Missouri
During his first State of the State Address last week, Gov. Jay Nixon outlined his priorities for the upcoming fiscal year, which include a 38 percent increase in funding for job creation and workforce development programs, an expanded college scholarship program, and level funding for a statewide science, technology, engineering and mathematics (STEM) initiative through the Department of Elementary and Secondary Education.

Announced in January, the Show Me JOBS initiative focuses on growing small businesses throughout the state and expands upon the current Quality Jobs Program and the Missouri BUILD program. Last month, the governor signed three executive orders in support of the initiative. Executive Order 09-03 directs the Missouri Department of Economic Development to work with the Missouri Development Finance Board to create a pool of funds designated for low-interest and no-interest direct loans for small businesses. The governor anticipates a pool of $2 million will be available for the loans from the four percent fee collected on all Missouri Development Finance Board tax credits.

Additional components of the plan include tax credits for employers to offset pre-employment training costs such as tuition at a Missouri community college or vocational school and establishing an Automotive Manufacturing Task Force to ensure autoworkers and other industry employees are equipped to produce high-tech, fuel-efficient vehicles. 

The FY10 executive budget includes $81.2 million in general funds for the Department of Economic Development, up $8.7 million from last fiscal year. Funding for the Life Sciences Research Trust Fund is reduced $7.6 million from FY09 levels. Created in 2003, the fund supports life science research, commercialization, and technology transfer using a portion of the state’s tobacco settlement funds.

Gov. Nixon recommends $4.3 million (a slight decrease from FY09) for the Missouri Technology Investment Fund, which supports the Missouri Manufacturing Extension Partnership, Innovation Centers, and the Missouri Technology Corporation. Small Business Development Centers would receive $250,000 in FY10 – half of the FY09 appropriation.

Within the Department of Higher Education, Gov. Nixon is proposing an expansion of the state’s current A+ Program, which provides scholarships for two years to community colleges in exchange for community service. The proposed Missouri Promise extends the program two more years to provide tuition at any Missouri college or university. The price tag for the program in FY10 is $26.2 million for year one of a two-year implementation and $25.3 million for the former A+ Program transferred from the Department of Elementary and Secondary Education for the Missouri Promise Program.

To continue the eMINTS grant program, a statewide instructional model for teachers in support of the Missouri Mathematics, Engineering, Technology and Science Initiative, Gov. Nixon recommends $1 million in FY10 – the same amount appropriated last year.

View Gov. Jay Nixon’s FY10 executive budget at: http://oa.mo.gov/bp/budg2010/.

A press release outlining the Show Me JOBS initiative is available at: http://governor.mo.gov/newsroom/2009/Nixon_provides_details_on_Show_Me_JOBS.

Ohio
Funding for a suite of new economic development programs under Ohio Department of Development (ODOD)’s strategic plan, a package of expanded tax incentives aimed at job retention and creation, and funding to continue the tuition freeze at Ohio’s colleges and universities are included in the 2010-11 biennial budget recommendation and are key components to Gov. Ted Strickland’s plan for boosting Ohio’s economy.

The executive budget recommends $1.2 billion in FY10 and $1.1 billion in FY11 in total funds for ODOD. This includes funding to support the following new programs outlined last September as part of the agency’s strategic plan:

• Ohio Hubs of Innovation and Opportunity, an initiative to identify at least 12 targeted geographic intersections in each region and build a physical and virtual hub of knowledge to accelerate talent attraction and investment opportunities. The hubs will offer resources including entrepreneurial and productivity assistance, access to capital, and technology development;
• Ohio Means Home, a new campaign designed to recruit former Ohio residents and graduates back to the state to advance their careers or start new businesses; and
• Ohio Green Places, a program to promote the development of programs and policies that advance the goal of making Ohio a leader in sustainable green development. This includes building an advanced energy business sector with a robust supply chain and a green building industry.

Gov. Strickland is proposing several changes to existing tax credits aimed at job creation and retention and investment in technology-based companies. To enable investors to continue receiving a tax credit by investing in Ohio-based technology companies, the governor proposed increasing the cap for the Technology Tax Credit to $45 million, up from $30 million. Budget documents note the current cap is likely to be reached by March 2009 and the estimated cost of $15 million would delay reaching that cap by three to five years.

