job Creation
Nebraska lawmakers passed LB 1114, a measure that extends for another five years the Business Innovation Act, a program that offers technical assistance and R&D grants to startup companies and entrepreneurs. The program was scheduled to end in 2016. The legislation also calls for a study on how Nebraska can increase venture capital investments.

New and existing Idaho companies looking to expand in the state are eligible for tax incentives under HB 546, the Idaho Tax Reimbursement Incentive Act. Businesses can recoup up to 30 percent of new income, sales and payroll taxes paid as a result of the expansion. Urban companies would have to create at least 50 new jobs; rural-based businesses are required to create at least 20. The bill awaits action by Gov. Butch Otter.

A measure to extend Minnesota’s Angel Tax credit two more years and add funds was signed into law by Gov. Mark Dayton. The bill increases the yearly allotment from $12 million to $15 million, and adds an additional $3 million this year. Beginning in 2015, the program divides the available $15 million into two eligibility pools. The first $7.5 million is available to any certified company or investor in Minnesota. The other $7.5 million is reserved for businesses that meet one of the following criteria: located outside the Twin Cities Metro Area, women-owned, or minority-owned. The new law also places restrictions on eligibility of investors, reports the Minnesota High Tech Association. The investor does not qualify if she or he is an officer or principal of the qualified business or if she or he is a family member of anyone who owns or controls over 20 percent of the business. 

Higher Education Affordability and Workforce Training
In an effort to fill the skills gap in the state’s workforce by making dual enrollment programs more affordable for students, Alabama lawmakers passed and Gov. Robert Bentley signed into law HB 384, a measure that sets up a scholarship program through taxpayer-funded donations. Under the bill, donors receive a state income tax credit up to 50 percent of their tax liability, and donors can direct up to 80 percent of their donation to a specific training program.

Georgia lawmakers passed HB 697 setting up the Zell Miller Scholars grant program to cover full tuition for students with a 3.5 grade point average or better under the state’s HOPE scholarship. The measure funds the gap between what the HOPE grant pays and the full cost of tuition and is aimed at technical college students training for jobs in high-demand fields.

A bill passed in Indiana seeks to attract and retain talented STEM teachers. HB 330 creates a loan forgiveness program for graduates with a 3.5 GPA or higher who teach in STEM fields for at least three years. To qualify, the student also would have to be in the top 20 percent of their high school graduating class or receive scores in the top 20th percentile on the ACT or SAT exam.

Oregon Gov. John Kitzhaber signed into law SB 1524, which directs the Higher Education Coordinating Commission to study the viability of a program allowing high school graduates to attend community college for free.

Wisconsin Gov. Scott Walker enacted a $35 million worker training bill that expands the state’s Fast Forward program. Funding will be used for grants to technical colleges to reduce waiting lists for enrollment and for programs and courses that train students in high-demand fields. The funds also will support collaborative projects among school districts, technical colleges and businesses and for employment opportunities for people with disabilities (see related Digest article).

Punishing Patent Trolls
Oregon became the second state, following Vermont, to pass patent trolling legislation with SB 1540. The legislation makes patent trolling a violation of Oregon’s Unlawful Trade Practices Act, and under the bill, those who have been targeted by a patent troll can sue for attorneys’ fees, reports Legal Newsline.

A bill limiting the ability of patent trolls to file claims demanding licensing payments was passed in Wisconsin. The measure, SB 498, awaits action from Gov. Scott Walker.

Similarly, legislation in Virginia (SB 150 and HB 375) empowers the attorney general to investigate cases of patent trolling, and establishes criteria for patent infringement and assertions made in bad faith.

Related bills currently are being considered in Maine (LD 1660) and Kentucky (SB 116).

Increased Accountability
Following a report from the Nebraska Legislature’s Performance Audit Committee last year, lawmakers passed LB 836, a bill to establish goal language to improve the state’s evaluation of tax incentive programs. The committee found that an absence of clear, measurable goals for the Nebraska Advantage Act and Angel Investment Tax Credit Act made it difficult to assess whether the program is doing what the legislature intended it to do, according to the bill’s sponsor.

Lawmakers passed SB 62 in Utah, an oversight bill that requires the USTAR governing authority to establish additional performance standards and expectations for its programs and provide a detailed annual report and annual audit. The bill also modifies the allocation of commercialization revenues and repeals the non-lapsing status of appropriations to the USTAR governing authority (see related Digest article).

Alabama, Georgia, Idaho, Indiana, Kentucky, Maine, Minnesota, Nebraska, Oregon, Utah, Virginia, Washington, Wisconsincrowdfunding, workforce, angel capital, tax credits, stem