SSTI Digest

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.

As part of the 2010-11 biennial budget unveiled last week, Gov. Tim Pawlenty proposed a package of tax incentives directed toward small, emerging businesses and companies that create green jobs and services. The governor's proposed Minnesota Jobs Recovery Act calls for a sizable investment over the next biennium with even greater costs beginning in 2012.

Within the Department of Employment and Economic Development, the governor is proposing investment tax credits totaling $50 million, deferred until 2012. Under the proposal, $38 million in tax incentives would be available to insurance companies for early-stage investments in certified capital companies. This proposal creates a 60 percent tax credit in the form of an insurance premium tax credit and is allowed only in the fifth calendar year after the investment is made at a rate not exceeding 20 percent of the earned credit in any taxable year, according to budget documents.

Facing a $1.6 billion budget deficit, Arizona legislators set their sights on the state's three-year old 21st Century Competitive Initiative Fund. A group of four Republican lawmakers led the effort to remove the program's $22.5 million from the 2009 state budget, which was signed by new Governor Jan Brewer last week. The fund was started under former Democratic Governor Janet Napolitano, who recently left office to join the Obama administration as secretary of Homeland Security. The Fund supported the efforts of Science Foundation Arizona (SFAz), a non-profit corporation that matched the state dollars with private funds to strengthen Arizona's biomedical research and industry. With the cuts, the future of the organization is uncertain.

Geographic Concentration Continues as California Share Grows, SSTI's VC Dashboard Shows U.S. venture investment experienced its first yearly decline since 2003 last year, according a recent PricewaterhouseCoopers and National Venture Capital Association (NVCA) MoneyTree Report. The report finds that total investment dollars dropped eight percent in 2008, while deal volume decreased by four percent. A press release accompanying the announcement cited market insecurity and a slowdown in exits for the fourth-quarter declines that led to the lower numbers.

The fifth installment of the Tech Talkin' Govs series includes highlights from state of the state, budget and inaugural addresses from governors in Alabama, Michigan, Ohio, Oklahoma, Pennsylvania and Utah.

Alabama Gov. Bob Riley, State of the State Address, Feb. 3, 2009 "And let's make Alabama more competitive with other states for higher paying jobs. Our current incentives focus almost entirely on manufacturing, and Alabama will continue to be aggressive in the pursuit of those jobs. But in today's economy we need a more balanced approach. One that makes more industries eligible for our economic incentives: knowledge-based industries that typically pay higher wages like research and development facilities, corporate headquarters and other entrepreneurial ventures. .

The technology agenda for President Obama includes both advancing biomedical research and improving the efficiency of medical treatment. Coupling this federal strategy with the initiatives of many states to stimulate health and biotechnology-related research may result in a boon of federal R&D spending from the Department of Health and Human Services (HHS) within the states.

Similar to a recent article examining the concentration and funding levels of DOE-related research (see the January 7, 2009 issue of the Digest), SSTI has prepared a table displaying the amount of HHS obligations for each state from 2001 to 2005, the most recent years available. The table also tracks the percentage of each state's total federal R&D obligations that originated from the HHS. This statistic shows the critical importance of health and medicine related-research for some states, or for states with large amounts of federal R&D coming in, the degree of diversification in the state's R&D portfolio.

Massachusetts Gov. Deval Patrick's secretary of Housing and Economic Development, Daniel O'Connell, resigned for personal reasons and was replaced by Greg Bialecki, an undersecretary who has been responsible for business development

SRI International announced that Stephen Ciesinski has been appointed Vice President of Strategic Business Development.

John Fremstad has left his post at the Metro Orlando Economic Development Commission to join the BE&K Building Group.

DATELINE: RICHMOND, Va.

The following information was released by the office of the governor of Virginia:

Governor Timothy M. Kaine today announced appointments to the following boards and commissions:

* denotes reappointment

Medical Advisory Board for the Department of Motor Vehicles

Juan A. Astruc Jr., M.D.* of Glen Allen, partner at the Retina Institute of Virginia;

Parker C. Dooley, M.D. of Accomack County, medical director of Eastern Shore Rural Health System, Inc.;

Anil Kumar, M.D.* of Glen Allen, assistant professor for MCV-VCU Health Systems;

Thomas Pellegrino, M.D.* of Norfolk, associate dean for education at Eastern Virginia Medical School;

John Sheppard, M.D.* of Cape Charles, president of Virginia Eye Consultants.

State Lottery Board

Susan Smith Feaster* of Loudoun County, chairman of the board and CEO of the World Leadership Institute.

PatFerrier@coloradoan.com

Doug Johnson of UniverCity Connections believes a bill providing tax credits to angel investors putting their money into start-up companies will create hundreds of new jobs in Colorado and help stimulate the lagging state economy.

Sponsored by Democrat John Kefalas of Fort Collins, the bill is expected to cost about $1.5 million, a price that if not reconciled will likely kill it as the state grapples with a possible $1 billion shortfall through next year.

"I completely understand that unless we can come up with a non-general-fund way to pay for this, it will be difficult to get out of the finance committee," Kefalas said.

"I don't want to further strain the budget for next year, but this is a very good economic development tool that will ultimately increase revenue because it will help businesses move along and create jobs. My job now is to figure out how to pay for it."

Superclusters can be explosive.

Colorado State University this week announced that its researchers have more than doubled the number of inventions, a phenomenal effort in two years. University officials attribute the success to the supercluster concept, which unites researchers with those in the private sector who can take their ideas and run, such as business experts, patent attorneys, marketers, etc. While the superclusters don't create new research, they foster it by speeding the transfer of technology from research to implementation.

The number of inventions attributed to CSU researchers rose from 42 in 2006 to 91 in 2008; CSU is expecting 100 this year.

Another report last week found that CSU has created 13 bioscience companies from 2002 to 2007, which is key to a growing employment sector. The report, by a coalition of advocacy groups, says Colorado ranks 11th in the country for bioscience venture capital investments. Two of three CSU superclusters are related to bioscience: infectious dis-eases and cancer research. The third supercluster is focused on renewable energy.

A party-line vote may be all the President can get as the House of Representatives is poised to vote on the American Recovery and Reinvestment Bill of 2009 (ARRA). That vote would be enough, though, to advance the $825 billion plan into the Senate, which is considering its own version of the bill this week.

As governors across the nation seek to fill record deficits, many new and longstanding TBED initiatives are facing challenging cuts or elimination. At the same time, governors are shoring up support for critical, targeted investments in the economy that they say are needed now more than ever. Using the platform of the state of the state, budget and inaugural addresses, several governors have announced new or increased investments in workforce innovation, bioscience, and alternative energy (see the Jan. 7, 14, and 21 issues of the Digest). Summarized below are executive recommendations from budget proposals in Georgia, Idaho and Vermont outlining new plans and proposed cuts to ongoing TBED efforts.