The executive budget includes $150 million in tobacco settlement funds over the biennium to support the Biomedical Job Stimulus Fund and the Bioproducts Job Stimulus Fund, which provide competitive grants to projects that have high job-creation potential through industry attraction or expansion opportunities.

Within the Board of Regents, Gov. Strickland proposed maintaining full tuition freeze in the next biennium for community colleges. However, the freeze will remain in effect only through FY10 for four-year public institutions. For the 2010-11 academic year, University System of Ohio will limit tuition growth to 3.5 percent, budget documents note. Legislators approved more than $250 million for the two-year tuition freeze in 2007.

A new scholarship program created during the 2007 legislative session to increase the number of graduates in science, technology, engineering, mathematics and medicine (STEMM) fields, the Choose Ohio First Scholarship, is slated to receive $29 million in the next biennium. The program requires a 1:1 match from higher education institutions (see the July 11, 2007 issue of the Digest). To support ongoing STEM initiatives in middle- and high-schools, Gov. Strickland recommends $2 million in FY10 and $4.5 million in FY11.

Gov. Ted Strickland’s 2010-11 biennial budget is available at: http://obm.ohio.gov/sectionpages/Budget/FY1011/ExecutiveBudget.aspx.

Texas
Gov. Rick Perry’s 2010-11 biennial budget significantly increases the state’s investment in two funds aimed at technology commercialization and attracting new businesses to the state. The Emerging Technology Fund (ETF) is slated to receive $203.5 million over the next two years, up from $117.3 million approved last biennium. The ETF provides funds to recruit top researchers, loans and grants to commercialization projects with ties to state universities, and establishes research centers in key technology areas. The program was created with a $200 million appropriation in 2005.

Gov. Perry is asking lawmakers to approve $260 million in FY10-11, up from $225.3 million approved last biennium, for The Texas Enterprise Fund. This fund was created in 2003 and attracts larger employers to the state and assists existing businesses with substantial expansion.

In support of the state’s 10-year, $3 billion Cancer Prevention and Research Institute of Texas, approved by voters in 2007, Gov. Perry recommends $53 million for debt service on the cancer research bonds with additional funds for operating costs over the next biennium.

Gov. Perry wants to expand higher education incentive funding by $168.9 million to give two- and four-year institutions additional rewards for increasing the number of degrees granted and awarding degrees in critical areas such as science and engineering, according to budget documents.

Gov. Rick Perry’s 2010-11 biennial budget is available at: http://governor.state.tx.us/files/press-office/Governors_Budget_2010-11.pdf.

Within the Department of Employment and Economic Development, the governor is proposing investment tax credits totaling $50 million, deferred until 2012. Under the proposal, $38 million in tax incentives would be available to insurance companies for early-stage investments in certified capital companies. This proposal creates a 60 percent tax credit in the form of an insurance premium tax credit and is allowed only in the fifth calendar year after the investment is made at a rate not exceeding 20 percent of the earned credit in any taxable year, according to budget documents.

Another $12 million is recommended for angel investments in regional investment funds, including a 25 percent tax credit for investments in funds that invest in qualified businesses meeting defined criteria. The credit would be allowed only after an investment has been held for four years. The proposal creates 20 funds that are geographically dispersed and requires each fund to invest at least 60 percent of its money in qualified businesses within the fund’s region. Both proposals dedicate 50 percent of the investments to green technology.

Tax incentives for angel investment are likely to be a topic of debate in the upcoming legislative session. There are currently two other proposals under consideration within the House Bioscience and Emerging Technology and Senate Business, Industry and Jobs committees aimed at increasing early-stage funding for Minnesota start-up companies, reports MinnPost.

Sen. Kathy Saltzman, DFL-Woodbury, is sponsoring two proposals aimed at increasing investment in the state’s bioscience industry. The proposed Angel Investor Tax Credit provides tax incentives for private investments in early-stage high technology and bioscience businesses and the Minnesota Business Investment Act offers tax incentives to insurance companies for investments made in high technology and green businesses.

Another proposal floated by Rep. Jim Davnie, DFL-Minneapolis, but not yet formally introduced would set aside $6 million for a 25 percent tax credit for angel investments in the high-tech, biotech, medical device and green manufacturing sectors, according to the article.

