In the October 26, 2001 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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House Stimulus Package Could Prove Costly to States 
With almost every state seeing declining revenues in light of the recession and Sept. 11 attacks, projections from the Center for Budget and Policy Priorities that the economic stimulus package passed by the House on Wednesday could further reduce states’ revenues by as much as $5 billion for each of the next three years may further exacerbate the problem. The Center, releasing its analysis of the House stimulus package on Monday, suggests the losses in revenues could compel states to institute still-larger program cuts or tax increases that would partially offset and thereby weaken the federal stimulus goals. 

The single biggest tax-cut item in the Ways and Means bill is a provision that allows partial expensing of business investments. This provision would allow firms to subtract immediately 30 percent of the cost of new investments in equipment or similar business property, rather than depreciating the costs of these investments over a number of years as under current law. 

Most states use federal rules on expensing and depreciation in the calculation of their own state corporate and other business income taxes, the Center explains. Of the 45 states that have corporate income taxes, 44 – all but California – conform to the federal rules. As a result, 44 states and the District of Columbia would experience revenue losses averaging $5 billion per year if this provision becomes part of federal law. 

Some states would lose additional revenues, the Center points out, because their tax systems conform to federal treatment of net operating losses and/or levy a corporate Alternative Minimum Tax (AMT) that piggy-backs on the federal corporate AMT. The House bill makes net operating loss provisions more generous and repeals the corporate AMT. 

States also are preparing for the first impacts of the tax cuts passed earlier in the year by Congress. The combined revenue loss to states as a result of the phase-out of the credit for state estate and inheritance taxes will be approximately $1.9 billion in federal fiscal year 2003 and $3.5 billion in 2004, according to the Center. 

More information is available at: http://www.epn.org/whatsnew/full_cite/1471.html 

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Technology Sector is Strong, Pittsburgh Tech Council Report Shows 
The Pittsburgh Technology Council's State of the Industry Report shows the region's technology sector, while continuing its growth, has become a significant driver of southwestern Pennsylvania's overall economy. 

Conducted by Carnegie Mellon University's Center for Economic Development, the report measures the six-county Metropolitan Statistical Area that encompasses Allegheny, Beaver, Butler, Fayette, Washington and Westmoreland counties. The report also includes separate data for the entire 13-county southwestern Pennsylvania region. 

Examining the economic impact that has been created by the region's core technology clusters – information technology, biomedical and biotechnology, advanced manufacturing, advanced materials, and environmental technology – the report assesses the overall sector, considering indicators such as venture capital investment and research and development activities. 

Key findings in the report include: 

Suggestions are made on attracting and retaining technology talent, encouraging the creation and growth of new entrepreneurial technology companies, improving access to capital, improving the structure and level of business taxes in Pennsylvania, and developing incubators and technology parks. 

Copies of the State of the Industry Report are available via the Pittsburgh Technology Council website: http://www.pghtech.org 

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Army to Create $125 Million Nano Center 
The Army Research Office (ARO) recently created an initiative – a University Affiliated Research Center (UARC) to be known as the Institute for Soldier Nanotechnologies – to develop nanometer-scale science and technology solutions for soldiers. 

Through competition for the center, ARO will award a single non-fee-bearing contract at an estimated base cost of $50 million. The contract, to be presented during the third quarter FY 2002 with an initial performance period of five years, will include provisions for task orders for additional effort estimated to reach $20 million over the five-year term. The contract also will have a ceiling of $125 million to allow for capitalizing on opportunities which may result. 

A single university will host the UARC, which will emphasize revolutionary materials research toward an advanced uniform and protective ensemble concept. The center, in turn, will work closely with industry, the Army's Natick Soldier Center, the Army Research Laboratory and other Army Research Development and Engineering Centers pursuing the Army's goals. 

The objective of the program is to enable a revolutionary advance in soldier survivability through the development of novel materials for integration into the Objective Force Warrior system. Research, therefore, will integrate such functionalities as multithreat protection against ballistics, sensory attack, chemical and biological agents, climate control, biomedical monitoring, and load management. 

Effective research solutions will be compatible with complicating factors, including soldier mission requirements, limited energy resources, communications needs, and rugged insensitivity or adaptive responsivity to extremes of temperature, humidity, storage, damage, and soilage. 

Proposals, which may be submitted by degree-granting universities in the U.S., are due by 2:00 p.m. ET on January 3, 2002. The broad agency announcement for this program is located at the ARO website: http://www.aro.army.mil/soldiernano/ 

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14-Member Team Authors Projections for Oklahoma Economy 
Meeting Challenges in the New Economy, recently released by the Oklahoma Center for the Advancement of Science and Technology (OCAST), presents a comprehensive look at Oklahoma's position in science and technology. 

In the report, an advisory team of 14 individuals suggests future initiatives and action in areas critical for Oklahoma's progress in economic growth. Longitudinal databases are used to provide insight and monitor progress in the areas, which are arranged in the following categories: Funding In-Flows, Human Resources, Capital Investment and Business Assistance, and the Technology Intensive Business Base. 

The team selected three areas of emphasis under most categories and compared Oklahoma's national ranking in 1997 (most current data available) with the rank they believe needs to be attained by 2005. Among the team's projections, some admittedly generous in likelihood, are the following: 

An ongoing project, Meeting Challenges in the New Economy is the first in a three-year review of the status of technology advancement in Oklahoma and recommendations for future growth. The report builds on past research, including a five-year strategic development plan released in June by Oklahoma Futures. Critical indicators also were pulled from the U.S. Department of Commerce report, The Dynamics of Technology-based Economic Development. 

