ST. PAUL, Minnesota –Many states aspire to have a medical industry like Minnesota’s. It turns out Minnesota wants what many other states have as well.
Legislators, spurred in part by the recent departure of small biotech companies to Wisconsin, will try next session to pass a series of tax credits that were vetoed as part of a larger bill this year.
States like Ohio and Indiana have their Third Frontier Programs and 21st Century Funds meant to build a base of companies which, hopefully, give birth to a Medtronic-sized business. But Minnesota State Sen. Kathy Saltzman said it’s not good enough to focus just on a medical-device industry and — the latest government priority — green jobs.
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“What is the next St. Jude Medical? What is the next Medtronic?” Saltzman said. “Anyone — state, county, anyone — if they think we don’t have to continue to work on being the best and we just can coast on our past successes we’re in trouble.”
Below, Saltzman discusses the concerns in her state and a potential economic incentive package on the horizon.
Q. VitalMedix is a four-member biotech start up. So based on that, it seems its departure last week is getting a disproportionately large reaction.
A. It is a small company. But this particular story should be a wake-up call to anyone in Minnesota who challenges the notion that (a financial incentive) policy is not necessary.
What is disappointing is that when we became aware they were looking at Wisconsin, when we read the headlines that they were looking for angel investors, the fact that we couldn’t in the end get something done is very disappointing. There was never a global agreement in Minnesota of how we were going to finish the session.
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Q. Where needs to be done?
A. We’ve done everything to create the incubator. We provide excellent funding for research at the University of Minnesota. But when these new ideas come off the lab bench, to get them across the bridge and out to the marketplace takes many different steps. If we don’t have the capital to support these ideas and the small emerging companies will swoop in and pluck them out. That’s what’s been happening. And we can’t solve a problem if don’t admit having one.
Q. What was proposed in Minnesota?
A. There were two bills. We wanted to use insurance premium tax credits to encourage investment in small business — it’s known as the CAPCO bill. And another included a 25 percent tax credit to anyone who invests in a new business in the state. They were introduced separate but added into another bill.
That bill was — not because of the angel investor credits — but as part of final attempts to balance the budget.
Q. Will you support both programs again?
A. We need to put together a more comprehensive package. The insurance pool program is there, but what are some of the other things emerging companies need? We’ve tried to establish a public-private commission for economic development of science and technology. That committee, called North Star Rising, was approved in other legislation but there was no fiscal note attached, so there was no funding for it. It’s a placeholder.
We just have to make sure we have every other economic development tool in place so that we have a seamless process. We need to make sure these emerging business have access to the funding they need.
