Senator Eliot Shapleigh - El Paso, Texas

They could become the stars of Texas' economic future.

Houston, Lubbock, San Antonio, Dallas-Fort Worth, El Paso and the middle and lower Rio Grande Valley are potential hubs for a state-funded initiative to develop new-technology industries.

The initiative, newly approved by the Legislature and destined to be signed into law soon by Gov. Rick Perry, will create Regional Centers of Innovation and Commercialization -- partnerships of universities, companies and nonprofit groups.

If that sounds like another Texas-size vision for economic development, it is.

As proposed, the centers are a key part of the state's new $200 million Emerging Technology Fund, which is designed to expand and expedite new research. The more wide-ranging Texas Enterprise Fund received an additional $185 million in state money this year. Both funds have become controversial because of their management plans.

Beginning as early as this fall, the centers will coordinate research and development programs -- and the commercialization of the results -- provide incubators for new businesses and expansion of existing ones, and offer work force training for businesses resulting from research and development initiatives.

"There's no doubt this will be the fuel for our growth engine over the next 20 years," state Sen. Eddie Lucio, D-Brownsville, said of his expectations for the Valley areas. "This program covers every corner of the state, which will allow us to compete with any other area of the country in emerging technology. It has great potential."

Under the new law governing the Emerging Technology Fund, projects will be screened by the centers and a new statewide council, but the final decisions on who gets money will remain with Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick -- just as with the Enterprise Fund.

To critics, many of the details of the new program are as troubling as those of the Enterprise Fund -- among them a lack of accountability to taxpayers. Also under the new law, information collected as a part of the application and screening process will be confidential unless the entity or individual consents to disclosure.

Proponents say that is necessary to safeguard trade secrets. But Phil Wilson, Perry's deputy chief of staff and an architect of the initiative, said as much detail as possible will be made public about approved projects.

Under current law, Perry's office oversees the Enterprise Fund.

The state will spend less on the two economic development funds than the $600 million Perry had requested. However, state officials say it is more than the $295 million Texas had for economic and tech development during the past two years -- a period they tout as a big success.

Perry has described the new economic development fund as Texas' "foundation for the future."

"Biotech, nanotech, semiconductors, emerging technology -- it's the future for Texas," Wilson said. "This will not be a job-driver like the Enterprise Fund, but it is a future technology builder that will create high-quality jobs over time."

So don't look right away for any big announcements of corporations relocating to Texas or building manufacturing plants here, like those linked to the Enterprise Fund.

The new fund is designed to create jobs and bolster the Texas economy over a period of years by "expediting innovation and commercialization of research," as the official definition reads. The two-dollar definition of that phrase is that it will pay for research and development at universities and various businesses to get new products to market faster than if the developers had to wait for private venture capital funding.

And how will the state be sure of getting something in return for its big cash investment, since the grants will carry no guarantee of new jobs?

"Royalty and interest income from a successful grant will come back to the state. That will be in each contract," Wilson explained, saying he expects most grants to involve a "two- or three-year turnaround" to marketability.

The state seed money will go to a variety of targeted industries: semiconductors, information, computer and software technology, energy, manufactured energy systems, micro-electromechanical systems, nanotechnology, biotechnology, medicine, life sciences, petroleum refining and chemical processes, aerospace, defense and "other pursuits as determined by the governor in consultation with the lieutenant governor and the speaker of the House of Representatives."

Ray Grasshoff, a spokesman for the Higher Education Coordinating Board, said the technology fund will support the state's efforts to better compete with other states for research funds. "Research leads to all sorts of new discoveries, and the commercialization of those discoveries helps drive the state's economic engines into the future," he said.

Wilson said that while application policies are still being developed, the funding process will work something like this:

The regional centers will gather applications for projects and send them to a new 17-member Emerging Technology Committee. The members are to be appointed by Perry from nominations from the higher education board, the presidents of state universities, members of the Texas Workforce Commission, top aides to Perry, Dewhurst and raddick who oversee economic development programs, and "other persons considered appropriate by governor."

Wilson said projects recommended by the regional centers can be from any place in the state, "but they will have to have a university partner."

The statewide panel will review, screen and make recommendations on who should get the grants, using peer review and advisory panels, among other methods. Their recommendations will go to Perry, Dewhurst and Craddick, who already decide which projects get money from the Enterprise Fund.

"Elected officials will make the final decision," Wilson said. "I expect we could have initial grants awarded by November, if the process goes like we hope it will."

And how will those officials pick the best candidates for future jobs? "We'll look for ideas that have merit worth pursuing, that can grow jobs in Texas in coming years, that we can use these funds to accelerate bringing a product or concept out of the lab and into the market," he said.

Some economists warn that projects such as those most likely to apply for funding are no sure deal. If they were, they would be able to attract venture capital and other private investments to bring their ideas to market.

Other states have found success in similar programs in recent years, and Texas' hopes are high for its new creation. After all, supporters and critics agree that while a public goal is to expand the economy with jobs, it is also to change the focus of universities and research programs to getting ideas to market. "The idea here is not to change the culture at a university," says Don Hicks, a professor of political economy and public policy at the University of Texas at Dallas. "It is meant to fund ways of making these commercialization resources available -- to pull them out, polish them and make them market ready."

Like other economists, Bernard Weinstein, a professor of applied economics and director of the North Texas Center for Economic Development and Research, said that while states have been undertaking such programs in various forms for more than 30 years, the results are difficult to measure. And $200 million in a state of 22 million people "isn't that much. But will this make a difference. Yeah, it could help a little bit."

Dividing up the Emerging Technology Fund

$100 million earmarked for 'incentives for collaboration' with businesses through the regional centers.

$50 million to match federal and other research grants at universities.

$50 million to acquire 'research superiority' for Texas by luring cutting-edge researchers from other states to boost the brain power and research prowess at Texas universities. The money cannot be used by Texas universities to take researchers from one another.

Source: House Bill 1765

The competition

To see how other states use public money to develop industry Click Here.