Background:

Economic Development Commission.

In 2002 Governor Locke created the Washington Economic Development Commission (Commission) through executive order as a means for business and labor leaders to assist in the improvement and development of the state's economy. The following year, the Legislature established the Commission in statute as an advisory body to the Department of Community, Trade, and Economic Development, now the Department of Commerce (Department).

The purpose of the Commission is to assist the Governor and Legislature by providing leadership, direction, and guidance on a long-term and systematic approach to economic development that will result in enduring global competitiveness, prosperity, and economic opportunity for all the state's citizens. In 2011 the Legislature directed the Commission to concentrate its major efforts on strategic planning, policy research and analysis, advocacy, evaluation, and promoting coordination and collaboration.

The 24-member Commission consists of 15 voting members appointed by the Governor, plus five agency directors and four legislators who serve as nonvoting ex-officio members.

Innovate Washington.

In 2011 the Legislature created Innovate Washington as the successor agency to the Washington Technology Center and the Spokane Intercollegiate Research and Technology Institute to serve as the primary state agency focused on growing Washington's innovation-based economy and to respond to the technology transfer needs of existing businesses. Innovate Washington was created to:

facilitate research and technology transfer opportunities supportive of state industries;
provide mechanisms for collaboration between technology-based industries and higher education institutions;
help businesses secure research funds and develop and integrate technology into new products;
offer technology transfer and commercialization training opportunities for students;
serve as the lead entity for coordinating clean energy initiatives; and
administer technology and innovation grant and loan programs.

Innovate Washington is governed by a 15-member board. The board consists of seven private-sector executives appointed by the Governor, four legislators, the Governor or Governor's designee, the president or designees from the University of Washington and Washington State University, and the Director of the Department.

The Legislature also created the Investing in Innovation Account as a nonappropriated account in the custody of the State Treasurer. Only the Executive Director of Innovate Washington or the Executive Director's designee may authorize expenditures from the account.

Innovate Washington has a performance agreement with the Innovate Washington Foundation (Foundation) under which the Foundation delivers the services for which Innovate Washington is responsible. The Foundation is governed by a separate board of directors than the board governing Innovate Washington.

Global Health Technologies.

In 2010 the Legislature created the Washington Global Health Technologies and Product Development Competitiveness Program, to be administered by a nonprofit 501(c)(6) organization with a 10-member board of directors appointed by the Governor. This entity is required to contract with the Department for management services. The board's duties include soliciting funds from businesses, foundations, and the federal government, and making grants for development of global health technologies and products.

Grant award recipients must conduct their research, development, and production activities within Washington, except for clinical trials that must be carried out in developing countries.

The Legislature also created the Washington Global Health Technologies and Product Development Account as a nonappropriated account in the custody of the State Treasurer to be funded with federal and state monies and used to support the grants for global health commercialization efforts.

The board submitted its first required annual report in 2012.

Washington Tourism Commission.

The Legislature created the Washington Tourism Commission (WTC) in 2007, as the successor to the Tourism Development Advisory Committee.

The WTC and its activities and responsibilities were eliminated during the 2011-2013 fiscal biennium in the Omnibus Appropriations Act. The WTC accordingly ceased activity, but their responsibilities remain in statute. Among its statutory requirements are quarterly meeting requirements and a biennial report to the Legislature on tourism-related activities.

Microenterprise Development Program.

In 2007 the Legislature created the Microenterprise Development Program in the Department of Community, Trade, and Economic Development, now the Department, to assist microenterprises in job creation by increasing the training, technical assistance, and financial resources available to them. The Department provides organizational support to a statewide microenterprise association and contracts with the association for the delivery of services and distribution of grants.

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Summary of Second Substitute Bill:

Economic Development Commission.

The statutes providing for the creation of the Washington Economic Development Commission (Commission), the Legislature's intent for the creation of the Commission, and the duties and authorities of the Commission are repealed. All statutory references to the Commission and the statewide economic development strategy are removed.

Innovate Washington.

The statutes creating Innovate Washington as a state agency, and providing for the agency's board of directors are repealed. All statutory references to Innovate Washington are removed.

