In the December 6, 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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Ugly Fiscal Crisis for States Getting Uglier
The need for the creation of high-wage jobs through tech-based economic development continues to grow at a time when many states are finding it increasingly difficult to make the necessary investments to be true players in a knowledge-based economy.

At a time when most states begin preparing budgets for fiscal year 2004, further cuts are required to balance the current year's budgets in nearly half the states. Comparisons to the Great Depression of the 1930s have slipped into some of the discussion of just how severe the crisis is for most states.

Whether one uses the collective shortfall of $17.5 billion that was reported in the National Conference of State Legislatures (NCSL) 50-state survey, or the $8.3 billion figure that 23 states must cut from current spending that was reported in Fiscal Survey of States, the situation for FY 2003 is critical. Fiscal Survey of the States, which was issued jointly by the National Governors' Association and the National Association of State Budget Officers in late November, includes several tables presenting each state's fiscal condition in sad detail.

The current outlook is particularly hard for states given the year they just came through. In FY 2002, sales tax collections were 3.2 percent lower than originally budgeted, personal income tax collections missed states' targets by 12.8 percent, and corporate income taxes were a staggering 21.5 percent lower than projected. Forty-one states collected less revenue in fiscal 2002 than they had planned for in their budgets. Sixteen states experienced negative growth in revenues in fiscal 2002.

Quick fixes to get past last year's squeeze — actions that included selling off states' entire tobacco settlement funds and draining state "rainy day" accounts so they'd be depleted from cloudy days with periods of light drizzle — have left states little room to negotiate through the continuing period of declining revenues and increasing expenses related to Medicaid, homeland security, and K-12 education. Medicaid expenses alone grew 13.2 percent in 2002, while state cash balances have dwindled more than 70 percent since 2000.

As a result, the Fiscal Survey of States discovered states have enacted the greatest increases in revenues since 1992. Most revenue enhancements came through hikes in sin taxes for items such as cigarettes and alcohol and by increasing fees.

Challenges for 2004 are further complicated by the fact that this is the first budget cycle for 24 new governors and 24 percent of the states' legislators. Campaign promises of new initiatives and no tax increases will meet the harsh reality of the current fiscal environment requiring deeper cuts, hiring freezes and layoffs.

In addition, the Bond Buyer reported on Nov. 26 that bond ratings are threatened to be or already have been downgraded for several states because of the states' fiscal stability. The article states Moody's has put a negative outlook on 15 states' general obligation ratings.  A Nov. 29 New York Times story pointed out that five of the eight states that used all or a portion of tobacco settlement funds to balance their 2002 budgets already have had their ratings lowered, making future bonds more expensive to those states.

More information on the NCSL survey is available at http://www.ncsl.org. Fiscal Survey of the States is available from http://www.nga.org or http://www.nasbo.org.

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North Dakota Governor's Budget to Focus on 'Smart Growth'
To build the state’s economy and create opportunity, North Dakota Governor John Hoeven is launching Smart Growth, a host of programs linking education, job creation and career development to build the state’s economy and communities. The Governor announced his plan with release of the 2003-2005 executive budget.

Smart Growth includes funding for these initiatives:

In his budget, Gov. Hoeven notes the Centers of Excellence Fund could yield a $3 million incubator proposed by North Dakota State University. Administered by the State Board of Higher Education, the fund's $5 million could also lead to $20 million in new ventures, he says.

The New Venture Fund — in partnership with the private sector and federal Small Business Administration — and Seed Capital Fund both would be administered by the state's Commerce Department. The former includes $3 million for technical assistance. Through the Seed Capital Fund, the Governor plans to implement Ideafest, a statewide business-plan competition for creating "the best and brightest ideas North Dakotans have to offer."

Overall, the executive budget reflects less than one percent growth in General Fund expenditures, compared to an average of 8 percent growth in the previous six bienniums. Thirty of 45 agencies will be spending fewer General Fund dollars than in the current biennium, according to the Governor's plan. In addition, more than 100 full-time equivalent positions will be eliminated by not filling vacancies and through early retirement.

