RALEIGH, N.C. — Several entrepreneurial organizations across North Carolina have endorsed with enthusiasm two proposals made by Gov. Mike Easley as part of hits new budget.

The General Assembly returned for a work session on Tuesday. Easley called for a five-fold increase in a matching grant program to help firms receiving grants from the federal government as well as a reduction in the sales tax on equipment needed for research and development by research companies.

“Building and preserving capital may be the biggest challenge faced by innovation-based start-up companies in North Carolina today,” said Sam Taylor, president of the North Carolina Entrepreneurial Association. “The governor’s budget proposals are going to help us attack that problem head-on. NCEA is very excited about the Easley administration’s proposals and we urge the General Assembly to adopt them as part of the state’s 2006-07 budget.”

Easley wants the matching grant program increased to $5 million from $1 million. Grants up to $100,000 are awarded to companies that receive Phase I Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) grants from federal agencies.

“Non-dilutive funding like that provided in the SBIR Grant Program helps companies through one of the toughest parts of the their growth cycle,” said Jon Obermeyer, interim chief executive officer of the Piedmont Triad Entrepreneurial Network. “We hope the General Assembly will adopt this recommendation.”

Easley’s sales tax reduction proposal would enable R&D companies to avoid the 7 percent tax on equipment purchases. The entrepreneurial groups noted that R&D companies that are already in the manufacturing stage pay a 1 percent tax or $80 per piece of R&D equipment, whichever is less.

“Investing in the early stage of the innovation curve is critical and the SBIR match will help fuel entrepreneurial, high-growth companies in North Carolina,” said Joan Myers, the president and CEO of the North Carolina Technology Association. “Any investment in R&D pays off in the short and long-term for creating new jobs in the state,” she added.

Monica Doss, president of the Council for Entrepreneurial Development, concurred with Myers.

Said Doss: “Governor Easley has taken two more very important steps in strengthening North Carolina’s innovation-based entrepreneurial economy. North Carolina’s universities and other research institutions have enormous innovative capacity, but many of our good ideas are never commercialized because of lack of capital and other barriers to innovation at the entrepreneurial level. These changes will help North Carolina’s small, innovation based companies attract more start-up capital and deploy it more efficiently.”

Dale Carroll, CEO of the regional economic development group AdvantageWest, said he believed Easley’s recommendations would assist in business creation and growth.

“Encouraging innovation is a critical component for Jim Roberts and our Blue Ridge Entrepreneurial Council to help grow the economy in western North Carolina,” said Carroll, referring to Roberts who heads the Blue Ridge group. “We believe that starting successful small businesses here in the mountains will help us secure a bright economic future for our children. We applaud Governor Easley for making North Carolina an even better state for small business by proposing to strengthen the SBIR/STTR matching grants program and to reduce sales tax on R&D equipment purchases by research companies.”