Democratic state budget plan cuts $70 million in high tech funding

Scott Olson, The IBJ

solson@ibj.com

Supporters of a state program that invests in high-tech startups are rallying to restore its $70 million appropriation to a budget proposal under consideration by legislators.

Democrats who control the Indiana House of Representatives advanced their version of a new state budget to the full chamber Monday after the House Ways and Means Committee endorsed the one-year spending bill.
 
The budget, however, fails to include funding for the 21st Century Research and Technology Fund, the state's showcase program for investing in fledgling high-tech firms.

Local technology initiative TechPoint said it will lobby lawmakers in the Senate to restore the funding. Republicans rule the Senate 33-17, while Democrats enjoy a 52-48 majority in the House.

"It's imperative to not only have the funding, but to show that Indiana is an innovative state," TechPoint President Jim Jay said.

Michael Snyder, managing principal of the MEK Group, a Carmel marketing and business-consulting firm with numerous technology clients, concurred.

"It sends a signal to the technology community on a national basis that Indiana is potentially willing to sacrifice its growing and robust technology sector to accommodate short-term budgetary needs, however legitimate," he said.
 
Neither Ways and Means Chairman William Crawford, D-Indianapolis, nor Vice-Chairman Scott Pelath, D-Michigan City, returned calls seeking comment this morning.

State legislators created the 21st Century Fund in 1999 and have provided it as much as $75 million in the typical two-year budget cycle.

A budget plan did not pass both chambers on the final day of the regular session on April 29, forcing a special session that began on June 11. The current two-year budget expires on June 30.

Cam Carter, vice president of small business and economic development at the Indiana Chamber of Commerce, said he ultimately expects the 21st Century Fund to receive funding, but probably not at the level supporters want.

He thinks lawmakers eventually will pass a two-year budget that will include a 21st Century Fund appropriation closer to $50 million.

Jay at TechPoint would not be satisfied with a lesser amount.

"It was a $75 million fund and took a haircut the last budget cycle," he said. "The more fully funded, the better."

In the past two years the fund has doled out $38.4 million in grants. A few of the recent recipients include Carmel-based ChaCha Search Inc., and Immuneworks LLC and FAST Diagnostics in Indianapolis.

Before the General Assembly convened in January, Secretary of Commerce Mitch Roob told IBJ that maintaining the 21st Century Fund is a top priority for Gov. Mitch Daniels.

"Almost everybody who looks at the success that we've had in Indiana in growing what has not traditionally been an entrepreneurship-friendly state and turning it into one, we can mention [the fund] as kind of the point of the sword," he said. "So we would be cutting our nose off to spite our face if we were to not fully fund it."