Prop 71

I just sent in my absentee ballot, so I have politics on the brain. Like I have done during previous election cycles, I am going to cover some of the initiatives on the California ballot and why I voted the way I did. If you are interested in this kind of stuff, I hope it's worthwhile reading, if not then move along and check back later when I post the usual Main Dish fare.

Proposition 71: Stem cell research funding

How I voted: AGAINST

What the initiative provides:
- authorizes the sale of $295 million per year in bonds over a 10 year period to fund stem cell research and dedicated facilities for scientists at California's univesities and other medical research facilities
- postpone the repayment of the bonds until the 6th year
- prioritize research to those areas that are most likely to result in therapies and cures
- create an oversight committee
- mandates priority to pluripotent and progenitor cell research, which would seem to exclude adult stem cell and cord blood research without explicitly saying so (the former being derived from embryonic cloning or surplus embryos from IVF procedures)

Pros:
- stem cell research is good, who wouldn't support that? Right?
- the initiatives is fiscally responsible in that it defers repayment for 5 years in order for the measure to result in some royalties payments and for the state to pass through our current fiscal crisis
- California's biotech industry must strive to become #1 in the world, this measure helps
- new cures and therapies will only serve to offset the enormous costs of California's healthcare system
- the initiative is insulated from micromanagement by Sacramento
- funding for human cloning is explicitly banned by this initiative
- the bulk of the funding will go to research being conducted in California's universities, serving as a magnet for researchers

Cons:
- state funded venture capital funds have been a disaster all over the country, there is no evidence to suggest that Califonia's attempt will result in anything but a waste of taxpayer money
- the bonds total $3b over the life of this initiative, however the total COST of the bonds to taxpayers is $6b when you add in interest. WHAT THIS MEANS is that only .50 cents of every dollar of taxpayer money actually goes to the stem cell fund
- the oversight committee is a 29 person board of political appointees. Section 125290.20 is a lengthy section detailing who gets to appoint what members and from what disease advocacy groups. Political appointees are a poor way to run an investment fund.
- 3% of the fund is authorized for administrative fees, in essence this is the management fee.
- the administrative group is authorized for up to 50 people with no explicit restrictions on consultants, and because the group retains the authority to exempt itself from the California open meeting law, and prohibits the Governor and Legislature from exercising oversight, there really is little control over how the money is spent or misspent. There's just too many ways for taxpayer money to be siphoned off for non-research functions. (section 125290.3.d.1.D explicitly allows matters concerning compensation, etc. to be held in closed door meetings).
- the initiative requires that all grant and loan awards be subject to licensing and royalty agreements. This is not an unreasonable requirement, however it establishes a two tier system where the best and most promising research will get funded through traditional private equity vehicles where the funders participate in the equity upside, leaving the State fund the table scraps.

Summary:

I am voting AGAINST this measure simply because taxpayer funded, political appointee managed investment funds are suboptimal investment vehicles at best, financial disasters at worst. If the State wants to encourage biotech investment in the state, then public/private partnerships in R&D centers can be effective, such as what Colorado is doing at Fitzsimmons. Reducing regulatory red tape, providing tax incentives for businesses, fixing our education system, and solving the State's spending crisis will all do more to attract investment in California's biotech industry. Finally, the idea that only 47% of the funds that taxpayers have to foot the bill for will go to actual research grants is offensive to me as a taxpayer.

Comments

[JEFFREY]

You got it right -
the proposition is a fraud. If there were viable possibilities in research - the giant bio companies would be all over this - they are not.

Morals aside - this s a state constitutional amendment that sticks the voters with a huge tab of 235 million dollars per year for the next 30 year sthat must be paid regardless of the condition of the state economy. The funds are not subject to legislative review and another constitutionla amendment would be required with 2/3rds majority to rescind 71.

Vote NO