SSTI Digest

With nearly 40 of the state governors now having given a state of the state or budget address, innovation themes continue to echo in their reviews of past accomplishments and plans for the coming year. There is a priority on education (both on teacher salaries and preK initiatives as seen in Alabama, in addition to higher education and a focus on its affordability with Connecticut proposing free tuition for community college for recent high school grads and Pennsylvania putting additional dollars into scholarships), energy, workforce, broadband and a special emphasis on distressed communities in Connecticut and Tennessee. While SSTI continues to review the addresses and features excerpts as they relate to innovation intiatives in this series, remaining speeches will be scattered over the coming weeks.

Alabama

In 2019, the administrations and legislatures in many states grappled with if and how to adjust state economic development initiatives to leverage the federal Opportunity Zone (OZ) program. The actions of 12 states that implemented new activities are described below.

Notably, many of these state efforts require applications and reports on OZ projects — unlike the federal OZ incentive. Some created a new requirement specific to OZs and some states placed the OZ benefits within existing initiatives that already require such information sharing. Investor use of state OZ benefits, therefore, may be one means by which the costs and benefits of the federal program will be able to be evaluated.

When Gov. Janet Mills addressed the United Nations General Assembly on Sept. 23, it was the first time a sitting governor of Maine has been asked to address the body. She had been invited as part of her participation in the UN Climate Action Summit 2019, and has made tackling climate change and embracing renewable energy key priorities of her administration. She is not the only governor stepping into the role where the federal government has backed out. Twenty five states are now part of the United States Climate Alliance; a collection of states that have committed to taking action that addresses the climate challenge and implement policies that advance the goals of the Paris Agreements, aiming to reduce greenhouse gas emissions by at least 26-28 percent below 2005 levels by 2025. Mills, along with governors from Illinois, Montana, Nevada, New Mexico and Pennsylvania, all joined this year. They are part of the increasing action seen across the states in clean energy, climate change and carbon reduction. This story takes a look at some of the 2019 developments in the states.

California

New Mexico Gov. Michelle Lujan Grisham became the latest governor to propose a plan for free tuition, with what has been called the “one of the most ambitious attempts to make higher education more accessible.” If approved, the plan would allow in-state students to attend any of the 29 state public colleges or universities, regardless of income. It is designed as a “last-dollar” program. If approved, it would be just the second state to offer full tuition coverage to its residents (New York offers the Excelsior scholarship, which will be fully phased in in 2020), according to New Mexico’s governor.

While higher education remains a viable path to economic advancement, adults without a postsecondary degree are increasingly benefitting from non-degree certificates and certifications, according to a recent report. As automation and technological advances demand more skills from workers in the changing economy, Strada Education Network and Lumina Foundation partnered to determine the value and impact of the growing number of non-degree credentials. They found that certificates and certifications can stand as a beneficial stand-alone credential, leading to higher full-time employment rates and annual incomes, although the findings vary among occupations and there are gender gaps across all occupations.

As the states turn to tackling their budgets, governors are presenting their spending and revenue proposals, and SSTI continues to monitor these. Budget constraints and deficits are problems for governors in Connecticut and Illinois, and Connecticut’s governor is proposing expanding the sales tax base while focusing on loan forgiveness and clean energy. Education is on the agenda in Illinois where the governor is hoping to build prosperity through skills training and college affordability. And in New Hampshire, more money is being channeled to higher education initiatives, part of which could be funded by legalizing sports betting if the governor there gets his way.

Connecticut Gov. Ned Lamont gave his first budget address, outlining his plan to address a looming budget deficit without raising the income tax as he promised on the campaign trail, and growing the state’s economy:

“My sales tax reform would broaden the base so that digital goods are treated equally and more significantly that we are capturing a growing segment of the economy. 

Reviewing another slate of governors’ state of the state and inaugural addresses reveals some recurring themes. With a focus on maintaining gains made since the Great Recession and increasing budgets, many governors are holding off on major new initiatives, but are proposing means to increase broadband access, diversify their economies, build renewable energy efforts, and increase their rainy day funds in case of an economic downturn. SSTI presents part 2 of our Tech Talkin’ Govs series, with coverage of governors in Colorado, Connecticut, Oregon, Virginia, West Virginia and Wyoming.

Follow along in the coming weeks as we continue to cover all of the governors’ addresses for 2019, bringing you excerpts of their words, promises and programs that touch on the innovation economy.

Colorado Gov. Jared Polis reiterated his goal of reaching 100 percent renewable energy in the state by 2040 and desire to expand broadband:

The ability of states to deliver the services promised to its residents relies on their fiscal soundness. With most states beginning their fiscal year in July, SSTI has reviewed the current fiscal standing for each state and here presents a snapshot of our findings.

Most states ended their fiscal year with a surplus and continue to recover from the Great Recession, with a growing economy and job gains. However, they face continuing demands on their budgets, with expanded Medicaid payments and the growing opioid crisis confronting nearly every state. Such decisions affect the state’s ability to fund innovation efforts, from the amount of support available for higher education and STEM programs, to funding for entrepreneurship, and forging public private partnerships to strengthen innovation programming that the private sector cannot fully support.

Our analysis found that some states that rely on the energy sector to fund their spending priorities continue to struggle, while others are already factoring in anticipated revenues as a result of new Supreme Court rulings involving gaming and online sales tax collections.

Declining enrollments, higher costs and limited state funding continue to challenge higher education institutions, and possible mergers continue to surface as an option to meeting those challenges. In Pennsylvania, a new study sponsored by the Pennsylvania Legislative Budget and Finance Committee identifies options to help ensure the sustainability of the State System of Higher Education, and mergers factor into those considerations. However, in Connecticut a plan to merge the state’s 12 community colleges into one was rejected last month by its regional accrediting authority, the New England Association of Schools and Colleges (NEASC).

SSTI’s Tech Talkin’ Govs feature continues as governors across the country are wrapping up their state of the state addresses. We review each speech for comments relevant to the innovation economy, and bring you their words directly from their addresses.

In this latest installment of Tech Talkin’ Govs, Arkansas is celebrating its low unemployment while Maine says it will focus on a commercialization bond and grow the workforce in part through a student debt relief program. Connecticut wants new goals for clean energy and Wyoming’s focus on economic diversification continues with the governor there calling for full funding for the ENDOW initiative.

Connecticut and Wisconsin both ended their protracted budget negotiations with the governors signing budgets in late September and late October. Faced with budget constraints and uncertainty about the spending plan, Connecticut’s funding for economic and community development is decreasing along with funding for the state’s MEP center and Manufacturing Supply Chain program, with no general funds provided for them in the second year of the biennium. Wisconsin appears to be maintaining its status quo on TBED-related initiatives and has increased funding to universities that increase enrollments for “high-demand” degree programs, making $5 million available on a competitive basis.

After training nearly 80 PhD scientists and engineers in the craft of policy making, the California Council on Science and Technology (CCST) has awarded planning grants to nine other states to evaluate the potential to create a policy fellowship for scientists and engineers in their state capital.  The new one-year grant, which is administered by CCST and funded by the Gordon and Betty Moore Foundation and the Simons Foundation, will support teams in Alaska, Colorado, Connecticut, Idaho, Massachusetts, Michigan, New Jersey, North Carolina, and Washington as they work on feasibility studies and other strategic steps toward creating science fellowships in their state policy arenas. It is up to each state to design the fellowship that would work best in their state, whether that is a position in the legislature or another body.