SSTI Digest

One starts up. Another bites the dust. The Certified Capital Company (CAPCO) Program, a complicated and controversial tool used by some states to encourage venture capital investments, finds its beginnings in one region while seeing its demise in yet another. The D.C. CAPCO program, officially launched today after being enacted in 2004 by the D.C. Council, will afford insurance companies with a tax credit against their premium taxes in exchange for making $50 million in equity investments over 10 years. The program's three fund managers - Wilshire D.C. Partners, Advantage Capital Partners and Enhanced Capital Partners - will look to invest in small and emerging businesses, including manufacturing centers and technology companies, through three initial funds. The CAPCO model combines private sector expertise in identifying, evaluating and financing businesses with the public sector's interest in encouraging equity investment. Companies…

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 U.S. Bureau of Economic Analysis (BEA) recently released its preliminary 2004 figures for per capita income, revealing average income received by persons grew by 4.7 percent between 2003 and 2004. The change in income was not evenly distributed across the country. The BEA explains financial activities were a particularly strong accelerating force in the Northeast (New York, Connecticut, Massachusetts and Delaware), construction in the West (Colorado, Idaho, Oregon, Nevada and Utah) and professional services more broadly across the country. Tech-based economic development practitioners and wise elected officials will note, as well, one-year change in per capita income is not a terribly useful measure for programs requiring longer time periods to yield results. The statistic is relatively volatile between single years, affected by major events such as the dot-com crash and the subsequent recession. SSTI has prepared a table presenting change in per capita income over the five-year period 1999-2004 and ranking the states using constant 1999 dollars.The result reveals only a 3.98 percent increase,…

Unofficial results posted today on the National Conference of State Legislatures (NCSL) website reveals political control of at least 10 of the country's 99 state legislative chambers (Nebraska has a unicameral legislature resulting in the odd total for the country) changed parties in yesterday's election. NCSL reports "Based on unofficial results, the Democrats won the Colorado House, Colorado Senate, North Carolina House, Oregon Senate, Vermont House and Washington Senate. In case of the Colorado and Washington chambers, the margin of victory is only one seat, and recounts are expected in several districts." Republicans took control of the Georgia House, Indiana House, Oklahoma House and Tennessee Senate. NCSL also says control of chamber in a number of state legislatures still await the outcome of key races. Chambers in the balance include the Oregon House, Maine Senate, Minnesota House, Montana House and Montana Senate. More information is available at http://www.ncsl.org.

Former NASA Administrator Richard Truly, now head of the National Renewable Energy Laboratory, announced his plans to retire in November.

One of the most critical elements needed for a tech-based economy is a strong higher education system that supplies a source of research ideas, new technologies and a skilled workforce. Studies have shown that individuals with college degrees earn more money, obtain better jobs, pay more taxes, and are more apt to perform volunteer work. Given higher education's important role, several states have been re-examining how higher education can play a larger role in their economy. SSTI highlights some of those efforts below. Colorado Colorado enacted a higher education initiative earlier this month, becoming the first state to offer college vouchers. Gov. Bill Owens signed Senate Bill 189 into law, which provides individual vouchers of $2,400 per year for Colorado students to attend public colleges and universities beginning in the fall of 2005. The bill also offers up to $1,200 for low-income students to attend one of three non-public institutions in the state. Recent reports from the Associated Press, however, indicate that budget restraints may force the amount to be cut to from $2,400 to $…

Pam Inmann is the new executive director of the Western Governors Association.

Brian Vogt is the new director of the Office of Economic Development and International Trade in the Colorado Office of the Governor.

The creation and subsidization of CAPCOs, certified capital corporations intended to encourage venture capital (VC) investment, is one of the more controversial policies some states have adopted to encourage the growth of tech-based economies. With substantial revisions to Colorado's short CAPCO experiment this month, questions are raised once again for other states that either have passed or are considering various approaches to increasing the availability of risk capital for new tech firms. Colorado Governor Bill Owens signed two bills on March 4 effectively ending the state's two-year-old CAPCO program -- and blocking an additional $100 million in tax credits scheduled for distribution in April. Instead, the $100 million will be split equally between a new Colorado Venture Capital Authority (see Colorado Senate Bill 04-106) to provide capital to businesses throughout the state and CoverColorado, a program designed to provide health benefits to the chronically ill. Colorado state lawmakers originally enacted CAPCO to stimulate economic growth, giving tax credits to insurance companies…

Brian Vogt has been appointed director of Colorado's Office of Economic Development and International Trade.

Joe May, president of Colorado's community college system, announced his retirement, effective in February.

Robert Olsen, the director of the Fitzsimons Redevelopment Authority, will become the head of the Economic Development Administration's regional office in Denver.