SSTI Digest

Small businesses often are surrounded by a myriad resources and potential partners that could help leverage their products and services to innovate and grow, but they are not always aware of how to access them. In order to remedy this lack of strong regional networks, the Obama administration has attempted to connect existing businesses, institutions of higher education, economic development organizations, investors, small businesses, and startups to create regional clusters that stimulate economic growth through the Small Business Administration (SBA) and the Economic Development Administration (EDA) regional cluster initiatives. The EDA and SBA have led a total of 50 pilot programs around the nation thus far. A commissioned study of the first two years of the SBA's 10 pilot cluster initiatives in which the agency invested $1 million toward regional industries and advanced defense technologies found a significant correlation between these initiatives and economic growth.

Green jobs have been at the center of a number of controversies in economic development circles over the past decade. Key among these debates is whether or not sufficient job opportunities exist to justify large public investments in green job-training programs. A recent report from the Government Accountability Office (GAO) reveals that, at least at the federal level, a great deal of uncertainty remains about the green job labor market. The report lays out a number of challenges for green jobs initiatives at the Department of Labor, where job placement is only at 55 percent of its target levels. In doing so, the GAO report shows that there is room for improvement in green jobs programs at the federal, state and regional level.

A recent report by Cleveland State University's Levin College of Urban Affairs details the economic impact of companies supported by JumpStart Inc. and the North Coast Angel Fund in the 2012 calendar year. The 127 companies included in the study created 2,140 jobs in Ohio (1,652 in Northeast Ohio), generated $269.7 million in economic benefits for the state, and produced $35.5 million in federal, state, and local taxes. Those studied included 63 "portfolio companies" that received technical and funding assistance and 64 "client companies" that received only technical assistance. Read the report...

The city of Los Angeles is working with a consortium of public and private partners to redevelop unused docklands into space that will support new industry cluster development. The project highlights a trend of high-profile projects across the country, with cities like Brooklyn and Philadelphia repurposing dockside warehouse space to seed tech startups and advanced manufacturing.

A 100-year old dock in Los Angeles is being developed as an urban marine research and business park. The development is a public-private collaboration between the Port of Los Angeles, the Annenberg Foundation, and a host of regional universities. The development will be used to focus on an untapped niche in ocean science, turning the LA waterfront into a global center for the study of the effects of climate change on coastal cities, according to the publication Nature.

The co-locating of researchers, donated equipment, and capital are recent examples of key elements provided by private-sector partners to help accelerate technology commercialization. In the past month, leaders from universities and nonprofit organizations across the country have announced new efforts to expand research capacity and bring more products to market by launching innovative centers in collaboration with corporate partners.

University-industry alliances often are credited with helping build regional innovation ecosystems with successes cited in new company formation, high-tech job creation and a better trained workforce, among others. Often times, companies look to leverage their R&D activities with complementary initiatives taking place at local universities. So is the case in Burlington, MA, where a new innovation center aimed at accelerating the commercialization of basic research is the product of a partnership between Northeastern University and Rogers Corporation.

Department of Energy (DOE) Secretary Ernest Moniz is leading a restructuring of the department's management, reorganizing programs and undersecretary positions to better align with the operational goals of supporting President Obama's Climate Action Plan, an "all of the above" energy strategy, and strengthening nuclear security. The move will create an Under Secretary for Management and Performance, merge the energy and science programs, and consolidate the department's defense waste cleanup efforts.

In a memo addressed to employees and released to The Hill, Moniz cited the need "to improve the effectiveness and efficiency of departmental operations." The reorganization reflects changes suggested by Turning the Page: Reimagining the National Labs in the 21^st Century Innovation Economy, a joint report released by ITIF, the Center for American Progress, and the Heritage Foundation.

During this year’s legislative sessions, several states looked toward creating, providing support for or redesigning programs that help incentivize businesses to hire and mentor student interns. In an effort to spur rural internships, Minnesota lawmakers approved a new tax credit program to support internships for students in greater Minnesota. In North Dakota, lawmakers committed $1.5 million to their Operation Intern program, while Nebraska lawmakers updated their Intern Nebraska grant program to provide students with a high-quality internship experience. Rhode Island Gov. Lincoln Chafee signed a bill that will allow high school students (16 years and older) to engage in pre-apprenticeship, apprenticeship and internship experiences during school hours in approved manufacturing career and technical 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.”

States across the U.S. are directing their attention to science, technology, education and technology (STEM) education, and already have passed a plethora of new initiatives in the current legislative session.  These programs are directed at various levels of education including primary education and higher education, with one program specifically designated for the state’s community colleges. A number of states have created STEM advisory councils under the governors’ offices, following the lead of Iowa and Massachusetts. Such measures suggest that STEM is no fleeting policy issue and that states are beginning to recognize the economic value of making long-term investments in students.

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

A continued trend toward improved fiscal conditions gave rise to targeted and riskier investments in research for several states this legislative session. In particular, lawmakers dedicated funds for life sciences research and for initiatives aimed at commercialization through partnerships with higher education and the private sector. Other states dedicated additional funds to expand promising research and technology-focused initiatives already underway.

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.