Just when you think Minnesota has turned the corner in stimulating high-tech innovation, the nagging pest otherwise known as the budget has once again reared its ugly head. And it’s not pretty.
Just weeks after Gov. Tim Pawlenty signed a bill that established the Minnesota’s first angel tax credits, the state Supreme Court ruled this week that he overstepped his authority by unilaterally cutting millions from the budget last year, a process known as unallotment.
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That means Pawlenty will fight the Democratic-led legislature over how to close a $3 billion budget deficit instead of $536 million one.
On the plus side, we should thank our lucky stars the bill containing the five-year, $50 million angel credit passed in late March. If lawmakers were still debating the bill today, it would probably die.
Here’s where the paranoia sets in. At the time, the Pawlenty administration and lawmakers had to scour every nook and cranny in the state’s tax code to finance the credit. They ultimately succeeded, but thanks to the court’s ruling, the financial thinking that underpinned their work is now, shall we say, outdated.
Faced with a huge budget deficit, would politicians be tempted to mess with the credit?
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“No,” Sen. Kathy Saltzman (D-Woodbury), a lead supporter of the credit, emphatically answered. “I don’t see any of that thinking here.”
Saltzman is probably right, but stranger things have happened. Remember, the angel credit is a five-year program. Who’s to say it will survive intact over that period, especially if the budget doesn’t improve, or if it even gets worse? These days, $50 million is a lot of money.
But let’s look beyond the credit. As I wrote before, the credit is important not just in dollar amounts, but how it impacts the mindset of Minnesota. Finally, the state finally stepped up and demonstrated to entrepreneurs, investors and companies that it was serious about innovation and economic development.
And the credit is hardly the end all. What about the proposed Minnesota Science and Technology Authority? Will promising startups like Miromatrix Inc. continue to receive state loans? Will big projects like the University of Minnesota’s Biomedical Discovery District and the Elk Run BioBusiness Park move forward? Will the state continue to fund economic development organizations like the BioBusiness Alliance of Minnesota?
Our innovation ecosystem is very fragile. Will it survive Minnesota’s perpetual budget mess?
