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Bush wants funds for start-ups

The governor wants the Legislature to set aside millions for business investment.

By JONI JAMES
Published January 30, 2006

TALLAHASSEE - Years after Florida's first effort to jump-start venture capital investment in the state fizzled in controversy, Gov. Jeb Bush will arrive in Tampa today to announce a new proposal aimed at pumping $75-million into start-up companies.

The plan, dubbed the Florida Capital Formation Program, is just one of five economic development proposals totaling $630-million that the governor will ask state lawmakers to include when they write a 2006-07 budget this spring.

Florida's state coffers are expected to be flooded with cash next year, thanks in large part to the increased sales tax collections from rebuilding after two active hurricane seasons. Lawmakers are likely to have $3.2-billion more to spend than originally expected.

Bush's pitch: Set aside a big chunk of that for business investment.

"How can we take this surge in one-time money to advance long-term economic activity?" Bush said Sunday in a phone interview. "That has been part of our strategy from day one (to) diversify our economy."

Bush will formally unveil his business-support plans this morning at the University of South Florida in Tampa. It's the latest in a series of rollouts Bush has done detailing elements of his budget proposal, which he'll release in full on Wednesday.

That budget plan also will include other business-friendly proposals such as tax breaks on new equipment purchases for manufacturers, a reduction in the state's school property tax rate, and money to support Miami's efforts to land the secretariat of the proposed Free Trade Areas of the Americas.

But today at USF, Bush will focus on economic development. Besides a new venture capital incentive plan, Bush's wish list includes:

* $250-million set aside over five years to fund "once in a lifetime opportunities" to recruit a major employer or research entity, similar to how the state pledged $369-million to encourage Scripps Research Institute to build a satellite operation in Palm Beach County. Under Bush's plan, the money would be spent only after the governor, the House speaker and the Senate president agreed.

"The criteria will have to be tight so the accountability is there," Bush said. "But the problem is these economic development deals don't match when legislative sessions are in."

-- $200-million awarded competitively to the state's universities for research areas that are likely to benefit Florida's economy, such as the optics research at USF, which Bush is expected to trumpet today.

-- $55-million for space technology initiatives, including $35-million aimed at securing Florida as the home of the space shuttle replacement called the Crew Exploration Vehicle.

-- A fivefold increase to $50-million to the governor's quick-action closing fund, which is used at the governor's discretion to recruit or retain companies.

Bush credits the fund, to which lawmakers' alloted $10-million this year, with helping lure one of Tampa's best recruits in years: Depository Trust & Clearing Corp. Bush pledged $4.4-million from the fund over two years to help land the company, which is expected to employ 500 high-wage earners by the end of 2006.

"But for the closing fund commitment, it wouldn't have happened, plain and simple," Bush said."

Less clear Sunday was exactly how the state's venture capital investment plan would work. No legislation outlining Bush's plan has been filed.

But Bush pledged Sunday the plan wouldn't resemble the much-maligned and complicated "CAPCO" plan the state Legislature quietly approved a year before Bush took office at the behest of a New Orleans-based capital venture firm.

That plan provided $150-million in tax breaks over 10 years for insurance companies that directed money to Florida start-up companies. Subsequent reports found that the economic downturn in 2001, coupled with other problems, resulted in no measurable impact of the fund. Lawmakers stopped funding the program in 2003.

Bush said his capital plan will have tighter fiscal controls and will use state money to leverage additional private investment, not just redirect state dollars for private investment.

"It will work, if it doesn't work, unlike losing the money, (the money) won't be extended," Bush said.

Florida start-up companies have frequently ranked among the worst at attracting investment dollars. Last year during the second quarter, MoneyTree reported Florida companies had collected just 0.5 percent of $5.8-billion distributed nationally.

--Joni James can be reached at 850224-7263 or jjames@sptimes.com

[Last modified January 30, 2006, 00:32:10]