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Patrick Seeks Additional $10M for Massachusetts Life Sciences Center in FY 2010 Budget

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By Alex Philippidis

This is an updated edition of a story first published on June 30

Massachusetts Gov. Deval Patrick is asking the state Legislature to budget another $10 million for the programs and operations of the quasi-public Massachusetts Life Sciences Center during the fiscal year that began Wednesday, in addition to the $10 million already within the $27.05 billion FY 2010 spending plan he signed into law two days earlier.

The extra $10 million would not be contingent — as is the $10 million already approved by the state House of Representatives and Senate — on the state finishing the 2009 fiscal year, which ended Tuesday, with a "consolidated net" surplus large enough to make the payment.

"It is unlikely, however, that the available fiscal year 2009 surplus will even approach this amount," Patrick acknowledged in his formal amendment requesting the life-sci funding be added to the budget.

"Moreover, the promotion of life sciences research is so fundamental to our citizens’ well-being and to the commonwealth’s economic future that I believe an additional $10 million transfer is justified, and I have reduced other spending to the extent necessary to afford this."

Legislative leaders had not announced whether, and when, they will consider the life-sci funding. Spokespeople for House Speaker DeLeo (D-Winthrop) and state Senate President Therese Murray (D-Plymouth) did not return messages from BRN this week. The life-sci funding request is one of 15 proposed changes to the budget for which Patrick is seeking action from the legislature.

"I wouldn't be surprised to see a lot of them just sit there. [Lawmakers] don’t have to take up anything. There's no requirement. They're probably trying to figure out what their strategy and approach is; which ones they'll take up and which ones they won't," said Michael Widmer, president of the Massachusetts Taxpayers Foundation, a policy research group focused on state spending and the state economy.

One of Patrick's other proposals would require a project labor agreement between the state and unions to be involved in the planned construction of a bioprocessing facility for the state-funded University of Massachusetts in Fall River, Mass. Such agreements typically limit the construction workforce to union members, in return for guarantees that a project will finish on time, and with no labor strikes.

Patrick is proposing the PLA more than two months after urging leaders from the life-sci sector "as your friend, your partner and your governor" to resolve differences with the state's largest unions over construction hiring and CEO compensation. The differences earlier this year sparked protests by Local 103 of the International Brotherhood of Electrical Workers and other major unions against industry practices called "Stop Biotech Looting" [BRN, April 17, March 2].

Technically, Patrick's proposals can be acted on until the end of the legislative session next year. Because they involve the current fiscal year's budget, "they could take up some of these later, but they're unlikely to," Widmer added.

Forecast: No Surplus

According to a projected financial statement updated on June 29, Massachusetts will end FY '09 with a general fund surplus of zero.

While the Massachusetts Budget and Policy Center, a think tank focused on state fiscal issues, has projected a $69.6 million surplus in FY '10, counting the general fund and designated funds, the center also noted Massachusetts used about $2 billion in one-shot revenue toward the new fiscal year's budget — including $1.5 billion in additional Medicaid reimbursements included in the $787 billion American Recovery and Reinvestment Act, the economic stimulus measures enacted by President Obama in February.

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The weak economy has reduced tax collections steadily since last fall, increasing the shortfall between revenues and expenses that Patrick and lawmakers have had to plug in order to balance the '09 and '10 budgets. Since last October, the officials have been forced to address a combined $9 billion gap in both fiscal years' budgets — $3.9 billion in FY '09, $5.1 billion in FY '10.

The $10 million sought for the MLSC would come from $147 million in spending that Patrick vetoed, using his line-item authority, in approving the FY 2010 budget.

"Investments in life sciences are critically important to job growth, by retaining our status as a world leader in one of the most exciting economic growth opportunities of the 21st century. Our ability to capitalize on this opportunity for innovation and economic leadership cannot depend solely on the availability of surpluses that are unlikely to materialize in this difficult fiscal climate," Patrick wrote in a June 29 letter to the state House of Representatives and Senate.

The additional $10 million for the MLSC is the only surplus funding for which Patrick has earmarked a purpose; the remainder would go to the state's rainy-day or Stabilization fund.

Patrick initially proposed $20 million in FY '10 program and operating funds for the MLSC, and earlier this spring scaled back his request to the same $15 million it received in FY '09. The state Life Sciences Act authorizes up to $25 million per year for programs and operations, a figure the state has been hard pressed to meet because of its budget squeeze.

The state House and Senate will vote on the MLSC request as an amendment to the state budget. If they approve it, the amendment goes to Patrick for his signature. If they reject it, Patrick can either sign the MLSC's original budget line with the $10 million subject to surplus, or veto it.

The program and operational funding at issue does not include the $25 million in tax credits the center is allowed to award each of the 10 years of the life-sciences act, or any additional capital funds that the center uses toward subsidizing life-sci projects under the law's $500 million, 10-year capital fund. This past fiscal year, the agency received $15 million from the Massachusetts Life Sciences Capital Program.

The figure for FY 2010 has not been decided, and won't be set until after Patrick and lawmakers finish their work on the budget.

As a condition of receiving its general-fund money, the MLSC must limit to $3 million its "total administrative and operational expenses" in FY '10.

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