Washington Biotechnology & Biomedical Association
2004 Legislative Agenda
Legislative Objective:
Reenactment of the Business and Occupation Tax Credit (B&O) and the Use and Sales Tax Exemption for Research and Development (R&D).
Critical Benchmarks for Growth
The Washington Biotechnology & Biomedical Association (WBBA) is a recognized leader in advancing the state’s bioscience research and industry sector. WBBA works to ensure fertile ground for continued growth of the biosciences in Washington state.
Fertile ground for growth must:
- Support strong academic research institutions.
- Facilitate successful technology transfer.
- Provide access to early stage capital.
- Promote a stable, supportive and proactive public policy environment at local and state levels
WBBA Members Speak
WBBA began in 1989 but did not gain real momentum until the mid 90s when the bioscience community was galvanized by the public policy discussion generated by the proposed enactment of tax incentives for research and development. Today WBBA finds the reenactment of these credits a galvanizing issue once again.
In response to a recent survey about their use of the tax credits, some WBBA members had this to say:
"Would I have started a company in Washington without the B&O tax credit in place? Maybe. Seattle has great research infrastructure for what we do. But without the B&O tax credit, Washington would not have been an automatic decision; we would have looked at BC and California too."
"We do take advantage of the R&D tax credit for B&O tax and this would have a multi hundred thousand dollar annual impact if the law is sunset."
WBBA asks the members of the Washington State Legislature to support the bioscience sector and the economy by enacting legislation to extend the tax incentives.
Background:
Washington State is home to a successful cluster of bioscience research institutions and companies engaged in development of innovative products to improve the health of patients worldwide. Because the bioscience industry is environmentally clean and the quest to cure disease has strong social value, there is critical competition between states and nations to recruit, retain and grow these companies.
Ross DeVol of the Milken Institute’s regional study group notes: "Although discoveries in biotechnology/bioscience will benefit the entire human race, there is a different kind of race underway – one to determine where the new industries will cluster. The economic consequences will likely be immense. The pool of high paying, equity owning knowledge workers that those industries will attract, and the supplier infrastructure that develops around them, promise significant wealth creation for the winning regions."
According to New Economy Strategies recent report on The Emerging 21st Century Bioeconomy, "Regions across the U.S. are in direct competition with each other and with communities around the globe for the billions of dollars in revenues, investment dollars and thousands of jobs expected over the next five years in the Bioeconomy."
Economic Impact in Washington State
In 2002 WBBA commissioned an economic analysis of the impact of the bioscience industry sector on the State’s economy. WBBA’s economic impact analysis states, "While the biotechnology and medical industry may not represent one of the largest production sectors in the State, its aggregate impact on the State economy is significant."
Direct Economic Benefits
- Since 1990 the sector has grown at an annual rate of 10 percent, significantly outperforming other sectors of the State’s economy.
- Between 1990 and 2002, employment growth within the biotechnology and medical device industry nearly tripled. In 2002 the combined industry employed 19,360 workers.
- Employees of biotechnology and medical device companies are well paid, earning an average of $64,000 in 2001, nearly double the statewide average of $37,000.
Indirect and Induced Economic Benefits
WBBA companies purchase goods and services from other companies resulting in wages and salaries that produce indirect impacts.
Induced impacts result from the purchases of goods and services in the general economy by the employees and owners of biotechnology research institutions and medical device companies, as well as those from the supporting industries.
WBBA’s economic analysis concluded that the purchases from other companies and the spending of their employees generate 43,170 jobs. Combined with the 19,360 direct jobs, the total job generation attributable to the sector is 62,350.
For every new job created in the biotechnology and medical device industry, another 2.23 jobs are created within Washington.
Ensuring a Competitive Edge
Biotechnology companies have much to offer. According to a study conducted by the Battelle Memorial Institute, "States continue to use their tax structures strategically to encourage private investment in biotechnology firms, to ease the burden on such firms, and/or to even the "playing field’ of biotechnology firms with traditional industries." According to the report the majority of states have research and development tax credits in addition to other incentives. WBBA companies have experienced first hand the aggressive marketing campaigns of other states as they seek to lure companies with offers of incentive packages that include much more than basic R&D tax incentives.
In the last year much has been said about the public policy environment in Washington State and its impact on all business sectors and the message is clear. Washington State must do better if it is to retain the businesses it has, let alone attract new companies able to provide top quality high paying jobs.
Targeted tax incentives are the only tools that Washington State has in place to assist and encourage the growth of the bioscience sector. It is up to the Washington State legislature to take action and enact legislation to continue these credits.
Looking Forward
WBBA’s legislative agenda for 2004 acknowledges the current budgetary constraints of the state and the short legislative session. As we look to 2005 and the state’s strong technology and manufacturing retention agenda, as exhibited by the incentive programs put in place in 2003 for the Boeing 7E7 program, we believe this is the start of a larger dialogue. The state cannot rest on an incentive program created a decade ago. Times have changed and the sector has demonstrated its ability to turn the promise of research into the reality of medicine – creating jobs across the country.
Other states have created a range of incentives from job training to biotech facilities construction. These states, like Washington, want to attract an industry that from 1992-2001 doubled employment nationally and tripled revenues with more than 150 marketed products (70 percent of which were approved, and therefore commercialized, in the past six years).
Washington State does not offer the bioscience sector incentives that are competitive to attract and retain industry operations that extend beyond R&D. Without a mature sector that researches, develops, manufactures and markets products, our young companies will continue to struggle to attract venture capital and those that reach commercial scale will look to other states which offer a more comprehensive set of incentives. WBBA looks forward to working with the state to build upon the strong foundation of its R&D tax incentive program to foster the long-term growth of our industry and help in the economic recovery for families in Washington.
For additional information, please contact:
Washington Biotechnology & Biomedical Association
200 First Avenue West, Suite 200
Seattle, WA 98119
Phone: 206.624.1967
Fax: 206.628.0899
or the WBBA lobbying team of
Linda Hull and Vicki Austin
Phone: 360.352.4980
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