In the March 15, 2002 Issue:

Copyright State Science & Technology Institute 2003. 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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Economic Stimulus Package Cost to States: $14.6 billion 
Governors will be forced to make cuts in education, health care and transportation budgets in light of the recently passed stimulus package that will reduce state revenues but provide no financial assistance for states facing increasing health care costs, says the National Governors' Association (NGA).

H.R. 3090 contains a three-year, 30 percent bonus depreciation provision that would cost the 45 states with corporate income taxes calculated under federal rules an additional $14.6 billion over three years, according to the nonpartisan Congressional Research Service. This comes as the states, nearly all of which are required by law to balance their budgets, are facing a cumulative $50 billion budget shortfall.

What may further complicate matters is a new study from The Council of State Governments (CSG) that shows states could lose an additional  $14 billion over the next nine years in projected Master Settlement Agreement (MSA) tobacco settlement payments. States have collected $1.6 billion less than projections made in the MSA in 1998, the CSG study concludes.

SSTI has published a table that provides state-by-state figures on the cost of the depreciation provision. The table was prepared by the independent Center on Budget and Policy Priorities and provided by the American Federation of State, County and Municipal Employees. Although the official CSG study will be released to the states on March 20, 2000, a faxed copy of the executive summary may be obtained by calling (859) 244-8246 or writing press@csg.org. Full copies also can be mailed or faxed.

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Louisiana Governor Outlines $187 Million Biosciences Initiative
Louisiana Governor Mike Foster's economic development plan calls for $37 million for a Biosciences Initiative, at the state's top research universities, $15 million to support industry clusters for regional universities, and $8.4 million to spur enrollment growth in community and technical colleges. Coupled by a $150 million bond issue, funding for bioscience endeavors would equal a $187 million investment.

For the Biosciences Initiative, The Comprehensive Economic Development Strategy for Vision 2020 recommends that the state invest $28 million in one-time capital expenditures and $9 million in annual revenues, beginning with the new fiscal year on July 1. Included is the Louisiana Health Research and Clinical Care Initiative, the $150 million bond issue that would cost the state $15 million a year to repay. Funding for this initiative — designed to update the state's medical schools' facilities and equipment and attract faculty — would come from interest earnings and tobacco settlement funds. It includes $70 million for a Capital Challenge Fund, $50 million for an Equipment Fund, and $30 million for a Research Revolving Fund.

The Biosciences Initiative also includes the following components:

More detail on the Biosciences Initiative and other items in The Comprehensive Economic Development Strategy for Vision 2020 is available at: http://www.gov.state.la.us/default.htm

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Manufacturing Pivotal to Economic Growth, NIST Report Says
Because knowledge-based services can be supplied anywhere across the world due to increased international investment in IT infrastructure, future U.S. competitiveness hinges on diversification and broadening of the technology-based manufacturing sector, according to NIST Senior Economist George Tassey.

Tassey's lastest report, R&D and Long-Term Competitiveness: Manufacturing's Central Role in a Knowledge-based Economy, lays out the critical role manufacturing and manufacturing R&D plays in the U.S. economy, presents the dire forecast for low-R&D intensive manufacturers, and presents a framework for analyzing federal R&D investment strategies consistent with a national innovation system.

Tassey also argues that the zeal or enthusiasm for information technology that dominated policy discussion during the past few years and overshadowed and "induced and unbalanced perspective" on the appropriate strategies to secure economic competitiveness.

Manufacturing accounts for 17 percent of U.S. gross domestic product (GDP) through nearly $1.5 trillion in profits and wages and salaries for 20 million workers. The report points out, though, that manufacturing's importance for future economic competitiveness is more evident when looking at the nation's R&D investments: Industry conducts 75 percent of all U.S. R&D and the manufacturing sector accounts for more than 70 percent of all industrial R&D and much of the economy's technology, including information technologies.

While the geographic barriers of most knowledge-based services can be overcome by investments in the IT infrastructure, co-development of critical technologies by manufacturing and service firms, especially through partnering, is aided by geographic proximity and access to the same technical infrastructure.

The report further identifies that, because private sector R&D investment has become more driven toward short-term goals, "traditional funding gaps found in the early phases of R&D are magnified." The result, Tassey says, is that the level of U.S. R&D investment is "too low in most industries and too concentratred geographically to spawn enough economic clusters to achieve high, long-term national growth rates and thereby maintian corporate profit growth and consistently raise real income of workers." He also suggests R&D funding must target longer-term, higher-risk research activities.

"Thus, overall economic growth requires a diverse and competitive manufacturing sector...(T)echnology-related policies need to be continually examined and adjusted to provide an environment in which private sector incentives to invest in technology are strong," Tassey concludes.

R&D and Long-Term Competitiveness is complete with useful tables and graphs and is available at: http://www.nist.gov/director/prog-ofc/report02-2.pdf

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Biotech Plan for Southwestern Pennsylvania Released
To shed light on the strengths and weaknesses of the region's biotechnology cluster, Carnegie Mellon University's Center for Economic Development (CED) has published A Biotechnology Action Plan for Southwestern Pennsylvania. The CED report says the Pittsburgh biotechnology cluster largely depends on the amount of available venture capital and the development of new technologies and that total funding levels must be increased to continue biotech development.

