December 30, 2009 |
2009-R-0471 | |
MASSACHUSETTS LIFE SCIENCES INITIATIVE | ||
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By: John Rappa, Principal Analyst | ||
You asked for a summary of Massachusetts' Life Sciences Initiative.
Enacted in 2008, the Life Sciences Initiative is a 10-year, $1 billion strategy to develop and sustain Massachusetts' life science industry cluster, which includes biotechnology, pharmaceutical, medical devices, diagnostic, and bioinformatic companies (2008 Mass. Chapter 130). As Figure 1 shows, the initiative addresses the cluster's physical, human, and financial capital needs.
Figure 1: Massachusetts Life Sciences Initiative
The initiative consists of many economic development programs targeted exclusively at the life sciences cluster. As Table 1 shows, these address the cluster's long- and short-term physical infrastructure, workforce development, and financial needs. The initiative's price tag includes up to $500 million in bonds for specified capital projects, $250 million in appropriations for grants and loans, and $250 million in personal and corporate business tax credits and sales tax exemptions. The latter are capped at $25 million per year.
Table 1: Massachusetts Life Sciences Initiatives
|
Needs |
Programs and Timeframe | |
Long-Term Needs |
Short-Term Needs | |
Physical Development |
$500 million in bonds for specified life science infrastructure and facilities, including water purification plants and incubator buildings |
Tax Incentives ● 10%, refundable personal income and corporate tax credit against the cost of acquiring, constructing, reconstructing, or erecting real and tangible personal property used exclusively in Massachusetts ● Sales tax exemption for purchasing tangible personal property to be used for developing a R&D or manufacturing facilities or utility support systems |
Human Development |
Matching grants for: ● Supporting new personnel conducting innovative research at colleges and universities ● Attracting and retaining nationally prominent faculty ● Encouraging business-university collaborative research Life Science Investment Fund grants for training future life science workers |
$5,000 -$15,000 grants covering living expenses for life sciences doctoral students and post-doctoral fellows Grants to vocational and technical schools for purchasing or leasing equipment for training in life sciences technology and research |
Technological Development |
Regional Technology and Innovation Centers for: ● Promoting collaborative research ● Building life sciences industry data bases ● Developing life sciences workforce ● Disseminating best life sciences business practices ● Facilitating public and private investments ● Reviewing proposals for Life Sciences Center funding ● Identifying life sciences regional clusters |
Tax Incentives ● 100% personal income and corporate tax credit against Federal Food and Drug Administration user fee applications for human drugs to be manufactured in Massachusetts ● Nonrefundable credit applicable to R&D expenses not covered under the generic R&D credit ● Deduction for clinical expenses of testing drugs for rare diseases or conditions ● Sales tax exemption for items used in R&D ● 15-year (normally, five-year carry forward) net operating loss carried forward ● “Throwbacks” excluded from sales factor for apportioning corporate income* Financial Assistance ● Life Science Investment Fund: grants, loans, investments, and other funding to businesses, universities, institutes, and other entities for commercializing life science R&D ● Small Business Equity Investment Fund: up to $250,000 investments in early stage life sciences firms ● Small Business Matching Grant Fund: Up to $500,000 to match federal grants for commercializing production-ready new technologies |
* “Throwback” requires companies to add sales in states where there are no corporate taxes to Massachusetts sales.
The programs are administered by the quasi-public Massachusetts Life Sciences Center (http://www.masslifesciences.com/index.html). They are open only to companies the center certifies based on statutory criteria. The criteria require a company, among other things, to project the state tax revenue it expects to generate and the number of permanent full-time jobs it expects to create or retain. The center can revoke a certification and funding if actual revenue is less than 70% of the projected revenue.
The initiative appears to be unique among states. Many, including Connecticut, support life sciences and other industry clusters through generic economic development programs administered by economic development departments or quasi-public agencies. Some, like Connecticut's Department of Economic and Community Development, may include units that help bioscience companies access programs administered by different agencies. (http://www.ct.gov/ecd/cwp/view.asp?a=1095&q=249634&ecdNav=|).
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