The Life Sciences Corridor fell victim to the state’s budget crisis, losing $5 million to the state’s general fund earlier this month. The reduction was finalized by Gov. John Engler’s Nov. 6 executive order that balanced the state budget.
Engler said Thursday that he opposes one-time-use funding to alleviate the state’s budget problems. Funding for the corridor comes from Michigan’s $8.1 billion portion of the 1998 tobacco settlement.
“There was a slight reduction in the payout this year, but not a reduction in the total billion dollar commitment,” Engler told The State News.
Engler praised the Life Sciences Corridor in January during his State of the State address.
“Scientists are gathering across Michigan - from Detroit to Ann Arbor to East Lansing and to Grand Rapids - to conduct pioneering research along America’s first Life Sciences Corridor. Their work is changing the world - again,” he said in that speech.
In February, he recommended a $10 million reduction of its funding.
Engler said the state plans to pay out the promised $50 million dollars a year over the next 18 years. However, $25 million was taken from the tobacco settlement fund and placed in the general fund as part of Engler’s budget order earlier this month.
“We have some one-time measures in the budget because it is a tough budget year, but I think (continued use of tobacco money) would be a very unwise thing to do,” Engler said.
The Van Andel Institute in Grand Rapids, MSU, the University of Michigan and Wayne State University make up the corridor, which is intended to make the state a global center for life sciences, research and business development.
MSU President M. Peter McPherson said such a significant budget reduction is a concern.
“I think it is very important that we fight hard to maintain this program - $5 million is 10 percent of the total and what you would hate to see is further reductions in future years,” he said.
Lawmakers were set to raise corridor funding back up to the promised $50 million level after governor-proposed reductions but that effort was defeated during final budget cuts made this month.
Still, McPherson said he was pleased that more money was not taken.
“What is important here is that there be a long-term commitment to this basic concept from the state,” he said. “And I am confident that is where the governor and the leadership in the House and the Senate will want to take it.”
MSU has received $32 million in corridor money and is promised $11.6 million more over the next four years to develop the Michigan Center for Structural Biology.
In addition, MSU has 14 other corridor projects including a food disease detection system and stem cell research for diabetes. The Life Sciences Corridor played a role in a decision by Pfizer, Inc. to expand onto U-M’s Ann Arbor campus earlier this month.
Todd Harcek, spokesman for House Appropriations Committee Chairman Rep. Marc Shulman, R-West Bloomfield, said the $25 million taken from the tobacco settlement fund was placed in the general fund for community health and related initiatives.
He said the reduction in funding is viewed as a deferment to later years by the Legislature.
“If we get the revenue back, we will fund (the corridor),” Harcek said. “They seem to forget we supported these programs when we (first) passed the budget - but we have to balance the budget.”
Appropriations Committee Vice-chairman Rep. A.T. Frank, D-Saginaw, said Engler has used one-time fixes to correct budget oversights in the past.
“Gov. Engler has built his budgets on one-time fixes,” Frank said. “One-time fixes create structural flaws that will cause future budgets to have to deal with them.”
Frank said he has yet to fully account for how all the state’s money has been appropriated since Engler’s Nov. 6 executive order.
MSU Economics Professor Charles Ballard, who attended the governor’s economic outlook luncheon last week, said he believes the economy will start to recover by next summer.
“That doesn’t get you out of the budgetary crunch for the state,” he said. “Because even with the economy picking up, that still will mean the 2002 revenues overall will not be as good as 2001.”
Ballard said the Research Seminar in Quantitative Economics at U-M estimated that state revenues would be down 7.8 percent in 2001 and down a further 2.8 percent in 2002.
“I think you have to be real careful about taking one-time money and spending them all right now, because those nonrecurring funds might be used better, invested over a period of time,” he said.
George Dambach, vice president for research at Wayne State, said he feels the reduction in the program’s second year was an isolated situation.
“You are concerned if it starts to establish a pattern,” he said. “We are assured that this is a one-time deal and next year it will go back up to $50 million.
“But, also I am a realist and know when things get tight, they cut everywhere.”
Dambach said even without tobacco dollars, the state should continue to support the corridor for the next 18 years.
“People will see it is a very wise investment,” he said. “They will probably want to double it if we continue to do what we think we will do.”
Eric Morath can be reached at morather@msu.edu.
