Examining the NCInnovation Controversy: Debunking the Massachusetts Life Science Center Comparison | Eastern North Carolina Now

    Publisher's Note: This post appears here courtesy of the John Locke Foundation. The author of this post is Brian Balfour.

    Criticism continues to mount over the North Carolina Senate's decision to include $1.4 billion for NCInnovation in its proposed budget. Not only would it be a massive crony scheme using taxpayer dollars to reward select businesses by political appointees, the organization's own justifications continue to raise red flags.

    Last month I highlighted how NCInnovation's own promotional brochure highlighted the failing VinFast as a success story of "intentional innovation efforts."

    Additionally, NCInnovation lists on its website several examples of "other states' success with innovation." Included among them is the Massachusetts Life Science Center (MLSC).

    This "success story," however, serves as a poor - and misleading - comparison for the proposal for NCInnovation.

    For starters, the NCInnovation site describes MLSC as "an independent organization," which has "deployed $1.6 billion in its Boston corridor, the vast majority of it coming from state appropriations."


    This statement is not true.

    As noted in MLSC's 2022 audit, the organization is considered " a component unit of the Commonwealth" of Massachusetts and as such is exercising state government functions, dependent on taxpayer dollars.

    Regarding the funding, the Massachusetts Life Sciences Act of 2008 did make MLSC the "steward" of $1 Billion over ten years, but that money is split among three funding vehicles.

    About three-fourths of $1 billion were dedicated to the "Capital Program" and "Life Science Tax Incentive Program." The Capital Program is for "municipalities and institutions for buildings, equipment, upgrades to roads, sewer lines and other infrastructure," while the Life Science Tax Incentive Fund "allows the Center to award tax incentives to companies on behalf of the Department of Revenue (DOR)."

    Neither of these programs are similar to the proposed activities of NCInnovation. Instead, they are similar to the traditional capital and infrastructure expenditures already captured in our state budget, tax credits offered through our Job Development Investment Grant (JDIG) program, and grants offered through the Golden LEAF Foundation.

    Only the third fund within MLSC, the "Investment Fund," could be compared to what NCInnovation would be tasked with doing. The MLSC Investment Fund is "used in making appropriations, allocations, grants or loans to leverage development and investments in life sciences in Massachusetts."

    The legislative act authorizing the funding for MLSC envisioned the Investment Fund allocating about $25 million a year over ten years, for a total of $250 million, a small fraction of the amount requested for NCInnovation in the Senate budget. And the actual amount disbursed from the Investment Fund has turned out to be even smaller. According to their 2022 audit, only "$22.4 million had been authorized and disbursed from the Investment Fund." By comparison, Bennet Waters, the CEO of NCInnovation, recently told WRAL that his organization planned to spend $106 million per year.

    In another example of why MLSC does not provide a legitimate example or comparison to help justify $1.4 billion in taxpayer funding for NCInnovation, sitting on MLSC's Board of Directors is the President of the University of Massachusetts. Such an arrangement would not be possible for NCInnovation, because the budget language requires that any "officer, employee, or member of a governing board of NCInnovation is not a State employee." This is another significant difference between MLSC and NCInnovation and a curious clause given the intended close collaboration between NCInnovation and the UNC system.


    We have already heard from policy experts in Ohio warning us that the Buckeye state's experience with a similar organization should serve as a warning, not inspiration, for NCInnovation. We now know that yet another state touted by NCInnovation as a "success story" in reality provides no meaningful comparison to justify NCInnovation's unprecedented request for taxpayer funds.
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