In the February 14, 2003 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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FY03 Budget Sets Commerce, SBA Funding
Congress Finished FY 2003 Budget Last Night

Congress wrapped up the Omnibus Appropriations Bill last night before recessing for the holiday weekend. The timing of the document's online release did not allow a complete review of the impact for tech-based economic development groups for today's Digest. Thanks, though, to assistance from the American Society of Mechanical Engineers, Association of American Universities and the Modernization Forum, SSTI does have numbers for selected elements of the Department of Commerce and the Small Business Administration.

The figures below do not reflect the 0.65 percent across-the-board cut Congress imposed to limit the size of the bill's contribution to the national deficit. The complete budget document is available at: http://thomas.loc.gov/home/approp/app03.html and http://www.house.gov/rules/108_hjres2cr_text.htm

Economic Development Administration — $320.765 million
The level is $30 million below the President's FY03 request and $15 million less than the FY02 appropriations. The cut appears to be borne entirely by the grants programs.

Under Secretary for Technology/Office of Technology Policy — $9.886 million
The appropriation is $1.65 million larger than the FY02 appropriation and $1.74 million greater than the President's FY03 request. Two earmarks reserve $1 million each to hold a Global Technology Summit and a Networked Economy Summit.

National Institute of Standards and Technology

National Telecommunications and Information Administration

SBA Non-credit Business Assistance Programs

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Congress Eliminates Funding for FAST and ROP
Within the past hour, SSTI has learned that Congress zeroed out the $3.5 million for two programs that supported state SBIR/STTR technical assistance efforts. The omission of any mention in the FY 2003 Omnibus Appropriations Conference Report of funding for the Federal and State Technology Partnership (FAST) and Rural Outreach Program (ROP) was not a mistake in the draft as originally thought by the programs' proponents.

In FY 2002, FAST provided $100,000 matching grants to 27 state SBIR outreach and assistance programs. The ROP, which is targeted to those states that historically have under performed in the SBIR program, has provided support to 25 states since its creation only three years ago. Lists of recipients for both programs are available at: http://www.sba.gov/sbir/indexfast.html

Although both programs comprise a small pool of money, each have proven critically important financially for state efforts to help small businesses in funding research and commercializing technology. In many cases, the federal funding made the difference between having at least one full-time person in the state committed to small tech firm assistance.

The FY03 solicitation for ROP was slated for a March 15 release. The FAST request for proposals would be released April 15.

Level funding of $3 million and $500,000 for FAST and ROP, respectively, had been requested by the Administration and was thought to be safe in the Senate Appropriations process. Neither program has ever had a strong ally in the House of Representatives. SBA officials are sorting through the options to try to restore at least some level of funding for state SBIR outreach. The SSTI Weekly Digest will keep its readers apprised as more information becomes available.

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Tech Talkin' Govs V
In SSTI's final look at the 2003 State of the State Addresses and Inaugural Addresses, we find the importance of building technology-based economies continues to be emphasized by governors across the country, despite – or because of – the down economy. Below are excerpts from speeches given in Michigan, Minnesota, Oklahoma, Rhode Island and Texas.

Michigan
Governor Jennifer M. Granholm, State of the State Address, Feb. 5, 2003

"To this end, I have committed my Administration to create a Technology Tri-Corridor. We will position Michigan to lead the world in the development of the technology-based industries likely to dominate the world economy in this new century. The Corridor will focus new technology business recruitment and development in three critical areas: the life sciences, the automotive industry and the emerging homeland security sector.

"Already, our Life Sciences Corridor has nurtured the development of cutting edge bio-technology firms and made our state a leader in this important new field. The same emphasis can help us build on our automotive heritage, and grow businesses that keep our citizens, state and country safe.

"Last week the President committed the federal government to the development of fuel cell powered cars within a generation.  As your Governor, I make my own commitment – not only will we build those cars in Michigan, our Automotive Technology Corridor will help develop the fuel cell technology those cars will run on.

