This issue of the newsletter focuses on activities in Augusta, including the new budget proposal, new bills being discussed and the results of the latest R&D evaluation. I have also included some initiatives being discussed in other states - some are quite close to Maine's and some are the polar opposite!


This newsletter is intended to be non-political, so if you want to know my analysis of these events and stories, feel free to check out my blog at www.innovationpolicyworks.com.


As always, I look forward to hearing from you. Let me know what's going on at your company or institution, and what's worrying you....we will share with the innovation community!





Catherine S. Renault, PhD

R&D in Gov. LePage's Budget



Despite all the dire predictions to the contrary, Gov. LePage's recently released budget for the biennium starting July 2012 is reasonably kind to science and technology-related items, especially if you consider that flat is the new up!


The Maine Technology Institute fares the best in this budget, realizing a $421,557 increase for each year. This brings MTI's budget back to the pre-curtailment levels. All other budgets such as the Maine Economic Improvement Fund (flat at $14.7 million annually), the Office of Innovation, the Applied Technology Development Centers (incubators), the Aquaculture Center for Innovation and the Downeast Institute, are flat at current funding levels.


The only significant cut is to the Graduate School of Biomedical Sciences that was zeroed out. It had been funded at $750,000 per year.


The Governor's budget proposal will be discussed before the Joint Standing Committee on Appropriations and Financial Affairs over the next few weeks. First up are public hearings that are held with the Committee and the policy committee of jurisdiction. The public hearing with the Education Committee including the MEIF and Biomedical Sciences appropriation is March 14. The public hearing on the DECD budget that includes MTI, and the incubators, is scheduled for March 23.  After the public hearings, there will be work sessions to hammer out the details. If the budget is approved before the end of March, it needs only to achieve a majority vote. After than, 2/3 is required to pass the budget, which means that some Democrats will need to agree with the Republican majority.


The public hearings are open to the public and anyone can testify. If you plan to go, expect to wait for your turn (it can be hours), and be prepared to provide 25 copies of your written testimony.  The Appropriations Committee meets on the second floor of the State House. For an updated schedule, visit  http://www.maine.gov/legis/ofpr/appropriations_committee/schedule_agendas/index.htm.



Outlook for Bonds Dim


Although several legislators have introduced bills to fund another round ($50 or $100 million) of the Maine Technology Asset Fund (MTAF), and there is a bond bill for $10 million for a marine-related incubator at the Gulf of Maine Research Institute, the LePage's administration is saying it will not support any bonds this year.


At issue is Treasurer Bruce Poliquin's  assertion that the state should not take on any more debt until the unfunded liability for the state employee's pension is taken care of. The unfunded liability of $4.432 billion must be actuarially balanced by 2028. The liability was created in part because of previous legislative action and in part by the decline in the stock market due to the recession.


On the other hand, Moody's gave the state of Maine a Aa2 bond rating last spring and reports that Maine's debt burden of $760 per capita (2.2% of personal income) is lower than the national median ($936). Given that this probably includes essentially bankrupt states like CA and NY, I am not sure that this is encouraging.


We do know that the previous MTAF investments have been quite successful at leveraging new funds from outside the state and kick-starting major new initiatives. 


Annual R&D Evaluation Results


On March 1, PolicyOne Research reported the results of its annual, independent evaluation of Maine's public research and development investments. As has happened every year for ten years, the report was made to the Commissioner of the Department of Economic and Community Development, the Governor and the legislature.


For the second year in a row, job growth was slightly negative in the technology sectors, but the rate of loss was considerable smaller than Maine as a whole or technology sectors in other states. Wages continue to be much higher than the Maine average, and revenues were strong.


Overall, the report stated that the impact of the organizations that responded to the surveys was over $1.6 billion, and showed a 1:10 return for the taxpayer's investments.


On the positive side, the nonprofit research institutions have increased their patenting and technology transfer activity, likely due to the changes in requirements for the Maine Technology Asset Fund.


This year's report showed that Maine's overall R&D capacity has been flat since 2002, but that our academic R&D has been growing substantially and our non-profit R&D is among the highest in the nation. It is the private sector where R&D has underperformed the rest of the country.


