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Cutbacks in service loom after 63 percent budget reduction

The Manufacturing Extension Partnership (MEP) is one of 15 finalists for the 17th Annual Innovations in American Government Award. Administered by the Ash Institute for Democratic Governance and Innovation at Harvard University's Kennedy School of Government in partnership with the Council for Excellence in Government, the award recognizes creativity and excellence in public sector service delivery.

With only two months to go in the 2004 fiscal year for most states, 32 are projecting small surpluses in the end - a sharp contrast to the situation they faced a year ago - according to a new report by the National Conference of State Legislatures (NCSL).

He may be more traditionally associated with gas-guzzling Humvees than anything remotely environmental, but Gov. Arnold Schwarznegger has become a big believer in alternative energy vehicles. The governor's recent call for creating a "Hydrogen Highway" by 2010 is, perhaps, the country's boldest commitment to getting hydrogen fuel cell vehicles on America's roadways anytime soon.

The U.S. Department of Homeland Security (DHS) recently selected Texas A&M University and the University of Minnesota to lead the second and third Homeland Security Centers of Excellence (HS-Centers). The department anticipates providing Texas A&M University, the University of Minnesota and their partners with a total of $33 million over the course of the next three years to address security in two key agricultural sectors -- foreign animal diseases and food security.

Studies have shown a strong correlation between high-wage economic growth and university research activity. Examination of nearly every strong regional technology center across the country will reveal at least one research university within its boundaries. As a result, many state and local technology-based economic development (TBED) efforts strive to increase the quantity and quality of university R&D undertaken within their boundaries.

A study released last week by the Economic Development Administration (EDA) and Carnegie Mellon University's Center for Economic Development finds that, within a region, universities are best able to affect the growth of young, emerging clusters. The study, Universities and the Development of Industry Clusters, concludes a "university must have a large base of research and development in order to significantly impact a cluster..."

One of the differences between technology-based economic development (TBED) and more traditional approaches to promoting economic growth is TBED's orientation that while all jobs may be important, they are not created equal. Traditional economic development may provide millions of dollars for financial incentives and infrastructure construction assistance for a shopping mall or "big box" retailer that provides many poverty-level wage positions or part-time jobs.

The Bush Administration's first budget request offers a mixed bag for state, local, and non-profit practitioners and policymakers in tech-based economic development. In research categories, the budget reflects the Administration's research emphasis in defense, biotechnology, and life sciences. The budget also reorganizes the nation's energy research priorities. Most other research categories were held at FY 2001 funding levels or received modest increases or cuts.

Research funding levels, with the exception of $150 million in Congressional earmarks, remain relatively flat between FY 2001 appropriations and the President's FY 2002 request. Economic development and Digital Divide programs, on the other hand, take several hits. Selected agency program highlights include:

The total agency budget request is $4.8 billion, $300 million less than the FY 2001 appropriation level. The majority of the reduction is absorbed by elimination of new project funding for the Advanced Technology Program, a 67 percent cut or $30 million for the Technology Opportunities Program, and a $77 million cut in Economic Development Administration programs. Selected Commerce program highlights include:

The Administration budget request calls for a $2.6 billion increase for missile defense alternatives and new technology development. The President plans to increase military research by $20 billion over the next five years. Research, Development, Testing & Evaluation (6.1, 6.2, and 6.3 spending categories) would grow by only two percent in FY 2002, however. The American Institute of Physics reports the final Defense budget request will be released on May 15.

The agency's total FY 2002 budget request of $19.2 billion reflects a drop of 2.3 percent. The DOE science budget would increase to $3.16 billion, representing an increase of one-tenth of one percent. Shifts within the R&D budget reflect the President's priorities in fossil fuel research: $150 million in new matching federal funds will support the Clean Coal Power Initiative. Funding for Biological and Environmental Research, on the other hand, falls by more than eight percent.

The Administration's FY 2002 budget request of $7.3 billion is $56 million, or 0.08 percent, higher than the FY 2001 appropriation. Funding for EPA science programs would be cut by $27 million or nine percent. Highlights of specific programs within the science budget include:

The Administration’s budget request includes a 13.8 percent increase of $2.8 billion in biomedical research within the National Institutes of Health. Not to be outdone, the Senate has already passed a budget resolution calling for an additional $700 million in NIH funding for FY 2002.

Total funding for the Community Development Block Grant (CDBG) program is reduced by $9.7 million or 0.3 percent over FY 2001 levels. A new $80 million Community Technology Centers initiative within the CDBG program budget will provide competitive grants to support the development and expansion of technology centers in high poverty urban areas. The budget request says the new centers will enhance the Dept.

The Administration's $14.5 billion request for NASA reflects an increase of just under two percent over the FY 2001 appropriations. While funding for the Science, Aeronautics and Technology unit of the budget would grow from $7.067 billion in FY 2001 to $7.192 billion in FY 2002, the distribution of funding across areas within the unit shifts:

NSF would receive $4.47 billion dollars in FY2002, up $56.1 million (or 1.3 percent) from FY2001 under the President’s budget request. S&T highlights are:

The Administration's budget request eliminates the New Markets Venture Capital Program, the New Markets and the Venture Capital Technical Assistance Grants. The programs are designed to increase access to equity capital and technical assistance to women, minorities and to businesses located in low- and moderate-income rural areas and inner cities.

The FY 2002 budget for Transportation proposes $59.5 billion, the highest funding level in the Department’s history. A summary of research and technology related programs follows:

In an attempt to attract more bioscience firms, Florida will invest up to $1 billion of its $102 billion employee pension fund into venture capital, the State Board of Administration recently announced. A forum was held last week by Enterprise Florida, the state's economic development agency, to outline the investment plan to more than 80 venture capitalists in attendance.

Two legislative bills encompassing economic development priorities of Gov. Jim Doyle’s Grow Wisconsin initiative recently were signed to provide assistance for both entrepreneurs and manufacturers.

The U.S. cannot take its position as a world leader of innovation and research for granted, suggest new initiatives sponsored by the National Science Foundation (NSF) and the Task Force on the Future of American Innovation. A report released on April 21 by NSF states the U.S. must take action, pointing out that invention requires both ingenuity and a skilled workforce.

Small firms, as much as large ones, may be key to the nation's ability to innovate, particularly in emerging fields, according to data published by the U.S. Small Business Administration (SBA). A report released earlier this year by SBA's Office of Advocacy shows that large firms in the biotechnology, medical electronics, semiconductor, and telecommunications industries are citing patents by small firms in higher-than-expected numbers.

The National Science Foundation has released a new statistical report entitled Federal Funds for Research and Development: Fiscal Years 2001, 2002, and 2003. Included among the 112 tables are 10 presenting the 2001 data by geographic distribution, performer and federal agency.

Whether it is "pink slip parties" in San Diego, the Washington DC beltway, or Chicago to encourage networking and placement of laid-off information technology (IT) workers or Wall Street analysts lamenting the condition of the tech-related stocks, much of the talk in the IT hot spots of the U.S. has been doom and gloom. Many other areas of the country, though, whose economies do not have a preponderance of dot-com companies that went bust are still trying hard to educate and retain IT workers.