"Wayne Gretzky once offered this advice: 'Skate to where the puck is going, not to where the puck is.' My colleagues, the puck is going toward the goal of homeland security, the third sector in the Tri-Corridor. And Michigan needs to get there quickly – literally to 'capitalize' by growing businesses in an area of emerging and critical need. Three economic strengths, three technology corridors.

"We will use Michigan’s financial power as leverage to bring investment capital to the Tri-Corridor. Today some 240 private investment funds do business with the State of Michigan. Our State Treasurer, Jay Rising, is now telling those fund managers that they’ll get more of our business if they make sound investments in our Technology Tri-Corridor."

Minnesota
Governor Tim Pawlenty, State of the State Address, Feb. 6, 2003

"It's easier to ride a wave than to create one. When it comes to future job growth, our state's economic health hinges on human health. We're a world leader in cutting edge medical technologies. Genomics, medical devices and biotechnology offer the promise of a longer life and the opportunity for more good jobs in Minnesota. We need to rekindle the entrepreneurial spirit of Minnesota's colleges and universities to make our state a global leader in this rapidly emerging industry. I will lead efforts to bring the Mayo Clinic and the University of Minnesota together to make two of the nation's premier providers strong partners in developing the treatments, devices and medicines that will revolutionize medical care within a decade. It will also be a big boost to our economy."

"[We must] provide greater incentives for investments in new Minnesota businesses. Once we get our heads above water with the budget, we should provide greater incentives for venture capital investment in new Minnesota companies. To build jobs, we need to be more friendly to job-creators and investment-makers or every one of us will pay the price. We need to stop the things that drive jobs away and start doing more of the things that bring jobs here to stay."

Oklahoma
Governor Brad Henry, State of the State Address, Feb. 3, 2003

"Today, I challenge Oklahoma higher education to harness the energies of the exceptional faculty and students in our colleges and universities as a force for economic development. Our institutions of higher learning can provide leadership in coordinating research and technology transfer efforts in support of both new and existing business and industry. Success in the global economy will go to those who work not only harder, but also smarter."

Rhode Island
Governor Donald L. Carcieri, State of the State Address, Feb. 4, 2003

"We must build partnerships with world-renowned entrepreneurs and scientists already in Rhode Island. We are seeing a growing number of biomedical research companies putting down roots here in the Ocean State-drawing from the intellectual strength of our colleges, hospitals and medical school.

"To leverage the power of our intellectual capital, I am proposing several targeted initiatives that will help us broaden and grow the economy. First, we need to double our investment in our business incubators. We call them our Slater Centers. Right now, we have four such centers, each focusing on an area where Rhode Island has a competitive advantage. The $7 million that's been invested thus far has generated more than $100 million in private investment and nearly 300 jobs...

"Secondly, to further nurture the industries of tomorrow, I am proposing that we invest in research and development at the University of Rhode Island. Rhode Island ranks dead last in the nation in research and development dollars expended by our public schools of higher education. We need to change that. I am proposing that we build a new Center for Biotechnology and Molecular Biosciences at URI. Such a Center will attract world experts and businesses, alike -- folks who will bring high quality jobs with them.

"By the way, we must also change our rules to allow our professors more freedom to commercialize their inventions.

"Thirdly, I am proposing that we dramatically increase our investment in worker training programs... We will create a world-class biotech training facility to provide the skilled workers. The State of Rhode Island will furnish the seed money to get this project off the ground. We will send a strong message to biotech firms across the globe that Rhode Island is ready to supply the talented workforce that 21st century companies demand.

"Simply put: what we intend to do is crank up our economic development efforts, to turn the ideas emanating from our colleges and universities into jobs and to train our workforce to fill those jobs."

Texas
Governor Rick Perry, State of the State Address, Feb. 11, 2003

"To help grow our economy, today I am proposing the creation of a Texas Enterprise Fund. To meet the demands of a competitive marketplace, we must be nimble, aggressive and forward-looking. Today I propose investing 30 percent of the revenue projected for the Economic Stabilization Fund - roughly $390 million - into a new Enterprise Fund.

