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NextGen Task Force Report Recommends Measures To Create Biotech and High Tech Jobs
Wednesday, March 10, 2004
Senate Majority Leader Joseph L. Bruno today unveiled an historic economic development and job creation plan that would build on successful Senate initiatives that have made New York globally competitive for high technology and biotechnology businesses and jobs.
The Excell-NY program is based on findings and recommendations made by the Senate�s NextGen Task Force, Chaired by Senator Dean Skelos (R-C, Rockville Centre). The Task Force held public hearings throughout the state to determine what proactive steps the state should take, and what obstacles need to be addressed, to help turn new ideas and technologies into new businesses and jobs.
"Starting with JOBS 2000 (J2K) and continuing with the Gen*NY*sis program and the Governor�s Centers of Excellence initiative, New York State has invested approximately $1 billion in biotechnology and high tech research and job creation programs," Senator Bruno said. "The success of these programs has propelled New York State into the forefront for attracting emerging high tech and biotech industries and today we are unveiling a plan to continue this momentum."
"Excell-NY is a comprehensive plan that will serve as a catalyst for innovation and job growth," Senator Bruno said. "Our plan will promote venture capital investments in emerging companies, provide information and assistance related to technology transfer, private business development and employee training and include targeted tax reductions, Empire Zone reforms and other actions that will strengthen the economy. In addition, we are proposing other tax reduction initiatives to spur job creation, make New York more economically competitive and improve our quality of life.
"Excell-NY is an outgrowth of the report and recommendations made by the Senate�s NextGen Task Force," Senator Bruno said. "I want to commend Senator Skelos and the other members of the panel who did an exhaustive amount of work to plot a course for future high tech and biotech economic growth and job creation in New York State."
"Through the �Gen*NY*sis� and �Centers of Excellence� programs, the State has invested in our high-technology and biotechnology research infrastructure, but this is only half of the equation," said Senator Skelos. "The NextGen Task Force was designed to build upon these capital investments and develop a comprehensive strategy transforming New York�s scientific excellence into new companies and quality jobs. The Task Force�s recommendations and Excell-NY initiative will create the competitive environment necessary to attract, retain and grow these dynamic new industries and establish New York State as the preeminent location to do business in the 21st Century."
"Building on the successful and informative NextGen Task Force hearings, it is clear we must continue to invest in New York State�s high-tech and biotech economies," said Senator Jim Alesi, Chairman of the Senate Committee on Commerce, Economic Development and Small Business. "We must now focus on helping to create venture capital and establish working labs for clinical trials in an effort to commercialize the products of research."
The NextGen Task Force report identifies the importance of a coordinated program of tax incentives, venture capital enhancements and capital/technological infrastructure improvements to attract and retain high technology and biotechnology firms, as well as to help emerging companies successfully pull technology out of the research labs and put them into the marketplace.
The centerpiece of the Senate�s Excell-NY economic development program is the creation of five regional Excell-NY Centers for Innovation. The focus of these not-for-profit centers would be to provide emerging businesses with innovation capital and venture capital and to provide technical and business expertise to further their growth into vibrant, competitive job creating firms.
Supporting activities of the Centers would include:
> An information portal for all federal, state, local and private programs;
> Providing the necessary links to government, academic and business resources for technical assistance in product design and production, employee training, business plans and marketing strategies; and
> Fostering networks among businesses both within and outside of New York State.
Although the NextGen Task Force focused on high tech and biotech industries, programs offered by the Excell-NY Centers for Innovation would be available to all businesses, whether it is nanotechnology, agriculture or any other type of business.
The regional Excell-NY Centers For Innovation would be located in Long Island, New York City, Central New York, the Capital Region/Hudson Valley and Western New York. They would each be governed by a Board of Directors comprised of nine representatives of private industry, university and research centers and economic development organizations.
To support the Excell-NY Centers for Innovation in their mission, the Excell-NY program includes:
Venture Capital and Financial Assistance -- Venture Capital is a critically important component of any plan to attract and grow high tech and biotechnology businesses and jobs.
According to a report by the National Governor�s Association, "venture capital is critical to growing the new businesses that will drive the new economy. Finding ways to nurture the culture of entrepreneurs, and the capital that feeds them, must be a top priority of the states."
The Excell-NY Centers would operate four capital funds to provide matching funds for early stage companies and for federal grants. The funds include:
> The Innovation Investment Fund that would target young, smaller companies with high potential;
> The Emerging Investment Fund that would target product development;
> The Business Acceleration Fund that would target mature, revenue generating companies looking to accelerate their growth; and
> The Loan Guarantee Fund that would allow the State to guarantee a portion of an early-stage investment by a venture capitalist in a New York high-tech startup.
