In the January 30, 2004 Issue:

Copyright State Science & Technology Institute 2004. 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.

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Kansas Legislature Wants $500M for TBED Strategy
Flanked by the Kansas Senate President and House Speaker, Republican legislators unveiled on Tuesday a two-pronged agenda to encourage entrepreneurship and biotechnology across the state. The plan calls for the state to invest at least $500 million over the next 10 years through a variety of new programs to encourage research, innovation and technology commercialization.

An interesting and unique element of the plan is the allocation of the tax revenues received from the Kansas bioscience sector over the next decade to pay for the state's increased investment in helping grow the industry. Similar to Tax Increment Financing models used to cover the cost of site-specific infrastructure costs for local economic development projects, the Emerging Industry Investment Program outlined in the Kansas Economic Growth Act identifies the relevant SIC/NAICS codes that would be included in the pool of funds earmarked for the bioscience initiative.

The entrepreneurship portion of the Act calls for creation of five major initiatives to foster entrepreneurship across the state:

Funding specifically enumerated in the strategy for the entrepreneurship element is limited to an initial state investment of $3.5 million. The press announcement for the strategy states "additional funds for the Enterprise Facilitation Program will need to be identified."

The bioscience portion of the strategy, however, carries a $500 million price tag to Kansas over 10 years and includes a number of new initiatives to encourage research in and commercialization of life sciences technologies. The creation of a new independent public agency, the Kansas Bioscience Authority, will oversee and administer much of the state's investment – with the goal of recruiting 25 eminent and 35 rising star scholars to be associated with the state’s universities – fund the development of the necessary lab space and equipment to conduct superior research in the biosciences, and drive technology transfer and the commercialization of bioscience discoveries.

In addition, the act would create the following within the Authority's responsibilities:

Through the proposed Business Assistance and Acceleration Program, the Kansas Technology Enterprise Corporation (KTEC), the state's lead organization for encouraging economic development through science and technology, would work to ensure that start-up companies have the right assistance and wet labs facilities to bring their businesses through the incubation period. In addition, an Executive Entrepreneurs Program would recruit serial entrepreneurs to work with start-up companies to ensure their success.

KTEC also would receive additional funding for a Bioscience Seed Fund. The fund's goal would be to provide early-stage funding for Kansas bioscience companies in the proof-of-concept and product development states.

In addition, the act includes several tax proposals to encourage the growth of bioscience firms. For example, the Bioscience Net Operative Loss Program would provide the opportunity for bioscience companies to sell their net operating losses to certain qualified taxpayers, which will allow bioscience companies to receive cash and the purchaser to receive the benefit of a loss, which could be used to decrease future tax liability. A Bioscience Tax Investment Program would provide incentives to bioscience companies to expand and locate facilities in Kansas by creating Bioscience Development Districts in which incremental tax increase in property and sales tax generated by the development and construction of new facilities to perform bioscience research, development and commercialization will be collected and reinvested into bioscience research.

Legislative approval of the Kansas Economic Growth Act seems highly likely during this session given the GOP holds large majorities in both legislative chambers.

The plan is available at: http://www.kshousegop.org/economic_growth/roadmap.pdf

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Not to Be Denied: Veto Overrides Kickstart MA Tech Initiatives
A quick scan of most state innovation indices and report cards will reveal Massachusetts is on the short list for comparison of what others states would like to achieve. But a leadership spot in the innovation economy is not being taken for granted in the Commonwealth.

The dot-com crash and recession hit the state hard, leading Massachusetts Speaker Thomas M. Finneran last summer to recommend that Massachusetts invest more than $100 million toward several tech-based economic development (TBED) initiatives (see the July 11, 2003, issue of the SSTI Weekly Digest).

Last September, Gov. Mitt Romney also seemed on board with making a significant TBED investment when he outlined his own $125 million jobs bill (see the Sept. 19, 2003, issue of the Digest). The governor's proposal spread the state's investment over three years.

While the two proposals contained several similar elements, politics is a fickle business and two months can be a long time for a Republican governor and a Democratic speaker of the house.

The legislature's economic stimulus package passed in November but, citing a projected $2 billion budget deficit for the coming fiscal year, Gov. Romney vetoed about half of the overall $100 million act as well as an additional $30.2 million from an $111 million supplemental spending bill.

With the opening of the 2004 session of the Massachusetts legislature, the legislature overrode more than $67 million in funding vetoed by Gov. Romney for both the stimulus package and the supplemental appropriations.

With initiatives ranging from regional Centers of Excellence to funding targeted for investment in emerging technologies, the restored stimulus package greatly expands the portfolio of resources available to Massachusetts researchers, entrepreneurs and tech firms. Highlights include:

HB 4328 is available in its entirety at http://www.state.ma.us/legis.

