state budget

The U.S. Government Accountability Office (GAO) released their annual State and Local Governments' Fiscal Outlook and long-term projections paint a bleak picture. Even though both state and local government near-term fiscal outlooks have improved slightly since 2010, these sectors face long-term revenue declines that will necessitate "substantial policy changes" to stimulate revenue growth. According to the report, without policy changes, governments will face an increasing fiscal gap between receipts and expenditures in the coming years that would force across-the-board programmatic cuts. The primary long-term driver of fiscal challenges is the increasing costs of health-related costs. Based upon current and historical spending and revenue patterns, GAO's model projects the receipts and the expenditures for each sector until 2060. Since 2007, GAO has published long-term fiscal simulations for both the state and local sectors using National Income and Product Accounts data collected by the Bureau of Economic Analysis. Read the report...

A budget agreement reached last week between Gov. Andrew Cuomo and legislative leaders adopts the economic development reforms set forth by the governor to establish a regional strategy for job creation. The approved budget allocates about $200 million in existing capital funds and tax credits to support 10 regional economic development councils and merges the New York State Foundation for Science, Technology and Innovation (NYSTAR), the state's tech-based economic development initiative, into the Department of Economic Development.

During the campaign trail and in speeches delivered during their first few weeks in office, governors in Florida and Nevada announced plans to overhaul economic development efforts without providing many details on how the new systems would operate. Draft legislation recently was introduced in the respective states, providing some insight on the structure and governance of the proposed agencies.

Budgets recently approved in West Virginia and Wyoming will dedicate new funds for TBED initiatives in the coming year. TechConnect West Virginia is slated to receive $250,000 for its efforts to develop immediate and long-term strategies to capitalize on the state's technology strengths. In Wyoming, lawmakers allocated a portion of Abandoned Mine Land (AML) funds for construction of a science, technology, engineering and mathematics (STEM) undergraduate teaching laboratory and for graduate stipends and fellowships to support students studying energy, natural resources and computational sciences at the University of Wyoming (UW).

Leasing the state's wholesale liquor distribution system to JobsOhio to provide a dedicated funding source of about $100 million annually for job creation is a key component to reforming Ohio's economic development efforts under Gov. John Kasich. The governor unveiled the plan last week as part of the 2012-13 biennial budget. The proposed budget also sets aside $33 million in the second year of the biennium to facilitate the transfer of economic development initiatives from the Ohio Department of Development (ODOD) to the newly established nonprofit corporation.

The FY12 Business, Economic Development and Labor budget approved by lawmakers includes $25.7 million for USTAR, the state-funded initiative to grow a knowledge-based economy. This is the same amount recommended by Gov. Gary Herbert, but down from FY11 projected spending of $35.4 million. That amount included some ARRA funding from previous years, however. Research Teams will receive $23 million and $1.9 million is slated for Technology Outreach.

Gov. Tom Corbett's budget proposal for the upcoming fiscal year funds many of Pennsylvania's longstanding efforts to grow a technology-based economy, but at a reduced level. At the same time, the governor outlined new initiatives and investments centered on a restructured Department of Community and Economic Development (DCED) that he says will eliminate duplicative programs and better position the state to attract businesses for job creation.

Gov. Bill Haslam is the latest governor to unveil a broad-based proposal to grow the state's economy and create jobs through investments in S&T by asking lawmakers to dedicate $10 million for a research consortium that would recruit senior scientists to advance scientific discoveries into commercial applications and spur high-growth companies. Similar TBED efforts focused on investing in university research, tech commercialization, and increasing access to capital were announced earlier this year in Kansas, Maryland, Nebraska and Virginia (see the Jan. 5, Jan. 19 and Jan. 26 issues of the Digest). The governor's budget also provides funding to continue the state's investment in biofuels and aerospace engineering and recommends new funding to recruit businesses.

Established to focus solely on job creation and replace the state's Department of Commerce, Wisconsin's new public-private partnership would receive nearly $200 million over the next two years for operating expenses and to administer economic development programs. Lawmakers also will consider measures to improve existing tax programs focused on enhancing angel investments and eliminating capital gains taxes during the upcoming legislative session. Gov. Scott Walker unveiled the 2011-13 biennial budget amid a turbulent political climate centered on a budget repair bill for the current fiscal year that involves a controversial provision changing collective bargaining laws.

Lawmakers approved many of Gov. Bob McDonnell's proposals aimed at growing Virginia's technology and life sciences industries by dedicating about half of the funding requested by the governor to support R&D, commercialization, SBIR matching grants, and funding for early stage equity investments. To help reach a goal of adding 100,000 college graduates to the state over the next 15 years, lawmakers also passed the Virginia Higher Education Opportunity Act of 2011, providing enrollment-based funding to increase access to higher education and enhancing science, technology, engineering and mathematics (STEM) fields of study.