Copies of Meeting Challenges in the New Economy may be obtained by contacting Shelly Mashburn, program coordinator of OCAST's research and development programs, at (405) 524-1357 ext. 226. 

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VC May be Down, But Past Impact Huge 
Venture capital invested during the past three decades created 7.6 million U.S. jobs and more than $1.3 trillion in revenue as of the end of 2000, according to an economic impact study released Monday by the National Venture Capital Association (NVCA). 

The research shows that $273.3 billion of venture capital created companies were responsible for 5.9 percent of the nation's jobs and 13.1 percent of the U.S. Gross Domestic Product in 2000. Venture investment most frequently led to job and revenue creation in the computer, consumer, and medical health sectors, followed by the communications, industrial energy, electronics and biotech. 

The new figures are substantially higher than preliminary numbers released this past Spring (see the May 4, 2001 issue of the Digest ) as they include not only independent venture-backed enterprises but also those venture-backed companies that have been acquired. 

The NVCA also released data that details venture-backed job and revenue creation by state. Topping both lists are California, Texas, Pennsylvania, Massachusetts, New York, and Washington. 

The study shows there was an unprecedented geographical diversification of venture capital during the past five years. While states such as California, Massachusetts and New York have consistently been national hotbeds
for venture investing, other states showed considerable growth and promise, including Maryland, Minnesota, Georgia, Oregon and Colorado. 

More information, including the state-by-state statistics, is available at: http://www.nvca.org/ 

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RuralTeleCongress Becomes National Organization 
A national conference since 1997, the RuralTeleCongress (RTC) has transformed into a national organization devoted to rural telecommunications. RTC, which held its inaugural session October 14-16 at the Aspen Institute in Colorado, has launched a redesigned website as part of its transformation. 

RTC is expected to serve five functions: an educator, convener, facilitator, and discussion forum; a catalyst for rural-based research; a disseminator of information; a way to dispel rural stereotypes; and an instrument for sharing and leveraging limited resources. 

The purpose of RTC is to be a convener of rural interests in rural telecommunications policy and its implications for rural consumers, with participants including citizens, small businesses, practitioners, industry representatives, federal and state and regulatory bodies, and representatives from other organizations. 

RTC's redesigned website will allow new members to register online and, supporting the creation of state chapters, will encourage the sustainability of seven areas of interest within each state and nationally. Initially, RTC will focus on seven areas related to rural telecommunications: 

Arranged by state and areas of interest, RTC's website eventually will serve as a database in which members will have access to projects, opportunities, and research papers. The website provides more information on RTC. 

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State and Local Tech-based ED RoundUp 

Jefferson County, Missouri 
Its first economic growth strategy in more than a decade, the Jefferson County Economic Development Corp. has issued a plan aimed at attracting new businesses while supporting existing ones, an article in the St. Louis Post-Dispatch reported. The nonprofit's plan suggests acquiring land for industry and commercial development by working with farmland owners and getting municipal governments to delineate rural parcels. Among the programs detailed by the plan are a nonprofit business incubator which would offer low rent to start-up companies and a loan program for the companies. Much of the plan is geared to assist area small businesses, but it also would market the county's strengths, including its river and interstate access, to businesses across the U.S. The Economic Development Corporation presently is seeking grants to secure funding for the plan. 

Los Angeles, California 
An area in South Los Angeles devastated by riots in 1992 has been replaced by a 54,000-square-foot business incubator and technology center capable of holding 30 start-up companies, according to the Los Angeles Times. The FAME Renaissance Center, with high-speed Internet connections, video conferencing facilities and a 700-seat auditorium for community meetings and business seminars, will offer loans of $1,000 to $500,000 and up to $1 million through a venture capital fund. The creation of the center began in 1997, when FAME Renaissance received a $300,000 grant from the city's Community Development Department to purchase a 90-year-old building that once was a telephone switching station for Pacific Bell. The building subsequently was renovated with $6 million in state and federal grants and contributions. A waiting list of 100 companies exists. 

Newport, Rhode Island 
The state's first Academy of Information Technology – a four-year educational program meant to expose high school students to new technologies and prepare them for high-tech jobs – recently was introduced by the Rhode Island Technology Council (RITEC) at the Newport Area Career and Technical Center at Rogers High School. Students at the academy, the Providence Journal-Bulletin reported, will receive four years of training in high-tech skills and will be placed in internships with area high-tech businesses. Currently, 27 students are enrolled in the academy, where courses including web page design and multimedia skills training are based on a curriculum set by the National Academy Foundation (NAF), a nonprofit organization. RITEC and NAF expect to sign up to three new schools for the 2002-2003 school year. 

West Virginia  
Being encouraged by Sen. Jay Rockefeller in 2000 to increase funding for entrepreneurial development, business leaders will propose an advocacy group instead of a venture capital company, according to the Sunday Gazette Mail. The group will consist of existing venture capitalists and others wishing to help state business owners needing money for new ideas. Although mining and manufacturing traditionally have supported West Virginia's economy, the group serves to give the state a much-needed boost. The West Virginia Venture Connection is being considered as a name for the group. 

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