SSTI Digest

State revenues experienced their steepest plunge in 25 years in the final quarter of the fiscal year ending June 30, 2020, according to a recent analysis by Pew. It also notes that while some of those revenues were expected to be recovered, nearly half of all states were still projecting revenue declines this fiscal year. The federal government’s decision to delay the April 15 tax deadline pushed tax payments into the first quarter of the current fiscal year, further straining many state budgets for fiscal year 2020. Gains made before the pandemic coupled with the federal stimulus payments helped states recover somewhat, but Pew found that at least 19 states were forced to pull back on spending and at least 15 tapped into their rainy day funds to balance the fiscal 2020 budgets.

In an event organized by the Hutchins Center on fiscal and Monetary Policy at Brookings, academics from some of the nation’s leading universities sought to answer questions centered around Opportunity Zones (OZs), including what is the goal of OZs, are they helping, and how would we know? The 2017 Tax Cuts and Jobs Act created more than 8,700 Opportunity Zones (OZs) across the United States. The program was intended to spur economic development in distressed communities and offered favorable capital gains tax treatment to investments in such locations. The program has already stimulated a flurry of academic research even though final regulations for designating OZs were not published until late 2019. these questions.

The U.S. Senate Committee on Commerce, Science and Transportation announced a new structure for its subcommittees in the 117th Congress, bringing the total number from six to seven. The subcommittees are:

The Ewing Marion Kauffman Foundation and Start Us Up coalition announced an update to the America’s New Business Plan platform to advance entrepreneurship. The update places a strong emphasis on the importance of addressing the historical inequities of the American economy, as well as the urgent concerns of the coronavirus pandemic. The lead-in to the specific policy proposals also acknowledges the importance of providing sufficient support to new companies, not just all small businesses.

The four pillars of the plan are access to opportunity, funding, knowledge, and support, and the policy recommendations are relevant to actions at the federal, state and local levels of government. SSTI, which is a member of the Start Us Up coalition, is particularly active in support of the plan’s recommendations to reauthorize a program like the State Small Business Credit Initiative, to support the Build to Scale program at EDA, and to create a visa category for immigrant entrepreneurs.

As governors continue to roll out their State-of-the State addresses in the month of February, we continue to see a heavy focus on recovering from the pandemic. Given most state’s fiscal condition, governors have been generally hesitant to roll out new initiatives during this time, although broadband continues to receive attention, especially with the renewed attention surrounding its importance during the pandemic. Some states, like Maryland and West Virginia, who are emerging from the pandemic on a better footing than they perhaps anticipated, are ready to forge ahead with tax cuts in an effort to attract business and new residents. Other states, like Illinois, are grappling with projected deficits while trying to maintain services. And a new bond proposal in Maine could help connect workers to jobs in high-growth industries while also spurring development in the state’s industries. This week we catch up with those governors who gave their addresses during these first weeks of February and review each of them for news or initiatives relating to their state’s innovation economy.

Discussions surrounding automation’s power and the effect it could have on jobs have only increased over time. The current pandemic adds to the debate of whether automation and robotics, which are unaffected by viruses and have the potential for cost savings, could offer a safer bet for industries than human labor. Such are the debates the authors of a new working paper considered in their research examining jobs that were identified in the past as being at risk of elimination through automation. While building on previous studies from the Organisation for Economic Cooperation and Development (OECD) of the impact of automation on jobs, OECD authors Alexandre Georgieff and Anna Milanez seek to expand that knowledge to a cross-country context and the paper claims to be the first to evaluate employment outcomes using the task-based measure of automation risk developed by the OECD. The researchers found no support for net job destruction at the broad country level.

Metropolitan areas in the U.S. with fewer than 370,000 residents are more likely to be more economically reliant on R&D performed by colleges and universities than larger metros, according to new SSTI analysis. Three data points are used to consider how R&D at institutions of higher education is impacting a region’s economy: NSF’s Higher Education R&D (HERD) data on expenditures at individual institutions; metro area Gross Domestic Product (GDP) data from the Bureau of Economic Analysis; and population estimates from the Census Bureau. The resulting analysis shows that despite larger metro areas producing a greater total amount of HERD, they are typically less reliant on these expenditures directly powering their economies.

This week, the U.S. Economic Development Administration announced that the Build to Scale program has opened for applications. The Build to Scale program provides operating funding for tech-based economic development initiatives in regional economies. This program has long been a top priority for SSTI’s Innovation Advocacy Council, and we are happy that our continued success in raising the program’s appropriation means this year’s funding opportunity will award $38 million in grants.

The FY 2021 program is comprised of two competitions, the Venture Challenge grants with two funding levels: one at $750,000 to build programs and another up to $1.5 million to scale programs; and the Capital Challenge, which has increased its level of funding and offers grants up to $400,000 to increase access to capital in communities where risk capital is in short supply.

The Government Accountability Office (GAO) has updated its Technology Assessment Design Handbook, a program evaluation tool designed to assist in the development of robust technology assessments. First released to the public in December 2019, the handbook now includes additions based on the experiences of GAO teams, a review of relevant literature, and comments submitted by external experts. It also provides a high-level process for developing policy options. While the tool is designed for use by GAO staff, its methods and strategies are useful to any organization conducting a technology assessment.

Ohio unveiled the Columbus Innovation District this week, marking the third such announcement in less than a year, with a $100 million commitment from JobsOhio, the state’s nonprofit economic development corporation. Other partners in the Columbus initiative include Ohio State University, which will contribute $650 million, and Nationwide Children’s Hospital, with a $350 million commitment. The district is intended to bring together globally recognized education and healthcare research institutions to help create in-demand jobs and fuel $3 billion in economic impact for Columbus and Ohio over the next 10 years.

Policymakers will need to consider the larger social and economic conditions associated with efforts to decarbonize the U.S. energy system if the nation is to reach net-zero carbon emissions by 2050. These broader considerations of future energy policy play a core role within the National Academies of Sciences, Engineering, and Medicine’s recently released report Accelerating Decarbonization in the United States: Technology, Policy, and Societal Dimensions, which details the varying dimensions of research and policy activities that are needed throughout the next 30 years to reach net-zero emissions by midcentury.

While natural gas production has continued to expand throughout the Appalachian region, the surrounding communities have yet to experience the economic and social benefits that were initially seen as surefire byproducts of the natural gas industry’s growing footprint within the area, according to a new report. The newly released study by the Ohio River Valley Institute weighs the impact natural gas production has had on the national economy against the continuing decline of jobs, income, and population levels throughout the Appalachian region.