Oregon Innovation Efforts to Continue with Reduced Funding

The legislature approved a budget agreement for the 2009-11 biennium last month, preserving partial funding for Oregon innovation efforts and passing legislation aimed at green job creation. A major component of Gov. Ted Kulongoski's climate change agenda did not survive the legislative session, however.

Along with $2 billion in cuts, the approved budget relies on federal stimulus funds and taps into state reserve funds, reports the Portland Business Journal. To generate additional revenue for the state, Gov. Kulongoski signed legislation last week raising both personal income taxes for top earners and corporate income taxes. Although lawmakers typically meet every other year, the legislature likely will convene early next year to address any further budget gaps, the article states.

The Oregon Innovation Council (Oregon Inc.) will receive $16 million over the biennium to continue R&D and commercialization efforts in nanoscience and renewable energy through the state's signature research centers. This is scaled back from the governor's recommendation of $20.5 million and $12 million less than the 2007-09 biennial appropriation. Funding is distributed among the following initiatives:

• $5.65 million for the Oregon Nanoscience and Microtechnologies Institute (ONAMI), the state's first signature research center that conducts R&D in micro- and nanotechnology;
• $3 million for wave energy research;
• $2.75 million for renewable energy investments through the Bio-Economy and Sustainable Technologies (BEST) signature research center; and,
• $2.5 million for the Oregon Translational Research and Drug Discovery Institute (OTRADI), which focuses on R&D and commercialization in controlling infectious disease.

The remaining funding will support the food processing and seafood industries. Lawmakers did not approve funding for a new forestry cluster initiative to increase technology development and commercialization efforts. Also left out of the budget is $1 million for an advanced manufacturing initiative at Portland State University.

Lawmakers passed a green jobs bill this session, directing state agencies to identify high-demand green industries and plan workforce development activities that promote the development of emerging green technologies and innovations. The legislation also calls for developing criteria for existing investments and new or expanded financial incentives and comprehensive strategies to recruit, retain and expand green economy industries and small businesses.

Legislators did not pass a bill at the center of the governor's climate package. Under SB 80, the state would have adopted a greenhouse gas cap-and-trade system to achieve greenhouse gas-emission reduction goals. The bill also would have established a Climate Improvement Fund and created a task force to develop recommendations for greenhouse gas-emission reduction. Lawmakers also rejected a measure allowing energy generated from existing biomass and municipal waste facilities to be included in the state's Renewable Portfolio Standard.

At the same time, a measure was passed by lawmakers cutting state tax incentives for wind farms from $10 million to $3.5 million. The bill also tightens requirements for receiving the tax credits. Companies are now required to stay in continuous operation for five years or risk losing the credits, reports The Oregonian.

In an effort to reorganize the state's economic development efforts, lawmakers passed a bill renaming the Oregon Economic and Community Development Department as the Oregon Business Development Department, or Business Oregon. The aim is to focus more intensely on job creation and retention, according to a press release. As part of the agency's realignment, the department's community development activities will be administered separately by a newly formed Infrastructure Finance Authority. Gov. Kulongoski proposed the reorganization last year.

The 2009-11 approved budget documents are available at: http://www.leg.state.or.us/budget/home.htm.