On Feb. 10, Tennessee Gov. Bill Lee presented his 2025 State of the State address along with his FY 2025-2026 budget proposal and legislative agenda. Building on the theme of both his speech and agenda, “Tennessee innovates,” Lee seeks to position the Volunteer State as the epicenter of energy innovation, especially nuclear power.

Research and development (R&D) tax credits are a common cornerstone of federal and state innovation policies and are offered to companies in hopes of spurring economic growth. But do R&D tax credits deliver the economic boost policymakers expect? Previous studies addressing this question often focused exclusively on either firm-level data or aggregate economic data. Firm-level studies typically found that R&D tax incentives significantly boost companies' investment in research and development. In contrast, macro-level analyses suggested a more modest impact on overall economic growth.

As this week’s recent research article mentions, R&D tax credits work, so it isn’t surprising several states have either proposed, amended, or enacted research and development (R&D) tax credits for both the current fiscal (2025) and new (2026) fiscal year in efforts to encourage innovation and economic growth. Some specifically target life sciences or biotechnology sectors while others focus on attracting new or existing companies and startups or to further develop life sciences and/or biotech sectors and hubs.

Higher education R&D (HERD) expenditures have steadily increased over time. They’ve soared past $100 billion in the most recent data year, fiscal year (FY) 2023, growing in every state. However, the gains are not shared equally in all fields of research.

NOTE: The nation's community of technology-based economic development organizations has entered annual report season, and we've already seen several releases from SSTI members. All document the impact TBED can have on advancing research, moving it to market, and helping businesses improve their profitability and competitiveness.

The U.S. Senate confirmed Kelly Loeffler to run the Small Business Administration by a vote of 52-46 on Wednesday, Feb. 19. Spending more than two decades in technology and financial service businesses, Loeffler is a former owner of the WNBA team, the Atlanta Dream and served in the U.S. Senate by appointment from 2019-2021.

In this week’s continuing coverage of gubernatorial addresses as they discuss the innovation economy, the following highlights have been selected from the State of the States or budget addresses given between Feb. 5 and Feb. 13, 2025, by the governors from Connecticut, Maryland, New Hampshire, and West Virginia. Information on previous 2025 State of the States and Budget addresses can be found here, here, and here.

SSTI is following personnel and policy changes across the federal government that will likely affect programs of importance for innovation-driven businesses and for growing stronger regional innovation systems across the country. There have been several announcements in the past week alone, so this week’s federal news column is fairly lengthy.

The Senate confirmed Howard Lutnick as the Secretary for the Department of Commerce on Tuesday, Feb. 18, by a vote of 51-45. Trade talks and tariff negotiations are expected to be top priorities for the secretary as the agency is expected to undergo several structural changes during the coming months. Current, estimates for employees at Commerce number around 50,000 people across a broad range of agencies, including the National Oceanic and Atmospheric Administration, which has been discussed in the media as a candidate for splitting up, relocation to another agency, and privatization.

The National Science Foundation issued a brief statement to invited NSF Engines proposers last week indicating its decision to delay the Feb. 11 deadline for the current competition for Regional Innovation Engines to a new date yet to be determined. The explanation states, “NSF anticipates a revision to the NSF Regional Innovation Engines program solicitation (NSF-24-565). By NSF policy, if a solicitation is revised, the deadline will be extended, likely to a month from when the revised solicitation is published. We will notify you when we have more information, including a revised solicitation.”

As the federal R&D budget has grown, peer review committee compositions changed, and federal research awards have grown in size, the threshold to obtain the designation as a Carnegie R1 university of $50 million in total research spending to earn the designation was met by 42 additional universities for the first time, bringing the total to 187 nationwide. New designees include San Diego State University, an SSTI member, and Howard University, the only historically Black college or university yet to receive the R1 designation.

The National Science Foundation, on behalf of the White House Office of Science & Technology Policy (OSTP), is providing the opportunity for public input toward the development of a national Artificial Intelligence (AI) Action Plan, as directed by President Trump’s Executive Order 14179. The Request for Information (RFI) is extremely broad. It states only that responses, to be submitted by March 15, may address any relevant AI policy topic, including but not limited to:

The Feb. 7, 2025, memo from the NIH Office of the Director (NOT-OD-25-068), now on hold because of two federal judge actions, announced the implementation of a flat 15% Facilities and Administrative fee (F&A) “across all NIH grants.” While the historic average F&A, or indirect cost rate, paid for by NIH is between 27 and 28%, the memo stated, the agency has previously allowed private small businesses without a negotiated F&A rate to charge up to 40% on their SBIR/STTR awards without further justification, drastically lowering their administrative burdens. Thus, a flat 15% fee on F&A if ever implemented would likely lead to some hardship for the small businesses.