The House and Senate proposals differ from Gov. Pawlenty’s plan in two main areas, according to the MinnPost article. Under the governor’s plan, investors would not be able to claim the tax credit until four years after the investment is made, while both the House and Senate versions would award the credit the same year the investment was made. Also, the governor’s plan calls for geographic dispersment to avoid concentrating the investments in the metro area.

Gov. Pawlenty’s Jobs and Recovery Act also calls for creation of a Green JOBZ program, modeled after the original JOBZ program. The Green JOBZ program would be available only to companies that create renewable energy, represent manufacturing equipment or services used in renewable energy or that create a product or service that lessens energy use or emissions. Companies will receive benefits for twelve years for all agreements signed by the end of 2015 under the plan. Gov. Pawlenty recommends $3.65 million in 2010-11 and another $6.6 million in 2012-13 for the effort.

Gov. Pawlenty recommends a one-time appropriation of $200,000 over the 2010-11 biennium to support the strategic implementation of the BioBusiness Alliance of Minnesota Destination 2025 Roadmap to define how Minnesota can be competitive in the bioscience sectors. The Alliance received a one-time appropriation of $1.75 million in FY08.

Within the Department of Education, the governor recommends $1.5 million each fiscal year (the same as last biennium) for the Math and Science Teacher Academy, which provides technical assistance to schools and districts and professional development to teachers to ensure the successful implementation of the new statewide standards in mathematics and science.

Gov. Tim Pawlenty’s 2010-11 executive budget is available at: http://www.finance.state.mn.us/fin/budget.

When the initiative was announced in 2006, it was conceived as a way to leverage private funding to support bioscience education, research and commercialization. Three local groups, Greater Phoenix Leadership, the Southern Arizona Leadership Council and the Flagstaff 40, created the SFAz that year to help support bioscience and technology-based growth. Governor Napolitano provided an initial $35 million in funding for SFAz and committed to an additional $25 million a year for four years. The state requires a private match for this funding before the money can be released (see the November 27, 2006 issue of the Digest).

SFAz provides a number of awards, including funding for strategic research partnerships, graduate research fellowships, grants to help researchers win large federal grants, small business catalytic funding and STEM education grants to improve the quality of K-12 instruction.

Republican opponents of the initiative claimed that the state should not favor one industry over another through grants for a specific sector. Representative Sam Crump, who led the effort to eliminate SFAz funding, insisted that the effort should not remain in place while K-12 and higher education faced massive cuts. Republicans, however, were not unanimous in their opposition to the program. On Wednesday, the Arizona Republic reported that Rep. Crump had been removed from his new position as chairman of the Government Committee by House Speaker Kirk Adams due to Rep. Crump’s opposition, to SFAz’s.

Read more about Science Foundation Arizona at: http://www.sfaz.org/.

Those losses were not equally spread out around the country. California, by far the nation’s largest venture capital market, made modest gains in invested dollars and only a slight decrease in the number of deals. Firms invested more than $14.2 billion in the state last year in 1,552 deals. Though these figures only account for a 3.34 percent increase and a 1.33 percent decrease respectively, in the current economic climate they represent a substantial uptick in California’s national venture influence. As of 2008, the state accounts for more than half of the nation’s venture investment (50.41 percent), up from 45.64 percent in 2007. Over the past decade, California has gradually increased its share of national investment from about 40 percent to about 50 percent. Last year marks the largest single year increase in California’s share of national venture capital investment on record.

Other top venture markets that had a good year in 2008 include Colorado, New York, Ohio and Hawaii. A few top-tier states had mixed results. Arizona, Minnesota and Virginia saw an increase in their number of deals, but a decline in total dollars invested. Connecticut, Georgia and Pennsylvania, had the opposite situation, with more deals but fewer dollars. Most other high-profile venture capital states, however, experienced declines in both investment dollars and in their national share of investment. Massachusetts, Texas, Florida, Maryland, the District of Columbia, North Carolina, Washington, Oregon, and Illinois all took hits. 

For a state-by-state breakdown of venture capital data based on the PricewaterhouseCoopers/NVCA data, visit SSTI’s Venture Capital Dashboard at: http://www.ssti.org/vc.

