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SSTI Digest
Geography: Hawaii
Hawai`i Governor Outlines Broad-based Innovation Strategy
With the opportunity presented by a $732 million budget surplus, Gov. Linda Lingle wants Hawai`i to shift its public investment philosophy away from land development and toward encouraging, nurturing and rewarding innovation, creativity, entrepreneurship and risk-taking. Most of Gov. Lingle's State of the State Address on Jan. 22 and her 56-page 2007 Initiatives booklet is dedicated to explaining how she wants the public sector to lead realignment of the state’s economy toward “one fueled by innovation and new ideas generated by our universities and a highly-trained workforce.”
Facing a legislature controlled by Democrats, the Republican governor’s plan embraces several proposals first advanced by legislative leadership last session, including a $100 million Hawai`i Innovation Fund. The privately managed technology-based equity fund would be capitalized from the State Employees Retirement System, under Gov. Lingle’s proposal.
Other proposals include:
Hawaii’s Investment in State TBED Agencies to Increase Dramatically in Proposed Budget
Hawaii Gov. Linda Lingle has submitted her budget proposal to the state legislature for the fiscal biennium 2007-09, including significant increase in the amount allocated for certain state economic development entities. The High Technology Development Corporation (HTDC), a state agency that develops and supports Hawaii’s science and technology resources, would grow from average annual expenditures of $4.2 million in the 2005-07 biennium cycle to $9.8 million in the next cycle. Projects funded by HTDC include providing matching grants for Hawaii-based companies receiving SBIR funds, administering high-tech incubators across the state and the state’s MEP program, and managing a renewable energy development initiative.
The Hawaii Strategic Development Corporation (HSDC) also would see a marked change going from a $246,500 budget in fiscal year 2005-06 and $4.3 million in FY 2006-07, up to a proposed $9 million in FY07-08 and $6.9 million in FY08-09. The primary goal of the HSDC is to provide investment capital to Hawaii-based businesses, such as seed capital and venture capital.
Hawaii Commission Recommends Greater Accountability for High-Tech Investment Tax Credit Program
A recent report from Hawaii’s Tax Review Commission recommends the state eliminate or drastically overhaul its five-year old tax credit for high-tech investors. According to the report, the current credit provides no clear advantage to the state and appears open to taxpayer abuse. The commission was particularly troubled by the lack of data provided by taxpayers who were approved for the credit and by the lack of transparency concerning the credit within the state’s Department of Taxation.
A review undertaken on behalf of the commission was unable to determine the effectiveness of the credit, due to insufficient data on its cost to the state and its impact on state high-tech industries. This lack of transparency led the commission to suggest the Hawaii credit may be a ‘black hole’ for tax revenues, and propose legislative changes that would restructure the credit as a program of grants administered by a state agency.
People & Organizations
Yuka Nagashima was named executive director of Hawaii's High Technology Development Corporation.
$120M Investment Fund Fails in Hawaii Legislature
Efforts to capitalize Hawaii's $120 million State Private Investment Fund (SPIF) collapsed Friday as a joint conference committee of the state legislature could not reconcile differences between House and Senate versions of the measure. Passage of Senate Bill 1695 was one of Gov. Linda Lingle's top economic development priorities for this legislative session.
The SPIF, created by the Hawaii legislature last year but left unfunded, is intended to encourage venture capital investments in state-based tech businesses using the Oklahoma Capital Investment Fund model of state-backed guarantees on private investments. Established in 1993, the Oklahoma program has been widely replicated in recent years.
Hawaii Lawmakers Pass Two Bills to Encourage VC Investment
To encourage investment in high tech companies, the Hawaii Senate recently passed Senate Bill 1695, authorizing $120 million for the State Private Investment Fund (SPIF) and Senate Bill 1696 to allow fiduciaries to make equity investments.
Under the SPIF program, the state could use transferable tax credits in order to guarantee commercial bank loans to professional venture capital (VC) firms. These firms, in turn, would use the loans to invest in local high-tech companies.
SPIF was created by the Legislature in 2004, although no funds were directed to it at the time. The fund is designed to function as a financing tool to provide a consistent source of capital to meet the demands of Hawaii's high tech industries, according to the Senate Majority Caucus.
TBED Organizations & People Update
Robert Rosner, chief scientist for the Argonne National Laboratory, will be the lab's new director.
Tech Talkin' Govs 2005, Part Four
The first three installments of SSTI's annual look at how TBED will play in the 2005 legislative priorities of the governors can be found in the Digest archives on our website: http://www.ssti.org/Digest/digest.htm
Hawaii
Gov. Linda Lingle, State-of-the-State Address, Jan. 24, 2005
High-Tech Tax Credit Bill Renewed with Minor Revisions
Amid criticism from taxpayers, legislators in Hawaii agreed to renew the widely debated bill that extends high-technology tax credit for another five years, without a provision requiring the disclosure of companies that receive the credits, the Honolulu Advertiser recently reported.
Act 221 was first enacted in 2001 to encourage high-tech business in Hawaii and to diversify the state’s economy away from tourism and the military. Based on a survey of businesses that claimed the credits, the state Department of Taxation says the tax credits helped generate at least 600 new jobs in 2002, with an average salary of $46,000.
Tech Talkin' Govs III
This is the third in a series of articles as SSTI continues its look at the prominence of tech-based economic development in the Inaugural, State of the State and Budget Addresses given by the nation's governors. Highlights from this week's speeches are provided below.
Hawaii
Gov. Linda Lingle, State of the State Address, Jan. 26, 2004
"Conservation, waste-to-energy programs and alternative energy initiatives can reduce our dependence on fossil fuels and move our state to the forefront of progressive energy policies. To demonstrate the state's commitment and leadership role, I ask you today to pass our bill that mandates 20 percent of all electricity sold in the year 2020 come from renewable sources.
Hawaii's HTDC Announces Statewide Incubation Services Program
Secures State as Pilot Site for FastTrac™
Coming soon to an island near you — business development services. That could be the sales pitch for a new development within the High Technology Development Corporation (HTDC), Hawaii's lead tech-based economic development agency.
HTDC launched last week a statewide incubation services program designed to give incubation tenants and non-tenants access to business development services, strategic partnerships, networking and marketing opportunities, shared support services, and business mentoring. Prior to launching its new program, HTDC's incubation services were limited to tenants at its Manoa Innovation Center on Oahu and its Maui Research & Technology Center on Maui. The expanded program brings services to technology start-ups on the Big Island and Kauai.
Hawaii's HTDC Launches New Tech Portal
Earlier this week, the High Technology Development Corporation (HTDC) launched HiTechHawaii.com, the state's newest and most comprehensive high technology web portal. A collaboration with the Hawaii Technology Trade Association, the site provides a single point of access to information about Hawaii's technology industry, including business and technology resources, job listings, events and news articles.
HTDC will be responsible for monitoring and keeping HiTechHawaii.com up-to-date. Among other features, the portal provides helpful information on doing business in Hawaii, tax incentives, funding opportunities, and meetings and conventions resources. The site also has valuable search capabilities, including a direct search and link to HTDC's Technology Business Directory and TechJobs Hawaii.