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California Lt. Gov. Says State Must Spend More for Biotech Training, Biofuels Research

With its lawmakers still embroiled in a budget stalemate, California’s second highest elected official told BioRegion News the state must spend more money in future years to develop a biofuels specialty for its biotech cluster as well as improve training programs so the cluster can fill the jobs it expects to create.
California Lt. Gov. John Garamendi said in an interview the state will pursue both objectives through a new advisory committee of biotech industry professionals he announced last week. The committee will craft programs and policies designed to help California maintain its biotech leadership at a time of increased competition from arch-rival Massachusetts and other states, he said.
One priority for action, he said, would be developing new training programs intended to help the state combat shortages of scientists for biotech and other high-tech businesses.
“We do not have in the state of California the kind of workforce needed to sustain the economic growth that we have, particularly in these new technologies,” Garamendi said, referring to biotech and biotech-based energy alternatives, a segment Gov. Arnold Schwarzenegger has publicly discussed as an engine for future economic growth.
“The reality is that this state, given its extraordinary growth in population, must invest in education and training; otherwise, the economy will slow down and falter, which will start a downward spiral. So we must invest, there’s no doubt about it.”
Asked whether the state should raise taxes to pay for training programs, Garamendi replied: “That depends upon how the economy grows in the near term, and how skilled we are at making sure that our current expenditures are efficient.
“We’re going to have to make sure that programs are efficient and effective, and the public will have to be persuaded to make those investments,” he added.
Budget Breakdown
That promises to be a tough sell. Schwarzenegger, a Republican, has credited his administration with reducing the state’s annual operating shortfalls or “structural deficit” from $16.5 billion when he took office in 2004. Earlier this year he vowed to eliminate such shortfalls via line item vetoes in this year’s $145 billion spending plan — though Legislative Analyst Elizabeth Hill, the state’s top fiscal advisor to the Legislature, has projected California would face a more than $5 billion budget shortfall in the 2008-09 fiscal year and deficits of more than $3 billion every fiscal year through 2010-2011.
But for months Schwarzenegger has sided with legislative Democrats over their Republican counterparts, who have insisted the budget be balanced without the vetoes. Republicans have also complained that the proposed budget relies on rosy revenue projections and spends funds carried over from borrowing of past years.
Senate Republicans have sought another $700 million in additional spending cuts, while Schwarzenegger and Democrats have resisted, in hopes of avoiding politically unpopular cuts in social service and healthcare programs.
The dispute explains why this week will be the sixth that the state has gone without a budget for the fiscal year that began July 1. While the Assembly passed a $145 billion spending plan for 2007-08 on July 20, twice since then the Senate has failed to follow suit because its Democratic majority could only add one additional vote from a Republican, Sen. Abel Maldonado (R-Santa Maria). Two of the GOP’s 15 senators are needed since the state requires budgets to pass the Senate as well as the Assembly by at least a two-thirds margin. The Senate ended budget negotiations and is not expected to act until the Assembly returns from its recess on Aug. 20.
The need for a balanced budget has also been cited by Senate Republicans in blocking another bill watched by biotech industry groups — Assembly Bill 1591, the “hyper-weighted” tax measure that reduces what multi-state corporations owe the state by changing the formula for how they calculate their taxes [BioRegion News, July 9].
Given the budget squabble, California cannot afford the additional workforce training sought by Garamendi without cutting other spending, said Jean Ross, executive director of the California Budget Project. The nonprofit group advocates for policies intended to benefit low- and moderate-income residents.
“That’s a question of policy priorities: Where do you raise your money? How much do you decide to raise? And how much do you decide to spend?” Ross said.
Garamendi, however, said the additional state spending he seeks for worker training is no different from the investment carried out by two South San Francisco biotech companies he visited minutes before speaking to BRN — Poniard Pharmaceuticals, a biopharma specializing in oncology products; and Cell Genesys, a developer of vaccines and gene therapies targeting cancer.
“Similarly, we’re going to have to invest in the research at the research institutions, and invest in the preparation of the workforce at the educational institutions,” Garamendi added.
The visits served as a backdrop to Garamendi’s announcement of the biotech advisory committee. The advisory committee, Garamendi said, will consist of “10 to 15” professionals from the industry, to be drawn statewide from “small companies, large companies, probably in a couple of different medical fields. We have a major opportunity for stem-cell research, so we’ll certainly be including that.”
Its purpose, he said, will be “to analyze and to recommend, to the governor and his administration and the legislature, to make sure they develop the programs if they’re not in place, to augment those that do exist and modify those that need to be modified.”
Biotech was the first industry selected for a panel that will advise the state’s Commission on Economic Development; the state plans similar panels for international trade, agriculture, the film industry, and at least one other topic.
“We spent part of a day looking at an advisory group of how city and county governments and other agencies [can] assist and promote the development of green energy systems. We’re probably going to set up a group of cities and counties and local and state agencies to advise us on what policies we should request the administration and the legislature to pursue just in that area,” Garamendi said.
A Revived Commission
The proposed advisory committee on biotechnology would offer its advice to the Commission on Economic Development, a 36-year-old board of legislative and gubernatorial appointees revived July 20 by Schwarzenegger to boost the state’s economic development effort.
In addition to naming Garamendi chair of the 17-member CED, as past governors have done with their lieutenant governors, Schwarzenegger also named his 10 appointments to the commission, all but the elected officials named so far. Of the remaining members, three are named by state Senate President Pro Tem Don Perata (D-Oakland), and another three by Assembly speaker Fabian Nunez (D-Los Angeles).
Schwarzenegger’s appointees include:
  • Hector Vincent Barreto of San Juan Capistrano, president of Barreto Associates, which assists people seeking to establish Web-based businesses; and chair of the Latino Coalition, a bipartisan Hispanic advocacy group based in the Washington, DC, area.
  • Omar Benjamin of Oakland, executive director for the Port of Oakland and a member of the Oakland Economic Development Corporation.
  • David Greenclay Crane of San Francisco, a special advisor to Schwarzenegger for jobs and economic growth.
  • Daniel Michael Curtin of Sacramento, director for the California Conference of Carpenters.
  • State Sen. Robert Dutton (R-Rancho Cucamonga).
  • Forescee Mariquee Hogan-Rowles of Los Angeles, president and chief executive officer for the Community Financial Resource Center.
  • Virginia Chang Kiraly of Menlo Park, owner of Knitting Girls.
  • State Sen. Michael Machado (D-Linden)
  • Thomas Nassif of Irvine, president and chief executive officer for the Western Growers Association, and the US ambassador to Morocco under president Ronald Reagan.
  • Assembly member Lori Saldaña (D-San Diego)
  • Aubrey Stone, president and chief executive officer for the California Black Chamber of Commerce.
  • Ashley Swearengin, executive director for the Office of Community and Economic Development at California State University, Fresno.
  • Demos V. Vardiabasis of Downey, an independent consultant.
  • State Sen. Leland Yee (D-San Francisco), the Senate’s assistant president pro tem.
The only remaining CED appointments to be made are two by Nunez.
Perhaps the best-known of the names outside California is Barreto, who served as administrator of the US Small Business Administration under President Bush for five years ending in 2006. The presence of Barreto as well as Hogan-Rowles on the CED board makes it “entirely possible” that the commission will review how the state subsidizes early-stage businesses, with an eye to increasing subsidies.
“Are we talking about new financing programs? I don’t know what the answer is going to be. We’ll certainly be looking at the availability of finance and other needs that small businesses have,” Garamendi said.
Also appointed by Schwarzenegger was CED’s new executive director, Rick Baum, until recently the chief deputy of the state insurance department.
The revived commission held its first meeting July 20. According to an agenda posted on the commission’s web site, CED members heard a presentation on California’s economy by Wayne Schell, president and CEO of the California Association for Local Economic Development, while Garamendi identified biofuel development and worker training as two key economic development priorities he hoped the commission will help advance.