Several smaller states posted big gains. Vermont had an active year, while Montana, Iowa and Nebraska experienced gains due to a few large deals.

PricewaterhouseCoopers and NVCA pointed out several other bright spots in the generally discouraging data. While a drop in later-stage investment drove the decline in fourth-quarter numbers, early-stage investment remained strong and seed-stage investment reached its highest point since 2000. Seed- and early-stage deals represent a growing share of overall deal volume.

Also, the clean technology sector continues to thrive despite the downturn. Seven of the ten largest deals in 2008 were in this sector. Investment in clean technology grew by 52 percent in dollars and 16 percent in deal volume.

Overall, however, the U.S. venture capital market appears to be entering a difficult period. In a recent NVCA survey, 90 percent of investors said they expect the market to slow down even more in 2009. More than half believe that investment will decline more than ten percent from the 2008 numbers. Most unfortunately for entrepreneurs, nearly all respondents predicted that capital would be harder to obtain for new companies in the coming year.

Read the Moneytree Survey press release at: https://www.pwcmoneytree.com/MTPublic/ns/moneytree/filesource/exhibits/08Q4_MT_Release_FINAL.pdf.

View the results of the NVCA Survey at: http://www.nvca.org/pdf/09PredixRelease.pdf.

Alabama
Gov. Bob Riley, State of the State Address, Feb. 3, 2009
“And let's make Alabama more competitive with other states for higher paying jobs. Our current incentives focus almost entirely on manufacturing, and Alabama will continue to be aggressive in the pursuit of those jobs. But in today's economy we need a more balanced approach. One that makes more industries eligible for our economic incentives: knowledge-based industries that typically pay higher wages like research and development facilities, corporate headquarters and other entrepreneurial ventures. …

“… As we seek to lessen our dependence on foreign oil, there are many companies working to create new and cheaper forms of energy right here in America. These companies also create 21st century jobs that are here to stay. But Alabama doesn't provide tax incentives to these companies. So our recovery plan makes sure Alabama will be a leader in the emerging green economy. …

“…the education budget I'm presenting to you protects funding for what we know works: the Reading Initiative, the Math and Science Initiative, and distance learning. Tonight, I urge you to join me in protecting these proven programs from any cuts.”

Michigan
Gov. Jennifer Granholm, State of the State Address, Feb. 3, 2009
“To restore our state’s economy, we need to tap the spirit of innovation and entrepreneurship that fostered the development of our domestic auto industry more than 100 years ago. This year, our Michigan Economic Development Corporation will launch a competition among Michigan universities to develop a comprehensive statewide plan to use our higher education system to maximize entrepreneurial activity in Michigan.

“This will involve better curricula to train the entrepreneurs we need to spur business growth and job creation, more effective transfer of university-developed research and technology, and increased assistance for growing Michigan businesses – all designed to power the transformation of our economy.

“… The success of the Kalamazoo Promise has inspired communities across the nation, but Michigan will now be the first state to replicate that achievement on a large scale. This year, 10 Michigan communities struggling with high rates of poverty will create Promise Zones that use the promise of free college education to spur greatness in our kids and economic development in those communities. …

“… (A)s we accelerate our push to get more kids to college, we cannot have them priced out of the market by tuition increases. I am asking Michigan’s universities and community colleges to freeze tuition for the next academic year. No tuition hikes during this year of economic crisis.”

Ohio – see article in this issue of the Digest
Gov. Ted Strickland, State of the State Address, Jan. 28, 2009

Oklahoma
Gov. Brad Henry, State of the State Address, Feb. 2, 2009
“Three years ago, we launched the EDGE Endowment with the simple but bold goal of transforming Oklahoma into the Research Capital of the Plains. Biotech, aerospace, renewable energies, knowledge-based industries -- these are the gateways to a thriving economy in the global age. … But, the endowment remains far below the ultimate goal of $1 billion. …

“… By dedicating future interest earnings from the Rainy Day Fund as well as a portion of future annual state investment earnings, the cutting-EDGE investment of today will become the cutting-EDGE research and jobs of tomorrow.  I urge you to join me in establishing a permanent funding source for this critical endowment. …

“… We must lay the foundation now to encourage and nurture the development and use of alternative energies such as wind, geothermal, solar, biofuels and compressed natural gas.”

