Keeping Up with the Joneses: Pa. Must Prioritize Innovation to Compete with Neighboring States
By Ryan E. Glenn, Director of Statewide Initiatives
Ben Franklin Technology Partners
When Gov. Tom Wolf proposed his 2021-22 General Fund budget he made sure to provide continued investments in innovation through $14.5 million in funding to the Ben Franklin Technology Development Authority (BFTDA), which funds the Ben Franklin Technology Partners (BFTP). The governor’s proposal for the upcoming fiscal year would keep Ben Franklin’s base appropriation level with the previous fiscal year and comes after the state provided an additional $1 million to each of the four statewide partners, matched by each of them, to support promising clients that were experiencing hardships due to the impact of COVID-19.
During these uncertain times, my colleagues and I are grateful for Gov. Wolf’s support and look forward to working with his administration and the General Assembly to ensure we have the resources we need to keep building an ecosystem that fosters high-tech development and drives entrepreneurial success.
It is worth noting that Gov. Wolf’s proposed budget not only recognizes the important role that Ben Franklin clients have played in Pennsylvania’s battle against COVID-19, it also sends an important message about the role technology and innovation must play in jumpstarting the commonwealth’s economy.
We concur with the governor. Now more than ever that investments in innovation are critical --- not only to help our state continue its response to the COVID-19 pandemic, but also to fuel the recovery that will help to get our economy back on track.
Other states are all too aware that innovation and technology represent a path forward in economic recovery efforts. When compared to other states, Pennsylvania’s appropriation for the Fiscal Years 2019 to 2021 shows just how competitive the field is for tech- and innovation-based economic development. Take a look at these state-by-state investments, according to the State Science & Technology Institute (SSTI), a national organization that conducts research on common performance standards, identifies best practices, analyzes trends in and policies affecting the innovation economy, and fosters greater connection and cooperation among and between all public, private, and nonprofit organizations encouraging prosperity.
For example, in neighboring New Jersey they recently passed economy recovery legislation known as the New Jersey Economic Recovery Act of 2020. Highlights of the bill include:
· The creation of the Innovation Evergreen Fund, which is expected to grow to $500M and allows entrepreneurs to raise money more efficiently, incentivizes the growth of venture capital in New Jersey and incentivizes large corporations to invest in programs that support the growth of our innovation economy (i.e., startups, incubators, workspaces, programming and more).
· Increasing the Angel Tax Credit from 10% to 20%, plus an additional 5% for investing in women-owned, diversity, or opportunity-zone-based businesses. There are also incentives for investors in venture funds.
· Increasing the Net Operating Loss program from $60M to $75M and increasing the cap from $15M to $20M for a company. This program has been a very effective way for NJ tech-companies to sell off losses.
And New Jersey is not our only neighbor utilizing innovation to jumpstart its economy.
Ohio’s governor and other state leaders recently unveiled the creation of the Columbus Innovation District, made possible 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 new district, the state’s third in a year, will bring together Northeast Ohio’s leading healthcare providers and education institutions with the goal of creating a pathogen center with global reach.
The announcement comes shortly after a separate announcement of a $100 million investment in the creation of a new Cleveland Innovation District, with the state of Ohio, through the Ohio Development Services Agency (DSA), JobsOhio and the Cleveland Clinic committing a combined $565 million to the new district. DSA is committing to $155 million, $100 million will be in the form of a loan, the terms of which are still being finalized, and an estimated $55 million in Job Creation Tax Credits (JCTC) over a 15-year period. Additionally, JobsOhio will invest $110 million and an additional $300 million will be invested by Cleveland Clinic.
States are making these kinds of investments for one very simply reason – they work.
Here in Pennsylvania, Ben Franklin has invested in more than 4,500 technology-based companies, boosted the state’s economy by more than $25 billion, and helped to generate 148,000 jobs through investments in client firms and spinoff companies since its inception. These jobs are in industries that pay an average of $79,364 annually, which is 52 percent more than the average non-farm wage in Pennsylvania. Not only are these jobs that pay, but these also are jobs that will help Pennsylvania attract and keep talent here and jumpstart Pennsylvania’s economy.
Every dollar invested by the state into Ben Franklin generates $3.90 in additional state taxes, according to independent research. Ben Franklin’s return on investment is precisely why supporting its work represents Pennsylvania’s best chance to recover from the economic damage inflicted by the COVID-19 pandemic. It also provides a proven opportunity to elevate our economy to greater future success.
Investing in innovation made sense in the best of times. As we can see in our own communities and abroad, it is even more critical now.