Last week North Carolina legislators enacted a hefty $11.8 billion budget which emphasizes the state’s long-term commitment to supporting business innovation, creating jobs and growing the economy. The plan calls for renewal of a number of successful programs, including the Qualified Business Venture Tax Credit, as well as funding for several new initiatives, all of which provide strong support for technology, research and development.
Highlights of the plan include:
• Extension of North Carolina’s Qualified Business Venture Tax Credit through 2010. The program provides a 25% tax credit for investments in qualifying small companies. The Credit had been scheduled to expire at the end of this year.
• $4.83 million in additional funding for North Carolina’s new SBIR/STTR matching grant program, the One North Carolina Small Business Fund.
• $6.5 million in non-recurring funding for biofuels research and economic development programs, including a $5 million allocation for a new North Carolina Biofuels Center at Oxford. The Center was proposed as part of a comprehensive biofuels strategic plan developed by the North Carolina Biotechnology Center in cooperation with other leading state research and economic development institutions. North Carolina State University received $1.5 million for research into various alternative and “bioenergy� technologies.
• $3 million in funding for the North Carolina Biotechnology Center’s proposed Centers of Innovation program, a new initiative designed to accelerate commercialization of biotechnology-related technologies across North Carolina.
• Establishment of a new tax break for research and development which includes a 50% rebate for sales taxes paid by medical testing laboratories for medical reagents. The same provision also established a broader 50% rebate for increases in sales taxes paid by medical and other testing laboratories for supplies used or consumed in analytical activities.
• Increase in the State’s existing research and development tax credit including the tax credit for private-sector spending on university-based research from 15% to 20%; credits for in-company research spending were increased by 0.25%, bringing the total available credits for such research to 3.25% for small businesses and companies conducting research in economically distressed counties; and credit increases for research at larger companies, raising the credit rate to between 1.25% and 3.25%, depending on total R&D expenditures.
On the chopping block was one major initiative backed by North Carolina’s entrepreneurial community, the proposed capital gains tax exclusion for founders stock and angel investments, and another bill aimed at providing state funds for venture capital.