EDITORIALS

Legislature’s $73 million small business jobs bond isn’t perfect, but Maine needs it

Joe Zak, a research assistant at Jackson Laboratory in Bar Harbor, Maine uses a pipette and a centrifuge to find genes of interest in DNA sequences while working in Dr. Zhong Wi Zhang's lab in this February 2010 file photo .Zak, a neuroscience graduate from the University of Michigan, got his job at the lab with the help of federal stimulus money.
John Clarke Russ | BDN
Joe Zak, a research assistant at Jackson Laboratory in Bar Harbor, Maine uses a pipette and a centrifuge to find genes of interest in DNA sequences while working in Dr. Zhong Wi Zhang's lab in this February 2010 file photo .Zak, a neuroscience graduate from the University of Michigan, got his job at the lab with the help of federal stimulus money.
Posted March 11, 2014, at 11:49 a.m.

Maine is in desperate need of research and development investments to drive the development of new products that form the basis for new businesses or spur the growth of existing enterprises.

Maine comes up woefully short in this area — at exactly the time the state needs an economic shot in the arm. Since innovation is responsible for the bulk of economic growth, the fact that Maine lags behind its neighbors and the rest of the country has consequences.

Total spending on research and development in Maine amounts to about 1 percent of the state’s gross domestic product. Maine ranked 45th nationally for research and development spending in 2010, according to the Maine Development Foundation.

Throughout the U.S., about 2.9 percent of states’ gross domestic product is spent on research and development. In New England, the level is higher: 4.4 percent. Maine is even lagging a group of peer states that don’t typically attract large research and development investments. Those 28 states spend 1.7 percent of their GDP on research and development.

Research and development spending isn’t — and shouldn’t be — entirely dependent on the state, but state spending is critical in Maine, where research and development investments have typically lagged and where the level of research and development activity by private industry is low.

It’s been much too long since Maine last devoted significant funds to research and development. In 2012, Gov. Paul LePage vetoed a bond proposal to provide the Maine Technology Institute with $20 million to award to businesses on a competitive basis for research and development and commercialization of products.

This winter, lawmakers are considering a $73 million bond package that includes research and development funding. Proponents are pitching it as a small business jobs bond. The package isn’t perfect, but Maine desperately needs the investment in programs that help small businesses grow and conduct valuable, innovative research and development.

The research and development elements of the bond include $10 million for the Maine Technology Asset Fund, a key fund that offers competitive awards to businesses to pay product research, development and commercialization expenses. It also earmarks $5 million for a loan guarantee program administered by the Finance Authority of Maine and $15 million for FAME’s Regional Economic Development Revolving Loan Program.

Evaluations have shown all three funds provide a return on investment to the state in terms of funds leveraged from other sources and increased state revenues as the businesses they help grow, retain and add jobs, and expand their sales. Maine Technology Asset Fund competitive grants require recipients to put up matching funds from other sources. The three funds are running low, and they deserve to be replenished.

Another $15 million from the bond package would flow to The Jackson Laboratory in Bar Harbor, which plans to build a one-of-a-kind biometric analysis lab. The facility would position the nonprofit research organization as one of the only places in the world where researchers have the equipment to identify changes in individual cells that signal the presence of disease.

The Jackson Laboratory, which pledges to bring $16 million in matching funds to the project, is a world-class research entity that is a tremendously valuable asset to Maine. But it should have to compete for state research and development funds.

The Maine Technology Asset Fund has a rigorous, competitive process set up for awarding funds — one that requires applicants to identify matching funds and prove the commercial potential of their innovations. The Jackson Laboratory has previously won multiple awards from the fund, proving it can compete and come out on top.

Regardless of the recipient, awarding research and development funds directly to a particular entity can set a dangerous precedent. It can have the effect of demonstrating which entities play politics best, rather than proving which ones have the ideas that are most deserving of state support.

The future of the $73 million bond package is now in the hands of the Legislature’s Appropriations Committee. Maine needs this investment in research and development, but the package would be more effective if all research and development funds were awarded on a competitive basis.

It’s our hope the Legislature’s budget writers don’t dispute the need for research and development investments, and they start the process of sending an effective bond package to the voters.

 

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