Economic & Tourism Development

State Economic Development News - February 2002

Posted February 27, 2002

Economic development news is playing out in the context of a continuing downturn in state fiscal conditions. Nearly every state reported a budget gap for NCSL's state fiscal outlook survey in January 2002.

Forty-five states and the District of Columbia report that revenues have failed to meet budgeted levels for FY 2002, and 28 states and the District of Columbia report that spending is above budgeted levels. At least 30 states have implemented budget cuts or holdbacks to address fiscal problems in FY 2002. More information on the NCSL state fiscal outlook survey is available.

Nearly a dozen states are considering proposals to expand or authorize gambling in order to raise new revenues. More information is available.

The current fiscal climate is likely to affect economic development proposals in 2002. The following selected economic development items have been gathered from media reports. Please contact Monica Kearns at (303) 364-7700 ext. 236 or monica.kearns@ncsl.org if you have comments or additional information on your state.

Alabama

Alabama Senate Bill 413 would tap $85 million over 10 years from the Alabama Capital Improvement Trust Fund to pay for expanding facilities at state research universities. The University of Alabama at Birmingham already has received money from this fund-after conducting a cost-benefit analysis and securing local government funds-for construction of a biomedical center. Information about the bill is available.

Florida

The Florida governor is proposing a $100 million commitment to create several university-based technology research centers. A press release on the proposal is available.

Hawaii

Hawaii House Bill 1933 would establish an income tax credit for college graduates as an incentive to retain them in the state after graduation. The bill text can be obtained.

Iowa

The Iowa Legislature passed legislation in January 2002 to support the growth of venture capital in the state. House File 2078, the Iowa Capital Formation Act, establishes a venture capital investment fund and triggers an income tax credit for venture capital investors if their investments do not meet a certain profit rate, among other provisions. Information about the act is available.

Also, a measure passed the Legislature to offer tax credits up to $50,000 to individuals who invest seed capital in Iowa businesses or in community-based seed capital funds. Under House File 2271, total tax credits will be funded up to $10 million a year. Information about the bill is available. Both measures are in line to be sent to the governor.

Kentucky

Kentucky House Bill 525 contains a number of provisions to encourage science and technology development, including tax incentives for venture capital investment and construction of research facilities. The bill text is available.

Louisiana

A special session of the Louisiana Legislature is scheduled to begin March 25, and The Times-Picayune of Louisiana reports that the session will focus on economic development issues.

Minnesota

The Minnesota governor has proposed merging the Department of Trade and Economic Development and the Department of Economic Security into a single department called the Workforce and Economic Development Department. A press release about the proposal is available.

Missouri

The Missouri Department of Economic Development will reduce its tax credit programs by $7.7 million for fiscal year 2002. Credits for infrastructure improvements, research, new jobs training, and brownfield demolition and remediation are among those affected. Information is available in a January 11, 2002 department press release.

Nebraska

A Nebraska bill that would change funding provisions for tax incentives passed the Revenue Committee, was designated a priority bill, and is awaiting first round floor debate. LB 946 would require the Legislative Fiscal Office and the Revenue Department to jointly produce an estimate of tax incentives to be granted in each biennial budget. The Legislature would appropriate the estimated amounts to four incentive funds, and tax credits and refunds would be awarded from the funds on a first come, first served basis. Credits would be deferred if insufficient funds are available, and the next appropriation to the incentive funds would include the deferred amount. Information about the bill is available.

New Mexico

The New Mexico Legislature passed House Bill 7, which allocates $15 million in general funds to help businesses pay for in-plant training. Information about the bill is available.

New York

The New York governor has proposed an Empire Opportunity Fund for economic development programs that would initially be $750 million, $50 million of which would come from the 2002-03 budget. The fund would be expected to grow to more than $2 billion in three years as it receives state revenues from recently-authorized Indian casinos. The governor also has proposed $250 million for technology development efforts such as upgrading university research facilities. Information about the proposed programs is available.

North Carolina

The North Carolina Technological Development Authority (TDA) recently laid off five of its 13 employees. A December 2001 report by the Office of the State Auditor questioned $1.5 million in TDA spending on entertainment, management salaries and other expenses. The News & Observer of North Carolina reports that the organization has since instituted new financial controls. Information about the organization is available.

Tennessee

A Tennessee contingency budget plan drafted by legislators would eliminate the state tourism and economic development departments. The contingency plan, introduced as House Bill 3072 and Senate Bill 3042, also would hold the amount of funds the state distributes to local governments at the FY 2001-02 level. Information about the bills is available.

The governor has proposed a $4.3 million budget increase, from $32 million to $36.3 million, for the Department of Economic and Community Development in the 2002-03 fiscal year. The budget also calls for $5 million in the department's budget to fund a technology development initiative worked out by the Tennessee Technology Development Corp., a nonprofit public-private partnership. Information about the governor's budget is available.

Virginia

In Virginia, local governments can receive state money to build access roads to industrial parks or public airports, but the funds must be repaid if the facilities remain unoccupied by a certain deadline. Senate Bills 26 and 43 would return money to local governments that have had to repay the state. Information on the bills is available.

Washington

Washington Substitute House Bill 2413 would require businesses that receive state incentives to file an annual report disclosing the type and amount of incentive received, the projected and actual jobs created with the incentive, and wages paid for these jobs. The Department of Revenue would compile this information each year in a report for the legislature. Information about the bill is available.

West Virginia

A West Virginia bill would institute new reporting requirements for economic development spending. Senate Bill 181 would require the state department of tax and revenue to provide annual reports to the legislature with detailed budget information on direct financial assistance as well as tax incentives given to businesses. Information on SB181 is available.

The West Virginia Legislature also is considering Senate Bill 249, which would restructure workforce development programs through the Workforce Investment Council. Information on the bill is available.

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