Tax incentives, improved access to venture capital and a new “brand” for the state are among the recommendations presented Thursday to strengthen Arizona's knowledge-based economy.
The report produced by Gov. Janet Napolitano's Advisory Council on Technology and Innovation after nearly a year of deliberations focuses on three areas identified as needing improvement — technology business infrastructure, commercialization of new technologies and capital formation for start-up technology companies.
The 30-member committee, which is composed of state lawmakers and representatives of academia and the private sector, was appointed by Napolitano in January to make recommendations to the Legislature and state policy-makers.
The council attached no price tag to the recommendations, but said they should be viewed as investments rather than expenditures because they will strengthen the state's economic competitiveness.
“We have already made investments in (the Translational Genomics Research Institute), and the universities are making investments in research,” council member Quinn Williams said. “If we don't implement these recommendations, we won't be leveraging the investments we have already made.”
Among the proposals are to establish a state office in Washington, D.C., to help secure more federal research and development grants, pursue establishment of a federal research lab in Arizona and approve a state constitutional amendment to allow Arizona universities to take equity positions in companies spun off from university research.
The amendment will require voter approval in November's election.
Also the group said the state should create a $100 million “Fund of Funds” to provide venture capital for start-up technology companies. The council said the money could be raised from private sources, pension funds, foundation endowments and loans secured by tax credits. Returns would come from the ventures that are assisted.
On the tax front, the committee said the the state's research and development tax credit, which expires this month, should be renewed and expanded to encourage more research here by private companies.
“We are told that we aren't competitive in attracting research dollars,” Williams said. “Companies like Motorola, Intel, Raytheon and Boeing all said when they make (research and development) decisions, several other states offer greater returns.”
Another key recommendation is the establishment of a strategic investment board, which would oversee the various venture capital programs.
The council also said the state's technology community should develop a “brand” name or slogan. Chairman Ed Zito cited North Carolina, home of the Research Triangle Park, which bills itself as “A State of Minds.”
Finally, the council recommended that the Arizona Department of Commerce, which has been a target of budget cuts, should be strengthened to promote the recommendations to state policy-makers and legislators. Zito said a sustained commitment will be needed by Napolitano, lawmakers and other state officials to implement the recommendations during the next few years.
“We are just at the starting line,” he said.
Zito said he hopes at least some of the capital formation recommendations can be implemented during the next legislative session.
After studying the recommendations, Napolitano is expected to announce her 2004 technology agenda at a Feb. 10 forum in Phoenix. The governor also may touch on some of the recommendations in her State of the State speech to the Legislature in January, said Jeanine L'Ecuyer, spokeswoman for the governor's office.