As we come to the end of February, more than half of the governors have either delivered their 2026 State of the State, their Fiscal Year (FY) 2027 Budget addresses, or a combination of the two, laying out their priorities for the coming year. With forecasted revenues for many states tightening, many governors and lawmakers, with a few exceptions, offer cautious or constrained funding priorities and proposed initiatives.
Governors not on the ballot this fall have used the addresses to speak to their accomplishments while in office. Many state leaders have spoken to prioritizing the implications of recent federal changes in tax statute and regulations impacting state contributions to Medicaid, food support programs, and education. In addition, governors have given much of their speech time to security and affordability issues, including childcare, housing, and energy costs.
While all addresses so far generally touched on economic development successes and initiatives or more traditional economic development activities like site development or shovel-ready programs and business attraction funding, proposals for growing stronger innovation economies have not been completely overlooked: several governors either recommended or built upon TBED and innovation initiatives. Some have highlighted the need for greater investments in non-college pathways to high paying jobs.
The following are states where governors have specifically laid out or discussed their proposed innovation agendas.
On Jan. 12, Arizona Gov. Katie Hobbs’ State of the State and Budget address encouraged lawmakers to rethink Arizona’s approach to data centers and their water use. Hobbs is recommending that the state end a decade-old tax exemption for siting data centers in the state. Revenue from the elimination of the Data Center Tax Exemption, which currently costs Arizona $38 million annually, and which seems to have bipartisan support, would create and sustain the proposed Colorado River Protection Fund, and in Hobbs’ words, “supercharge [Arizona’s] conservation efforts and continue building a sustainable and growing economy.”
Delaware Gov. Matt Meyer’s State of the State address (Jan. 22) alluded to a few items concerning innovation or TBED activities (without offering much in specifics), such as: state lawmakers are embarking on an ambitious modernization of Delaware’s banking framework and laws—the first in decades; the Delaware Prosperity Partnership (the state’s public-private economic development agency) is expanding its mission to grow an innovation economy in concert with its on-going mission of attracting and recruiting large employers and businesses to the state, through tools, capital and support.
Illinois Gov. J.B. Pritzker used his eighth State of the State address to propose a Vocational Training Grant Program. This initiative would provide school districts and regional vocational centers with support (funding amount not specified) to build and expand specialized workforce programs and partnerships with businesses to forge higher paying career paths for high school students while meeting the workforce needs of the state’s employers.
The same day, Pritzker issued an executive order intended to speed up the siting and construction of capacity to provide two gigawatts of nuclear power to the state by 2033.
New Mexico Gov. Michelle Lujan Grisham’s State of the State (Jan. 20) expressed a continued commitment to energy-innovation economic growth without explicitly announcing any new initiatives. The governor did call for $150 million in tax credits to solidify the state’s investment in future-forward technologies, particularly in quantum and fusion energy.
New York Gov. Kathy Hochul presented her State of the State address on Jan. 13, and unveiled new proposals to fuel innovation, and create high-skill, high-demand jobs. Collectively, the proposals outline a strategy for expanding the state investments in advanced technologies and associated programs:
Quantum technology: Gov. Hochul is proposing to establish up to four additional quantum hubs across New York, in addition to a hub already established at the State University of New York Stony Brook, that will serve as incubators and foster the development and commercialization of quantum technologies. These hubs will be regional anchors for quantum innovation, prioritizing commercialization of new inventions and real-world use cases. Each hub will host an incubator for quantum-focused startups, providing early-stage companies with critical resources, including mentorship and access to local quantum networks and quantum computing.
Biotechnology: Hochul called for renewed investment for the life sciences through the proposed Bolstering Biotech Initiative. This program seeks to support all phases of the life science sector pipeline, from discovery to commercialization of life-changing therapeutics—with a focus on neurodegenerative disease—and catalyze private investment in biotechnology research and development through the following programs:
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Venture Capital Investments: Leveraging public and private venture investment to support promising startups with the potential to mature into the next generation of industry leaders;
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Fellowships and Workforce Development: Seeding new skills-training programs designed to equip New Yorkers with the necessary skills to fill high-demand roles from production to c-suite in the biotech field, opening pathways to high-paying jobs for New Yorkers;
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Commercialization Grant Program: Creating a new, performance-based grant program modeled on the state’s successful Biodefense Commercialization Program to support companies in bringing biotech innovations to market in targeted areas such as neurodegenerative diseases; and
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Statewide Clinical Trial Consortium: Establishing a statewide clinical trial consortium to leverage the combined strengths of New York’s research institutions to expand access to cutting-edge therapies and position the state as a premier destination for medical innovation.