"We could set aside $200 million to close the deal with companies like Toyota, recognizing that not one dollar would be spent without the guarantee of jobs and paychecks coming to Texas. We could also fund efforts to attract Nobel laureates and endowed chairs in the promising fields of technology and biotechnology [from the press materials supporting the Governor's speech: $55 million "would be used to attract technology and biotechnology businesses and support university research. This component would include establishment of a Nobel Laureate Center, endowed chairs and participation in other projects such as technology parks." An additional $40 million "would allow Texas to compete to retain Sematech, which is being lured by New York. Sematech has proposed building a wafer manufacturing facility that would attract related businesses to the area."] ...

"We must also continue to build on our recent progress in reading and math by strengthening the science curriculum. My Science Initiative will improve pay for expert science teachers while preparing our students for the technology jobs of the future."

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States Face $26B Gap Before June 30, NCSL Finds
State budget gaps have grown by 50 percent in the last two months and state policymakers will work to resolve unprecedented budget shortfalls for the next 15 months, according to findings from the latest budget survey released by the National Conference of State Legislatures (NCSL).

Based on information collected from legislative fiscal directors in late January 2003, NCSL reports that two-thirds of the states must reduce their budgets by nearly $26 billion between now and June 30, which ends the current fiscal year in most states. In November, when NCSL issued its last report, states projected a cumulative gap of $17.5 billion. States already had addressed a $49.1 billion shortfall as they crafted their fiscal year 2003 budgets.

State legislatures face a minimum $68.5 billion budget shortfall for FY 2004, and with a third of the states unable to provide estimates for the NCSL survey, next year's cumulative budget deficit could rise significantly. Thirty-three states estimate budget gaps in excess of 5 percent, with 18 of those facing gaps above 10 percent.

Sluggish revenues are a major contributor to the budget shortfalls, according to the report. At least 30 states say revenue collections are below budget forecasts, with 12 of these reporting collections below revised estimates. Thirty-seven states say spending is exceeding budgeted levels, with all but five reporting excessive Medicaid or health care costs.

The report says states have been using rainy day funds, tapping other state funds, delaying capital projects and cutting spending to balance their budgets. Twenty-nine states have imposed across-the-board budget cuts.

Copies of State Budget Update: February 2003 are available for purchase from NCSL. For ordering information, contact NCSL's marketing department at 303-364-7812 or books@ncsl.org.

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Virginia Creates Institute for Defense and Homeland Security
With nearly $1 billion in federal R&D funding proposed for the new Department of Homeland Security, many states, universities and companies are exploring ways to be actively involved as R&D partners. Already home to several military and intelligence research activities, with proximity to Washington, D.C. in its favor, Virginia recently announced an effort to further strengthen its competitive position in the funding race.

Last Friday, Governor Mark R. Warner announced the creation of the Virginia Institute for Defense and Homeland Security (IDHS), a university and industry research consortium dedicated to delivering solutions to support U.S. homeland security and defense objectives. More than 20 companies have already signed on as founding members to work with the 12 Virginia universities in the consortium.

The Virginia IDHS will conduct research, education and technology transfer at member institutions and firms with an emphasis in the fields of telecommunications, biodefense, sensor systems and risk management. Additionally, industry consortium members will commercialize technology and develop solutions that support rapid deployment.

Plans for the Virginia IDHS were developed in September 2002 by the Virginia Research & Technology Advisory Commission, a 29-member panel established to advise the Governor on research and technology strategies for the Commonwealth and make policy recommendations to enhance the global competitive advantage of research institutions and technology-based commercial endeavors.

