Going back two decades, Mississippi’s current and former senators have distinguished themselves as masters of the earmark system.
One of the primary beneficiaries of that targeted federal money has been the various research departments of the state’s colleges, universities and community colleges.
That spigot most likely won’t flow like it once did, now that the Republican congressional leadership has enacted what amounts to an unofficial moratorium on earmarks. A bill proposed by Secretary of State Delbert Hosemann would leverage private capital to fill some of the funding gap.
The College Private Research Incentive Program would offer a seven percent tax credit to private sector industries that enter into a technology-based research agreement with any college, university or community college in Mississippi. Hosemann said Mississippi, if his legislation passed, would become the first state with such a program.
“If you go back to the institutions of higher learning, their numbers reflect that we have about $450 million to $500 million in research grants that are given to the system,” Hosemann said in an interview in his Jackson office last week. “Of that total, only about 13 percent is from private enterprise. So most of the research that’s been conducted at the university level is funded federally, from Sen. (Thad) Cochran and others.
“As the country is facing budget shortfalls at every level, I thought what we needed to do is encourage private enterprise to tap into the intellectual properties at the universities. Also, my business clients and customers I’ve known about have had to shrink their employee size the past two years, many times in their R&D divisions. They don’t have the same number of employees anymore and they can’t really fund it themselves. It’s less expensive to go somewhere where people already had the knowledge (for R&D-related work) and empower them to do so. That’s the goal of this.”
The legislation was one of several bills Hosemann’s public policy group submitted after about eight months of studying which of Mississippi’s business statutes needed modifying. The committee Hosemann formed to study the issues, he said, had as some of its members stakeholders from the private sector.
The research incentive program might have found an ally in Speaker Billy McCoy, D-Rienzi.
“I’ve always tried to do what I thought was good and best for businesses,” he said. “Based on what I’ve heard, I thought the committee ought to take a look at it. Tax credits are not something I really jump on in times like these, but I thought this deserved a look (from the House Ways and Means Committee).”
Eligible expenditures include those associated with obtaining the rights to technology, including fees related to patents, copyrights, licenses and payments related to a research agreement with an institution of higher learning.
IHL Commissioner Hank Bounds had not returned a message left on his cell phone by the time the Mississippi Business Journal went to press Thursday.
Not included are research agreements that do not contain some sort of intellectual property.
“We’re not just doing studies about what kind of toothpaste to use,” Hosemann said. “We want to do things that will create jobs and we want it to come out of the private sector. We wanted to unleash the experimental and developmental side, the polymer science side, the aerospace side. It has to be something that has intellectual property to it.”
If the legislation clears the Capitol and is signed by Gov. Haley Barbour, all new research agreements that fit the criteria would be eligible for the tax credit. Existing agreements that received a modification after July 1 would be eligible, too.
“We want people to pour those dollars into research,” Hosemann said. “It keeps students busy on work credit. It keeps professors busy and it utilizes intellectual property that’s just sitting there. And it allows the private side to tap into some of the best knowledge we have in our colleges and universities and community colleges. I thought there was a need and I thought the economics made sense.”
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