Report urges state R&D investment; Gov. Baldacci considers a proposed $150 million bond package to spark economic growth

BYLINE: MATT WICKENHEISER Staff Writer

The Governor's Council on Jobs, Innovation and the Economy recommended Thursday that Maine invest $150 million over the next three years to promote research and development and job creation.

The council was established last December by Gov. John Baldacci to develop recommendations following an October Brookings Institution report that examined Maine and its economic future. The group made the investment recommendations in its final report to be released on Monday.

While a $150 million investment is being suggested, Baldacci hasn't officially backed it. According to a statement, Baldacci ''is still weighing the demands of several competing priorities and has not made a final decision on the package he will present next week.''

''We've gone two years without a bond package. We've got issues that we must address,'' Baldacci said.

The council recommends a three-year R&D bond package totaling $150 million, with $50 million available annually. The funding would be granted in a competitive process and could be used for capital and infrastructure that supports economic growth. The council suggested how the money should be divided:

n<!-- 2009(unknown) -->$15 million per year would be directed toward the University of Maine System to support R&D infrastructure.

n<!-- 2009(unknown) -->$7 million would be available for biomedical proposals.

n<!-- 2009(unknown) -->$5 million would be available for marine-related proposals.

n<!-- 2009(unknown) -->$23 million would be available for other technology sectors.

''As part of our study, we examined the state's capacity to bond,'' said council Chair Karen Mills in the statement. ''Some projections indicate the state could afford $500 million of new bonds. Now is the time to be aggressive and to provide resources to develop and expand private sector jobs that can sustain themselves.''

Thursday's recommendations come on the heels of a new report evaluating Maine's R&D efforts that strongly suggests the state should invest more and be more consistent about it.

Maine has invested almost $300 million in R&D since 1996, according to the Maine Comprehensive R&D Evaluation and Innovation Index 2006, with 50 percent going to the University of Maine System, 27.7 percent to nonprofit research laboratories and 22.5 percent to organizations that support the private sector, such as the Maine Technology Institute.

The evaluation was done by PolicyOne Research of Portland and RTI International of Durham, N.C., for the state's Office of Innovation.

Researchers found private-sector recipients of investment show higher job growth and significantly higher average wages when compared to the Maine economy as a whole. State investments have helped the universities build their research capacity and add to an educated work force.

According to the report, Maine has dramatically increased state-sponsored investments in research and development early in the new century. In 1997-98, Maine had an annual R&D investment level of $3.6 million. By 2003-04, Maine's annual investment was more than $60.7 million.

Since 2003-04, Maine has maintained an annual state investment level in excess of $20 million, a decrease from the prior three-year period, the evaluation said.

''It says we need to invest more in R&D, it's not that complicated,'' said Catherine S. Renault, director of the Office of Innovation. ''We made a big ramp-up, and you have to keep priming the pump.''

Renault is new to the office, having taken the position in January. She previously served as a project manager for RTI International, a think-tank based in Research Triangle Park, N.C., and as a senior research associate in the office of economic development at the University of North Carolina. There, she assisted in evaluating research and development in Maine.

With her recent move to Maine, Renault is the presenter of the evaluation and the recipient, as well.

Another point to take away from the report is that the state needs to invest more heavily in programs that support the commercialization of university and nonprofit organization research, said Renault.

''We need projects that are ... industry-led, that pull on our really excellent research institutions,'' she said.

A good example of this, noted both Renault and the report, is the Advanced Engineering Wood Composites Center at the University of Maine.

''Work being done at AEWC and contemplated for the future match very well to the rapid growth areas in the marketplace,'' the report said.

Baldacci proposes in his budget to spend an additional $8 million over two years in industry cluster development awards, which would support this commercialization, said Renault.

Renault said Maine has three strengths that stood out to her, as she reviewed the report: The state has one of the largest not-for-profit lab sectors in the country. Maine's 8th graders ranked 20th in the nation in math skills in 2005 and 8th in science skills. And the state has been doing well in bringing in federal funds through the Small Business Innovation Research program.

Areas for improvement include overall research and development performance and increasing industry levels of R&D, she said.

Also, the state needs more venture capital - or any sort of risk-based capital - coming in, she said. According to the report, Maine ranked 43rd in 2005 in venture-capital investments.

Staff Writer Matt Wickenheiser can be contacted at 791-6316 or at:

mwickenheiser@pressherald.

com