FY2012 House 1 Budget Recommendation:
Issues in Brief
Deval L. Patrick, Governor
Timothy P. Murray, Lt. Governor
The fiscal year 2012 recommendation provides $10 million in funding to the Massachusetts Life Sciences Center (MLSC) and assumes that $20 million in tax incentives, previously awarded, will be taken by companies. Building on the Administration and Legislature’s initiative (Chapter 130 of the Acts of 2008) to promote and advance the life sciences sectors in Massachusetts, the fiscal year 2012 recommendation continues to make essential investments targeted towards job growth, business expansion and new revenues for the Commonwealth.
The Governor’s budget proposal makes additional funding available to the MLSC in fiscal year 2012 to provide research grants and accelerator loans to researchers and early-state companies. This will continue the state’s efforts to promote Massachusetts as a global leader in all stages of business development in life sciences industries, from discovery to commercialization. Finally, this funding will allow the Center to continue its efforts to expand education and workforce opportunities to Massachusetts residents, providing experience within this growing sector that offers higher-than-average salaries at all levels of employment.
Outside Section 49 allocates the first $10 million of any fiscal year 2011 consolidated net surplus to be made available to the Massachusetts Life Sciences Investment Fund held by MLSC. Consistent with the previous three fiscal years, this funding mechanism has provided continuing state support to the Center for matching grants and loans, as well as supporting the operations of the agency. While the $10 million reflects an important and necessary investment in these high-growth sectors, it does reflect a lower annual appropriation than the $25 million that was originally contemplated in the life sciences initiative announced by the Governor in 2007 and passed by the Legislature in 2008. The reduced amount again reflects that all segments of the state budget, including key priorities of the Administration and the Legislature, have been reduced in the spirit of shared sacrifice in this fiscal downturn.
Governor Deval Patrick and Dr. Susan Windham-Bannister, President and CEO of the Massachusetts Life Sciences Center, attend the opening of Organogenesis’ new facility in Canton
Massachusetts is a global leader in the life sciences, including biotechnology, pharmaceuticals, medical devices, diagnostics and bioinformatics. There are roughly 80,000 Massachusetts residents employed in these sectors, and hundreds of companies classified as life sciences-related are located in the state, generating billions in annual business activity. Medical devices are presently our state’s leading export. Massachusetts receives more per-capita in NIH research grants than any other state by far, and local companies received more per-capita than any other state from this past year’s Federal Therapeutic Tax Credit program for early-stage companies. The Life Sciences Center, the quasi-public agency charged with implementing the state’s ten-year, $1 billion Life Sciences Initiative, is making investments to accelerate growth in these sectors, with the dual objectives of creating jobs and advancing scientific discovery that hold promise for improved health outcomes. These targeted investments already are creating thousands of real jobs for real people in the Commonwealth.
The Center continues to highly leverage the public dollars that have been entrusted to it. To date, the Center has committed $215 million in state funding and leveraged more than $700 million in outside investment, helping to create a projected 7,500 jobs across the Commonwealth. This means that for every $1 of taxpayer money that the Center has invested, we have attracted more than $3 in additional outside investment – creating a public-private investment fund of more than $900 million for the state’s life sciences Supercluster in just two years.
The Center’s statewide investments over the past year have included two new large-scale job-creating capital projects, authorization for three loans to provide working capital to early-stage companies through the Center’s Accelerator Program, three grants to support the commercialization of technologies through a new Small Business Matching Grant Program, a second round of Research Matching Grants to promising new investigators, and the second year of tax incentive awards to encourage job growth at 30 life sciences companies. The Center also funded a second year of the Life Sciences Internship Challenge, a program that is developing the next generation of the Commonwealth’s talented life sciences workforce. These new investments join the more than 40 grants, loans and projects that the Center is administering through commitments made in prior fiscal years.
The Center’s Board of Directors approved two new capital projects in fiscal year 2010 totaling $96.6 million in authorizations, while maintaining the financial commitments made to previously approved projects from the prior fiscal year. To date, the Center has committed $129 million to five capital projects, which are expected to create more than 4,000 jobs in the building trades and more than 1,000 permanent jobs in the life sciences. Through all programs combined the Center’s investments have contributed to the creation of more than one million square feet of new life sciences research and manufacturing space.
The Center’s 2010 Internship Challenge received an overwhelming response, with nearly 900 applicants seeking internships this past summer. Through the Challenge, 170 interns were matched with 93 life sciences companies, an increase of over 60% from the 104 interns hired in 2009. Selected interns came from 46 different academic institutions and 32% were from public colleges or universities. Of the selected interns, 13 were from community colleges, up from two the prior year. This increase reflected the Center’s commitment to set aside 10% of program resources for community college students, and extensive outreach to community colleges to encourage their participation. Interns came from communities across the state; from Swampscott to Pittsfield, and Amesbury to New Bedford. Thirty-seven of the interns were offered full or part-time positions with their host companies at the conclusion of their internships.
Governor Deval Patrick and Dr. Susan Windham-Bannister participate in a ceremony marking the expansion of Cubist Pharmaceuticals in Lexington
The Center has awarded a total of $5.375 million in loans to nine active early-stage life sciences companies in Massachusetts through the Center’s Accelerator Program. The Accelerator Program, the Center’s flagship investment program, supports and “de-risks” early-stage companies by providing loans that will match outside sources of capital. The loans are designed to address the need for capital investment associated with the long life sciences R&D cycle and the high cost of translating research into a commercially viable product and, ultimately, in the hands of patients. In September of 2010, Good Start Genetics became the first of these companies to pay back their loan, with interest, after securing $18 million in Series A financing. In October of 2010, Invivo Therapeutics paid back their loan, with interest, after raising $13 million in private financing.
In December 2010, the Center announced their second round of tax incentives for life sciences-related companies proposing to expand business operations and employment within Massachusetts over the next five years. In total, $23.9 million in tax incentives were authorized for 30 companies that committed to expanding their total workforce by 999 jobs. Each company has similarly agreed to meet and maintain all projected job targets for no fewer than five years. It is anticipated that the indirect economic benefit from these jobs, commonly known as the multiplier effect, will result in substantial secondary job creation. Finally, based on the state revenue projections from the expanded income tax collections resulting from these new positions, the state will collect additional revenues equal to the amount of the tax incentives awarded within 5 to 6 years.
Fiscal year 2011 has also been a strong year for company recruitment. The Center recently welcomed UK-based Sagentia and French biotech company Integragen to Massachusetts. Major local company expansions were recently announced by global leaders sanofi-aventis and Novartis.
Our state faces stiff competition for life sciences jobs and investment dollars, both domestically from states like North Carolina and California, and internationally from countries like China and India. We cannot and must not take Massachusetts’ global leadership in the life sciences for granted. Through continued investment, including full implementation of the Life Sciences Initiative, we can ensure that our life sciences sectors continue to thrive throughout the Commonwealth.
Lt. Governor Timothy Murray and Dr. Susan Windham-Bannister cut a ribbon at the opening of NeoStem in Cambridge.
Prepared by Rob Dolan, Executive Office for Administration and Finance ·
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