In the October 29, 2008 Issue:

Copyright State Science & Technology Institute 2008. 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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Election Preview: Voters to Decide on Statewide TBED Issues
While the Presidential election takes center stage on November 4, voters in several states also will cast their votes on statewide ballot issues affecting the TBED community. In addition to the 11 gubernatorial races and more than 5,800 state legislative seats up for grabs, voters across the nation will consider measures to provide funding for public education, expand investment in alternative and renewable energy, lift restrictions on stem-cell research, and eliminate income tax and state spending caps. Following is a summary of selected ballot issues from across the nation.

Funding Public Education

Florida
Florida voters will be asked to amend the state constitution to require that the legislature authorize counties to levy a local option sales tax to supplement funding for public community colleges. Ballot question 8 requires voter approval to levy the tax.

Maryland
A proposal in Maryland asks voters to approve an amendment to the state constitution authorizing video lottery terminal gaming to provide funds for public education. Question 2 legalizes up to 15,000 machines at sites in four counties and the city of Baltimore. HB 4 requires the revenue raised from the video lottery machines be used for public education in pre-K through grade 12, public school construction and capital improvements, and construction of capital projects at community colleges and public senior higher education institutions.

Energy

California
Voters will decide on two energy-related issues. Proposition 7 requires public and private utilities to generate 20 percent of their power from renewable energy by 2010, 40 percent by 2020 and 50 percent by 2025. The measure additionally speeds the approval process for new renewable energy plants, requires utilities to sign longer contracts (20-year minimum) to procure renewable energy, and creates accounts to purchase rights-of-way and facilities for the transmission of renewable energy. The state estimates the short term impact to include a spike in rates leading to higher costs, lower sales and income tax revenue and higher local utility tax revenues.

Proposition 10 authorizes the state to borrow $10 billion over 30 years for R&D in alternative fuel technology in order to reduce the state’s dependence on foreign oil. The proposal calls for $3.4 billion to help consumers purchase high fuel economy or alternative fuel vehicles and to fund research into alternative fuel technology, $1.25 billion for R&D and production of renewable energy technology - primarily solar - and grants to cities for renewable energy projects and to colleges for training in renewable energy efficiency technologies. Total funding is $5 billion from general obligation bonds with another $5 billion in interest.

Missouri
Proposition C requires investor-owned electric utilities to generate or purchase electricity from renewable energy sources such as solar, wind, biomass and hydropower with the renewable energy sources equaling at least 2 percent of retail sales by 2011. This would increase incrementally to at least 15 percent by 2021. The measure would not have an impact on taxes and any rate increase to consumers must be capped at one percent.

Stem Cell Research

Michigan
Voters will decide on a controversial issue overturning the state’s ban on stem cell research. Proposal 08-2 amends the state constitution to allow research on embryonic stem cells created for fertility treatment that would otherwise be destroyed. The measure additionally prohibits state and local laws that prevent, restrict or discourage stem cell research, future therapies and cures.

Taxes

Colorado
A proposal in Colorado aims to eliminate rebates that taxpayers receive under the taxpayer bill of rights and divert those funds to a new savings account for public education. Amendment 59 creates a savings account within the State Education Fund and places 10 percent of income tax revenue that is currently deposited into the fund into the savings account until it reaches a certain threshold.

Massachusetts
Massachusetts voters will decide on a measure to eliminate the personal income tax by 2010. Question 1 on the statewide ballot reduces the state personal income tax rate to 2.65 percent for the tax year beginning Jan. 1, 2009 and eliminates the tax for all years after Jan. 1, 2010.

North Dakota
Statutory Measure 2 reduces individual income tax rates by half and corporation income tax rates by 15 percent for tax years beginning in 2009. An analysis conducted by the state tax commissioner finds the measure would reduce state general fund revenues by an estimated $414 million in the 2009-11 biennium.

