Saturday, October 28, 2006

Missing: Arnold's Promised $150 Million Stem Cell Loan

Last July, in the heat of the national debate about stem cell research, Gov. Arnold Schwarzenegger made headlines by promising $150 million to bail out the fiscally strapped California stem cell agency.

Today, more than three months later, the agency has not seen one dime of the promised loan despite the governor's July 21 statement that CIRM "need(s) the money now." Schwarzenegger said that it was "critical we take action" and that money should begin flowing "as soon possible."

The California Stem Cell Report queried both the governor's office and CIRM concerning Schwarzenegger's failure to provide the money. The governor's office has not responded to our request on Friday about what has blocked the cash. CIRM also has been less than informative.

Dale Carlson, spokesman for the agency, said that the State Department of Finance "needs to review the loan documents which are still being written," but declined to elaborate.

Unexplained was whether there is some problem with making the loan to CIRM, which one would think would be a fairly routine procedure that could be executed in less than three months. Unexplained also was the exact nature of the loan mechanism, which was not discussed in news reports at the time of the governor's announcement.

Anne Sheehan, an aide to the governor, told the CIRM Oversight Committee at the beginning of August that the loan amounted to "uncharted waters" for the state but that she expected action on it by the middle of August.

Since Schwarzenegger's politically exquisite timing of the loan announcement, which received worldwide attention, he has been involved in a re-election campaign in which he has built a commanding lead over his Democratic opponent, state Treasurer Phil Angelides. Perhaps the campaign has distracted Schwarzenegger's office from fulfilling the loan promise.

California stem cell Chairman Robert Klein alluded to the pressures of the campaign at a meeting of the CIRM Oversight Committee earlier this month. He indicated that the elections had made it difficult to hold a meeting of the CIRM Finance Committee, a special body created by Prop. 71, to approve issuance of CIRM bonds.

However, neither CIRM nor the governor's office explained if or why the Finance Committee would be involved in a loan between two state entities. Klein indicated that the Finance Committee, at its next meeting, would review more requests for bond anticipation notes, which are expected to be issued to private contributors to CIRM.

A July 20 press release by CIRM cited a section of Prop. 71 that appears to allow the state director of finance to provide funding to CIRM from the state's general fund if it is within the amount of unsold bonds authorized by the Finance Committee. That group has already approved $200 million in bonds, which have not been sold, so it would appear giving CIRM the $150 million is a simple ministerial act, but maybe not.

Klein said he hoped the Finance Committee could meet very soon after the fall elections, which will come a week from Tuesday.

The stem cell agency has been strapped for funds because of lawsuits that have blocked the issuance of state bonds that would fund it. It has operated, for the most part, on the basis of private contributions and loans since it began operations in late 2004. CIRM did not respond to a question from the California Stem Cell Report about whether the failure to provide the loan has created any financial difficulties at the agency. Sphere: Related Content

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