An Executive Steering Committee representing academia, industry and federal and state government will formally establish the consortium's vision and policies. Funding for the institute will come from the federal government, participating universities, industry partners and Virginia’s Center for Innovative Technology (CIT). The Virginia IDHS will initially reside at CIT’s headquarters in Herndon. More information will be available in the coming weeks at: http://www.cit.org

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$50M Biotech Initiative Proposed for Iowa
Governor Tom Vilsack has announced a plan to invest $50 million into the creation of a life sciences initiative to help establish Iowa as a leader in the life sciences. Developed with the Regents Universities, Iowa Business Council and leaders in Iowa's biotechnology industry, the biotech plan's success hinges on a three-part strategy:

Funding for the $50 million life sciences initiative would be allocated across four key initiatives:

The life sciences strategy is part of the proposed Iowa Values Fund, the Governor's $500 million, five-year budget proposal to help transform Iowa's economy. In addition to this $50 million biotech commitment, $250 million of the Iowa Values Fund would be designated for developing the three key industry clusters of life sciences, advanced manufacturing, and information solutions. A portion of the Iowa Values Fund will focus on regional economic development efforts statewide.

More information on the Iowa Values Fund is available at: http://www.governor.state.ia.us

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NJ Governor Shifting State TBED Priorities
NJCST Out, Cancer Research In

Tight fiscal times are the norm for state and local governments across the country. While the federal government can ponder record-busting deficits for FY 2004, declining revenues are forcing state leaders to take scalpels, knives, axes and in some cases even chain saws to their budgets. Most budget proposals for 2004 include some sort of revenue enhancement measures – new taxes, eliminating loopholes and credits, increasing user and service fees – but none of the states are relying completely on increasing revenues to deal with their shortfalls. There are also spending reductions.

Budget cuts also can provide a glimpse of a governor's core priorities and the political clout of particular constituencies. What stays in or is spared the deepest cuts can be revealing. The 2004 budget cycle in New Jersey, which got underway February 4 with Governor James McGreevey's budget address, provides an example. Facing a projected $5 billion deficit, Gov. McGreevey spent much of his address to the New Jersey legislature outlining a budget request that "contains cuts I abhor and eliminates programs that I support."

In addition to cutting university and college aid by $100 million, the budget proposal eliminates 109 programs "saving nearly $300 million." More than $50 million of that savings comes from eliminating two economic development programs:

Saved from the axe, though, is Gov. McGreevey's life sciences research initiative.

"I have a vision of New Jersey as a national leader in medical research. In last year's budget, we provided $20 million for cancer research. This budget will continue our efforts by providing $18 million for New Jersey's battle to fight cancer," the Governor said in his budget address.

The budget process now moves to the state's legislature, which has an opportunity to reveal its own core priorities. The Senate is split evenly between the Democrats and Republicans. The General Assembly is controlled by the Democrats. Gov. McGreevy also is a Democrat.

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New Maine Governor Pushes $43M R&D Bond Package
Governor John Baldacci used his February 5 budget address to outline a proposal to float a $70 million economic development bond, the majority of which would be dedicated to research and development projects. Citing the successful results of several R&D bond packages approved by voters over the past five years – with last summer's $35 million bond being the most recent – Gov. Baldacci wants the state to take advantage of historically low interest rates and the state's good bond rating to commit an additional $43 million for R&D projects.

The Governor says the funds will support the joint biomedical research efforts of the University of Maine System, Jackson Laboratory, and the other biomedical research organizations around the state. Other funds will continue research in natural resource based industries in the university system.

In addition, Gov. Baldacci called for using a portion of the funding to establish a revolving loan fund to assist in equipping new business start-ups that have evolved from the natural resource industries research.

The final tech-related component of the economic development bond includes support for equipment needed by Maine's Technical Colleges to move toward becoming a true two-year community college system that offers career and transfer programs and low tuition.

Gov. Baldacci's budget address is available at: http://www.state.me.us/governor/baldacci/news/speeches/index.html

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NGA Releases Brief on Rural Development Strategies
Rural economic development policies must build upon the natural assets of rural America, advises the latest issue brief from the National Governors' Association (NGA) Center for Best Practices. Innovative State Policy Options to Promote Rural Economic Development suggests rural strengths include natural resources, local business networks, and an under-exploited entrepreneurial culture.