Pennsylvania
Gov. Ed Rendell, Executive Budget Address, Feb. 4, 2009
“I am also proposing that we increase funds for our community colleges, which serve as the training ground for Pennsylvanians seeking new skills to help them re-enter the job market. …

“… Last week the bipartisan partnership of Senator Erickson and Representatives Vitali and Ross called for ambitious, needed and achievable improvements to the Alternative Energy Portfolio Standards enacted in 2004. What is especially impressive in their work is their dual focus on increasing the use of solar and other renewable energy sources and greater speed in the application of technologies that will reduce greenhouse gas emission from energy generation. I applaud their proposal and believe that if passed, it will stimulate further job creation in the Commonwealth in a sector that holds real promise for decades ahead. …

“… Next, the FY2009-2010 budget includes a provision known as the Pennsylvania Tuition Relief Act, which will provide critically needed college tuition assistance to Pennsylvania families earning less than $100,000 a year.”

Utah
Gov. Jon Huntsman, Jr., State of the State Address, Jan. 27, 2009
“… (J)ust as Wall Street is known for finance and Silicone Valley for technology, by 2012, I believe Utah can become the premier destination in America for renewable energy. …

“… We will be the epicenter for energy development - but we must have the land, transmission, and regulatory framework to make it a reality. We must look beyond 20th century mentalities and bet on 21st century realities. We must pass legislation this year to incentivize, rather than penalize, innovative technologies where the risk is real, but the reward is great.”

Similar to a recent article examining the concentration and funding levels of DOE-related research (see the January 7, 2009 issue of the Digest), SSTI has prepared a table displaying the amount of HHS obligations for each state from 2001 to 2005, the most recent years available. The table also tracks the percentage of each state's total federal R&D obligations that originated from the HHS. This statistic shows the critical importance of health and medicine related-research for some states, or for states with large amounts of federal R&D coming in, the degree of diversification in the state's R&D portfolio.

For the U.S. as a whole, HHS R&D obligations increased every year, rising from $21.25 billion in 2001 to $28.45 billion in 2005. Over this five-year period, the HHS share of federal R&D peaked in 2003 at 28.7 percent of the nation’s total, but two years later in 2005 reached its lowest share at 26.6 percent of total R&D funding.

As the home to HHS divisions such as the National Institutes of Health (NIH) and the U.S. Food and Drug Administration (FDA), Maryland led the country with $7.02 billion in HHS R&D funding in 2005, just under one-quarter of all HHS R&D obligations. This was followed by California at $3.26 billion, Massachusetts at $2.21 billion, New York at $1.97 billion, and Pennsylvania at $1.43 billion. These five states alone accounted for 55.7 percent of HHS’s total obligations in 2005. North Carolina and Texas were the other two states in 2005 where HHS R&D obligations surpassed one billion dollars.

Four states and Puerto Rico had HHS R&D obligations make up more than 50 percent of their total federal R&D obligations in each of those five years.For each year, North Carolina had at least 66 percent of their total federal R&D obligations coming from the HHS. Over this same period, Puerto Rico consistently had 58 percent of its total R&D federal portfolio from the HHS. Wisconsin always had more than 57 percent, Oregon more than 57 percent, and Kentucky more than 54 percent.

On the other end of the scale, there were 10 states from 2001 to 2005 where HHS R&D obligations did not exceed 20 percent of the state's total federal R&D obligations. In only one state, DOE R&D-heavy New Mexico, did the percentage of HHS funding not exceed 5 percent of the state’s total R&D obligations.

SSTI's table is available at: http://www.ssti.org/Digest/Tables/020409t.htm

The original data for each state, including the R&D breakouts for every agency in addition to HHS, can be found at the NSF's Federal Funds for Research and Development series. They can be accessed at: http://www.nsf.gov/statistics/fedfunds/

The South Dakota Wind Energy Association, a group geared toward supporting the development of wind energy in South Dakota, has been established.

Suzy Ticknor joined Oak Ridge National Laboratory as the director of the Industrial Partnership Program. Previously she was vice president of the Council on Competitiveness.