Oregon
Measure 59 would allow individual taxpayers to deduct the federal income taxes they pay from their state tax returns. With no general sales tax collected in the state, Oregon’s state service and public schools rely on income tax collection. The state estimates a reduction in state budget revenues by approximately $360 million in the first year and $1 billion in the second year.

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U.S. Bailout of Financial Sector Also Extends Alternative Energy Incentives
Though the U.S. Treasury's initial proposal for a bailout of the financial sector was only three pages when it was first submitted to Congress, federal legislators did not waste time in expanding its scope. The $700 billion emergency stabilization package, passed early this month, eventually swelled to more than 400 pages. One of the largest additions to the bill was a new section extending incentives for alternative and renewable energy. 

These provisions include an extension of the wind energy Production Tax Credit and the solar energy Investment Tax Credit, as well as several other energy credits. In total, the bailout act contains 150 pages of energy provisions. 

The 30 percent investment tax credit for solar, geothermal and fuel cells was extended through 2016, as was the ten percent credit for microturbines. New investment credits were introduced for combined heat and power systems, small commercial wind property and geothermal heat pump, all of which will stay in effect through 2017. A new provision allows public utility property to beeligible for the credit, and the credit may now be used to reduce the alternative minimum tax for certain taxpayers.

The wind Production Tax Credit (PTC), the largest of the PTCs, was only extended through next year, but a variety of other power-generation methods received extensions through 2011. This included producers of electricity from closed- and open-loop biomass, geothermal, small irrigation power, municipal solid waste, trash combustion and qualified hydropower. A new PTC for marine and hydrokinetic renewable energy has also been added.

The termination date for existing clean renewable energy bonds has been pushed back until the end of 2009. Under the act’s provisions, $800 million in new funding for these bonds has been approved, and can be used to finance facilities for wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, qualified hydropower, landfill gas, marine renewable and trash combustion-base power. Local government-led conservation and greenhouse gas reduction projects will be able to benefit from new qualified energy conservation bonds authorized through the bailout bill.

A breakdown of the bailout bill’s energy provisions is available at: http://www.nixonpeabody.com/publications_detail1.asp?ID=2443

The full Emergency Economic Stabilization Act (H.R. 1424) is available on http://thomas.loc.gov/.

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Vermont Rolls Out New Initiative to Spur Software Industry
Gov. Jim Douglas recently announced Vermont will roll out a suite of grants and incentives to strengthen the state’s software industry. The initiative includes state-funded low-interest loans to software businesses, employment growth incentives and a tax credit for software research. In his unveiling of the software initiative at Champlain College’s new Emergent Media Center, Gov. Douglas explained that state agencies will use these new measures in conjunction with the Center to help build a local software development cluster.

Under the new initiative, the state will provide $150,000 to the Vermont Center for Emerging Technologies to support student entrepreneurs. The money will fund three low-interest loans to help state university and college students start new software design companies. A $47,000 grant to the Vermont Software Developers Alliance, the statewide software trade association, will help provide support for existing businesses. 

Gov. Douglas also announced his intention to expand Vermont’s Employment Growth Incentive. The change will expand the cash incentive to companies that create new software jobs. Vermont’s Department of Labor will start giving priority to software and related technology firms in coming rounds of awards. Also, the state will introduce a new R&D tax credit that mirrors the federal R&D tax credit at the state level. 

Read the Governor’s press release on the software initiative at: http://governor.vermont.gov/tools/index.php?topic=GovPressReleases&id=3181&v=Article

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AURP Promotes Nationwide Place-Based Innovation Zones
The U.S. should create a nationwide network of innovation zones which gather the capabilities of entities such as research parks, technology incubators, universities, and federal laboratories according to a recent report from the Association of University Research Parks (AURP). The Power of Place: A National Strategy for Building America’s Communities of Innovation, recommends coupling distinct federal policies, regulatory reforms, and incentives along with these research and commercialization clusters to accelerate their impact.

