SSTI Digest

Geography: Texas

TBED People and Organizations

Karl Fooks, a past managing director for J.P. Morgan & Co. in Asia, is the new president of the Hawaii Strategic Development Corporation. Fooks replaces John Chock who retired last year.

Missouri, Ohio and Texas Governors Seek Increased Support for TBED Efforts

Not all of the news coming out of governors' offices is bad for TBED strategies. For example, just in the past week, governors in Missouri, Ohio and Texas proposed increases in state investments for job creation in emerging fields, higher education scholarships, and technology commercialization and research programs. The following overview provides highlights of their recommendations for TBED proposals in the upcoming fiscal year or biennium.

Tech Talkin' Govs, Part IV

The fourth installment of the Tech Talkin' Govs series includes highlights from state of the state, budget and inaugural addresses from governors in Hawai'i and Texas.

University of Texas System Combines Support for Teaching and Commercialization Excellence with $15 Million Initiative

The University of Texas System Board of Regents recently approved $15 million in funding for three programs that will support innovation and extraordinary effort among its faculty. Two of these programs will make awards for teaching excellence, one for faculty at the University of Texas at Austin (UT Austin) and the other for teaching at the system's other eight universities. The third program will support a Center for Technology Commercialization at UT Austin to accelerate technology transfer and new venture creation. Each of these programs will receive $1 million annually for the next five years for awards and operations.

TBED People

John Hindman announced his resignation as secretary of the Kentucky Cabinet for Economic Development.

Useful Stats: 2006 Industrial R&D Intensity per State

According to National Science Foundation (NSF) data released two weeks ago, companies spent in aggregate $247.7 billion on R&D expenditures performed in the U.S. in 2006. Leading the nation was California, with $58.4 billion in industrial R&D, followed by Michigan ($16.5 billion), Massachusetts ($15.6 billion), New Jersey ($14.6 billion), and Texas ($13.3 billion).
SSTI has prepared a table presenting the state rankings for industrial R&D performed in 2006, the per-state gross state product in 2006, and each state's industrial R&D intensity. The industrial R&D intensity is the ratio of industry-based R&D to the gross state product.
Using these calculations, Massachusetts experienced the largest industrial R&D intensity in 2006, at 4.64 percent. This was followed by Michigan (4.38 percent), Connecticut (4.04 percent), Washington (3.89 percent), and California (3.35 percent). The industrial R&D intensity for the U.S. as a whole was calculated to be 1.89 percent.
The table may be accessed by visiting:
The NSF has released an InfoBrief, explaining the methodology of their Survey of Industrial Research and Development: 2006 at

Texas Council Recommends Reorganizing Economic Development Efforts

Texas Gov. Rick Perry's Competitiveness Council has released its recommendations following a year-long study of the state challenges in the global economy. The study found that Texas lacks the institutional organization to execute transformational economic programs and will require greater collaboration between state agencies to remain competitive in high-tech industries.

People & TBED Organizations

The Colorado Governor's Energy Office added to its staff three regional representatives: Bob Mailander, Joani Matranga and Mona Newton.

People & TBED Organizations

The Houston Technology Center has launched its new Emerging Technology Council.

Texas Hopes to Score Big with Video Game Tax Credit

For an industry that takes in more than $10 billion per year, video games receive relatively little dedicated support for economic development initiatives. When video game creators do attract the attention of federal and state politicians, it is often because of allegations of violent content and for encouraging sedentary lifestyles amongst consumers. A handful of states, however, have launched programs and credits that actively encourage the growth of the industry.


Texas joined these states last week when Gov. Rick Perry signed a bill approving up to $22 million in incentives for the entertainment sector, including video game companies. The money will be used to offer grants that will cover up to 5 percent of the total in-state spending on any video game project. The awards may range up to $250,000. Similar grants will be available for film, advertisement and television production through the program.

The state hopes the grants will help it capture some of the prominence in game development that it enjoyed in the 1980s and 1990s. Austin, in particular, was a hub for the industry and hosted headquarters and branches of many of the top names in the industry. For two decades, Origin Systems - creator of the Ultima series - was based in the city, along with branches of noted designers such as Dallas-based Eidos and NC Soft. In the late 1990s and earlier this decade, however, Austin suffered a few industry setbacks, with the closing of both Origin and Eidos and cuts following the tech bust.


Still the region remains important in the industry with big names such as Blizzard Entertainment, makers of the immensely popular World of Warcraft, Sony Online Entertainment, BioWare, Amaze Entertainment and Aspyr maintaining a strong presence. The Austin American-Statesman reports that the city is currently home to about 50 game companies, with about 1,000 employees.


The state hopes to build on this foundation and increase its presence in the industry, which generated revenues close to $12.5 billion in the U.S. last year. The grants will only cover a small portion of the costs of game production, which can take several years, but is an important symbolic victory for the game design community. In order to ease the concerns of those who object to the often-violent content of PC and console games, applicants will be subject to a review of their project's content before an award is made. The Texas Film Commission will have final approval over all grants.


Texas is not the only state competing for game design firms through such incentives. In April, the Georgia Department of Economic Development hired Asante Bradford as a Digital Entertainment Liaison to help build the state's growing video game industry. The department offers tax credits to game developers through the Georgia Entertainment Industry Investment Act. That measure, signed in 2005, provides developers with a 9 percent base tax credit on all in-state expenditures. The Florida High Tech Corridor recently added Interactive Entertainment to its list of supported industries and is currently conducting research into the sector's needs. Hawaii, Wisconsin and Connecticut all provide incentives to video game developers through their programs to support the television and film industries.


