In the February 26, 1999 Issue:

Copyright State Science & Technology Institute 2002. Information in this issue of the SSTI Weekly Digest was prepared under a cooperative agreement with the U.S. Department of Commerce, Economic Development Administration. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected. Any opinions expressed in the Digest do not necessarily reflect the official position of the U.S. Department of Commerce.

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PRESIDENT’S BUDGET DRAWS MIXED REVIEWS FROM CONGRESS
Senators Bill Frist (R-TN) and Joe Lieberman (D-CT), Co-chairs of the Science & Technology Caucus, issued a joint statement reacting to the Clinton Administration’s FY 2000 budget request for R&D. Calling the President’s request a "mixed blessing," the senators praised the commitment to civilian R&D, while disagreeing with proposed cuts for defense research of nearly six percent.

The senators also raised concern that in future years, according to the President’s projections and citing spending caps, appropriations for much of the civilian R&D program would see only modest increases, remain static or even face reductions. Earlier this month, Senator Frist introduced S 726, legislation calling for doubling federal civilian R&D spending over the next twelve years; Senator Lieberman was a co-sponsor of the bill (see related article).

In the House, Science Committee Chair James Sensenbrenner (R-WI) issued an eight-page critical reaction to the Administration’s budget request for R&D. Rep. Sensenbrenner said the President’s budget overspends the budget cap by $17 billion while total R&D spending could see a $1 billion decrease after adjusted for inflation. Because civilian R&D is proposed to grow by 2.9 percent in the Clinton budget, most of the impact of inflation would be felt shrinking defense research spending. "For every dollar increase in non-defense R&D, defense R&D loses almost two dollars," Sensenbrenner said.

Rep. Sensenbrenner continued by stating the 5-year spending projections in the Clinton R&D budget do not keep pace with inflation and could decline as much as 8 percent in real dollars based on current inflation rates. Rep. Sensenbrenner reported civilian R&D would see a 2 percent decrease in funding by the year 2004 when the President’s budget requests for the outyears are adjusted for inflation.

The budget review and analysis prepared by Rep. Sensenbrenner can be found on the web at http://www.house.gov/science/budget_analysis.htm. The press release issued by Senators Frist and Lieberman can be found on Sen. Lieberman’s webpage at http://www.senate.gov/~lieberman/r021199e.html

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MISSOURI ONE STEP CLOSER TO $40 MILLION SEED FUND
Investment capital to develop and commercialize new technologies may soon be easier to find in Missouri. The Commerce Committee of the Missouri House of Representatives last week endorsed House Bill 753, a proposal to create a $40 million seed capital fund supported by Governor Mel Carnahan. The fund would be capitalized at $10 million each year for four years. Additionally, private investors would get a 100-percent tax credit for all money they contributed to the new seed capital fund. Investments would be limited to Missouri businesses.

To find money for the new seed capital fund, the bill calls for implementing a temporary suspension of the state’s corporate research and development tax credit, which is capped at $10 million a year. For four years, no new credits would be granted under the R&D tax credit.

The biggest losers under the proposal are the three large St. Louis corporations which claimed 69 percent of the credits last fiscal year: Boeing, Monsanto, and Southwestern Bell Telephone. According to published reports, none of the corporations has voiced opposition to the proposed plan.

While the proposed fund is to be privately managed, oversight would be handled by a new 13-member Missouri Seed Capital Investment Board. The board would be comprised of the director of the Missouri Department of Economic Development, seven appointees of the Governor, and five "representatives from innovation centers having contracts with the department to provide business services."

By July 1, 2000, the innovation centers are to develop and jointly approve a Missouri Seed Capital and Commercialization Strategy, which would include identifying 1-5 qualified funds that would invest the state’s seed capital. The board must then approve or reject the plan.

Under the bill, the selected funds are required to contract with the innovation centers so that the centers "receive and share equally at least 60 percent of the equity, dividends, or other earnings" generated from the fund. These monies must in turn be used for reinvestment in qualified funds to provide ongoing seed capital, start-up capital and follow-on capital for Missouri businesses.

The bill now moves on to the full House for its consideration.

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BILL REINTRODUCED TO DOUBLE CIVILIAN R&D
Senators Bill Frist (R- TN) and Jay Rockefeller (D-WV) introduced legislation to nearly double civilian and pre-competitive research over the next 11 years. S. 296, titled the Federal Research Investment Act , was cosponsored by 18 other Democrats and Republicans. The bill was referred to the Senate Committee on Commerce, Science and Transportation for consideration.

A similar bill passed the Senate by unanimous consent last session; the House did not act on the bill before adjourning.

Civilian R&D made up only 2.1 percent of the overall federal budget in FY 1998, according to the bill. S. 296 calls for a steady 2.5 percent annual increase above the rate of inflation (assumed to be 3% each year) throughout an 11 year period beginning in 2000. The end result could be civilian R&D  representing 2.6% of the total federal budget and nearly double FY 1998 expenditures.

Text of S. 296 can be found on the Web through http://thomas.loc.gov

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SENSENBRENNER CALLS FOR PERMANENT R&D TAX CREDIT
U.S. House Science Committee Chairman, James Sensenbrenner (R-WI) has introduced H.R. 760, a bill to make the national research and development tax credit permanent. Ranking Minority Member George Brown (D-CA) has agreed to cosponsor the legislation.

Proponents of the bill say making the credit permanent would remove uncertainty and disincentives for companies in pursuing longer-term research projects.

The R&D tax credit is slated to expire June 30, 1999.  The President’s FY 2000 budget request extends the credit for one more year until June 30, 2000. Since it was first enacted in 1981, the tax credit has been extended eight times and modified five times.

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PRESIDENTIAL MENTORING AWARD NOMINEES SOUGHT
The National Science Foundation has issued a call for nominations for the 1999 Presidential Awards for Excellence in Science, Mathematics and Engineering Mentoring (PAESMEM). Each award is accompanied by a $10,000 grant.

Awards will be made to individuals or institutions. The award recognizes individuals who have "demonstrated outstanding and sustained mentoring and effective guidance to a significant number of students at the K-12, undergraduate or graduate education level."

Institutions will be recognized for programming that enables "a substantial number of students underrepresented in science, mathematics and engineering to successfully pursue and complete relevant degree programs." Post-secondary institutions must demonstrate students have been mentored successfully to either the baccalaureate, master’s or doctoral levels.

All nominees must have served as mentors for at least five years. The deadline for PAESMEM nominations is March 31, 1999.

The program is administered by NSF on behalf of the White House and the Office of Science and Technology Policy. Awardees will be honored at a White House ceremony in September 1999.

Copies of the Call for Nominations which includes selection criteria and guidance for application submission may be obtained on-line at: http://www.nsf.gov/cgi-bin/getpub?nsf9969

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