SSTI Digest

SSTI’s analysis of state revenue outlooks and budgets reveals early warning signs that underscore the importance of expanding investments in TBED initiatives and regional innovation to strengthen state economies, even as states face the prospect of reduced budget flexibility. The states' Fiscal Year (FY) 2028 budget season is rapidly approaching. While most governors will not release their budget proposals until January 2027, and with 36 states possibly electing new governors those spending plans are likely to include multiple or delayed versions; nonetheless, several states, beginning with Colorado, are expected to begin unveiling their proposed spending plans in late October and early November. 

TEDCO recently announced the findings of an independent economic impact study detailing its contributions to Maryland. The 2026 study shows that in fiscal year 2025, TEDCO supported more than $1 billion in statewide economic output, 4,027 jobs and $479 million in labor income—building on a track record that now totals more than $9.9 billion in economic output and 38,000 jobs since inception. 

USDA Rural Development recently announced that the Farmers Innovation Fund has been certified as a Rural Business Investment Company. This designation allows Farm Credit System institutions and others to invest as limited partners. The Farmers Innovation Fund, a unique joint initiative of AgLaunch Holdings Inc. and Ag Ventures Alliance, is guided by farmers’ expertise aiming to bring promising technologies to the market faster, reduce the risk of adopting new innovations, strengthen U.S. agriculture supply chains, and create new opportunities for rural businesses, entrepreneurs, and manufacturers. 

A recently enacted Louisiana law (Senate Bill 374/Act 499) allows the state’s colleges and universities to establish economic development districts without legislative approval. The act authorizes higher education institutions, in coordination with local governments, to create such districts and retain the sales tax revenues generated within them that exceed municipality baseline revenue amounts.

Place-based economic development is back near the center of federal policy, from Opportunity Zones to the CHIPS and Science Act. That renewed attention comes with a familiar problem: decades of enterprise zones, tax incentives, infrastructure investments, and other geographically targeted programs have produced results that are hard to summarize cleanly. In a new NBER working paper, Matthew Freedman and David Neumark ask the better question: not simply whether or not these policies work, but under what conditions they might work, for whom, and why. Their review points to a practical conclusion: policy design matters and targeting a distressed community with development-focused financial incentives is rarely enough on its own.

For the civic leaders of Osceola County, the Great Recession of 2008 made clear that they could not base their economy so heavily on travel and tourism. By the time COVID-19 hit in 2020, they knew the steps they had taken to diversify their economy were the right ones. When the Build Back Better Regional Challenge (BBBRC) opportunity arose in 2021, the county and its partners were well-positioned to operationalize the benefits the grant presented to the region and create a trained workforce for a recently attracted semiconductor industry. How did Osceola County get here? There are potential approaches to emulate by more areas of the county dependent on low-wage sectors like tourism or, for that matter, extraction-focused regions subject to “boom and bust.” 

One persistent question in economic development policy is how incentives impact private sector investment decisions. Recent and ongoing research from Murillo Campello and Guilherme Junqueira of the University of Florida, published in the National Bureau of Economic Research working paper series, explores the impact of the Qualified Small Business Stock (QSBS) program on venture capital risk-taking. The researchers found that the availability of QSBS tax benefits strongly influences venture capital investment behavior, specifically in traditionally structured venture capital funds. They also found no similar behavior among angel or corporate investors, an insight that may hold important program design and policy lessons for the TBED community. 

The U.S. Small Business Administration (SBA) has proposed updated commercialization performance standards for companies that win large numbers of Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) awards. The proposal would apply to firms that received more than 25 Phase II awards across all participating agencies during the previous five completed fiscal years. To remain eligible for new Phase I or Direct-to-Phase-II awards, those firms would need to show that a minimum share of their total revenue comes from sources other than Phase I and Phase II SBIR/STTR funding. The threshold would be 33% non-SBIR/STTR revenue for the FY 2027 assessment and 50% beginning in FY 2028, measured over the previous three completed fiscal years. Phase III revenue and other government contracts would count as non-SBIR/STTR revenue. Firms that do not meet the benchmark would be ineligible to submit proposals for new Phase I or Direct-to-Phase-II awards for one year. SBA says the updated standards are scheduled to take effect Nov. 15, 2026, after review of public comments, which are due by October 31.

With extensive cuts to federal research funding since January 20, 2025, one might wonder what impact this is having on scientists, both in the U.S. and abroad. Recently published results from a survey by  AIP (American Institute of Physics) offer a snapshot of how more than 2,000 respondents from AIP’s member organizations view the impact of these changes.

The University of Alaska Board of Regents voted on Aug. 4 to eliminate higher tuition rates for out-of-state students. The unanimous vote is expected to be finalized in November, when the regents will set tuition rates for the 2027-28 academic year. University finance officials said the change is not expected to significantly reduce revenue, but it could help the University attract more students from outside Alaska. 

Intellectual property-intensive industries account for 44% of private-sector GDP, 66 million jobs, and $1.58 trillion in commodity exports, according to a new report released by the United States Patent and Trademark Office this month. The report sheds light on how IP is distributed among various industries. 

A recent flurry of new rules, both proposed and finalized, may interest small business owners or those who advise them. The U.S. Small Business Administration (SBA) has proposed two new rules. The first, Revised Size Standards Methodology, will update SBA’s methodology for determining which businesses qualify as “small.” The second, on Small Business Size Standards, would consolidate the number of industry-specific size standards and raise size standard thresholds.