The top agenda item for the Oregon Council for Knowledge and Economic Development (OCKED) has to do, in part, with the 4-year-old council's survival.

Senate Bill 838 would create the Oregon Innovation Council (clever shorthand: Oregon Inc.), an umbrella economic development group that would take over OCKED's role as well as coordinate the efforts of the Engineering Technology Industry Council (ETIC) and the Oregon Growth Account (OGA).

"It will cut down on the alphabet soup," offers Allen Alley, OCKED's chairman and CEO of Tualatin-based Pixelworks. In addition to coordinating the state's innovation-based economic development activity, the bill would ensure that the council's work continues beyond 2006, when the law that formed OCKED (to work with industry, education and government to promote knowledge-based industries) sunsets.

The bill, which started its legislative life as two bills, SB 175 and SB 186, is not without a price tag. It includes funding for ONAMI — the Oregon Nanoscience and Microtechnologies Institute, an OCKED pet project — requesting $7 million for the 2005-07 biennium, in line with Gov. Ted Kulongoksi's recommended budget.

And the bill charges Oregon Inc. with establishing the ONAMI-type initiatives of the future, creating signature research centers, such as for wood products or renewable energy, that are partnerships between Oregon universities and private-sector businesses.

Whether Oregon Inc. will have a budget for such activity going forward isn't yet known. Various long-term funding models for Oregon Inc. are being discussed in Salem, including tax increment financing on the payroll of newly created innovation-based jobs.

The idea behind the tax-increment proposal, modeled after a similar program in Kansas, is straightforward — it's an effort to fund future research centers and other job-generating activities without dipping into the cash-strapped general fund. But the notion of locking up future tax revenues could prove to be a controversial one, when budgets for education and state health care programs have gone begging in recent years.

Rep. Tom Butler (R-Ontario) was privy to an early look at the proposal as one of OCKED's legislative members. "I think there's some pretty good thinking behind it," Butler says, though he hasn't yet seen a version of the proposal that he's completely comfortable with. Another possibility he'd entertain would be to give some of the increased income tax revenue back to the companies creating the jobs.

In addition to paving the way for future research centers, SB 838 creates a $2 million Oregon Commercialized Research Fund.

The fund, also covered in Gov. Kulongoski's budget, is designed to fill the so-called "Valley of Death" funding gap where a business idea or research discovery shows promise, but isn't developed to the point where a venture capitalist would invest. Grants from the fund would be given to businesses that collaborate with an Oregon research university or nonprofit research institute.

"This bill addresses the question: How are we commercializing the research coming out of ONAMI and the like?" says Pat Scruggs, innovation economy officer with the Oregon Economic and Community Development Department, which would administer the fund with the help of an advisory council. "This funding leads us to the business development side."

Scruggs envisions the fund becoming self-perpetuating, giving awards to companies that then pay money back to the fund as their business matures — assuming the initial concept is successful.

Sen. Ryan Deckert (D-Beaverton), an OCKED member and sponsor of the bill, acknowledges that the fund may be a tough sell. Not only is the initial $2 million outlay difficult to defend when established programs are being told to make do with less, but, he says, it's hard to explain why research is so intimately linked to the state's future economic growth. "This is research in a petri dish at OHSU," Deckert says. "But if we move it along, it could be the next big building on Macadam Avenue employing hundreds of people. It's worth the state's investment."

Deckert and Butler don't expect discussion of SB 838 to reach a crucial pitch until later this spring, after new state revenue projections are in and the final details of the budget are hammered out.

In the meantime, it's in OCKED members' best interest to tout their accomplishments in order to frame the debate in favor of Oregon Inc. Last month, members were celebrating the announcement by Richland, Wash.-based Pacific Northwest National Laboratories that it will house its Microproducts Breakthrough Institute (a partnership with Oregon State University) at ONAMI, a move that will likely help augment the $28 million in federal research funds already snagged by the center.

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Copyright 2005 Oregon Business magazine