Meanwhile, on the other side of the Atlantic Ocean, France approved a measure earlier this year that may be the most aggressive move yet to compete for dominance in the game industry. The French government will provide tax credits of up to 20 percent of the total production costs of video game projects, if the game draws on more than one branch of artistic talent including graphic artists, musicians, sound creators, writers and directors.


While economic development professionals struggle to decide whether video games qualify as software or as entertainment, the industry continues to grow at an impressive pace. In 2006, revenues grew by almost 20 percent over the previous year. With the arrival of the Nintendo Wii and Playstation 3 late last year, along with the rise of on-demand game downloads and subscription-based gaming, many expect an increase in demand for interactive content.


Find out more about the Texas Moving Image Industry Incentive Program at:

Texas Governor Vetoes $570M in Spending from Proposed Budget; Slashes University Funding

Last week, Texas Gov. Rick Perry signed off on the state’s budget, but not before making substantial use of his line-item veto. Overall, the approved $151 billion FY 2008-2009 budget increases general revenue spending by $7.7 billion (11.8 percent) over the current biennium. Much of that new spending will support education in the state; however, a number of programs, particularly those connected to higher education, failed to receive the governor’s approval.


In all, Gov. Perry vetoed nearly $200 million in higher education spending. The largest of the cuts resulted from the governor’s decision to end group health insurance for faculty at the state’s community colleges. The veto is the result of a long-standing argument over whether or not the state should bear the financial responsibility for these benefits, according to a recent Austin-American Statesman article. The governor charged that many community colleges had inappropriately inflated their budget requests to receive funding for costs that should be covered by local taxes and tuition.


Gov. Perry characterized about $36 million in additional cuts as necessary to trim funding for “pet pork projects” at the state’s institutions of higher education. These cuts include a total of $12 million intended for life science and medical research at the University of Texas at San Antonio, the UT Health Science Centers at Houston and San Antonio, and the UT Medical Branch at Galveston. The funding would have supported research into diabetes, obesity and public health. The governor said the cuts were necessary to prevent overlap of research programs at the state's various universities and that a long-range plan for statewide university research was needed before larger investments could take place.


The governor also eliminated funding for a proposed pilot program to track and improve student performance from high school through college and into the labor market. In his proclamation, Gov. Perry argued that the Texas Higher Education Coordinating Board should be able to cover the cost of the program within its existing budget.


This year’s legislative session, however, was not entirely disappointing for the higher education community. Earlier this month, Perry signed off on a bill to authorize funding for a $300 million Cancer Prevention and Research Institute and additional cancer research around the state. That measure, which is dependent on a constitutional amendment, will be put to Texas voters in November. The referendum would authorize a total of $3 billion in general obligation bonds for cancer research to be issued in grants between 2010 and 2020.

Perry also fulfilled a pledge made in his February State of the State address to create a new pilot program to increase the number of engineering and computer sciences graduates in the state (see the Feb. 19, 2007 issue of the Digest). The TEXAS Technology Grant program will provide grants to engineering and computer science students, particularly those from underrepresented demographics and those that demonstrate financial need. The budget increases the biennial allocation for the existing TEXAS Grants program by $96.2 million to fund these new awards.


Gov. Perry’s announcement on the budget is available at:

Funding Cleared for $3B Stem Cell Research in California

Texas Voters Likely to Decide on Similar Level for Cancer Research

After years of legal challenges to the California Stem Cell Research and Cures Act, the path for funding the $3 billion initiative has been cleared by the California Supreme Court. Texas may soon join the race to fund medical research with its own $3 billion bond issue supporting cancer research.


The California Supreme Court last week declined to hear an appeal challenging the constitutionality of Proposition 71, effectively ending the lawsuits that have held up most of the bond funding for three years, according to the California Institute for Regenerative Medicine (CIRM), the state agency that manages the project.


Voters in 2004 approved the bond issue, which immediately faced challenges from groups opposed to stem cell research. A ruling last year from the Superior Court and Court of Appeals deemed the act to be constitutional in its entirety.


Despite the legal setbacks, CIRM went ahead with its first round of funding last year through the purchase of bond anticipation notes and a $150 million loan from the state’s general fund authorized by Gov. Arnold Schwarzenegger. The agency funded $158 million in stem cell research projects, including 103 research grants at 23 nonprofit institutions and 169 research fellows throughout the state.


The Supreme Court decision maintains that no additional litigation can delay issuance of the bonds and allows CIRM to move into the next round of funding. This includes up to $48.5 million in shared laboratories grants and loans and $222 million for major facilities at California universities, research hospitals, medical schools, and research institutes.


A similar bond issue focusing solely on cancer research is likely to make it on the November ballot in Texas. Pending approval by the Senate, voters will be asked to decide on a $3 billion bond issue that provides grants to the Cancer Prevention and Research Institute of Texas. The constitutional amendment calls for grants of up to $300 million annually over the next 10 years through general obligation bonds. The House approved HJR 90 earlier this month.


Although Gov. Rick Perry supports the measure, he pushed for an alternative funding source earlier this year. In his State-of-the-State Address, Gov. Perry proposed using proceeds from the sale of the state lottery instead of a bond proposal for a caner research trust fund that he said could generate more than a quarter-billion dollars each year (see the Feb. 19, 2007 issue of the Digest).