The Texas Legislature will begin its next session in an economy when no industry will remain untouched, said David Margrave, Texas Healthcare and Bioscience Institute board of directors chairman. The state will face reduced sales tax revenues and tight budget.
For the past several months the legislative committee of Texas Healthcare and Bioscience Institute has been identifying legislative priorities, Margrave told those attending the institute’s annual meeting.
The Texas Healthcare and Bioscience Institute has spent the past 12 years building bioscience effort in Texas, he said.
“Step by step, piece by piece, year by year, we’re building this structure and filling in the gaps to help Texas become a true bioscience leader,” Margrave said.
The state comptroller said in May the state had a $11.8 billion surplus, said Meg Propes, Texas Healthcare and Bioscience Institute board member. But that was before Hurricane Ike devastated a large portion of the Texas coast and the associated costs of rebuilding became part of the state budget.
The financial outlay for Ike, the increased costs of Medicaid, education, medical care and social services have lead some to project a budget shortfall of $3 billion to $4 billion.
Other problems facing the life sciences industry is the possibility of the Emerging Technology Fund running out of money by the end of this fiscal year, which is highly likely according to the governor’s staff, Propes said.
The Emerging Technology Fund has increased investment in small technology companies throughout the state and is critical to the advancement of small companies especially in light of current economic situation on the national scale, she said.
“It is the hope that this fund would be self sustaining, but it’s too early in its development for that to happen,” Propes said.
The Texas Healthcare and Bioscience Institute and its partners also are pushing for a research and development sales tax exemption.
“It’s a state sales tax exemption on research and development equipment that is also used in manufacturing,” she said. “Texas in one of seven or eight states that doesn’t have a research and development tax credit on its books, putting it at a distinct disadvantage for recruiting and helping Texas companies to grow.”
Propes admits it would be a difficult bill to sell, because it would be a sales tax loss to the state. However, the argument for the bill is the economic benefit, which far outweighs the cost to the state from loss of sales tax revenue.
“Our hope for all emerging technologies and companies is that they grow, they help people, they employ more Texans and they stay in Texas,” she said.
The 81st Legislature will have two new state senators and 22 new state representatives to educate on the impact of legislation on the life sciences, Propes said.
The political dynamics, she said, have changed in both chambers.
The environment for the biotech industry is tough, said Tom Kowalski, president of the Texas Healthcare and Bioscience Institute.
The Emerging Technology Fund and the Enterprise Fund were created to invest in the research and development in the bioscience and health care industry, enabling businesses to advance and remain in Texas.
The Scott & White’s Cancer Research Institute received a $7.5 million grant in November 2007 from the Texas Enterprise Fund.
“It breaks my heart when I see a company leave that is formulated off of the R&D that we have performed in the state of Texas,” Kowalski said. “We find them in California, we find them in New Jersey and North Carolina, when they ought to be here.”
The Emerging Technology Fund has served as a beacon as to what is happening in Texas, he said. It has sparked collaborations, it has sparked investments, it has created companies and its impact is just now becoming known.
Editor’s note: This is one in an occasional series of stories about the next Legislative session and its effect on this area.
