Governor Orders $150M Loan to Stem Cell Agency
Gov. Arnold Schwarzenegger (R) on Thursday authorized a $150 million bridge loan to the California Institute for Regenerative Medicine one day after President Bush vetoed legislation that would have expanded stem cell research nationwide, the Sacramento Bee reports (Yamamura, Sacramento Bee, 7/21).
Bush on Wednesday vetoed the bill (HR 810) because he said it "would support the taking of innocent human life in the hope of finding medical benefits for others," adding, "It crosses a moral boundary that our decent society needs to respect" (California Healthline, 7/20).
Schwarzenegger on Tuesday sent a letter to Bush urging him to approve the legislation. According to the letter, a veto would "send a disastrous message to limit the role the federal government must play in pursuing the most promising forms of the most basic scientific research" (California Healthline, 7/19).
Under a provision of Proposition 71, the stem cell agency's bond-financing board approved $200 million in bridge financing notes to be sold privately while litigation challenging the constitutionality of Proposition 71 is pending. State voters approved the proposition in 2004 to provide $3 billion over 10 years to fund stem cell research.
Private foundations are expected to purchase a total of $50 million of the notes, and the state now will buy the remaining $150 million (Gledhill, San Francisco Chronicle, 7/21). CIRM to date has issued about $14 million in bonds for some training sessions and has commitments from private bond buyers for an additional $32 million (Krieger, San Jose Mercury News, 7/21).
The loan from the general fund will carry an interest rate of about 4.8%. CIRM will repay the loan when and if lawsuits challenging the agency are decided in the state's favor, according to Molly Arnold, chief counsel for the Department of Finance.
A state court of appeals is expected to hear the lawsuits by December (Vesely, Oakland Tribune, 7/20). The attorney general's office on Wednesday asked the court to expedite the lawsuits (San Jose Mercury News, 7/21).
Under Proposition 71 provisions, Schwarzenegger could have ordered the loan as early as last year (Sacramento Bee, 7/21).
However, Robert Klein -- chair of the Independent Citizens' Oversight Committee, which administers CIRM -- said the agency had not asked for the loan sooner because of the lawsuits. Klein said Schwarzenegger is now confident that the law will be upheld after a Superior Court judge affirmed its constitutionality in April.
CIRM President Zach Hall said the money will provide funding for at least one round of research grants (Somers, San Diego Union-Tribune, 7/21). The money is expected to be available within a few months, and CIRM plans to issue a statewide call for grant applications (Oakland Tribune, 7/20).
Democratic gubernatorial candidate Phil Angelides called the loan a "smokescreen to cloud the memory of California voters that it was Arnold Schwarzenegger who campaigned for President Bush in Ohio and helped put him back into office."
Plaintiffs in the lawsuits against Proposition 71 said they would consider seeking a restraining order to prevent the loan. The Life Legal Defense Foundation, one of the groups challenging the constitutionality of Proposition 71, also filed a lawsuit three weeks ago seeking the return of money from bond anticipation notes already sold and to block the issuance of additional bonds.
Other critics of the agency said Schwarzenegger should have demanded more transparency and legislative oversight in approving the loan (Romney, Los Angeles Times, 7/21).
KCRW's "Which Way, L.A.?" on Thursday included a discussion of the loan to CIRM. The segment includes comments from Klein and San Diego-Union Tribune reporter Terri Somers (Olney, "Which Way, L.A.?," KCRW, 7/20).
The complete segment is available online in Real Player.
KQED's "This Week in Northern California" on Friday also will include a discussion of the loan to CIRM. Guests on the segment will include San Jose Mercury News reporter Lisa Krieger ("This Week in Northern California," KQED, 7/21). Check local listings for show times.