SSTI Digest

With no significant boost in funding for Michigan's economic development efforts proposed in the executive budget, Gov. Rick Snyder outlined steps to reform the way businesses are incentivized and modify the state's approach to job creation by better supporting local and regional initiatives as a means to transform the state's economy.

The governor's budget includes $199.3 million in FY12 and $199.8 million in FY13 in total funds for the Michigan Strategic Fund within the Department of Treasury. Of that amount, $75 million (the same as last year) is slated each year for the 21st Century Jobs Fund, administered by the Michigan Economic Development Corporation (MEDC) to invest in high-tech industries and university research. Most of the funding ($50 million) would be used for business attraction, economic gardening, innovation and entrepreneurship. The remaining $25 million would support Michigan tourism programs. Budget documents note that business attraction and retention efforts would be augmented with an additional $25 million in general funds.

SSTI recently reported on two important bills passed by lawmakers in Michigan late last year and in New Jersey earlier this year that would provide incentives for taxpayers who invest in emerging technology companies. As an update to the Dec. 8, 2010 and Jan. 12, 2011 stories, both former Michigan Gov. Jennifer Granholm and New Jersey Gov. Chris Christie have taken action on the bills with opposing outcomes. Gov. Granholm signed HB 5921 into law on December 14, enacting a measure to provide a 25 percent personal tax credit for individuals who invest at least $20,000 in qualified seed and early stage companies. Gov. Chris Christie on Friday vetoed S.2454, the New Jersey Angel Investor Tax Credit Act, along with 13 other bills approved by lawmakers in January as part of a jobs package.

In the “2011 Global R&D Funding Forecast,” researchers from Battelle and R&D Magazine project consistent and positive global R&D spending in 2011. Global R&D (including public, private and nonprofit spending) is projected to increase by 3.6 percent from $1.15 trillion to almost $1.2 trillion. However, 2011 R&D as a percentage of global GDP will remain constant at 1.9 percent. This increase is attributed to a shift in the geographic distribution of investment. Asian countries continue to rapidly increase their investments in R&D spending (China has over taken Japan as the second largest investor in R&D spending to the U.S.) and the U.S. and Europe should maintain nearly flat levels of spending.

U.S. states must develop an export strategy as a component of the state's “competitiveness agenda,” according to a new report from the Brookings Institute. In “Boosting Exports, Delivering Jobs and Economic Growth,” the authors point towards the rapid growth of American exports in comparison to the overall economy's economic growth to highlight the need for effective and efficient state export strategies. Between the third quarter of 2009 and the third quarter of 2011, U.S. exports grew by 12.7 percent almost four times the overall economic growth (3.2 percent). States, the authors contend, fail to export efficiently and effectively for several reasons including lack of data to understand strengths and weaknesses; efforts are reactive, fragmented and inconsistently funded; or states ignore exporting efforts by the federal government and other institutions leading to duplication of and failure to leverage those programs. The report provides three policy prescriptions to remedy those issues. They include: “Get smart about assessing exports and the performance of their export promotion activities;”

Alabama then-Governor-elect Robert Bentley on January 3 named former House Speaker Seth Hammett as director of the Alabama Development Office, replacing Interim Director Linda Swann. He also appointed the president of the Birmingham-based Economic Development Partnership of Alabama, Bill Taylor, to lead efforts to grow and retain existing Alabama industries, while at the same time recruiting new businesses to the state.

Colorado Gov. John Hickenlooper nominated Dwayne Romero, president of Related Snowmass, to be the new director of the Colorado Office of Economic Development and International Trade.

Florida Governor Rick Scott fired John Adams, the current president of Enterprise Florida, so that he can choose a new leader to help promote his job creation and economic development agenda.

Hosted by TechColumbus, SSTI's 15th Annual Conference will be held at the Hyatt on Capital Square in Columbus, Ohio on November 8-9, 2011. Past attendees know SSTI's conference is the premier event for sharing ideas on the best ways to encourage technology-based economic development and foster regional prosperity in a global economy. And 2011 will be no exception.

Central Ohio provides an excellent backdrop to celebrate SSTI's 15th Annual Conference. The state has made science and technology a central focus for its economic development investments, making Columbus a perfect choice to showcase successful technology-based economic development practices and strategies.

