Arizona Gov. Napolitano seeking changes in economy –

Gov. Janet Napolitano told high-tech business leaders Tuesday that Arizona’s economy is changing into one focused on research and technology development, and that it needs a new economic infrastructure to match.

Jane Larson
The Arizona Republic

http://www.azcentral.com/arizonarepublic/business/articles/0211TechForum11.html

"We must be selective, focused and aggressive about our future," Napolitano said, noting the state’s successes in areas ranging from aerospace to optics and biotechnology. "We are now positioned to take advantage of niche markets . . . But to do so successfully, our new economic infrastructure is needed to grow our small businesses into global enterprises."

Napolitano spoke to about 500 business leaders at the second Governor’s Technology Forum, held Tuesday at the Hyatt Regency Phoenix. She used the forum to urge support for legislation designed to address the shortage of venture capital that has plagued small, growing technology companies in the state.

Arizona has come far in the past year, she said. The Governor’s Council on Innovation and Technology produced a roadmap for the state’s high-tech economy, and lawmakers approved technology-transfer legislation and $440 million to build new research buildings at the state’s universities.

The state now needs to address the issue of capital required to attract and grow knowledge-based companies, Napolitano said. But she also warned that government cannot do the job alone, and that the private sector needs to take part.

She called on leaders to contact their legislators and express support for three bills introduced in the Arizona Senate last week.

They include a program to offer tax credits of 30 to 35 percent to those investing in qualified businesses or venture capital funds. The state’s research-and-development tax credit also would be extended and enhanced.

Napolitano also urged support for a bill that would create an Arizona investment fund, a program that would offer tax credits of up to $50 million, and one she said would attract an additional $250 million in investment to the state.

Making the proposals reality will not be easy, leaders acknowledged. Voters still must approve a constitutional amendment to make it easier for small companies to commercialize university technology. And various bills to create venture-capital funds have failed year after year in the conservative Legislature.

Napolitano said the proposals should be portrayed as raising the overall wealth in the state and not as benefiting the technology community alone.

"What it really comes down to is creating high-quality jobs for the people of Arizona," she said. "When you put it in those concrete terms, of how many people you’re able to hire and how many families that supports . . . this is really about developing the entire Arizona economy."

A competing bill that would establish a venture-capital fund backed by insurance companies has been introduced in the Senate. That bill, introduced by Sen. Dean Martin, R-Phoenix, could set up a divisive situation similar to the one that arose three years ago, when both competing bills went down to defeat.

Martin said he’s encouraged to hear Napolitano calling for the private-sector’s involvement. Business growth will be spurred by funding, which needs to be lured into the state, he said. "We really need to expand and attract more capital if we are going to drive growth into the 21st century," Martin said.

Martin was concerned about the constitutional amendment. "Last year it was described as transferring technology into the private sector. Now, it’s described as commercializing." He worries that the change in semantics could mean the private sector would be forced to compete with the government.

Valley business leader Sharon Harper, whom Napolitano tapped to head a campaign for the technology transfer amendment, said the campaign will need a clear message to voters. The proposal will be on the November ballot.

Phoenix attorney Quinn Williams, who heads the governor’s council’s capital formation committee, said supporters will have to educate legislators on why the bills are needed.

Supporters also will have to explain how the programs will make a difference to the state’s economy, he said.