NOTE: The nation’s community of technology-based economic development organizations has entered annual report season, and already we've seen several released from SSTI members. All document the impact TBED can have for advancing research, moving it to market, and helping businesses improve their profitability and competitiveness.

In a recent executive order, The White House is calling for the federal government to establish a Sovereign Wealth Fund (SWF) that will "promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish economic security for future generations, and promote United States economic and strategic leadership internationally.”

A Feb. 7 memo from the Office of the Director of the National Institutes of Health (NOT-OD-25-068) announced the decision to implement a flat 15% Facilities and Administrative fee (F&A), also known as an indirect cost rate, ”across all NIH grants.” Public statements from the Association of American Medical Colleges (AAMC), Association of American Universities (AAU), American Council on Education, (ACE) and Association of Public and Land-grant Universities (APLU), among others, outlined their objections to the move, highlighting the impact it would have on medical research.

Answering the question of what impact a flat 15% F&A reimbursement rate would have on the nation’s SBIR startups requires real data. The data doesn’t currently exist that we are aware of. As a result, SSTI invites all SBA FAST recipients, state SBIR matching grant programs, life science-based innovation and commercialization offices, and other interested TBED initiatives to join us for a virtual meeting as we launch a ‘citizen-science based’ online record gathering initiative to help inform state and federal policymakers.  Register here.

President Trump’s nominee to become Secretary of Commerce, Howard Lutnick, cleared the Senate Committee on Commerce, Science and Transportation on Feb. 4 by a vote of 16 to 12. A floor vote is expected soon, possibly still this week. Among the agencies within the Commerce Department are two agencies that support core elements of regional innovation and technology-based economic development more broadly. The National Institutes of Standards and Technology (NIST) oversees the Manufacturing Extension Partnership and the Economic Development Administration, which is one of the largest federally supported of core TBED and economic development efforts around the country. Lutnick’s support of the CHIPS Act and sustaining the current structure of the National Oceanic and Atmospheric Administration (NOAA) remain unclear, according to Roll Call. Lutnick is currently CEO of Cantor Fitzgerald, a Wall Street financial services firm.

In this week’s continuing coverage of gubernatorial addresses as they impact the innovation economy, the following highlights have been selected from three of the eight State of the States or budget addresses given between Jan. 28 and Feb. 5, 2025, by the governors from Indiana, Mississippi, and South Carolina. This is the first address for Indiana's new governor, and it provides evidence of economic development being one of his top priorities. Information on previous 2025 State of the States and/or budget addresses can be found here and here.

The launch of a new private equity firm in central Ohio is a reminder of the continuing ripple effects of a decades-long strategy of cultivating an innovation system. If the State of Ohio hadn’t created and provided sustained funding over decades for its integrated array of technology-based economic development programs, the founders of a newly launched private equity firm wouldn’t be in the position now to commit to helping more mid-market companies succeed in central Ohio.

Readers may have noticed the most populous states end up topping many of the statistical tables related to economic development. Normalizing the data by some relevant, related measure can provide a higher quality look that is a little closer to the “apples to apples” appeal that might help influence some policy issues. For this week’s edition of Useful Stats, SSTI is exploring research intensity as a component of state gross domestic product (GDP) and the research load “carried” by each member of the R&D personnel within the state’s higher education community.

SSTI’s new analysis of NIH data reveals the agency’s external R&D spending per award has been essentially treading water for the past 25 years in terms of real dollars—rising just 4% since FY 2000 when adjusted for inflation. This slow growth comes despite the crucial role NIH funding plays in technology-based economic development (TBED) policies across many states, particularly in the biomedical and life sciences. However, NIH funding remains a major economic driver as the world’s largest funder of biomedical and behavioral research, having generated nearly $2.50 of economic activity for every dollar spent in FY 2023, according to NIH estimates. While these awards support innovation, academic research, and regional economies, their purchasing power has eroded over time, barely keeping pace with inflation.

Artificial intelligence, market saturation, and shifting demands from both employers and students are driving changes in coding bootcamps and other programs in the tech training sector, according to a recent Inside Higher Education story. These factors have contributed to several closures in the past year:

In this week’s continuing coverage of gubernatorial addresses as they discuss the innovation economy, the following highlights have been selected from five of the eight State of the States or budget addresses given between Jan. 17 and Jan. 28, 2025, by the governors from Maine, Missouri, New Mexico, Utah, and Wisconsin. Information on previous 2025 State of the States and/or budget addresses can be found here.

The U.S. National Science Foundation announced awards totaling approximately $40 million to support research and STEM workforce development in Delaware, Guam, Kentucky, Louisiana, and Vermont, according to a January 22 NSF press release. These grants are part of the NSF Established Program to Stimulate Competitive Research (NSF EPSCoR).