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Gov. plans funding boost for research projects

December 28, 2006|Evan Halper | Times Staff Writer

SACRAMENTO — A plan announced Wednesday by Gov. Arnold Schwarzenegger to boost public funding for cutting-edge research could prove to be a boon to some of the state's top universities -- and to private companies that leverage their breakthroughs into big profits.

The proposal, which is to be included in the budget unveiled by the governor early next month, calls for investing $95 million in four research projects based at the state's public universities. The projects designated for funding, at least one of which would be developed in partnership with a major oil company, are mostly geared toward the creation of cleaner-burning fuels.

Plans to build the world's most powerful computer, as well as research that companies could use to create new electronics products and pharmaceuticals, would also receive millions of dollars under the proposal.

"California will reap tremendous rewards for our economy and environment from this investment in our innovation infrastructure," Schwarzenegger said in a statement.

But some advocacy groups questioned whether the state would get a proper return on its investment.

They urged the administration to put safeguards in place that would ensure that taxpayers -- and not just private companies -- reap some of the profits created by publicly funded innovations.

"It may be possible to do these things without them being a corporate giveaway, but in the past the state hasn't done a very good job of showing that," said Lenny Goldberg, president of the California Tax Reform Assn., a union-backed think tank.

The state often does not share in the profits reaped by the private seed companies formed around technological breakthroughs in public university labs, Goldberg and others say.

But Schwarzenegger administration and university officials said the innovations boost the overall business climate in the state, drawing more companies to California and leading to new jobs and a stronger economy.

"This is about two things: building the kind of research and human capital pool that will sustain California well into the future, then making sure those innovations are transferred into the marketplace," said Bruce Darling, the University of California's executive vice president for university affairs. "The goal is to make sure everyday Californians benefit."

The governor's proposal comes less than two months after the defeat of Proposition 87, which would have funded such investment on a much larger scale -- about $500 million a year for several years -- through a new tax on oil companies. The governor, a strident opponent of new taxes, spoke out against the measure.

The current plan would be a one-time shot in the arm for the research institutions. The funding would come out of existing revenue in the already strained state budget, as well as from the sale of tens of millions of dollars in "lease-revenue" bonds, a type of borrowing available to the state for infrastructure investments that can be approved by the Legislature without the consent of voters.

While advocates for the poor cautioned that the new spending would cut into funds available for healthcare programs and social services, at least some leading Democrats embraced the proposal.

Assembly Speaker Fabian Nunez (D-Los Angeles) said the part of the plan that boosts funding for a project at the UC Lawrence Berkeley National Laboratory geared toward creating clean-burning fuels "will go far in combating the threat of global warming."

Most of the rest of the proposed spending -- $40 million -- is contingent on a UC school winning a grant from the BP oil company.

UC Berkeley and UC San Diego are among universities nationwide competing for a $500-million BP grant to create a research institute dedicated to the development of alternative fuels. Should either UC campus succeed, the state will add $40 million to the program.

Steven Chu, director of the Lawrence Berkeley lab, said the proposal would not be a subsidy for BP. Products developed by the institute would typically be available to all companies, and the state would ultimately recoup its investment by capturing a share of royalties paid to the institute, he said.

"Not a single penny of tax [money] will go specifically to helping BP," Chu said.

But budget watchdogs said they would like to see the state not only recoup its investment but also leverage it for maximum return.

evan.halper@latimes.com

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