“The reality is that this state, given its extraordinary growth in population, must invest in education and training; otherwise, the economy will slow down and falter, which will start a downward spiral. So we must invest, there’s no doubt about it.”

“Our commission will help guide future policies and actions that will continue our movement toward a sustainable growth economy. But, there are many obstacles that we will face along this path, including the population growth of California and the infrastructure that will be required to accommodate it. We will need to find efficient methods to overcome these obstacles,” Garamendi told CED members at the July 20 quarterly meeting, according to remarks posted on the commission’s web site.
The number of California residents is expected to soar, to 59.5 million by 2050 from the current population, estimated at 36.5 million last year by the US Census Bureau.
Industry Raises Issues
News of the advisory committee was welcomed by one of the state’s top biotech groups, which hopes the state will work to address issues the industry considers important.
One of those issues is the lengthy land-use and environmental-review processes of many communities. Matthew Gardner, president of BayBio in San Francisco, said California needs to shorten the average two-year length of those reviews.
“The process for companies expanding here in many cases just takes too long. We’re dealing with products that are timed to get to market after the FDA approves them, and every day lost after that is another day that a patient is not getting an approved product. We can capture and harness more of the downstream investment coming from the industry if the state works on improving some of those processes.”
Accelerating permitting has been a priority in several states. Just a few examples: Indiana and New York have “shovel-ready” programs securing approvals, and thus speeding up development time, for designated properties. In Massachusetts, the state’s Chapter 43D quicker-decision process, signed into law in August 2006, requires decisions within six months on sites designated by communities as “priority development” sites.
In California, the industry has also long sought faster project permitting. In additional to faster decisions, a coalition of eight groups that included BayBio suggested “establishing an electronic standard that directly links state and local processes” in the 2003 report Taking Action for Tomorrow: California Life Sciences Action Plan.
The report also offered recommendations for strengthening California’s life science work force:
  • The state Employment Development Department should join with industry groups to forecast and communicate future life sciences industry employment needs.
  • Designate four regional academic centers to advance the state’s development of clinical science and lab programs — where possible, between educational system segments such as state universities and community colleges.
  • Mandate internships and other programs to prepare students for life sciences jobs.
  • Strengthen science education in public schools.
In San Diego, the life sciences industry group BIOCOM and the San Diego Workforce Partnership are collaborating on a successful worker training program. The Life Sciences Summer Institute will have placed by summer’s end 118 high school and college students in internships since 2005. The number of student internships each year has grown from 13 in 2005 to 44 last year and 61 this year. Interns learn laboratory basics at a biotech “boot camp” held at the Southern California Biotechnology Center at Miramar College before moving on to paid internships with companies.
The institute is also expected to train 53 teachers with the potential to reach more than 16,000 students by the end of the 2007-08 school year through the institute’s Teacher Externship Program. The two-week paid program, hosted at the Community Lab of Biogen Idec, exposes teachers to the Amgen-Bruce Wallace Biotechnology Laboratory Program curriculum, then a week of half-day industry experiences and half-day curriculum workshops.
“The state is considered a leader, but by no means is the continued growth of biotech guaranteed. There are things the state could look at and explore in terms of how it supports companies in growing and investing in their pipelines,” Gardner said.

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