Gov. Hoeven's Smart Growth initiative is available in its entirety at: http://www.governor.state.nd.us/media/news-releases/2002/12/021204.html

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Useful Stats: Defining High Tech Employment
What constitutes high tech employment? Through aggressive marketing of its annual reports, the AEA, formerly known as the American Electronic Association, has captured most of the media's attention around the country. While a very good report, AEA's Cyberstates only reports employment in its member industries, which represents just one-third of the nation's industrial R&D. The result is, when many people think of high tech, they only think of information and communication technologies (ICT).

Obviously, high tech is more than ICT. Researchers in aerospace or the biosciences — to name two fields excluded in the AEA analysis — will point that out. Having the highest concentration of automotive research and researchers in the country, Michigan promoters also are quick to take issue with the annual AEA survey. As a result, the Michigan Economic Development Corporation (MEDC) recently released a study presenting a more comprehensive review of different technology employment figures across the country, which compares the results to the figures reported in Cyberstates.

Conducted by the Center for Automotive Research (CAR) at the Altarum Institute, Michigan: The High-Technology Automotive State concludes that a more complete definition of high tech includes the 29 industry groups identified by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) for calculating the total number of high-tech workers by state. The BLS researchers define industries as “high tech” if the percentage of the industry’s workforce in both research and development and technology-oriented jobs was twice the overall U.S. industry average.

While the emphasis is on Michigan's position nationally, the MEDC study includes several tables presenting tech employment figures for all 50 states and a discussion of potential limitations of relying on Cyberstates to characterize a state's tech activity. Michigan is ranked fourth in the U.S. for total employment in high-tech industries, the findings show, and the state has more than 568,000 high-tech workers — a gain of more than 38,000 high-tech workers since the study was first completed about two years ago. For comparison, Michigan was ranked 17th in the 2002 Cyberstates survey with 110,050 high-tech workers, a significantly lesser figure. MEDC reports the automotive industry alone employs more than 70,000 high-tech workers in Michigan.

Using the 2001 BLS high tech employment compiled in Michigan: The High-Technology Automotive State and total 2001 employment, SSTI has prepared a table presenting high-tech's share of employment in all 50 states. The table is available at: http://www.ssti.org/Digest/Tables/120602t.htm

Michigan: The High-Technology Automotive State is available at http://medc.michigan.org/news/reports/economic/.
The first-ever mid-year update of Cyberstates is available for purchase from http://www.aeanet.org.

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New Strategy Outlines Future for Arizona Bioscience
A new biotech report funded by a private foundation finds Arizona possesses many of the essential elements needed to become a national leader in the biosciences. Now, all the state needs is at least 10 years and a $1.4 billion public-private investment, according to the report Platform for Progress: Arizona's Bioscience Roadmap.

The Flinn Foundation is counting on the encouraging findings of its report, the detailed roadmap therein, and the momentum of the planning process to help energize the entire state to make the necessary effort. The planning process was overseen by a 25-member committee of state, business, university and economic development leaders.

Platform for Progress argues the biosciences not only would build upon Arizona's strengths in electronics, optics and advanced engineering, but also would bring stability to the state's economy by balancing more cyclical industries. To mazimize the impact of its investments, the study contends, Arizona should focus its near-term efforts on three existing and emerging research fields — neurological sciences, cancer therapeutics and bioengineering. Research to prepare the study determined Arizona already has a critical mass of researchers and facilities in these areas.

Success requires that Arizona mobilize public and private leadership; increase the general public's understanding of the biosciences and its impact on the state's quality of life; invest in bioscience facilities, labs and faculty at the state's universities; attract a greater share of federal bioscience research funding; and develop and retain scientific and technical talent in the state.

Four strategies and 19 supporting actions to develop Arizona's bioscience research base are prescribed in the roadmap. Eight performance measures also are offered to monitor Arizona's progress. Although Arizona's commitment to the biosciences must be long-term, outcomes such as increased federal research funding and numbers of bioscience firms should be measurable within the next three to five years, the study concludes.

