A program developed by Rep. Warren Kampf (R-Montgomery/Chester) and Rep. Joe Hackett (R-Delaware) to expand investment in Pennsylvania’s high-tech industries and fuel job creation has passed the General Assembly in conjunction with the state budget and is headed to Gov. Tom Corbett for his signature.
“Due to economic constraints over the last several years, the state’s investment in high-tech industries had been reduced, even though we have historically seen strong returns on those investments,” Kampf said. “If Pennsylvania is going to be a leader in promoting new, technologically advanced industries, we need to find new ways to support these investments.”
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“Biotechnology, medical device, software and advanced networking technology are the fuel of our economic engine,” Hackett said. “We must embrace every opportunity to bolster Pennsylvania’s status as a home to these industries by supporting venture capital funding and investment in them.”
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The new program, known as InnovatePA (Innovate in PA), is designed to auction insurance premium tax credits to insurance companies that pay the tax in the Commonwealth. The up-front capital pledged by these companies will then be used to make investments in Pennsylvania-based, high-growth, technology-oriented businesses through the Ben Franklin Technology Development Authority and Pennsylvania’s Life Science Greenhouses.
InnovatePA will provide at least $75 million in funding to promote the growth of these industries. By competitively auctioning $100 million in deferred tax credits to insurance companies, the state will generate funds to invest in new jobs and growing industries.
Funds generated through the tax credit auction will be deposited as follows:
• Fifty percent to the Ben Franklin Technology Partners for at least $37.50 million.
• Forty-five percent to the Venture Investment Program within the Ben Franklin Technology Development Authority for at least $33.75 million.
• Five percent is allocated equally to each Regional Biotechnology Center, also known as the Life Science Greenhouses, for at least $3.75 million.
Beginning in 2017, the state will allow up to $20 million in tax credits to be claimed per year by the insurance companies that purchase the credits. This annual cap allows for responsible budget planning in the coming years, while making up-front investments in high-tech businesses to promote job growth and economic development. All unused tax credits will expire by Jan. 1, 2026.
In recent years, the programs under the Ben Franklin Technology Development Authority have created and helped retain a combined total of more than 9,000 high-paying jobs through 145 new companies. Additionally, the Life Science Greenhouses have helped grow more than 225 companies, which have directly and indirectly impacted more than 20,000 jobs.