The report contends the U.S. is losing human capital and its competitive position to other foreign governments which are providing incentives and employing place-based technology development strategies. Because of this changing global landscape, only one of the ten largest research parks in the world – the Research Triangle Park in North Carolina – is located in the U.S. And a new model of research parks is emerging, where commercial and residential space, multi-tenant buildings, and sustainable design concepts merge with a diverse collection of participating institutions (see the Nov. 28, 2007 special issue of the Digest on planning innovation spaces).

Recommended in the report is the launch of a federal government program to establish these innovation zones across the U.S., based on national priorities such as energy and homeland security, which would also require matching grants from the states, local government and private industry for their establishment. Other policy recommendations include:

The Power of Place: A National Strategy for Building America’s Communities of Innovation can be accessed at: http://www.aurp.net/meet/power_of_place.cfm

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Useful Stats: Funding Provided by NIH Grants per State, 2002-2006
In the 2002 report Signs of Life: The Growth of Biotechnology Centers in the U.S., Joseph Cortright and Heike Mayer suggested it would take more than a decade for biotech investment strategies to yield fruit  - as measured by NIH funding and biocommercialization efforts. On the state level, with five years of NIH research funding data now available, some states can boast real percentage and actual dollar changes in the amount of NIH funding captured.

Since total NIH funding peaked during the 2002-2006 period before beginning several years of nongrowth or decline in actual awards made, the gains in some states means other states saw declines.

SSTI has prepared a table showing the yearly total amount from NIH grants directed to each state from 2002 to 2006, the percent change over that period, and the rank of that change. The total amount of NIH grants in the U.S. in 2002 was $18.9 billion, gradually increasing every year to $23.1 billion in 2005. In 2006, this amount fell to $20.8 billion.

View the table at: http://www.ssti.org/Digest/Tables/102908t.htm

Among the states, five had totals larger than $1 billion in 2006: California at $3.1 billion, Massachusetts at $2.2 billion, New York at $1.9 billion, Pennsylvania at $1.4 billion, and Texas at $1.1 billion.

From 2002 to 2006, West Virginia experienced the largest percent increase in NIH funding – 48.1 percent – from $15.2 million in 2002 to $22.6 million in 2006. South Dakota, Louisiana, Kentucky, and Nebraska finished out the top five in percent increases over this period. Twenty-six of the states experienced increases larger than 10 percent from 2002 to 2006.

Eleven states and the District of Columbia experienced a percentage decrease in NIH funding during the five year period. It is interesting to note, none of those 12 states had significant statewide biotechnology initiatives in place during the study period.

To see the state breakouts for NIH grants going back to 1998, which includes the projects funded for each Congressional district, visit: http://report.nih.gov/award/trends/State_Congressional/StateOverview.cfm

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TBED People
Southern Growth hired Ted Abernathy, Jr., former Executive Vice President & COO of the Research Triangle Regional Partnership, to serve as its Executive Director, filling the vacancy created by Jim Clinton's resignation in September.

The Minnesota Center for Engineering & Manufacturing Excellence has hired Ronald Bennett as executive director.

The City of Virginia Beach Economic Development Department has hired Scott Hall to fill their newly created position of Business Development Coordinator.

Marquette University has named Keith Osterhage as executive director for its office of research and sponsored programs.

Mary Jo Waits is the new Director for NGA Center for Best Practices' Social, Economic & Workforce Programs Division within the National Governors Association.

Dennis Yablonsky, secretary of the Pennsylvania Dept. of Community & Economic Development resigned effective Oct. 23.

New Jersey Gov. Jon Corzine named Jerold Zaro as Chief of the Governor's Office of Economic Growth.

Michigan Gov. Jennifer Granholm has reorganized the Department of Labor and Economic Growth and changed the department’s name to the Department of Energy, Labor and Economic Growth. Stanley (Skip) Pruss, currently the governor's energy advisor will serve as the new CEO and director of the renamed department. Pruss replaces current Director/CEO Keith Cooley, who, in early November, will become the new president and CEO of the NextEnergy Center, the state’s renewable energy industry accelerator.

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