Rural economic development presents distinct challenges as well, including poor links to markets, geographic isolation, a lack of infrastructure and tools for business development and growth, and the out-migration of human capital. The recent economic downturn in the U.S. also has hit rural areas harder than urban and suburban areas, intensifying the challenges for rural communities.

The NGA issue brief suggests states can utilize economic development strategies that rely predominantly on growing a region's assets rather than relying on outside investment. Three strategies states can employ for rural economic development are highlighted, complete with current examples and explanations of how they have been employed in various states. The strategies are:

Innovative State Policy Options to Promote Rural Economic Development can be downloaded at: http://www.nga.org/cda/files/0203RURALDEV.pdf

Arizona Creates Council on Innovation and Technology
To help formulate the best approach for the state to deploy to help build a stronger technology sector, Arizona Governor Janet Napolitano has established a state advisory group of consisting entirely of high tech business leaders. Created by executive order, the Governor's Council on Innovation and Technology will recommend ideas for energizing the industry.  The Council will include committees on capital formation, technology transfer and infrastructure and supply chain development.

The Council on Innovation and Technology will focus on implementing a statewide strategy for a smooth transfer of technology from universities to the private sector; attracting more venture capital to the state to assist growing and new tech-based businesses; and developing Arizona's infrastructure so it can support tech growth. Additionally, the Council will provide ongoing long-term policy input to the Governor.

The Governor's press announcement is available at: http://www.governor.state.az.us/press/03_01_31.htm

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Maine Seeks Statewide EPSCoR Director
The State of Maine's Experimental Program to Stimulate Competitive Research (EPSCoR) Committee is seeking a Statewide EPSCoR Director to provide leadership and vision for the State's EPSCoR Committee, called the Research Capacity Committee (RCC), and the state's research enterprise. Working directly with the RCC, the Director participates in the development and implementation of the state's EPSCoR strategy. The Director also reports to the Chair of the RCC. For more information, visit http://www.ssti.org/posting.htm or access the full job description at http://www.mstf.org.

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2003 SSTI Conference To Count Toward IEDC/CEcD Recertification
Certified economic development professionals have an extra reason to attend Building Tech-based Economies: From Policy to Practice, the nation's premier educational and networking experience for the TBED community. The 2003 SSTI Annual Conference will be recognized by the International Economic Development Council (IEDC) as a professional development event that counts toward the recertification of Certified Economic Developers (CEcD).

The IEDC CEcD program is designed to unite the economic development profession around a core level of professional competency in eight topic areas. To sit for the certification exam, prospective candidates must have 10 years of professional experience, or at least four consecutive years of paid experience, and a series of professional development training courses across at least six of the eight competency areas.

An important goal of the CEcD program is to ensure that those who are certified continue their own professional development and continue to contribute to the profession. IEDC recognizes the attendance of select non-IEDC events as a way for a CEcD to contribute to her/his recertification.

IEDC encourages members of the economic development community to participate in nationally recognized events, such as SSTI's 7th annual conference, to increase their knowledge, enhance the profession and participate with peers in the field.

Building Tech-based Economies: From Policy to Practice will be held in Seattle, Washington, on October 21-22, 2003. Several intensive preconference workshops will be held on October 20. Conference host is the Washington Technology Center. More information on SSTI's annual conference will be forthcoming at: http://www.ssti.org/conference03.htm [expired]

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Pass the Digest Along!
With more than 20 new governors and hundreds of newly elected state legislators, mayors and city council members across the country, many states and communities are seeing fresh faces in key positions that will influence the shape and direction of tech-based economic development policy, funding and program implementation. SSTI encourages its readership to get issues of the SSTI Weekly Digest in their hands to help bring your new partners into the larger tech-based ED community as soon as possible. If the Digest doesn't forward well, back issues, including this one, and the subscription form are available online for your convenience: http://www.ssti.org/Digest/digest.htm

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