Ohio voters approved Issue 1 — an extension of the Ohio Third Frontier program — during Tuesday’s primary election by about two votes for every one vote against.
Third Frontier is the $1.35 billion, 10-year program to energize Ohio’s economy by investing in technologies in five industry clusters, including biomedical. The current generation of the program ends in mid-2012. With the approval of Issue 1, Third Frontier will be extended four years — through mid-2016 — with the proceeds of a $700 million bond issue.
So far, the program has granted about $1 billion to research collaborations, entrepreneur support organizations, venture capital authorities and companies. Those grants have generated a $6.6 billion economic impact on Ohio, creating nearly 50,000 jobs and more than 600 companies, according to reports by an independent consultant and the Ohio Department of Development.
When Investment Rhymes with Canada
Canada has a proud history of achievement in the areas of science and technology, and the field of biomanufacturing and life sciences is no exception.
Job creation is important. But the “leverage effect” — attracting $9 in investments and federal grants for every $1 granted by the Ohio program — is more important. These additional investments are creating technologies, supply chains and industries in Ohio that will sustain its residents with jobs and prosperity long after Third Frontier is gone.
So what does voter approval of Issue 1 mean to the Ohio biomedical community? It means new technologies and emerging companies in the industry will receive some part of the $175 million in grants per year that Third Frontier will make between 2012 and 2016.
So far, Third Frontier has granted $365 million, or about 36 percent of its grant dollars, to research, development and commercialization projects in the industry. Remember that leverage effect? Those grants are pulling in about $3.3 billion in investments and additional grants that probably would have gone elsewhere.
Third Frontier grants have gone a long way to put Ohio biomedical companies on the national venture capital map, according to Baiju Shah, president and chief executive of BioEnterprise, the bioscience company developer in Northeast Ohio. They’ve also created collaborations among researchers, institutions, companies and even industries that could generate the next best medical device or therapy.
Is there a cost to approving Issue 1? Of course. The state will sell $700 million-worth of bonds to raise the money required to extend — and slightly expand — the program. Third Frontier had about $160 million a year to grant in its first decade. It will have about $175 million a year to grant in its extra four years.
That money will be repaid by taxpayers in future years. Some say that’s too high a price for a state — like so many others — that’s struggling with high unemployment and budget deficits.
Here’s one consolation: Because Third Frontier’s extension comes solely from bond money, it won’t be subject to the vagaries of the state budgeting process. That means politicians won’t be able to earmark it to plug holes in the state budget.
Here’s another consolation: The business case for Third Frontier — made by a group led by Rick Fearon, chief financial and planning officer, and vice chairman of Cleveland’s Eaton Corp., and a Third Frontier commissioner — estimated the first generation of the program would pay for itself by 2014 with additional taxes from the companies and jobs it creates.
I would rather invest my tax dollars in economic growth than in maintenance. What about you?