In addition, the Senate�s Excell-NY plan would expand the current CAPCO program by $10 million a year to allow any large manufacturing company in the State to participate. This expansion would expand the amount of venture capital funding available privately within the state.
Expansion of Pipeline For Jobs -- A component of the Senate�s J2K program, the Pipeline for Jobs provides grants, loans and interest subsidies for the construction of new water supplies to growing municipalities and businesses. The success of the program has outgrown available funding. The Excell-NY program would expand Pipeline for jobs to include infrastructure improvements for incubators, commercialization centers or business parks for technology research and development space built by private developers, industry or research institutions. The Excell-NY Program would fund this expanded Pipeline for Jobs program by $10 million in SFY 2004-05.
Targeted Tax Reductions -- Tax reductions include an expansion of the current research and development credit from the current 9 percent to 40 percent. The credit would be refundable and available for four years. Eligible expenses for the credit would be expanded from research and development costs to include commercialization and job training expenses.
Another tax option is to allow local governments to offer a property tax rebate to developers who finance costs of outfitting or retrofitting technology parks to accommodate new businesses. Eligible costs would include utilities, sewers, fiber optics and road improvements. This program would allow the developer to recoup these costs over a period of time. Participation in his program would be at local option.
Empire Zone Reform and Expansion -- The NextGen Task Force report stresses the importance of technology clusters in expanding the development of high tech and biotech businesses. These clusters allow for the sharing of information, equipment and facilities, reducing costs and accelerating the access to markets.
New York State has promoted this clustering of businesses through its Empire Zone program. In recognition of the importance of technology clusters, the Excell-NY program recommends a number of reforms to the current State program.
At present, eleven counties in New York are without Empire Zones. The Excell-NY program recommends the establishment of a two mile empire zone in each of these counties. In addition, the empire zone acreage in Genessee and Orleans counties would be expanded from one mile to two miles.
To enhance the creation of clusters at current zones, the Excell-NY program allows zones that have used all of their existing zone acreage to add adjacent parcels with approval of the zone designation board if this additional acreage fosters clusters of technology companies and attracts significant new employment and capital investment from outside New York State.
Additional Tax Reductions -- Other tax reductions in the Excell-NY plan are proposed to make New York State more economically competitive in specific areas, and to improve our quality of life and save taxpayers money on a wide variety of goods and services. They include:
-- Elimination of the PBT on Kero-Jet Fuel, saving airlines $9.5 million annually;
-- Eliminating the sales tax on private aircraft repairs, saving these repair companies $10 million. Repair services and machinery used on commercial aircraft are exempt from New York sales taxes, but private aircraft repairs and services are not.
-- A multi-year phase-out of the life insurance premium tax increase, saving about $48 million when fully effective;
-- Eliminating the Alternative Minimum Tax for farms and making the investment tax credit refundable at an annual cost of $2 million;
-- Addressing a sales tax ruling by the state Tax Department to stipulate that only 25 percent of the ticket price to an amusement park is taxable.
-- Enacting a credit against the personal income tax for taxpayers who provide services to a senior parent or relative in their home equal to 20 percent of qualified expenses up to $2,400 per year. The program would also provide a prorated enhanced STAR property tax credit for "in-law" apartments for eligible seniors. This new program would provide financial relief of $70 million to those families providing special care for their loved ones at home.
-- Increasing the current credit for long term care insurance from 10 percent to 25 percent. This increase would save taxpayers $7.5 million easing the cost of these insurance policies.
-- Providing that buyers of goods and services only pay State sales and use tax on the purchase price after it has been reduced by any coupons or rebates. By taxing the net sales price, this proposal will save State taxpayers $15 million.
-- Amending the $500 residential petroleum tank tax credit to make the credit refundable for the 2001- 2003 tax years. It is estimated that this would result in up to $1.5 million in reduced personal income tax revenue during SFY 2004-05.
The total programmatic cost of the Excell-NY program in SFY 2004-05 is estimated at $7 million growing to $50 million when fully effective. Tax relief to New York�s taxpayers under this program is estimated at $40 million in SFY 2004-05 growing to $283 million when fully effective.
"To remain competitive, New York must focus on its strengths including an educated workforce, New York�s numerous outstanding public and private research institutions, a strong financial center and strong work ethic," Senator Bruno said. "Our Excell-NY plan will help New York succeed in this national as well as global competition by remaining at the cutting edge of new ideas and technologies."
SENATE REPORTS:
NYS Senate NextGen Task Force Report
Excell-NY: Leveraging the State's Investments for Growth
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