February 11, 2005 12:04 PM PST

Michigan governor asks voters to fund high tech

Michigan Gov. Jennifer Granholm will ask voters in November to approve a $2 billion bond issue for turning the Rust Belt State into a high-tech mecca.


Jennifer Granholm
Governor, Michigan

Granholm, who announced the plan in her State of the State speech earlier this week, said the funds, which would be spent over a 10-year period, could create 72,000 high-wage jobs. The state hopes to attract companies interested in alternative energy and biotechnology.

"Imagine Michigan, the state that put the nation on wheels," she said, "as the state that made those wheels run on pollution-free fuel cells, the state that made these United States independent of foreign oil."

State bond issues have once again become a popular tool for attracting industry investment. Late last year, California voters approved a measure to sell $3 billion worth of bonds to build a stem cell industry center that will likely be clustered in San Diego or the San Francisco Bay Area. New York Gov. George Pataki for the past few years has enticed chipmakers and nanotechnology companies to Albany with tax breaks and a newly built infrastructure.

The state-level activity comes primarily as a result of two factors.

One, other nations have created fairly extravagant, and successful, programs to attract high-tech companies and the economic boost that comes with them. Chipmakers that decide to erect plants in China or Mexico, for example, don't have to pay those governments a national income tax for 10 years, under certain circumstances.

In Taiwan, some chipmakers make more after taxes than before because of accumulated tax credits. Singapore, meanwhile, has begun to offer generous packages to biotech professors to encourage them to relocate to the island nation.

Two, the U.S. government isn't offering a lot of help. The proposed budget for the National Science Foundation for fiscal 2006 is $5.6 billion, only a 2.4 percent increase over the $5.47 billion budget for fiscal 2005. The proposed budget for the National Institute for Standards and Technology is $200 million lower, at $536 million, for the coming year.

The relatively flat budgets for the NSF for the past few years have drawn criticism from, among others, Intel CEO Craig Barrett.

Sometimes these state programs work, and sometimes they don't. North Carolina had one of the highest illiteracy rates in the nation in the late '50s. But now, because of efforts such as Research Triangle Park, parts of the state have some of the highest concentrations of people holding doctorates in the nation.

By contrast, in the late '90s, Virginia launched incentives to make itself a silicon manufacturing center, but the effort led to empty buildings and sporadic activity.

 

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