Texas Lawmakers Boost Emerging Tech Fund by $50M, Pass R&D Tax Credit

May 22, 2013

The budget agreement reached by Texas lawmakers earlier this week includes $50 million in new funds to provide grants to technology companies for research and commercialization activities under the Emerging Technology Fund (ETF). A bill to address accountability and transparency of the fund was passed in the House, but later removed from the Senate calendar despite controversy surrounding the decision-making authority of the grants. Lawmakers also passed a measure to reinstate an R&D tax incentive that was repealed in 2006, and set aside funding to lure a space transport company to the state.

Total funding for the Emerging Technology Fund is $57.2 million for the biennium, which includes carryover funds. Gov. Rick Perry had requested $69.5 million. The fund was established in 2005 to foster emerging technologies, enhance university-industry collaboration, and promote technology commercialization (see the June 13, 2005 issue of the Digest). Since then, $200 million has been awarded to more than 100 companies to incentivize commercialization activities. In recent years, however, lawmakers have criticized the governor for preferential treatment of grants awarded to companies that have contributed to his election campaigns.

Seeking greater transparency, the House passed a bill (HB 3162) with overwhelming support to amend the eligibility requirements for industry participants and remove the governor, lieutenant governor and speaker from having final say on the commercialization grants. Under the bill, approval would be determined by a newly named Texas Research Technology Fund board. The measure was never taken up in the Senate, however, after it was removed from the calendar by Lt. Gov. David Dewhurst, also the Senate president. Defending his actions, the lieutenant governor said in a statement that a 2011 audit of the fund resulted in the passage of reforms, reports the Austin-American Statesman.

The budget passed by lawmakers also includes approval of $600 million over two years for the Cancer Prevention and Research Institute of Texas (CPRIT), a research-focused institute established in 2007 through a $3 billion voter-approved bond. Facing its own conflict-of-interest issues as reported by several news outlets, the agency's funding was tied to a bill tightening oversight and transparency. The bill awaits action by the governor.

Hoping to capture opportunities related to commercial space travel, lawmakers set aside $5 million in FY14 for the Spaceport Trust Fund contingent on certification that SpaceX has committed to locating its facilities at a spaceport in Texas. The governor recently signed into law a measure to authorize space flight launch operations at a public beach near Brownsville, TX.

To improve the state's competitiveness, encourage new investments, promote high-wage jobs, and encourage innovation and efficiency in manufacturing, lawmakers passed HB 800, establishing an R&D tax credit for franchise or sales tax. The state's previous incentive for R&D activities was first implemented in 2001 and later repealed in 2006, according to an article in the San Antonio Business Journal.

The general appropriations bill (SB 1) awaits the governor's action. A conference committee report is available at: http://www.lrl.state.tx.us/scanned/83ccrs/sb0001.pdf#navpanes=0.

Texasstate budget, tax credits, state revenue, public equity funds