Both chambers of the General Assembly voted unanimously on Tuesday to allow biotech companies to use state investment tax credits for up to 15 years – rather than the seven allowed for all other industries – as long as they meet employment and salary targets.
The votes – 62-0 in the House and 37-0 in the Senate – came just two weeks after legislative leaders unveiled the measure, dubbed the “Biotechnology Jobs Growth Act.” There was no lengthy debate in either chamber.
In the Senate, Finance Chairman Stephen D. Alves, D-West Warwick, gave a brief overview of the bill before the vote. In the House, a similar presentation by Finance Chairman Steven M. Costantino, D-Providence, was followed by a few questions and comments.
Costantino said it gave him “great pride” to sponsor the bill, an extension of Rhode Island’s longstanding 10-percent business investment tax credit.
The credit is awarded for new buildings, upgrades, new equipment and other investments made here after Dec. 31, 2001, is nontransferable and is usable for up to seven years. The new legislation extends the term to 15 years for biotech companies, as long as they:
n Pay at least half their employees who work 30 hours or more per week a wage equal to or greater than 125 percent of the average annual wage earned by such employees in Rhode Island; based on state figures for the third quarter of 2005, that would be about $48,000 a year.
•Provide benefits “typical to the biotechnology industry.”
•Maintain an average quarterly number of employees for each year that is at least 9.5 percent greater than the average in the fourth year of the initial credit.
•Maintain a median wage that is at least the same as it was for the three previous years.
“We have been blessed with some major, major investments in this state,” Costantino said, citing a May 4 report in USA Today that ranked Rhode Island sixth in the nation for income growth (9.1 percent from 2000 to 2005, compared with 2.2 percent for the country).
“It’s nice to be in the top 10 on a good issue,” Costantino said. He reminded his colleagues that Amgen is adding 450 jobs in West Greenwich, and added that the existing tax credit “was never really sensitive” to the biotech industry, which can take many years to fully develop a single product.
“This act does that: It puts forward a tax policy that … makes sense for biotech investment here,” Costantino said. “Let’s hope that Bristol-Myers [Squibb Co.] is listening.”
Rhode Island is one of four states that Bristol-Myers is considering for a $660 million drug plant, along with New York, Massachusetts and North Carolina.
No one spoke in opposition of the House or Senate bills, but some House members did raise concerns. Rep. Al Gemma, D-Warwick, noted that biotech plants require “volumes of clean water,” and urged his colleagues to “start thinking of a long-term, sustainable water supply,”for those plants.
Amgen has been having difficulties securing commitments to satisfy its long-term needs from the Kent County Water Authority.
Rep. Nicholas Gorham, R-Glocester, said he would vote for the credit extension but said that “we haven’t seen real tax relief yet for small business.”
“We’ve done something for Hollywood, we’ve done things for Fidelity [Investments], and now we’re going to do things for another large company,” he said. “But hopefully we can do something a little more expansive … across the state.”
Costantino countered that many biotech companies are small businesses, and in fact, Rhode Island has recently lost two such companies that were on the brink of growing bigger (he was referring to RenaMed and Spherics, both of which moved to Massachusetts).
“What ends up happening in biotech is often they start extremely small, and they grow and they grow,” he said. “You want that small [firm] to not only do their research and their foundation work here; you want them to stay here. That’s why you have to look in the long term as to what these companies can be.”
Before the legislation can go to Gov. Donald L. Carcieri’s desk, at least one chamber has to pass the other’s bill – something that normally occurs quickly. Carcieri’s office did not return calls seeking comment, but Amgen spokesman Larry Bernard said the legislation “seems to have a broad base of support, and we’re hopeful the governor supports it as well.”
“The governor has been extremely helpful to the biotechnology industry, and we have no reason to think that he would do otherwise in this case,” Bernard said.
Amgen is “very pleased” by the bills’ quick passage, Bernard added, “because this legislation encourages long-term investment in the biotechnology industry. When biotech companies look for locations to expand, Rhode Island should be among the top prospects.”