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Florida Budget Requests $60M for TBED Initiatives
The 2005 budget request submitted this week by Florida Governor Jeb Bush includes $20 million to establish two more Centers of Excellence at Florida universities. The new centers would join the three selected last year through a competitive process [see the May 16, 2003 issue of the SSTI Weekly Digest.] Each center receives $10 million from the state and is designed to foster innovative, cutting-edge technology research at Florida’s colleges and universities, develop commercially viable applications for that research, and recruit high-tech industries and thinkers to the state. The initial legislation enabling the state's investment in the centers permitted creation of up to five.

To help strengthen the academic research infrastructure, Gov. Bush also recommended the state commit $25 million to match private donations to state universities.

To encourage the growth of alternative energy technologies, the governor's budget also includes $15 million in seed capital to share the cost of installation and demonstration of hydrogen fuel cells by Florida companies. Press materials accompanying the budget request says the funds are intended to make Florida ready for next generation energy technology and will help defray the costs of creating mobile hydrogen fuel cells and fueling stations.

More information on the 2005 Florida budget request is available at: http://sun6.dms.state.fl.us/eog_new/eog/library/releases/2004/January/budget-1-20-04.html

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Rochester Gains $15M VC Fund as Kodak Slashes Workforce
Nearly every region engaged in building a tech-based economy wants more access to seed and venture capital money. It's particularly useful when your largest employer announces it will lay off up to 23 percent of its workforce – as many as 5,000 people in your community and 15,000 across the globe – during the next three years.

The generous but bittersweet offer came from Eastman Kodak Company last week as it announced the creation of a $15 million economic development fund designed to promote business development and job creation in the greater Rochester region. Kodak currently employs more than 20,000 people in Rochester, a third of its total employment of 64,000 worldwide in 2003.

Kodak will commit $5 million per year for three years to the new Rochester Economic Development Fund, which is targeted at projects having the potential to generate and retain jobs in the Rochester area. The company will work with other businesses, community groups, universities and local government to expand the fund.

Investments made by the fund will take a variety of forms, but will be targeted at projects that hold the promise of job growth. Kodak will work with community leaders to explore a range of potential projects that may include the use of intellectual property or other community assets. In addition, the fund will be used to attract businesses into excess Kodak real estate.

"Our community is well-positioned to take advantage of the opportunities presented by this fund," said Thomas Mooney, chief executive officer of the Rochester Business Alliance. "Just as Kodak is transitioning to a new business model, Rochester will transition to seize opportunities presented by technologies and entrepreneurial ideas. This fund provides a resource to support the entrepreneurial spirit that has distinguished Rochester."

Kodak will continue to invest in the Center of Excellence for Infotonics, a collaborative project between Kodak, Corning Inc., Xerox Corp., and a number of New York universities, with public sector financial support. Kodak has committed $15 million over five years to Infotonics, which is designed to create a platform for new technologies and job creation.

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North Carolina Innovation Economy Strong, BST Index Finds
Despite a sluggish national economy, North Carolina held its own over the last three years, according to a measure of 25 broad indicators of innovation, technology and economic growth released earlier this week. In all, Tracking Innovation: North Carolina Innovation Index 2003 considers more than 50 performance measures across five general categories, highlighting the state’s strengths and weaknesses.

North Carolina’s performance on each measure is compared to that of the U.S. as a whole and that of six selected states — Georgia, Massachusetts, Michigan, Pennsylvania, Texas and Virginia. The 76-page index, sponsored biennially by the North Carolina Board of Science and Technology (BST), argues that the state’s technology-intensive economy, fueled by high and increasing levels of inputs, is strong at its core.

On a scale from 1-7, with 1 being best, North Carolina averages a 4.5 ranking across all measures. The state's highest average rank, 3.35, occurs in the area of economic structure, the index shows. Economic structure is defined as the intensity of the state's technology activity, the performance of its technology-related industry sectors, its role in the global economy, and key employment and wage trends. North Carolina places above average in six of the area's eight measures.

Where the state has weaknesses, the index indicates, is in its ability to convert its clustered core strengths in R&D and innovation into economic activity across the entire state. The index also underscores the need for North Carolina’s focus on building a well educated workforce with the ability to access increasing levels of technology. In the area of preparation, which addresses this need, North Carolina ranks below average in eight of 10 measures.

The 2003 Index is a comprehensive update of a similar index published by the BST in 2000 as part of the Vision 2030 Project. Indicators in Tracking Innovation 2003 were compiled from a wide range of secondary data sources. State policymakers are expected to use the updated index as a basis for developing recommendations over the coming year to support the state’s innovation economy.

