SSTI Digest

The Research and Innovative Technology Administration (RITA) of the U.S. Department of Transportation (DOT) recently released Research Activities of the Department of Transportation: A Report to Congress, identifying DOT’s current and projected research, development and technology priorities. A newly formed DOT agency as of November 2004, RITA will lead cross-departmental efforts to identify and implement research priorities, and ensure that those investments are effective and align with DOT’s objectives. In addition, RITA will manage the University Transportation Centers program, which invests in university-based centers of excellence to advance innovation, research, education, and technology transfer. According to the report, there are five DOT objectives that guide the agency's research priorities: safety, mobility, global connectivity, environmental stewardship, and security. Most DOT priorities address more than one objective and are supported by several departmental programs. In a speech to the American Society for Engineering Educators Panel, RITA Administrator Samuel Bonasso…

Glenwood Springs, Colo., is the nation’s most entrepreneurial region, according to a study recently released by the U.S. Small Business Administration's Office of Advocacy and the Edward Lowe Foundation. The region's ranking is based on the Regional Entrepreneurship Index, a measure intended to standardize assessment of entrepreneurship within and across regions. The study, The Innovation-Entrepreneurship NEXUS, attempts to show that innovation without entrepreneurship yields minimal economic impact. The authors note, “Whether they are building new firms or reinventing existing ones, entrepreneurs, through the application of new ideas to products and services, capture locally the economic benefits of innovation.” The Regional Entrepreneurship Index used by the study ranks a total of 394 regions according to their entrepreneurial and innovation activities. The study finds the more entrepreneurial regions were associated with higher levels of technology than the less entrepreneurial ones. The leading regions expended nearly 54 percent more on R&D and recorded 67 percent more…

The Small Business Administration (SBA) is anticipated to release its latest summary statistics for Small Business Innovation Research (SBIR) awards soon. Unfortunately, the data typically do not include proposal figures, a useful measure of the general effectiveness or need for SBIR technical assistance and outreach in any given state. For several years, the Useful Stats column of the SSTI Weekly Digest has attempted to rectify this omission and FY 2004 is no exception. For FY04, SSTI has aggregated Phase I award, proposal and award-to-proposal conversion percentages for all 50 states and the District of Columbia for 10 of the 11 participating agencies. (The Commerce Department's National Oceanic and Atmospheric Administration refused to provide proposal statistics.) The table is available at: http://www.ssti.org/Digest/Tables/042505t.htm SSTI also has compiled similar tables for 2001 and 2002. An announcement of the 2003 table's availability will be made in an upcoming issue of the Digest. Links to the Phase I tables for other years are provided below: FY 2002…

Venture capital investments in Montana may have become a little more attractive last Friday as the Montana House of Representatives passed the Montana Equity Capital Investment Act, moving the legislation to Gov. Brian Schweitzer for his consideration and expected signature. To maximize the rate of return for investors, Senate Bill 133 calls for the creation of a $60 million Montana Equity Fund, which will be used as a provisional financial safety net for investors and distributed as tax credits should investments go badly. Adopting what is commonly referred to as the Oklahoma model, the act also establishes the Montana Capital Investment Board to oversee the fund's activities. The goal of S.B. 133 is to attract local and out-of-state venture investment funds by providing a guaranteed monetary return to investors through tax incentives. The program is expected to mobilize capital in the state, creating a permanent source of funds that will be available for academic, technological and innovative start-up companies as well as expanding businesses. More information on the Montana Equity…

Tech firms in New Mexico received happy tax news on April 4 as Gov. BIll Richardson signed several bills to encourage economic growth across New Mexico. House Bill 410 authorizes the Small Business Technology Tax Credit, created to attract R&D investment into the state by providing small companies with a three-year “tax holiday.” The tax credit is available to businesses with total revenue of $5 million or less, no more than 25 employees, and qualified research expenditures of at least 20 percent. Gov. Richardson also signed H.B. 518, the SMART Money Initiative, which creates a $10 million fund to be used as loans for companies looking to build or expand in New Mexico, particularly in rural areas. The initiative will be administered by the New Mexico Finance Authority and is estimated to grow to $30 million over 10 years with loan paybacks. The governor anticipates the state's one-time $10 million investment will net approximately 3,000 jobs over the decade. Both bills were priorities for Gov. Richardson during this session of the state legislature (see the Jan. 24 issue of the Digest).…

New York's Empire Zones Program dodged a veto from Gov. George Pataki as an agreement was met with the legislature to restructure the program. The state budget, signed into law last week, extends the program and allows for an additional 12 zones to be created throughout the state. Under the agreement with the legislature, Gov. Pataki will give up some control of the administration of the program to a new board, which will oversee creation of the new zones and rule on boundary issues for all existing zones, according to an article in the New York Times. The new board will consist of a panel of representatives appointed by the legislature and the governor. Currently administered solely by the Empire State Development Corporation (ESD), the program provides tax benefits to companies operating inside a specific area that create jobs. Benefits are not provided to companies based on job projection, according to ESD, rather on jobs created or qualified business activity. The program has over the past few years come under scrutiny from critics saying it is ineffective and blaming the…

