The state government general fund shortfall in the current fiscal year is projected to be between about $550 million and $1 billion. This shortfall will need to be eliminated through spending cuts and/or revenue enhancements. The Legislature has demonstrated a preference for spending cuts. However demand does not decline during a recession for most public-sector services, including university services. Any reduction in funding for universities will have a negative and direct effect. A reduction in state government spending for universities of around $200 million would cause direct and indirect job losses of approximately 4,000. A substantial decrease in state government funding for universities will have negative consequences beyond these short-term effects.

Economic development leaders and public officials throughout the country are tending to the effects of a sour economy and huge state budget deficits when they would rather be creating quality jobs and new economy assets. According to the most prominent thinking on today’s knowledge economy, locally developed and exported technology will be the primary economic differentiator between future winners and losers. Thus, with long-term fiscal and economic health at stake, the 50-state race is on for advantages and leadership in science and technology. This report sheds light on these issues through an overview of Arizona’s standing in science and technology today, short case studies of four competitors in the west, as well as Arizona, and ideas for Arizona’s leaders to consider as they strive to give our state an edge.