Chopped Mitochondria?

State Treasurer Phil Angelides says tax-exempt financing of stem cell research "may not always offer the lowest-cost choice" for the California stem cell agency, according to the web site, California Politics Today.

Reporter Marc Strassman disclosed the treasurer's position, quoting from an Oct. 26 letter by Angelides to the stem cell agency.

"It is more likely that the Institute will want to pursue a strategy that involves a mix of taxable and tax-exempt financing, as the state will do with the recent housing bond approved by the voters," Angelides wrote to CIRM.

Strassman said Angelides, who is seeking the Democratic nomination for governor, "distanced" himself from other proponents of the Prop. 71 in the October document.

In the letter, Angelides said his staff estimated that if the state were to use taxable bonds to fund the agency, the increased interest costs would be $423 million. Other estimates have placed it as high as $700 million.

Strassman said that under Angelides' scenario, the state would spend $6.5 billion for stem cell research with a net return of $1.1 billion. Strassman continued:

"How many of the venture capitalists clustered on Sand Hill Road in Menlo Park up in the hills behind Stanford, whose investments in existing and future bio-tech start-ups could see triple-digit increases in value as a result of Prop. 71-funded grants, would accept a deal like that....?

"Would Treasurer Angelides be willing to make, or be allowed to stay in office after making, any other investment on these terms with the billions of dollars of taxpayer money under his control as the State's chief financial officer? Would any CFO?

"Why then should the voters and taxpayers of California accept such terms either? What do the folks in and around the Stanford bio-tech venture capital community think the rest of us are, anyway, chopped mitochondria?"

Strassman carried another item that recounted a history of Angelides' statements concerning tax-exempt financing of the agency and expectations of significant returns for the state. Also included was a similar history for state Controller Steve Westly, who is also seeking the Democratic gubernatorial nomination. Look for the material towards the end of the article which leads with the state's bond counsel refusing further comment about conversations with Angelides.