The Innovate Washington Program is created in the Department of Commerce (Department) to support business growth in the state's innovation and technology sectors and facilitate statewide technology transfer and commercialization activities. The Innovate Washington Program expires June 30, 2015. The Department is required to contract with a nonprofit entity located in Washington that has experience facilitating commercialization and technology transfer activities to administer the Innovate Washington Program. Funds in the Investing in Innovation Account may only be used by the contractor for the stated allowable purposes, and expenditures may only be authorized by the Director of the Department.

The mission powers, duties, and functions of Innovate Washington are transferred to the Department. All reports, files, other written materials, regardless of physical form or characteristics; furniture, equipment, and other tangible property; and funds, credits, and other assets, including intangible assets, held by Innovate Washington are transferred to the Department. The Department must honor any donor-imposed conditions or restrictions imposed on donated assets.

Innovation Research Teams, Innovation Partnership Advisory Group, and the Entrepreneur-in-Residence Program.

The Innovation Research Teams, Innovation Partnership Advisory Group, and the Entrepreneur-in-Residence program from the Department are eliminated.

Global Health Technologies.

Requirements for board membership and the 501(c)(6) status of the nonprofit organization administering the Washington Global Health Technologies and Product Development Competitiveness Program are removed. Responsibility for contracting with the board to implement and manage the program is transferred from the Department to the Life Sciences Discovery Fund Authority (Authority). The Authority may receive up to 4 percent of the funds for administrative expenses.

Washington Tourism Commission.

The statutes creating the Washington Tourism Commission (WTC) and providing for the WTC's duties and responsibilities are repealed.

Microenterprise Development Program.

The statute authorizing the Microenterprise Development Program is repealed. Definitions of "microenterprise development organization" and "statewide microenterprise association" are removed. A technical correction is made to the definition of small business.

Second Substitute Bill Compared to Original Bill:

The second substitute bill does the following:

reinstates language authorizing a joint working group responsible for identifying industry clusters. Transfers the Economic Development Commission's role in identifying industry clusters and jointly convening the working group to the Department of Commerce (Department);
removes language transferring responsibility for innovation research teams (STARS), the entrepreneur-in-residence program, and the innovation partnership advisory group from the Washington Economic Development Commission to the Department, and instead eliminates those programs;
transfers the mission of Innovate Washington to the Department along with its powers, duties, and functions. Provides for the transfer of real property, funds, credits, and other assets, including intangible assets, from Innovate Washington to the Department. Specifies that all reports and other written material, regardless of physical form and characteristics, must be transferred to the Department. Establishes that the Department shall honor any donor-imposed conditions on donated assets, returning them to the grantor as necessary to comply with the conditions imposed in the granting instrument. Requires the Department to use donated assets for the purposes articulated in Innovate Washington's enabling statute, of growing the innovation-based economic sectors of the state and responding to the technology transfer needs of existing Washington businesses, where the instrument conveying the asset to Innovate Washington restricted the use of the asset to the purposes of Innovate Washington;
creates the Innovate Washington Program at the Department, and describes the duties of the Innovate Washington Program. Expires the Innovate Washington Program and all duties on June 30, 2015;
transfers responsibilities for the Investing in Innovation program from the Department or its contractor to the Innovate Washington Program. Expands allowable uses of the Investing in Innovation Account to include purposes consistent with the Innovate Washington Program. Allows funds to only be used by the contractor for the stated allowable purposes;
requires the Innovate Washington Program instead of the Department to: (1) designate members and convene the aviation biofuels work group; and (2) administer the small business innovation assistance program.
reinstates the requirement for the Global Health Technologies and Product Development Competitiveness Program (Program) to be administered by a nonprofit board. Removes the requirement that the Life Sciences Discovery Fund Authority (Authority) administer the Program or contract with a nonprofit organization to administer the Program, instead requiring the Authority to contract specifically with the Program. Removes requirements pertaining to board membership and 501(c)(6) status. Allows the Authority to use up to 4 percent of funds for administration. Removes authorization to fund the recruitment and employment of global health researchers; and

repeals the statute authorizing the Microenterprise Development Program at the Department. Removes definitions of microenterprise development organization and statewide microenterprise association, which are only used in the repealed statute.