Tracking Innovation 2003 is available at http://www.ncscienceandtechnology.com/Reports.htm.

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USASBE Cites HBS as National Model for Encouraging Entrepreneurship
It's one thing to call your entrepreneurship education efforts the best, but it's another when more than 950 of your peers from around the country do. The entrepreneurship program at Harvard Business School (HBS) recently won the top award for MBA programs nationwide from the United States Association for Small Business and Entrepreneurship (USASBE), an organization devoted to entrepreneurship education and development. USASBE named Harvard Business School as its National Model MBA Program winner at the organization's annual conference in Dallas on Jan. 17-19.

HBS has offered courses in entrepreneurship for more than half a century and counts among its 65,000 graduates some of the world's most successful entrepreneurs. Thirty-one faculty are enrolled in the Entrepreneurial Management unit and another 30 whose work is directly related to entrepreneurship are in other units. The program also requires its 900 first-year students to take the course "The Entrepreneurial Manager," and the school offers nearly 20 elective courses in entrepreneurship to second-year students.

The school's Arthur Rock Center for Entrepreneurship has supported entrepreneurship efforts since 2003. Beyond the curriculum, the Rock Center also organizes an annual Business Plan Contest, coordinates the activities at the HBS California Research Center in Silicon Valley, and publishes New Business, a twice-yearly overview of entrepreneurial interests and pursuits at HBS.

In addition to supporting a variety of faculty projects, the fund that established the Rock Center also provides fellowships for MBA and doctoral students, underwrites symposia and conferences on entrepreneurship, and develops new publications and websites to extend the reach and impact of the school's work in this field.

More information is available at http://www.hbs.edu.

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Tech Talkin' Govs III
This is the third in a series of articles as SSTI continues its look at the prominence of tech-based economic development in the Inaugural, State of the State and Budget Addresses given by the nation's governors. Highlights from this week's speeches are provided below.

Hawaii
Gov. Linda Lingle, State of the State Address, Jan. 26, 2004
"Conservation, waste-to-energy programs and alternative energy initiatives can reduce our dependence on fossil fuels and move our state to the forefront of progressive energy policies. To demonstrate the state's commitment and leadership role, I ask you today to pass our bill that mandates 20 percent of all electricity sold in the year 2020 come from renewable sources.

"This ambitious goal would be mandated in steps through a balance of incentives and penalties. We are also proposing a bill to encourage the use of non-fossil fuels by exempting them from the Hawai`i state fuel tax...

"We ask you to work with us in providing improved investment tools to encourage technology industries, as well as non-tech businesses, to locate and stay in our state. The programs we are proposing would encourage investments through professional venture capital managers and offer incentives for investment in University of Hawai`i-based research. The objective would be to help not only start-up firms, but also more mature companies that are ready to launch a product or service."

Kentucky
Gov. Ernie Fletcher, Budget Address, Jan. 26, 2004
"...[T]he global economy is changing rapidly. To prosper we will change with it and we will seize the opportunities of the Knowledge Economy. To do this, we will recognize our universities and our community colleges as essential economic engines. They transfer technology from the laboratory to the work place. They are the incubators of human capital. And for our colleges and universities to fulfill this role, we must invest in their training, technology transfer and research. That's why our budget makes the wise investment of expanding research space in both of our major universities...

"I have provided over $25 million for economic development to support our New Economy initiatives...

"But, let me remind you that our current tax code deters economic development and does not reflect the new, knowledge-based economy. By modernizing our tax system, we will be able to generate economic growth, expand opportunity and avoid such tough times in the future."

Michigan
Gov. Jennifer Granholm, State of the State Address, Jan. 27, 2004
"In December, I convened a Manufacturing Matters Summit and brought together some of the best minds among our business and labor leaders. The detailed agenda we developed together will guide our fight to retain jobs. First, and this was the overwhelming consensus of the bipartisan business and labor leaders who attended our Manufacturing Summit: we all must insist that our federal government pursue international trade policies that level the playing field for our businesses...

"As your elected leader, I would not be doing my job if I did not force the question upon Washington and upon you, the Legislature: How can a state so reliant on manufacturing compete with countries paying $1.57 an hour or with countries offering no benefits, no labor and no environmental standards?

"...In the weeks since our Manufacturing Summit, we’ve begun to make important changes in our tax system to strengthen Michigan businesses... Our State Treasurer, Jay Rising, is leading an effort to restructure business taxes in Michigan to make us even more competitive as a center of manufacturing...

