Life Sciences Funding Not A Sure Thing

June 10, 2005
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GRAND RAPIDS — The proposed budget presented by the House Appropriations Committee Monday calls for $6.5 million to $7.5 million in cuts to the Michigan Economic Development Corp.'s budget and leaves funding for life sciences up in the air.

Included in the $7.5 million reduction in the MEDC's budget is $1 million in administrative staff cuts.

"The MEDC has 190 employees, of which 20 are executive vice presidents making $150,000 a year," said Rep. Jerry Kooiman, R-Grand Rapids, who sits on the Appropriations Committee. "The question is, do we need that top-heavy of a structure, first of all, and do we need that many employees? The state of California is much larger and has fewer employees than we do in their economic development arm."

Funding for life sciences in fiscal 2006 remains under discussion, Kooiman said. In fiscal 2005 the life sciences drew on a $20 million Technology Tri Corridor program, which was funded equally by the MEDC and the state. In addition to life sciences, the corridor funds advanced auto technology and homeland security industries.

Gov. Jennifer Granholm's proposed budget has no money for life sciences, he pointed out. Granholm is proposing a $2 billion bond issue to provide dollars for life sciences. The Senate has a $1 billion bond issue that's moving through the Senate, as well.

"We put a $100 placeholder in the budget that reflects that we want to do something, but we have not developed an alternative to the governor's proposal nor have we passed her $2 billion proposal. That's one of those issues that remains under discussion."

Rep. Dave Hildenbrand, R-Lowell, said his philosophy is that economic growth is spurred not by borrowing, but by creating a healthy business environment and letting the marketplace go to work. He told the Business Journal he has concerns about borrowing either $1 billion or $2 billion and having to pay it back over 30 years.

"So for 30 years our citizens are paying back on a gamble in the hope that we'll create jobs," Hildenbrand said. "We don't know if the life sciences are going to create jobs. I don't think as a Republican caucus we're totally convinced yet that life sciences is the way to go, but we're all looking at it. I'm not convinced that throwing $2 billion into the marketplace and trying to force this to happen is the answer. I think it's risky at best."

Kooiman said he's not sure the government is the best investor of people's dollars. He said that while he's very supportive of life sciences, he agrees with Hildenbrand.

"The question is: Do we mortgage our children's future to invest in that? If it succeeds, great. But if it doesn't — and given the MEDC's track record, I'm not positive it will — we've burdened future generations. They'll be scratching their heads wondering why Jerry Kooiman passed that bond and wondering what they got out of it."

He said the state might be better off creating a private-sector, market-driven approach that reduces taxes and regulations so that Michigan becomes more attractive to all business development, including life sciences.

"We want to say all businesses are welcome in Michigan. We want to open Michigan's doors to business. We want to have lower taxes than our neighboring states and a less restrictive regulatory structure."

As Kooiman sees it, higher education here is moving the state into a position to improve the potential for research and development in each sector of the Technology Tri-Corridor.

The state can invest in its university structure, which does most of the research in Michigan anyway, he said, and offer incentives to universities to commercialize.

"Then if we need to further look at incentives through taxes or whatever to attract life sciences industry, we can certainly do that. But for government to pick winners or losers in the marketplace and invest in certain companies — which the governor's proposal does — I'm not sure that's the right approach."

Hildenbrand said Michigan has the advantage of having great research institutions but it just hasn't capitalized on those resources as have states like California

As proposed, the House Republican budget is balanced at $39.7 billion and does not raise taxes or fees on either residents or businesses.

"It's a solid budget that's actually based on reduced spending," Kooiman said. "I think the budget does a good job of protecting kids and senior citizens while being fiscally responsible and fiscally prudent. We can't afford to continue one-time fixes and pushing off the issue from year to year. Nor can we go back to the taxpayers and ask for more money."

The House budget panel voted 18-11 to send the budget proposal to the full House, which was expected to begin discussing the proposed state spending plan on Thursday at the earliest.

House Speaker Craig DeRoach, R-Novi, said he wanted to see a vote on the proposal Thursday, but scheduled a Friday session in the event that the House couldn't meet that deadline.    

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