LA WATCHDOG--Authorizes $5.5 billion state bonds for: stem cell and other medical research, including training; research facility construction; administrative costs.
Dedicates $1.5 billion to brain-related diseases. Appropriates General Fund moneys for repayment. Expands related programs. Fiscal Impact: Increased state costs to repay bonds estimated at about $260 million per year over the next roughly 30 years. [$7.8 billion including interest]
In 2004, Proposition 71 was approved by 59% of the voters. It established the California Institute for Regenerative Medicine to oversee stem cell research and provide funding for research and research facilities. It also amended the State’s Constitution to allow stem cell research. And importantly, it authorized the issuance of $3 billion in general obligation bonds to fund research, putting the State on the hook for the repayment of the bonds at an average cost of $200 million a year for 30 years. There was also the prospect of huge royalties from the commercialization of the research.
But times have changed and the need for the State and its taxpayers to spend $7.8 billion for stem cell research over the next thirty years is an expenditure we cannot afford in this age of deficits and Covid-19.
In 2004, the federal government refused to fund stem cell research because of religious objections. With the change in administrations in 2009, the federal government began to fund stem cell research, lessening, if not eliminating, the need for Californians to fund this research.
Today, there are also billions of venture capital and corporate dollars actively looking to invest in stem cell research, negating the proponents’ arguments that $5.5 billion is required to fund the CIRM’s efforts and overhead for the next 15 years.
Furthermore, if the Legislature and Governor believe that the CIRM is a worthwhile organization, they could allocate resources to fund the operations and bureaucracy of the Institute while it looks for and identifies worthwhile investments that are funded by foundations and the private sector. This would save California over $7 billion over the next 30 years.
Another alternative would be for the CIRM to seek outside funding to fund its daily operations. Like with the State, this would also require the Institute to justify its existence and its ability to develop attractive investment opportunities.
Based on the 17,000 word (!) ballot measure, administrative costs are not to exceed to 7.5% of the $5.5 billion in bonds, or $412.5 million over the next 15 to 20 years. That implies an annual cost in the range of $20 to $30 million.
Another issue that has been raised is the lack of transparency and accountability of the CIRM, especially given the lack of legislative oversight and the many conflicts of interest on the part of many members of the governing board. These are not addressed in a meaningful way in the ballot measure.
As for royalties and the return on California’s investments, this windfall has not materialized. Since 2004, the State has received a measly $350,000, representing a return of one hundredth of 1% (0.01%).
In this time of budget deficits, the State and Californians cannot afford to spend $7.8 billion (including interest) over the next thirty years on investments which have no return, especially when there is third party money that will fund any worthwhile investment.
Save $7.8 billion and vote NO on Proposition 14.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council. He is a Neighborhood Council Budget Advocate. He can be reached at: [email protected].)