Semiconductor Chip Design Center: The governor called for the launch of a downstate-based Semiconductor Chip Design Center toto serve as a chip prototyping facility, will also serve as an incubator to startup firms, train chip designers, and connect startups to the larger semiconductor sector throughout New York State.
Modern Manufacturing Modernization Program: Hochul announced that she will direct the Empire State Development to launch the Manufacturing Modernization Program to support the state’s small and mid-size manufacturers. The statewide network would provide technical assistance to small manufacturers as they incorporate AI into their operations, supply chain consultations to help businesses adapt to geopolitical and tariff impacts, and capital grants to modernize equipment or pivot to priority sectors, such as clean energy.
Another item detailed in Hochul’s State of the State address includes a new statewide office of Digital Innovation, Governance, Integrity & Trust (DIGIT), to oversee AI and digital technology laws.
On Feb. 3, Pennsylvania Gov. Josh Shapiro gave his 2026-2027 Budget address and 2026–27 budget, which includes $100 million for Innovate in PA 2.0 to invest in life sciences, robotics, technology, energy, manufacturing, and agriculture. Innovate in PA 2.0 would be financed by Insurance Premium Tax Credits, and would expand venture capital access, strengthen leadership pipelines in life sciences and biotech, support clinical trials, commercialize university research, and seed regional venture studios.
For workforce development, Shapiro’s 2026–27 budget request also calls for an additional $18 million in vo-tech, CTE, and apprenticeship programs, supporting high-quality STEM and computer science education, and expanding Schools-to-Work pathways. The budget additionally seeks to:
Increase Industry Partnership grants by $3.5 million, more than doubling total funding to $6.3 million, helping regional networks of business leaders and public leaders address workforce needs in key growth sectors, including health care, IT, agriculture, transportation, and manufacturing;
Create a dedicated appropriation for WEDnetPA of $12.5 million to train more than 1.3 million workers, giving Pennsylvania companies the skilled workforce they need to grow and compete; and
Include $2 million for the new Career Connect Program to expand internship opportunities statewide, connecting students and job seekers with meaningful work experience and career pathways.
Shapiro also addressed the continued development/expansion of data centers in his state and announced a new intentional initiative policy: The Governor’s Responsible Infrastructure Development standards, or GRID, that seeks to balance data centers, state resources and communities. Developed in consultation with the community, GRID would hold data center developers accountable to a set of standards in exchange for commonwealth financial and siting support.
Tennessee Gov. Bill Lee, in his final State of the State address on Feb. 2, announced that his budget request for the 2026 legislative session will include an additional $25 million for Tennessee's Nuclear Energy Supply Chain Investment Fund (also known as the Nuclear Energy Fund). As a priority of Lee’s second term, the Tennessee Nuclear Energy Fund is dedicated to supporting the expansion of nuclear-related businesses, workforce development, and site development throughout the state. Since its inception in 2024, the Tennessee legislature has allocated $70 million to the Nuclear Energy Fund, which has backed 14 projects involving private companies, universities, and local governments, totaling approximately $47 million in committed funds. These initiatives have encompassed a range of activities, such as uranium enrichment, advanced reactor development, nuclear component manufacturing, education programs, and site or infrastructure preparation.
In addition to his continued recommendations for funding to the state's Nuclear Energy Fund, the governor’s FY 2026-2027 budget proposal also includes:
$50 million to continue Tennessee's efforts to lead the nation in the adoption of artificial intelligence technology;
$20 million to accelerate Tennessee's quantum computing industry by attracting substantial federal and private-sector investment;
$10 million further investment in the Governor’s Investment in Vocational Education (GIVE) program to support nuclear workforce education, as recommended by the state’s Nuclear Energy Advisory Council;
$3 million for Next-Gen Academies at Tennessee Tech University for nuclear and cyber technologies; and
$25 million further investment in the Rural Development Fund to improve the quality of life in rural communities by supporting business development and infrastructure planning.