Can Washington get its life sciences groove back?
Jay Inslee's plans to help biotech in Washington are a bit more ambitious than Rob McKenna's proposals. But the state government's budget woes — especially in education — means that the Legislature likely won't allocate much money to biotech in the upcoming session.
McKenna and Inslee outlined their biotech plans Friday to the Washington Biotechnology and Biomedical Association annual governor's summit in Bellevue. Both candidates want to keep research and development tax credits intact. Both said the state's education system needs improvement to send more students into biotechnology. Both said Washington's universities need more money to accept and teach biotech students. Both said the economy needs to improve to increase that flow of science students — citing their broad economic development measures as ways to do so.
"I believe this industry is a wellspring of economic potential," Inslee said.
McKenna pointed to the state's fees and taxes as a drag on biotech. "This is one of the most expensive states in which to do business. ... I don't think we need to be one of the cheapest states. But we don't need to be one of the most expensive," McKenna said.
Inslee said he would create a designated office to provide state help in finding private capital and networking opportunities for biotech bsuinesses. He also proposed allowing fledgling biotech businesses to sell their research and development tax credits to established tech firms — essentially old firms providing money to young firms that have no revenue, while getting their tax credits in return. Inslee also is looking into removing legal restrictions that hamper universities from licensing their research for private biotech ventures. "We have artificial restrictions on this great research,"Inslee said.
McKenna criticized Inslee's biotech office proposal. "I'm leery of the approach he's taking of picking winners and losers. ... I'm afraid it'll result in the cronyism that we see in Washington, D.C.," he said.
Life sciences make up Washington's fifth largest business sector, according to the Washington Biotechnology and Biomedical Association (WBBA).
WBBA figures show about 34,000 direct biotech jobs in the state, a number that grows to roughly 92,000 jobs when the ripple effects and support jobs are added. The biotech industry contributes roughly $11 billion to Washington's economy with more than 400 drug research and medical technology firms across the state.
Biotech is one of Washington's strongest industrial sectors job-wise. The state's workforce dipped 2 percent from January 2007 to January 2012. Meanwhile, life science jobs grew 12 percent in the same period, according to Washington Research Council figures.
Even though this sector is growing, it won't be able to count on much financial help from the state. That's because the source of state's biotech aid is already being tapped into for other Washington government expenses. Washington's Legislature will face $2 billion to $6 billion in revenue shortfalls when it tackles the state's 2013-2015 budget early next year. The bulk of that shortfall will be due to last January's Washington Supreme Court ruling that says the state is not meeting its constitutional duties to fund basic education. As a result, the Legislature will have to find billions of dollars in worth of new revenue and budget cuts in the upcoming session.
Inslee and McKenna have both ruled out calling for new taxes, claiming the needed extra revenue can be raised by an improved economy. Outgoing Gov.Chris Gregoire contends that claim is unrealistic.
The state has a Life Sciences Discovery Fund set up to help biotech research. In 2005, Gregoire and the Legislature established a program to spend $350 million — supposedly $35 million a year from 2008 though 2017 — to bolster life sciences research and turn that research into jobs. The money comes from part of an annual lawsuit settlement payment from tobacco companies to numerous states, including Washington.
The fund finances projects that cover a broad spectrum of health-related undertakings: brain, breast cancer, and blood and diabetes research; developing technologies for human cell therapies; creating gluten-free wheat; improving surgery safety in at least three-quarters of the state's hospitals; helping rural communities deal with mental health and substance abuse issues; developing "smart home" technology for the elderly; and providing gene sequencing equipment for researchers. Other research addresses early detection of tooth decay and systemic shock as well as help in diagnosing back pain. One effort has been to teach better CPR techniques to first responders.
John DesRosier, the fund's executive director, said the resulting research and training have saved roughly 350 lives and the surgical safety program prevented 300 operations that would have been needed to fix previous surgical mistakes. "Surgery is safer in Washington state," he said.
The actual tobacco payments and allocations for research from the Life Sciences Discovery Fund initially turned out to be close to the projections, about $33 million each in fiscal 2008 and fiscal 2009. Then the Legislature began dipping into Washington's tobacco settlement revenues to pay for other programs, sending less than $15 million to life sciences research in 2010 and about $5 million in 2011. The 2012 figure was less than $5 million. Looking toward 2013 and beyond, DesRosier said, "We don't know what to expect."
Overall, $88 million in tobacco settlement money has been set aside in the Life Sciences Discovery Fund with all of it currently allocated to specific proejcts.
DesRosier noted that education and health care will be fighting for any spare money in the upcoming budget talks, meaning that little will likely go to the life sciences fund. He said, "I'm not going to argue against putting money into health care for people who need it."