President Barack Obama's FY12 budget request includes fewer ambitious proposals related to TBED than his previous budgets, but his new request offers increases for many R&D programs and several new efforts to promote high-tech development at the regional level. The proposed budget eschews most of the savings measures proposed by the National Commission on Fiscal Responsibility and Reform last November (see the November 17, 2010 issue of the Digest), which would have eliminated several agencies and reduced research funding. Instead, the Administration has proposed increases for research, particularly clean energy and renewable fuels research, and focused on reorganizing existing programs to achieve savings through efficiencies.

SSTI's full report is available for download in pdf format.

The fifth installment of SSTI's Tech Talkin' Govs series includes excerpts from speeches delivered in Maryland, Montana, Oklahoma, Texas, and Utah. The first four installments are available in the Jan. 5, Jan. 12, Jan. 19 and Jan. 26 issues of the Digest.

MarylandGov. Martin O'Malley, State of the State Address, Feb. 3, 2011"To create more jobs, we must leverage the power of our diversity... we must leverage the power of our geography... And we must harness the potential of Maryland's Innovation Economy: bio-tech, green-tech, clean-tech, cyber security, information technology, aerospace, global trade, and next generation manufacturing. ...

Following last week's announcement of the Startup America initiative, the National Economic Council, the Council of Economic Advisors and the Office of Science and Technology Policy have released the details of its innovation strategy. The strategy emphasizes the private sector's essential role in building next-generation companies, with the government serving as an "innovation facilitator." It includes recommendations on how the federal government can invest in the necessary building blocks for research and entrepreneurship, promote market-based innovation and catalyze strategic industries. SSTI will examine these recommendations in greater detail in next week's federal budget issue. The Department of Commerce (DOC) has released a request for information (RFI) regarding the measures that could achieve its innovation goals. The announcement includes ten questions to help guide the discussion. DOC also will accept electronic versions of reports, articles and analysis. Comments must be submitted by April 1, 2011.

Gov. Andrew Cuomo announced plans to direct $200 million in existing funds to establish 10 regional economic development councils to allocate funds and provide business assistance programs across the state. At the same time, the governor would consolidate programs supporting high-tech companies currently administered by the New York State Foundation for Science, Technology and Innovation (NYSTAR) with the Empire State Development Corporation (ESDC) — a move he says will eliminate duplicative functions and save the state $1.9 million in the coming year.

A majority of the funds slated for the councils ($130.6 million) would come from reprioritizing and redirecting existing economic development funds for competitively determined project grants, according to budget documents. The councils, made up of state government, business, community, and academic leaders, would compete for the funds based on economic development plans. Another $70 million would be provided in tax credits through the enhanced Excelsior Jobs Program.

Citing the need to ensure a competitive edge in the weak economic climate, Texas Gov. Rick Perry is asking lawmakers to continue investing in the state's economic development tools by providing an additional $15 million for the Texas Emerging Technology Fund (ETF) and retaining funding for the Texas Enterprise Fund in the coming biennium. The governor also is proposing $50 million for science, technology, engineering and mathematics (STEM) scholarships and $32 million to increase STEM academies.

Gov. Perry is seeking $219.2 million for his priorities and initiatives over the next two years, which includes the additional funds for the ETF and STEM incentives as well as $20 million for the Film and Video Game Incentive program and $11.3 million for Economic Development & Tourism. House and Senate committee budget recommendations unveiled last month would provide $21.3 million for the ETF in unexpended balances not obligated in the current biennium, but add no new funding. The governor's budget would add an additional $15 million to foster emerging technologies, enhance university-industry collaboration, and promote technology commercialization.

Vermont Gov. Pete Shumlin has released a jobs package that includes a number of initiatives that could enhance the state's innovation economy. The jobs bill calls for a new creative economy office that would focus on technology efforts, a mentoring program for entrepreneurs, a statewide internship program, and a tax credit for companies that hire STEM graduates. Gov. Shumlin also has renewed his predecessor's pledge to extend full wireless voice and data coverage across the state.

The governor, announcing the jobs bill last week, said that the legislation is intended to help stimulate every sector of Vermont's economy. Accordingly, most of the bill's provisions benefit the state's agriculture and food industries. Several initiatives, however, specifically target manufacturing, high-tech businesses and entrepreneurship.