In the June 13, 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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$105M Tech Tax and VC Legislation Passes in Vermont
Capital for start-up and early-stage business ventures should become more plentiful in Vermont based on legislation, S. 178, passed in late May. A spokesperson for Governor Jim Douglas appraised the act's total impact as representing a $105 million investment into the state's economy.

Injecting more higher risk investment capital into the state's economy had been one of the key economic development priorities for Gov. Douglas during his first legislative cycle. The cornerstone of the Douglas Plan for Prosperity was to recapitalize and expand the financing mechanisms offered by the Vermont Economic Development Authority, the state's commercial and agricultural low-interest lending agency. S. 178 raises the state's commitment to the fund from $25 million to $70 million.

The legislation also enacts new tax credits and amendments to encourage angel investment and development of sustainable energy technologies, including:

S. 178 is available at: http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2004/bills/passed/S-178.HTM
The Douglas Plan for Prosperity is available at: http://www.gov.state.vt.us/pdf/VEDA_plan.pdf

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Mainers Pass $60M TBED Bond
On Tuesday, voters in Maine approved Governor John Baldacci's request to issue $60 million in bonds to finance several research infrastructure, economic development and housing related projects. Packaged and marketed as the Jobs Bond, the measure won easily with 60 percent of the vote in this special election. The tech-based economic development portion of the bond will be allocated as follows:

According to the Bangor Daily News, the state's electorate has now passed 10 of 11 statewide bond requests since November 2001.

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USDA Awards $20.1M for Rural Business Development
The U.S. Department of Agriculture (USDA) recently announced the selection of 97 loan and grant recipients in 24 states that will receive $20.1 million in rural business development funds. The loans and grants are expected to assist in creating or saving nearly 10,000 rural jobs and supports 772 business ventures as part of the Bush Administration's efforts to spur economic development in rural areas.

Administered through USDA Rural Development, the grants and loans are awarded to local organizations which in turn use the funds for a variety of purposes, including revolving business loan funds, studies, technical assistance, community facilities, improving medical care and communications, and other projects to stimulate jobs and growth. Many of the awards are made in conjunction with assistance from other sources, leveraging USDA funds for greater effect.

The assistance includes Rural Business Enterprise Grants, Rural Business Opportunity Grants, Rural Economic Development Loans and Grants and Rural Business Enterprise & Television Demonstration Grants. The recipients are more than 80 cooperatives, nonprofit corporations, local governments, tribal authorities and other entities. A list of the awards is available at: http://www.rurdev.usda.gov/rd/newsroom/2003/2003busdevel.html

USDA Rural Development's mission is to deliver programs in a way that will support increasing economic opportunity and improve the quality of life of rural residents.

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France Boosts Support for R&D
Following extensive public consultation, the French Ministry for Industry and Research has announced a revamped national strategy to boost support for research and development (R&D) activities in France. The plan, to be implemented in 2004, aims to make financial resources for innovative companies more accessible and to increase France’s appeal to the international R&D community.

Some of the key measures include:

Invest in France Agency is the French government agency for international investment. For more information, visit Invest in France Agency North America at: http://www.afii.fr/NorthAmerica/Newsroom/PressReleases/?p=pr_2003-04-09

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Mayors Report: Metro Areas Lose 1 million-plus Jobs in 2001-02
In 2003, the nation's 20 top metropolitan areas will generate $4 trillion in output, or 36 percent of the national economy, according to a new report by the U.S. Conference of Mayors and the Conference’s Council for Investment in the New American City. However, overall employment growth this year is predicted to be 0.1 percent in those same metro areas, with nine experiencing either no job growth or continued employment contraction.

The Role of Metro Areas in the US Economy: Employment Outlook reports the nation's 319 metro areas lost nearly 1.01 million jobs in 2001 and 2002, three times the job loss outlined in preliminary government estimates in January. The projected job growth rate of 0.1 percent for 2003 represents a significant downward revision from the January report, which predicted the rate to be 0.9 percent.

The unemployment rate is unlikely to decline until jobs grow at an annual rate of 1 percent – predicted to occur this year in only Phoenix-Mesa (1.6 percent) and San Diego (1 percent) – the report states. Of the top 20 U.S. metro areas, those with the predicted greatest job losses in 2003 are San Francisco (-1.3 percent), Detroit (-1.2 percent), Philadelphia (-0.7 percent), Boston (-0.6 percent), and Minneapolis-St. Paul (-0.5 percent). Outside of Pheonix-Mesa and San Diego, other top 20 metro areas projected to experience the greatest job gains are Chicago, Denver, Washington, D.C., and Oakland.

A sector-by-sector analysis included in the report forecasts significant 2003 job losses in manufacturing (-2.9 percent), transportation-communications-utilities (-1.4 percent), and construction-mining (-0.6 percent). Manufacturing employment is projected to decline in all of the nation's 20 largest metro areas.

The report assumes a strong pickup in national economic growth during the second half of 2003, due in part to fiscal stimulus from the recent tax package. If a strong second-half recovery does not materialize, the report cautions, then the top 20 metro areas may lose jobs overall.

"We don’t see any help for cities coming down the road," said Boston Mayor Thomas Menino, President of the U.S. Conference of Mayors. "The recent tax package provided assistance to states, which mayors support, but left out any help for the nation’s cities, which drive our national economy."

The U.S. Conference of Mayors is the official nonpartisan organization of the nation's 1,183 U.S. cities with populations of 30,000 or more. The Role of Metro Areas in the US Economy: Employment Outlook is available at http://www.usmayors.org.