Legislation that would extend and expand the federal research tax credit was introduced in the U.S. Senate last month. Senate Bill 627 seeks to make permanent the research credit that was first enacted in 1981 and is set to expire Dec. 31, 2005. The bill, sponsored by Orrin Hatch (R-Utah), also would provide an alternative simplified credit for qualified research expenses and increase the rates of the alternative incremental credit. The simplified credit addresses changes in business models and economic circumstances that currently prevents some businesses from using the credit. Under S.B. 627, companies could receive a credit of 12 percent for qualified research expenses that exceed 50 percent of the average of those expenses for the three previous years. The credit would be 6 percent for companies having qualified research expenses in just one year. Qualified research expenses include in-house expenses for wages paid and supplies used in the conduct of qualified research, and up to 75 percent of contract expenses for qualified research, according to the Internal Revenue Service. The credit…

Do tax credits pave the way for more investment in R&D and equity investments in new enterprises? Or, do they reward companies and venture capitalists for investments they would have made anyway? Discussions on these questions can become quite heated and fueled by data supportive of both sides, as two new academic analyses demonstrate. The recent studies examine two Canadian business tax credits, but come to opposite conclusions. One study reviews the impact of Canadian R&D tax credits, a permanent feature of the Canadian tax code. A second study focuses on a Quebecquoise investor credit established a decade ago to encourage local venture capital to the region. In Evaluating the Impact of R&D Tax Credits on Innovation: A Microeconometric Study on Canadian Firms, Dirk Czarnitzski, Petr Hanel and Julio Miguel Rosa use national survey data to compare firms who claimed the credit with similar firms who did not. Canada offers companies an R&D tax credit of 35 percent for the first $2 million and another 20 percent on any excess amount (see article above for U.S.…

Gross State Product (GSP) is considered, at least in theory, to be an effective measure of the "value added" by a state's economy. That is, the figure represents the sum of all net industrial activity within the state, where net activity is defined as total outputs (sales or receipts and other operating income, commodity taxes, and inventory change) minus total inputs (consumption of goods and services purchased from other industries or imported). Comparing states' GSPs is difficult without some form of standardization, such as population or "per capita." Examining standardized trends over several years for an individual state or for comparison among two or more states may serve as a macro indicator of the state's economic health or direction. To test this, SSTI has prepared a table presenting: each state's rank for GSP on a per capita basis for the years 1999-2003; the percent change in population for the period and rank; the percent change in total GSP for each state for 1999-2003 and rank; and, the percent change in GSP per capita for the five years and rank. National Gross…

On the final day of March, Gov. Brad Henry signed legislation establishing a $475 million bond issue for a slate of higher education projects, much of which targets research and laboratory facilities. The Oklahoma Higher Education Promise of Excellence Act of 2005, which the governor called "desperately needed," was one of his top legislative priorities for the year (see the Feb. 7, 2005, issue of the Digest). The bill containing the bond issue, H.B. 1191, also provides $25 million in the form of a bond bank to finance future improvements at the state's colleges and universities. Projects slated for University of Oklahoma include construction of a chemistry and biochemistry teaching and research-laboratory complex, infrastructure improvements for the University Research Campus, and construction of new engineering and technology facilities. Oklahoma State University will receive $76 million for projects, including a new science and technology research center and renovation of existing research laboratory and office space. Gov. Henry noted that college enrollments are at record highs, but that the bulk of…

The U.S. Department of Commerce announced Friday that President Bush intends to nominate David Sampson as Deputy Secretary for the agency. If confirmed, Dr. Sampson will succeed Theodore Kassinger, who will resign effective April 30, 2005. Prior to becoming Deputy Secretary, Mr. Kassinger served as General Counsel from 2001 to 2004. Mr. Kassinger has served as Deputy Secretary since July 2004. Dr. Sampson was nominated by President Bush on March 19, 2001, and confirmed as the Assistant Secretary of Commerce for Economic Development by the U.S. Senate on Aug. 3, 2001. Sampson has served as the principal advisor to Secretary Donald Evans on domestic economic development policy.

Two organizations with seemingly the same goal in mind recently released statistics on the health of their region's technology sectors. Relying on different methods, the Pittsburgh Technology Council (PTC) and the Sacramento Area Regional Technology Alliance (SARTA) both analyze and report the impact of technology clusters on the local economy. PTC's annual State of the Industry report gathers growth indicators from state and federal resources to track southwestern Pennsylvania's employment statistics, number of tech companies, and total annual payroll for information technology, life science, advanced manufacturing, advanced materials, and environmental technology industries. According to PTC, the goal is to quantify the impact and draw attention to the region's significant technological resources. The 13-county analysis also features an overview of eight emerging clusters such as robotics, supercomputing and nanotechnology. In addition to industry-specific measurements, the report also provides numerical data that include R&D expenditures at universities, average annual SBIR funding, and…