"The second step in growing our economy is to diversify and grab the attention of entrepreneurs... Today, we need to instill that entrepreneurial thinking — to get our residents and our young people imagining that they have the potential to be their own boss, the innovator, the producer of wealth and job... And Michigan will attract and grow their businesses at every stage of development — from a big idea, to a promising start up, to a business wanting to double its growth and provide growing job opportunities along the way.

"New ideas can create entire new industries almost overnight. But our best new ideas in Michigan can also die in the research lab or someone’s garage or migrate elsewhere if entrepreneurs don’t have access to capital here in our state. Tonight, I am announcing that my Administration, through the Michigan Economic Development Corporation, is creating three new financial tools to help businesses take root in Michigan and grow new jobs at every stage of development. These new funds will leverage federal and private dollars to make more than half a billion dollars available for starting or expanding 21st Century businesses.

"Together these three funds send a half-a-billion dollar message to entrepreneurs and businesses — we will help you grow your business and new jobs here in Michigan...

"And because engineers and technology workers are so important to the Michigan workforce, beginning in the next academic year we will make zero percent loans available to students in our public universities who pursue engineering and technology degrees. They’ll keep that zero percent rate as long as they continue to study and work in Michigan.

"...Broadband – high speed internet access to information and customers – is no luxury. It’s a necessity to compete in our high-tech new world. Unfortunately, many areas of Michigan still lack this lifeline to our information-driven economy. I am particularly pleased to announce tonight that by 2007 we will have brought high speed internet service to every corner of our state, through the work of the Michigan Broadband Development Authority."

Mississippi
Gov. Haley Barbour, State of the State Address, Jan. 26, 2004
 We have a complex web of workforce development programs. More than 10 state agencies have some workforce development function... Our community colleges should be given more of the franchise in workforce development and training. They have a proven record of performance in workforce training and a well-deserved reputation for tailoring programs to meet specific needs and, thereby, create jobs. The community colleges have the ability, and they are ready and willing to take on more responsibility.

"To ensure better coordination of workforce development efforts, I propose we integrate the efforts of the state Workforce Investment Board with those of the State Board for Community and Junior Colleges. This will give consistent direction and focus to our overall workforce development strategy...

"Of course, a lot of employees will still get job training from their employers. To increase and improve these programs, I propose giving employers more incentive to upgrade the skills of their workers by reforming the job training tax credit...

"I want to let you know that the largest increase in my budget will be to restore some of what has been cut from our universities and community colleges. My reason is simple: we want to make community colleges a key part of our workforce development efforts and to make our universities the leaders in turning their research into commercial products and services. These institutions are where economic development and education meet, and that is too important a place to cut. Our institutions of higher learning are economic gold mines, and we must do a better job of mining them."

Ohio
Gov. Bob Taft, State of the State Address, Jan. 28, 2004
"Let's continue to support the Third Frontier Project through the tobacco and capital budgets this year. And given the loss on Issue One last year, I will ask you to redirect additional dollars to protect capital investments already made...

"I am asking you to extend the maximum term of our successful Enterprise Zone Program from 10 to 15 years. Michigan and Indiana already have zones that extend beyond our limit. Large projects have longer paybacks and our local communities need all the help they can get to compete for new jobs."

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Ohio’s IT Alliance Seeks President and Chief Executive Officer
Ohio’s IT Alliance (OITA) invites applications and nominations for the position of President and Chief Executive Officer. OITA's mission as a statewide public/private partnership is to drive the growth and improve the competitiveness of Ohio through the development and support of its information technology industry. The new President will enhance OITA’s role as the key public/private catalyst for industry growth and success. The successful candidate must: demonstrate a strong public presence with the ability to lead through influence; have compelling analytic and strategic problem solving and planning abilities; evidence successful leadership in an IT enterprise or function in both strategy and operating roles; demonstrate a successful track record in sales/marketing, business development, operations, and fund raising in technology based companies or related organization; and possess familiarity/experience with technology based economic development. A more complete description is available on SSTI's online Job Corner at: http://www.ssti.org/posting.htm

Responses should be submitted to: Nicholas S. Brill, Brill Neumann Associates, 312 Stuart Street, Boston MA 02116; marika@brillneumann.com. OITA is committed to equal opportunity and affirmative action.

SSTI sponsors and affiliates are welcome to forward job openings to SSTI for a complimentary announcement in the SSTI Weekly Digest and on SSTI's website. More information about becoming an SSTI sponsor or affiliate is available at: http://www.ssti.org/sponsors.htm

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Correction for the Jan. 23 Issue
In last week's Tech Talkin' Govs II article, we inadvertently listed Mark Warner as the Governor of South Carolina. Gov. Warner leads the Commonwealth of Virginia. Mark Sanford is Governor of South Carolina. SSTI regrets the error.

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