Other areas of concern are the extremely low ranking on graduate student enrollments in science and engineering -- we are now 51st, and dropping rankings on SBIR and patents.


The Bangor Daily News reported on the legislative hearing at http://new.bangordailynews.com/2011/03/01/business/legislators-advised-on-growing-'innovation'-economy/


R&D and related bills of interest


Of the almost 750 bills already introduced this year, surprisingly few relate to economic development, although job creation is on everyone's mind. Quite a few are to allow minors and folks over 75 to hunt and fish for free, but that is another matter.


The most substantive bill is LD 22, An Act to Improve the Seed Capital Tax Credit. Identical to the bill that died on the Appropriations Table last year, this bill would encourage out of state angel investors to invest in small Maine businesses. While this bill has received good support in the Taxation Committee, Gov. LePage has indicated that he will not support this measure.


 Several bills are both for more renewable energy and against it! LD 183 allows for net metering for solar users; LD192 encourages the development of a green data center in Maine and LD241 promotes energy independence and renewable energy production. In contrast, LD502 suggests a moratorium on expedited permitting of Grid-scale wind energy development and LD711 would further regulate noise from wind turbines in residential developments.  


As noted above, LD225, sponsored by Senator Rector, would authorize $50 million for MTAF while Rep. Cain's LD409 would authorize $100 million for it. LD263 suggests a bond to fund construction of a marine technology incubator facility at the Gulf of Maine Research Institute (GMRI), while LD470 authorizes a bond issue to complete renovation of a bulkhead at GMRI.


Finally, several bills relate to the Department of Economic and Community Development. LD 323 calls for a private-public partnership to implement a coordinated strategy to attract new businesses to Maine and LD465 suggests new efficiencies in the delivery of economic development services (unspecified in the bill). Another interesting bill, LD700, suggests that the Finance Authority of Maine create a microloan fund called "Believe in ME" for entrepreneurs younger than 30.


More details about these bills can be found on the Maine Legislature website http://www.maine.gov/legis. Simply type the LD number into the box in the upper right hand corner. 



In This Issue
R&D in LePage Budget
Outlook for Bonds Dim
Annual R&D Results
Bills of Interest
Other States' Initiatives

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What's Happening in Other State Legislatures and State Houses?


Maryland Governor Martin O'Malley is supporting a $100 million public-private partnership called InvestMaryland to fuel investment in Maryland's start-up and early stage companies.  This is a premium tax credit program that auctions the tax credits to insurance companies. Some of the funds would be invested directly by the Maryland Venture Fund and some would be placed with 3-4 private venture funds.


Arizona is replacing its Department of Commerce with the Arizona Commerce Authority. They are eliminating the state's energy efficiency and renewable energy deployment offices, the rural economic development initiative, the Arizona Main Street program and many technology programs.


At the same time, Arizona has extended its angel investment tax credit through FY16 and raised the cap from $2 million to $10 million. In addition, the Arizona R&D tax credit has been increased by 10 percent.


Wisconsin is replacing the Wisconsin Department of Commerce with a new Wisconsin Economic Development Corporation. This will focus exclusively on job creation.


Illinois is forming the Illinois Innovation Council including the best minds in business, academia and research and development to identify strategies to foster innovation and economic growth.


New Jersey Gov. Chris Christie is proposing to double the state's research and development tax credit, although he also vetoed the New Jersey Angel Investor Tax Credit Act that had been approved in the fall.


Oregon Governor John Kitzhaber's budget bill boosts funds for innovation by 19 percent - these funds are coming from lottery funds.


Virginia passed a $5 million R&D tax credit fund.


Nebraska is considering sweetening their angel tax credit by raising their rate to 40% and making it refundable, which helps angel investors who don't pay taxes in Nebraska.  The bill also limits the credit to investments in companies with less than 25 employees in aerospace, agricultural processing, nanotechnology and pharmaceuticals. 


About Innovation Policyworks, LLC


Innovation Policyworks, LLC, is an innovation strategy and evaluation firm focused on the development and measurement of effective state and regional technology-based policies and programs. This is different from any other offering because we explicitly link policy design and evaluation: recommended programs are appropriately focused on outcomes with a disciplined measurement process in place that allows policymakers and legislators to see what progress is being made and whether improvements need to be considered. 


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