Dividing the biotechnology/biomedical cluster into three sub-clusters — pharmaceuticals, instruments and devices, and tissue engineering — the report draws a comparison with other regions, including Boston, Philadelphia, San Jose and Chicago, and observes that Pittsburgh ranked 165th nationally in 1998 in biotechnology patents per biotechnology employee.

One of the region's strengths, the report says, is the high level of Small Business Innovation Research (SBIR) awards in biotechnology received from the U.S. Department of Health and Human Services, including the National Institutes of Health. Between 1993-1998, these agencies accounted for 32 percent of all SBIR awards made to firms in the region, including nearly $7.3 million in 1998.

Among the region's weaknesses, according to CED, is a level of biotechnology venture capital investment too low to support "a robust biotechnology cluster." Out of more than $1 billion in such funding nationally in 2000, Pittsburgh's biotech firms received only $1.9 million. This level of funding showed an increase over the previous year but reflected a 68 percent decrease from 1998-2000, the report states.

CED suggests two keys to success will be experienced managers for the region's biotechnology workforce and university technology transfer policies that could make the region a center of biotechnology. The region's Life Science Greenhouse initiative, which will receive about $30 million in state funding, is one effort underway to help ensure that success. (see related Digest article at http://www.ssti.org/Digest/2001/051101.htm)

A Biotechnology Action Plan for Southwestern Pennsylvania is available in its entirety at: http://www.pghtech.org/advocacy/clusterbio.pdf

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People

President Bush has nominated Elias Zerhouni, executive vice dean of the Johns Hopkins University School of Medicine, as the new director of the National Institutes of Health.

San Diego Community College Chancellor Augie Gallego has been selected as the new chairman of the American Council of Education, only the second community college executive to hold the position since the organization's founding more than 80 years ago.

Rod Linton has been tapped to lead Utah's new Office of Science & Technology within the Dept. of Community & Economic Development. Mike Keene is the new State Science Advisor and Director of the Centers of Excellence Program.

Shaye Mandle has resigned as president of the Illinois Coalition to accept a position as the new executive director of the East West Corporate Corridor Association in DuPage County.

George Newstrom was sworn in as the Virginia Secretary of Technology. Newstrom succeeds Don Upson, who is returning to the private sector for technology consulting.

Gov. Don Siegelman has named Anne Payne to director of the Alabama Department of Economic and Community Affairs. Payne has been serving as ADECA's assistant director since last August.

Stan Sokul has been named executive director of the PCAST, the President's Council of Advisors on Science & Technology. Sokul formerly served as a lobbyist on Internet policy issues.

Tracy Taylor has been named to serve as CEO for the Kansas Technology Enterprise Corp (KTEC). Taylor fills the position vacated by Rich Bendis.

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October 2-3. Dearborn, Michigan. Be There.
With one of the country's largest concentration of industrial and academic scientists and engineers, it is only fitting that Michigan hosts SSTI's Sixth Annual Conference, October 2-3, 2002.

Led by the Michigan Economic Development Corp. (MEDC), Michigan has consistently been among the leading states for implementing innovative programs and policies to create tech-based economies: the life sciences corridor and billion biotech investment, automation alley, fuel cell commercialization, broadband deployment, university tech transfer, and the list goes on. MEDC, the host sponsor for SSTI's 2002 conference, is itself a product of innovative thinking in 1999 that privatized most of the state's economic development and worker training programs. More information about MEDC's tech initiatives can be learned by visiting its website: http://www.michigan.org

About SSTI's 6th Annual Conference
SSTI's annual conference has become the premier event nationally for the tech-based economic development community. Focusing on practical tools and policies for fostering economic growth through science and technology, SSTI's central goal in holding the conference each year is a quality experience for each participant. Conference agenda is set by SSTI's member organizations, and presented material is open to discussion, as always.

With the phenomenal growth of the Digest's readership over the past year, SSTI fully expects the 2002 annual conference to sell out. Audience size is limited to maintain a personalized educational experience.

Evaluations from past SSTI conferences reveal attendees have prized the event's intimate-yet-elegant qualities as much as the high-caliber breakout sessions. But SSTI keeps an eye on affordability too — taking its non-profit status to heart and making sure participants can afford to send multiple staff members to maximize the conference's impact on their tech-based ED efforts. Many programs' travel budgets will be limited during FY 2003, so SSTI is working hard to ensure the 2002 annual conference is affordable for entire teams of staff.

Elegant affordability is unsurpassed with the selected site for the 2002 conference: The Ritz-Carlton, Dearborn, across from Ford's World Headquarters. The hotel is offering an outstanding sleeping room rate of $139 per night for conference participants. Several limited-seating, in-depth workshop and off-site tour options will precede the conference on October 1.

Mention the SSTI Annual Conference to get the discounted rate when making reservations with The Ritz-Carlton at 1-313-441-2000. More information about the conference will be posted on SSTI’s website and will be available through the SSTI Weekly Digest.

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