Cut This, Go Home: Biotech Center

Recommendations for the 2015 Budget Negotiations

As budget negotiations for the long-overdue 2015 North Carolina state budget continue, the Civitas Institute would like to remind legislators and taxpayers about opportunities to save real money in the budget – which will enable negotiators to come to an agreement once and for all.

This series, entitled “Cut This, Go Home,” will include several budget items that should no longer receive taxpayer funding because they fall well outside the legitimate, core functions of government.

The first installment in this series is the North Carolina Biotechnology Center.

• Now in its 30^thyear, the North Carolina Biotechnology Center uses taxpayer money in “support of biotechnology research, business, education and strategic policy statewide.”
• The “funding” the center does involves loans to biotech companies and grants for research, often to universities.
  • The Biotech Center does no actual biotech research itself, nor does it create any biotech products. It serves as an informational hub of sorts for North Carolina’s biotech industry, as well as a conduit that receives tax dollars from the state budget and doles them out in research grants and business loans.
• The Biotech Center exists almost exclusively due to government funding. Taxpayers supply the overwhelming majority of revenue to the private, non-profit Center.
• The Biotech Center receives millions of taxpayer dollars every year. In the last several years, funding has ranged from $19.5 million in FY 2010-11 to $8.5 million for the last fiscal year
• Leadership is richly rewarded: According the organization’s 2012 IRS documents, CEO Norris Tolson received nearly $300,000 in compensation. Eight other staffers received compensation well above $100,000. Not bad pay for people who don’t themselves do any actual biotech research or develop any biotech products.
• There is no reason the services the Center provides should be considered a “core function” of state government. Indeed, if the service the Center provides is of value, then the beneficiaries should be the ones to voluntarily pay for the services, instead of taxpayers being forced to subsidize it.
• Biotech firms seeking funding should do so like the rest of us: find a bank or other lending institution willing to loan them the funds. Or, as is the case with most new start-up businesses, a venture capital fund.
• North Carolina taxpayers SHOULD NOT function as a venture capital fund. Those types of high-risk decisions should be made by people who have a direct stake in the decision, not by people who will be giving out taxpayers’ money.
• The biotech industry in North Carolina has grown to include more than 600 firms employing more than 61,000 people and generating more than $73 billion annually in economic activity. The industry is more than capable of thriving without the help of the taxpayer-funded Biotech Center.

Eliminating the ongoing funding of this non-profit will save taxpayers over $8.5 million yearly at the current levels. This money can go to funding other legitimate state functions or be used to continue lowering tax rates to make the state even more successful at job recruitment.