SSTI Digest

In this final coverage of gubernatorial addresses as they discuss the innovation economy, the following highlights have been selected from State of the States or budget addresses given between Feb. 18 and March 14, 2025, by the governors from Florida, Illinois, North Carolina, and Ohio.  Information on previous 2025 State of the States and/or budget addresses can be found here, here, here, and here.

Many metropolitan areas grapple with demographic shifts, labor shortages, and changing economic conditions, so understanding the factors that encourage former residents to return may help policymakers design more effective strategies for talent retention and regional revitalization. The Cleveland Fed's recent District Data Brief titled "Boomerang Migration: Which Regions Have the Most, and Can It Make a Difference?" examines the movement of individuals who return to their home regions after relocating elsewhere. 

The Small Business Innovation Research (SBIR) program is one of the federal government's most substantial investments for moving innovation from America’s small businesses into the private market or federal procurement in areas like defense, space, energy or transportation.

States have launched a variety of funding programs, technical assistance efforts, and outreach initiatives to help ensure more of their own innovation-driven small firms can capture and succeed with SBIR. These programs act as a catalyst for innovation, accelerating the commercialization of new technologies and ultimately fueling local economic growth. 

A two-page proposal for a $40,000 Phase IA award? Phase II performance ratios required for companies receiving 10 and 25 Phase I awards over their lifetime? Halving the budget for STTR and shrinking university partner share? Creating a 0.25% carve-out of DOD SBIR funds for phase III awards up to $30M each? Limiting all federal technical assistance and outreach to 25 states with the fewest SBIR/STTR awards? Stronger, broader, tougher foreign risk requirements for the companies and agency due diligence? 

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Webinar: Starting down the path for SBIR reauthorization

SSTI will hold a webinar to walk through the INNOVATE ACT as introduced on Monday, March 24 at 3:00pm (eastern). Interested technology-based economic development organizations may register here to attend or receive SSTI’s summary slide deck of the bill after the event.

By automating routine tasks, improving data analysis, and enhancing marketing efforts, AI can revolutionize how small firms conduct business—and that should impact the type of assistance technology-based economic developers offer their innovation-driven entrepreneurs. Understanding how small business owners perceive and utilize AI is crucial for developing strategies that support their growth and competitiveness. 

One possible tool for aiding a reassessment of entrepreneurial support services might be a recent report by the Initiative for a Competitive Inner City (ICIC), AI in Business: How Small Business Owners Are Learning, Using, and Navigating Challenges with AI Tools. It delves into how small business owners are learning, using, and navigating the challenges associated with AI tools. 

Over the past two years, AI tools have become more accessible, allowing small businesses to streamline operations and boost productivity. However, adopting AI is not without risks, particularly seen in concerns about information privacy. 

Frank Salomone has been hired as the associate administrator in SBA’s Office of Investment and Innovation. Salomone’s background includes more than 12 years as director of Segal Marco Avisors, an investment consultancy, and just over six years with Verizon Investment Management Corporation, according to his LinkedIn profile. He is a graduate of Iona University with a Bachelor of Business Administration and Master of Business Administration degree.

Wednesday, March 19, 3:00 pm EDT | Zoom
No charge; registration required.

Fostering a thriving tech-driven ecosystem is essential for sustainable regional growth. Our panelists will explore key strategies to accelerate technology commercialization, support startups, attract investment, and build collaborative networks. From leveraging public-private partnerships to enhancing workforce development, we’ll discuss actionable insights that can help regions compete in an increasingly technology-driven world.

• Griffin St Louis, Sr. Program Manager—Maryland Innovation Initiative, TEDCO

Overall U.S. gross domestic product (GDP) has steadily increased over the past decade. However, the growth in the sectors which drive it has been uneven. Data from 2014 through 2023 reveals that sectoral contributions to private industry GDP have shifted from manufacturing (down 1.57 percentage points since 2014) and mining, quarrying, and oil and gas extraction (down 1.05), to professional and business services (up 0.85) and construction (up 0.72). Differences in the sectoral makeup of private industry GDP at the state level show that most states share similar primary sectors but vastly different second-largest sectors. Significant changes in federal policy may affect GDP composition going forward. 

All data used in this article comes from the U.S. Bureau of Economic Analysis’ (BEA) GDP and Personal Income tables. Data used for GDP is in millions of current, not adjusted for inflation, USD, and is for private industries. All sectors and industries referenced are based on the 2017 North American Industry Classification System (NAICS) used by the BEA.

 

NOTE: The nation's community of technology-based economic development organizations has entered the annual report season, and we've already seen several releases from SSTI members. All document TBED's impact on advancing research, moving it to market, and helping businesses improve their profitability and competitiveness.

To help the TBED community prepare their own annual reports, SSTI is speaking with a few of our members to learn more about their evolving approaches to preparing their annual reports. This week, we share insights from our third conversation based on an interview with Lizzette Arias, communications manager, and Arnold Liyai, program manager, from US Ignite. The first two parts of this series are available here and here.

On Feb. 10, Tennessee Gov. Bill Lee presented his 2025 State of the State address along with his FY 2025-2026 budget proposal and legislative agenda. Building on the theme of both his speech and agenda, “Tennessee innovates,” Lee seeks to position the Volunteer State as the epicenter of energy innovation, especially nuclear power.

Research and development (R&D) tax credits are a common cornerstone of federal and state innovation policies and are offered to companies in hopes of spurring economic growth. But do R&D tax credits deliver the economic boost policymakers expect? Previous studies addressing this question often focused exclusively on either firm-level data or aggregate economic data. Firm-level studies typically found that R&D tax incentives significantly boost companies' investment in research and development. In contrast, macro-level analyses suggested a more modest impact on overall economic growth.

As this week’s recent research article mentions, R&D tax credits work, so it isn’t surprising several states have either proposed, amended, or enacted research and development (R&D) tax credits for both the current fiscal (2025) and new (2026) fiscal year in efforts to encourage innovation and economic growth. Some specifically target life sciences or biotechnology sectors while others focus on attracting new or existing companies and startups or to further develop life sciences and/or biotech sectors and hubs.

The following is a brief wrap-up of some states that have recently introduced or implemented notable R&D credits in their innovation space.