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Useful Stats: 2000 Industrial R&D Intensity, Per Capita by State
U.S. businesses spent $180.4 billion in non-federal funds for research and development in 2000, according to the National Science Foundation's (NSF) annual Survey of Industrial Research and Development. The figure reflects 13 percent growth over 1999 findings and the 47th consecutive year of increases. Federal funding for industrial R&D, however, fell to $19.1 billion in 2000, a 15 percent drop from 1999.

Top R&D-performing manufacturing industries in 2000 were motor vehicles, trailers, and parts ($18.3 billion), pharmaceuticals and medicines ($12.8 billion), semiconductor and other electronic components, ($12.8 billion), communications equipment ($11.2 billion), and, navigational, measuring, electromedical and control instruments ($10.1 billion).

Top R&D-performing nonmanufacturing industries were wholesale and retail trade ($25 billion), software publishing ($12.6 billion), scientific R&D services ($9.7 billion), computer systems design and related services ($4.9 billion), and, finance, insurance and real estate ($4 billion).

While California and Michigan maintained their traditional 1-2 leadership positions for the total industrial R&D, several changes occurred in the other top 10 slots. Nebraska saw the greatest one year change in its ranking, jumping from 42nd in 1999 to 19th for 2000. Using the NSF data, SSTI has prepared a table presenting total industrial R&D for each state for 1997-2000 and the percent change over the four years <http://www.ssti.org/Digest/Tables/061303t.htm>. The table reveals 13 states experienced a decline in industrial R&D activity during the period.

More telling, perhaps, is to standardize the geographical distribution of NSF's findings. Considering industrial R&D on a per capita basis shows Michigan slipped from the top state to second, falling behind Delaware. Only three states did not shift positions up or down between the two years. A per capita table presenting industrial R&D across the states for 1997-2000 <http://www.ssti.org/Digest/Tables/061303t2.htm> also reveals that company research expenditures were more heavily concentrated in a few states — only 13 states were above the $707.02 national industrial per capita in 2000 compared to 15 the year before.

Considering industrial R&D intensity – the portion of the Gross State Product represented by industrial R&D – is another useful measure. SSTI's third table <http://www.ssti.org/Digest/Tables/061303t3.htm> presents the state rankings for 2000 industrial R&D intensity, with Michigan, Washington, Nebraska, Delaware and Idaho garnering top honors. A table SSTI prepared last year presents 1997-99 industrial R&D intensity for comparison: <http://www.ssti.org/Digest/Tables/041202t.htm>

NSF's detailed statistical tables for the 2000 Survey of Industrial R&D are available at: http://www.nsf.gov/sbe/srs/nsf03318/htmstart.htm

The NSF Issue Brief on the survey is available at: http://www.nsf.gov/sbe/srs/infbrief/nsf03306/start.htm

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Draft NSF Strategic Plan Open for Comment
Meeting short-term budget demands are consuming more and more of state, local and academic tech-based economic development practitioners' time. However, keeping an eye on the long-range funding picture is critical for sustained success. One of the most important federal sources for supporting the research enterprise is the National Science Foundation (NSF). At NSF Director Rita Colwell's request, the public has the opportunity to participate in developing NSF's strategic vision and plan for the next six years.

"The views of the science and engineering community and the public are very important to us and will be reflected in the final draft of the updated plan," Dr. Colwell writes.

While comprising only four percent of the total federal research and development budget, NSF funds one-fifth of all federal support for basic research and 40 percent of non-life-science basic research at U.S. academic institutions. In addition, Congress has committed to doubling the NSF budget within five years so the agency's role is likely to grow in importance for state and local tech-based economic development plans.

Required to be updated every three years by the Government Performance and Results Act of 1993, NSF's strategic plan is used to set the agency's priorities and allocate resources or investments consistent with those priorities. Comments are to be submitted before July 15, 2003.

More information, including links to the draft strategic plan, is available at: http://www.nsf.gov/od/stratplan_03-08/draft-stratplan.htm

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Review of MEP Underway
The National Academy of Public Administration (NAPA) has begun a review of the Manufacturing Extension Partnership (MEP) that will examine the program's mission and execution. MEP requested the independent analysis.

As part of the study, NAPA will consider whether there are barriers that prevent small firms from obtaining technical and business advice they need to improve innovation, productivity and competitiveness. NAPA will then identify business models for providing services.

The report is scheduled to be completed in February 2004. NIST is asking interested parties to comment on the study by going to http://www.napawash.org/pc_government_performance/ongoing_nist.html

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TBED Comings and Goings

G. Michael Alder has been named executive director of the Biotechnology Association of Alabama.

Thomas Anderson is the new director of the Automation Alley Technology Center in Michigan.

Colorado Governor Bill Owens has appointed Tim Fritz as the director of the Office of Aerospace and Aeronautics.

Hempstead (New York) Mayor James Garner was elected to serve as the 61st president of the U.S. Conference of Mayors during its annual meeting this week.

The Arlington Technology Incubator (Texas) has selected Geoffrey Grant to serve as the new director beginning July 1.

The Charleston Gazette reports Ron Hatfield, director of jobs development for the West Virginia University Institute of Technology's Technology Research and Development Corp., will also serve as the new executive director of the Upper Kanawha Economic Development Corp.

Joseph James has announced his resignation as head of the Prince George's Economic Development Corporation (Maryland).

The new executive director of the Virginia Piedmont Technology Council is Gail Milligan.

Tucked in the fine print of Illinois' budget bills was language to merge seven financing agencies, according to the June 11 edition of The Bond Buyer. Among the agencies included in the merger are the Illinois Development Finance Authority, the Illinois Research Park Authority (inactive), the Illinois Community Development Authority and the Illinois Rural Bond Bank.

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