Platform for Progress is available at http://www.flinn.org.

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Hawaii's HTDC Launches New Tech Portal
Earlier this week, the High Technology Development Corporation (HTDC) launched HiTechHawaii.com, the state's newest and most comprehensive high technology web portal. A collaboration with the Hawaii Technology Trade Association, the site provides a single point of access to information about Hawaii's technology industry, including business and technology resources, job listings, events and news articles.

HTDC will be responsible for monitoring and keeping HiTechHawaii.com up-to-date. Among other features, the portal provides helpful information on doing business in Hawaii, tax incentives, funding opportunities, and meetings and conventions resources. The site also has valuable search capabilities, including a direct search and link to HTDC's Technology Business Directory and TechJobs Hawaii.

With the launch of HiTechHawaii.com, Hawaii joins a number of other states using the Web to create a greater sense of community within a dispersed constituency base and to more easily share pertinent information across the state. The portals also can serve as tools for attracting new business activity, venture capital or strategic alliances. HTDC's new portal is available at: http://www.HiTechHawaii.com/

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OTDC Seeks President and Chief Executive Officer
The Oklahoma Technology Development Corporation (OTDC), a private, not-for-profit corporation dedicated to the creation and expansion of high-technology businesses in Oklahoma, is seeking a President and Chief Executive Officer. OTDC operates the Oklahoma Technology Commercialization Center, a state-funded initiative of the Oklahoma Center for the Advancement of Science and Technology designed to stimulate and encourage technology-based business growth and assist with the processes of technology commercialization and early stage business development.

Under a large, broad-based board of directors, the President and CEO of OTDC serves as the executive director of the Tech Center. Responsibilities will include business strategy development; long range planning; board interaction; interface with public sector partners, universities, and private industry for the purpose of forging productive partnerships; and increasing public awareness of issues facing technology-based firms.

Interested applicants are requested to include current base salary information along with resume. The full job description is available at http://www.ssti.org/posting.htm.

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People

Howard Bell is the new executive director of Wayne State University's Research and Technology Park. One of the state's SmartZones, the park was recently named the permanent site for Michigan's $50 Million NextEnergy Center.

Laurence Gebhardt has been selected to serve as the first director of Idaho's TechConnect East.

Chuck Henderson has announced he will retire as president of the University of Nebraska's 130-acre Technology Park next June.

Iowa Governor Tom Vilsack announced that the Director of the Iowa Department of Economic Development, C.J. Niles, will be stepping down effective December 31.  Mary Lawyer, the department's chief of staff, will serve as interim director.

The Senate unanimously confirmed Anne B. Pope of Tennessee as Federal Co-Chairwoman of the Appalachian Regional Commission. Pope currently serves as Commissioner of the Tennessee Department of Commerce and Insurance.

Lewis D. "Luke" Rich, a vice president and Western New York regional director for Empire State Development Corp., is taking early retirement at the end of the year.

Ellis Rubinstein, former editor of the magazine Science, has been appointed to serve as Chief Executive Officer of the New York Academy of Sciences.

At the University of New Mexico, Avi Shama has been named Special Advisor to the President on Economic Development. The new position will encourage, coordinate and promote economic development activities of various UNM units.

Jack Spencer is the new president of the Georgia Biomedical Partnership.

Senator Ron Wyden (D-OR) is joining Sen. Bill Frist (R-TN) as co-chair of the monthly Congressional Forum on Technology and Innovation.

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2003 S&T Calendar Filling Up
Although only a few events remain for 2002, SSTI's web calendar of S&T items has brief descriptions and contact links for more than 120 regional or national conferences, meetings and workshops planned for 2003.

SSTI's calendar ranges from venture capital forums to workshops on how to secure federal technology funding for programs such as the Small Business Innovation Research program. Annual meetings for many associations involved with tech-based economic development also are included. The calendar is available at http://www.ssti.org/calendar.htm.

Suggestions for additional events for inclusion should be directed to ssti@ssti.org. Please note: events should be intended for a regional, national or international audience.

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