SSTI Digest

New Texas Gov. Greg Abbott recently announced several planned changes for the state’s economic development efforts. The governor is restructuring a number of offices, including the Workforce Investment Council and Women’s Commission under the Director of Economic Development, to increase focus on job creation. Abbott also proposed the elimination of the state’s Emerging Technology Fund, and using the programs remaining balances to launch a new University Research Initiative. The new program would provide matching funds to help Texas universities recruit world-class researchers. Additional ETF funding would be transferred to the Texas Enterprise Fund, a deal-closing fund administered by the governor’s office. Read the announcement…

On Tuesday, 36 states held gubernatorial elections. Though it was a good night overall for incumbents, 10 new governors will take office next year. Republicans picked up four governorships that are currently under Democratic control, including Arkansas, Illinois, Maryland and Massachusetts, while Democrats managed a win in currently Republican Pennsylvania. New governors will also take office in Arizona, Hawaii, Nebraska, Rhode Island and Texas. Several of these new candidates have made technology-based economic development a part of their platform, including new funding for research, STEM initiatives, workforce development and manufacturing.

Arkansas

On the heels of a recent memo from the President’s Council of Advisors on Science and Technology (PCAST) highlighting the difficulty middle-skill workers are having finding a route into the modern economy, reports from two tech hotspots suggest that local action is needed to ensure that tech success translates into widespread economic prosperity. San Francisco and Austin are leaders in the nation’s innovation economy and fared better than most of their peer cities through the Great Recession. However, rising housing prices and a lack of resources for middle- and low- wage workers have led to rising inequality and less robust economies in both cities.

In a recent comparative study of state S&T policy dynamics in Georgia, Missouri and Texas, authors Jarrett Warshaw and James Hearn examine the nature of state efforts intended to bring together government, universities and industry to support innovation at publically funded universities and spur economic development.

The National Institute for Standards and Technology (NIST) Manufacturing Extension Partnership (MEP) program recently awarded $2.5 million for five pilot projects to improve small U.S. manufacturers' supply chain competitiveness and foster their readiness to adopt advanced technologies. The projects will be led by MEP centers and bring together teams of experts in specific technology areas. MEP centers in California, Georgia, Oregon, Texas and Wisconsin each will receive approximately $500,000 for the pilot efforts, which, in most cases, involve partners in other states. Read the announcement…

Because universities are increasingly seen as hubs for regional economic development, many institutions are reorganizing their business engagement efforts to eliminate the barriers between universities and the innovation community. Recently, the University of New Hampshire, the University of Michigan Medical School and the University of Texas at Arlington all announced plans to streamline and redesign their innovation services, aiming to increase their contribution to regional job and business creation. In each case, these institutions are hoping to create stronger connections with the private sector by creating a single office to engage with entrepreneurs, businesses and investors.

This week, the University of New Hampshire (UNH) announced the launch of UNH Innovation, a new office that will incorporate the former Office of Research Partnerships and Commercialization, laboratory services, equipment and facilities rental, and various other university venture and economic development programs. UNH Innovation intends to combine these functions with a number of new services, including mentoring and internship programs.

A number of states recently have taken action to expand R&D tax credits and other legislation that would support innovation, commercialization and manufacturing. Hawaii, California, Maryland, Texas, and Florida have signed into law tax incentives and R&D tax credits and an R&D tax credit in New Hampshire went into effect.  The Maine legislature also passed a capital tax credit that will begin in 2014.

In late June, the Maine Senate and House passed LD 743, which will extend the Maine Seed Capital Tax Credit. The original tax credit program was created in 1989 with a $30 million cap. This extension will provide an annual cap of $5 million in tax credits to qualifying investors, beginning in 2014. “A tax credit certificate may be issued to an investor other than a private venture fund in an amount not more than 50 percent of the amount of cash actually invested in an eligible Maine business in any calendar year,” according to the bill. The business invested in must be “a manufacturer or a producer of a value-added natural resource product.”

At the close of many recent legislative sessions, states across the country moved to strengthen their high-tech workforce while supporting industry cluster development.

As many state legislative sessions wind down, a clearer picture of the current direction of state innovation policies is emerging. This week’s SSTI Weekly Digest presents a few of the major trends in technology-based economic development initiatives approved by state legislatures during their most recent sessions. While this review is not meant to be comprehensive, it should illuminate the shifts states are making to refine their investments in the high-tech economy by providing smarter, more targeted support.

Over the past few months, the Digest has reported on several major capital access initiatives, transparency efforts and agency reorganizations that have made headlines amid a slow economic recovery and renewed attention to accountability in economic development.

While other stories in this issue will examine some of the trends in legislation that previously have gone unreported in the Digest, several major legislative efforts have appeared in earlier issues, but represent other intriguing developments in state innovation policy.

Rice University's Rice Alliance for Technology and Entrepreneurship has been named the top university business incubator in the world by the University Business Incubator (UBI) Index based in Sweden. The group reviewed 550 university business incubators and studied 150 incubators to determine the top incubators in the world based on their value for the ecosystem, their value for clients, and their attraction rate and past performance. Other U.S. incubators that made the UBI Index Top list include VentureLab, the University of Buffalo Technology Incubator, and Tech 20/20.

The budget agreement reached by Texas lawmakers earlier this week includes $50 million in new funds to provide grants to technology companies for research and commercialization activities under the Emerging Technology Fund (ETF). A bill to address accountability and transparency of the fund was passed in the House, but later removed from the Senate calendar despite controversy surrounding the decision-making authority of the grants. Lawmakers also passed a measure to reinstate an R&D tax incentive that was repealed in 2006, and set aside funding to lure a space transport company to the state.

Measuring impact is critical to the success and sustainability of any economic development initiative, and as the national debate over fiscal austerity and taxpayer spending continues, TBED organizations can expect increased scrutiny and accountability for their investments.

Amid growing skepticism from the public, lawmakers increasingly struggle with finding a balance for funding new efforts that may take awhile to pay off with more pressing state needs. This year, measures to encourage the creation or expansion of high-growth companies through the use of tax incentives have been unveiled in several states. At the same time, lawmakers in some states are pushing for greater disclosure requirements through transparency measures. SSTI has compiled pending and recently approved legislation below.