SSTI Digest

Perhaps in no other sector are efforts to grow an industry so dependent on a strong public-private partnership as they are for biotech and the life sciences. Most of the research funding for the field flows from the government to universities and research institutions. Industry then steps up for clinical studies and commercialization.

With only two months left in most fiscal years, states must still close a $21.5 billion budget gap in order to comply with their balanced budget requirements, according to a report issued today by the National Conference of State Legislatures.

Entering their third straight year of budget shortfalls, state lawmakers have had to close a cumulative $200 billion budget gap. NCSL President and Oklahoma Senator Angela Monson says state policymakers are dealing with complicating factors on both sides of the budget.

"Already plagued by anemic revenue performance, lawmakers have been besieged by spending overruns - from Medicaid to homeland security to emergency snow removal," she said. "The problems have been relentless as most states have run out of the simple, painless options."

The Senate and Congressional Manufacturing Task Forces garnered support from a majority of senators and representatives for continued funding of the Manufacturing Extension Partnership (MEP). Senators Olympia Snowe (R-ME) and Joe Lieberman (D-CT), co-chairs of the Senate Task Force, drew support from 58 Senators with both parties joining forces to support MEP. Representatives Jack Quinn (R-NY) and Marty Meehan (D-MA), co-chairs of the Congressional Task Force, spearheaded the House effort and won support from 203 colleagues. The California House delegation and Congressional Hispanic Caucus sent letters of their own bringing the total House support to 246 Representatives. The letters support $110 million for MEP in the FY 2004 appropriations bills

As in FY 2003, the Administration's FY 2004 budget request recommended phasing out federal funding for MEP to less than $13 million. In FY 2003, Congress provided $106.6 million for the program.

The Economic Development Administration (EDA) recently announced the recipients of its 2003 Excellence in Economic Development Awards. A total of eight award-winners were named across seven broad award categories. Those pocketing awards in Innovation and Technology-led Economic Development, respectively, are described below.

Innovation

Washington Governor Gary Locke signed legislation last week that will give a tax break for research and development (R&D) firms. HB 1462 – passing unanimously, 96-0, in the State House and by a majority, 41-4, in the State Senate – prohibits Washington's local governments from taxing the intellectual property of these companies.

The new law provides that "a city may not impose a gross receipts tax on intellectual property creating activities." Such activities are said to include R&D that leads to the creation of patents, trademarks or other intellectual property. However, municipalities may continue to tax research firms that occupy a certain amount of square footage or have a certain number of workers.

To help make his state a leader in research, development and innovation, New Jersey Governor James McGreevey recently signed an executive order establishing the Commission on Jobs, Growth and Economic Development. Highlighting the state's strengths but calling for it to move forward, even with a $5 billion budget shortfall looming, the governor said the commission is needed to put New Jersey in position to be more competitive.

The commission is being charged with five primary functions, including:

A recent study by Iowa State University researcher David Swenson suggests the ISU Research Park's substantial and diverse economic activity bolsters Iowa's economy. Focusing on current tenants, Swenson's research shows that the park links directly to almost $88 million in total industrial output. Businesses that provide goods and services to park customers and employees are said to generate an additional $46.3 million in economic activity.

Park administrators commissioned the Iowa State Department of Economics to complete the analysis to measure current economic value created by the park's companies and centers. The park has tracked growth by employment and new business starts for more than 10 years; however, it has never studied its overall economic impact.

Florida Incubators Form Alliance to Expand Services

The Seminole Technology Business Incubation Center (STBIC) and the University of Central Florida Technology Incubator have partnered, and the benefits are expected to be widespread, the Orlando Sentinel recently reported. STBIC – a joint venture of Seminole County, Seminole County Port Authority and Seminole Community College – is supported by grants from NASA and the Technological Research and Development Authority, which sponsors Florida programs that enhance education and economic development. Eight companies already are housed by SBTIC, but up to 15 more are expected to join in the next year.

Comparing the recent release to the same report issued two years ago surfaces an unavoidable danger of relying on trends identified 13 years ago in the 1990 decennial census. The 2002 educational attainment figures released by the U.S. Census Bureau in March reports 26.7 percent of the U.S. population 25 years or older holds at least a Bachelor's degree, about one percentage point higher than the previous year. The range across the states shows the District of Columbia at 44.4 percent with the highest and West Virginia with the lowest at 15.9 percent.

SSTI extends its thanks to those of you who have participated in the 2003 SSTI Weekly Digest survey. As mentioned in a separate e-mail earlier this week, the survey results help us determine the editorial direction and content of future issues of the Digest and Funding Supplement. We're also open to suggestions for our website, publication catalog, investment portfolios and hairstyles, so the survey offers a great chance to express yourself.

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The Economic Development Administration (EDA) has announced it has $228.12 million available for grants to support state, regional and community efforts to create wealth and minimize poverty by promoting a favorable business environment to attract private capital investment and high skill, high wage jobs through world-class capacity building, infrastructure, business assistance, research grants and strategic initiatives.

U.S. Senator Olympia Snow (R-Maine) recently introduced a bill to boost the flow of venture capital to small businesses by allowing tax-exempt entities, such as pension funds and university endowment funds, to invest in Small Business Investment Companies (SBIC) without incurring unrelated business taxable income.

S. 855, or the Small Business Investment Company Capital Access Act of 2003, is an approach to inject needed investment money into the economy while providing a stable, diversified and secure investment vehicle for tax-exempt pension and endowment funds. Industry experts believe the bill could boost capital available for SBICs by $200 million in the first year alone, according to the National Association of Small Business Investment Companies.