JLF’s Becki Gray reports that the Senate Finance Committee just passed Senate Bill 527, Life Sciences Development Act, by voice vote. The bill resurrects a state-backed venture capital loan fund to support biotech startups. As CJ‘s David Bass reported last year, the bill
would establish a private limited liability company to make taxpayer-funded loans of up to $30 million each to biotech companies. To underwrite the loans, the Life Sciences Development company would sell equity certificates (similar to shares of ownership) to investors.
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One particular provision has stoked the ire of opponents. It would cover investors’ outlays by giving them taxpayer-funded credits if returns from the startup companies weren’t as much as expected. Foes of the proposal say the credits would have taxpayers assume at least part of the venture capitalists’ risk.
Moreover, the North Carolina Institute of Constitutional Law concluded that the fund likely would violate the North Carolina Constitution, as the state would be lending its taxing authority to a private entity.
Sponsors, led by Sens. Fletcher Hartsell, R-Cabarrus, Pete Brunstetter, R-Forsyth, Dan Clodfelter, D-Mecklenburg, and Bob Rucho, R-Mecklenburg, must rush this through the Senate by the end of business tomorrow to beat the crossover deadline. Zipping it through the General Assembly at the last minute with no public fanfare looks like the sleight of hand that went on in the General Assembly when it was controlled by the other party.
