State legislative leaders unveiled a bill on Wednesday to allow biotechnology companies to take advantage of Rhode Island’s investment tax credit for up to 15 years, rather than the usual seven, as long as they meet target wage and employment levels.
Dubbed the “Biotechnology Jobs Growth Act of 2006” – an echo of last year’s “Jobs Growth Act” targeting the financial sector – the bill would extend the tax credit for companies with a median wage that’s 125 percent higher than the state median, about $38,200 as of last fall.
Companies also would be required to increase jobs by at least 9.5 percent sometime after the fourth year of the credit and maintain their employment level over the years, or else lose all credits.
“That’s a high bar,” said Larry Bernard, spokesman for Amgen, which helped legislators draft the measure. “The state is not giving anything away, believe me.”
At the same State House news conference where the bill was unveiled, Amgen announced it would add 450 jobs at its West Greenwich manufacturing facility by the end of this year, bringing its total employment there to more than 1,700.
The median wage for current Amgen workers in Rhode Island is $55,000, Bernard said.
The company has invested more than $1.5 billion in its local plant, which produces the active ingredient for the biotech drug Enbrel, used to treat rheumatoid arthritis and psoriasis.
The tax credit bill’s lead sponsors, Senate Finance Chairman Stephen D. Alves, D-West Warwick, and House Finance Chairman Steven M. Costantino, D-Providence, said their goal is to promote such investments, keep biotech companies in the state and attract new ones.
“Too often … when these companies expand, they have chosen to leave Rhode Island,” said House Speaker William J. Murphy, D-West Warwick. “Two [biotechnology] companies have announced their intention to leave Rhode Island for Massachusetts in the past year, and both have cited Rhode Island’s less-than-competitive environment for biotechnology investment.”
The extension will make Rhode Island’s tax policies competitive with those of Connecticut, Massachusetts, New Jersey, New York and Pennsylvania, officials said. But unlike the policies in Pennsylvania and New Jersey, Rhode Island’s measure would not allow tax credits to be transferred to a third party or sold back to the state.
Alves noted that the bill “will not create any new tax credits,” and called the measure “responsible tax policy that encourages industry-wide growth.” By making the credit usable for 15 years, he added, more biotech companies will be able to take advantage of it.
“We want companies and individuals to stay in Rhode Island, and that’s what this tax policy does,” Costantino said. “This act really brings the investment tax credit from a flirtatious promise to a true benefit, and that’s exactly what we’re trying to do in this state.”
Asked why, with the state’s $300 million deficit, the state would expand a tax credit program, Costantino replied: “The work we are hoping this does is … we’re actually going to gain revenue. … It’s going to bring the state money because of the jobs they’re maintaining, the investments they’re making.”
For Amgen, the incentives are retroactive – it’s already made its big investments, and it had already planned to add jobs before the legislation was introduced. Since moving to Rhode Island in 2002, Amgen has renovated an existing manufacturing plant and built a new one.
But David Beier, Amgen’s senior vice president of global government affairs, said the measure shows “a long-term commitment to high-skill, high-wage jobs.”
“Every other country in the world wants a biotech industry,” Beier said. “Every other state wants a biotech industry.”
Michael McMahon, the departing executive director of the R.I. Economic Development Corporation, praised legislators for being “smart enough to figure out and say, ‘If we can encourage Amgen to grow, we’ll win. If we can encourage Amgen to grow, other companies will win.’”
Bernard said a majority of the 450 jobs will be on the manufacturing side, though a specific breakdown has not been released. Some of the jobs will involve quality assurance, which requires lab technicians to collect and test samples of the drug for ensured safety, as required by the Federal Drug Administration’s regulations. The rest of the jobs run the gamut from higher-paying engineering jobs to administration to maintenance.
Of the plant’s 1,300 current employees, about 12 percent live in Massachusetts and 5 percent live in Connecticut, Bernard said. The rest are Rhode Island residents. Beier said two-thirds of the jobs will go to people with four-year degrees, many from Rhode Island colleges.
The University of Rhode Island set up a biotech manufacturing program in 2003 and has graduated about 50 people, four of whom have been hired by Amgen, said Gregory Paquette, director of biotechnology programs at URI.
Bernard stressed that while the measure is expected to benefit Amgen, “this isn’t an Amgen bill – it’s to spur development of the biotechnology industry.”
It will be several years before the extension kicks in, he noted, and “the hope is that this act will be of great benefit to Amgen, but we really can’t predict a dollar figure.”
With reports by Marion Davis.
