April 13, 2010

MC can now own biotech company with public tax dollars

ANNAPOLIS - The Maryland General Assembly approved a bill that would allow Montgomery County to invest taxpayers dollars in biotech startups. The measure would empower Montgomery to make stock investments in Maryland companies. State law prohibits local governments from making equity investments, which are regarded as high-risk, according to a legislative analysis of the bill. The state government is allowed to make such investments, however, and Montgomery officials wanted in on the return.

"We want to allow the county to do what the state does," said Montgomery's legislative analyst, Sheila Sprague. Sprague said the bill, sponsored by the Montgomery delegation, was drafted at the urging of County Executive Ike Leggett. The Senate unanimously approved the bill, while the measure won approval by a 135-3 vote in the House. Gov. Martin O'Malley is expected to sign the measure. But a Montgomery County senator stopped the ball rolling when the measure went before the Senate Finance committee during the approval process.

"I read this [bill], and I see it as saying county government can own 25 percent of a private business ... and I actually have a problem with that," said Sen. Rob Garagiola, D-Poolesville. "It seems like there could be a lot of conflicts." Finance Committee Chairman Thomas M. Middleton asked Garagiola to return the bill to the Montgomery delegation and add a clawback provision to give taxpayers some financial security. When Garagiola aired his grievances before the delegation, Sens. Brian Frosh, D-Bethesda, and Mike Lenett, D-Aspen Hill, chimed in.

Frosh said the bill seemed "risky," and Lenett suggested, "Why don't we just save the money [instead of investing]." But Sens. Rich Madaleno, D-Wheaton, and Rona Kramer, D-Olney, said the bill was fine as written. Kramer said the money the county would be investing would be spent on grants and loans, and the county should be able to profit off its investments. Montgomery's Department of Economic Development would be in charge of making the county's investment decisions. The department has about $850,000 in county appropriations for business loans, said Director Steve Silverman. But the department can petition the County Council for more money. The bill would unleash the department's funds for investments, and there is no cap limiting the amount of money the county can use for investments versus loans.

SOURCE: Washington Examiner

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