A $50 million bond proposal under consideration by Maine voters would restore one of the state’s key tools for technology investment and help grow the state’s research and development spending, which lags far behind national and New England averages.

The bond is the only statewide issue on the June 13 special referendum ballot.

If approved, $45 million of the bond would be distributed in grants from the Maine Technology Asset Fund manged by the Maine Technology Institute. The competitive grants support infrastructure, equipment and technology upgrades for public and private entities involved in certain technology sectors.

In the last round of financing issued through the asset fund in 2015, MTI received requests for more grants than it could pay for, indicating high demand for the program, said Brian Whitney, president of MTI.

“The last time we funded projects with this money, we got oversubscribed four-to-one,” he said. “I think there is sufficient project demand, this is a welcome bond measure from the Legislature.”

Maine’s R & D spending lags behind the nation. The Jackson Laboratory, shown here, and the University of Maine have received several awards but, in general, firms seeking grants far outnumber the available funds. File photo/Whitney Hayward

Bond funding would be provided to public and private entities that are required to match state dollars with at least the same amount of federal or private investment, according to the Secretary of State’s Office. The funding can be used for construction, to purchase machinery or equipment or other infrastructure investment.

Grants would be aimed at the biotechnology, aquaculture and marine technology, composite materials, environmental technology, forestry and agriculture, information technology and precision manufacturing sectors.

The bond is projected to potentially cost taxpayers $63.7 million after interest is included over its 10-year repayment schedule. Maine voters typically support bond referendums and there has been no organized public opposition to the current proposal. If the bond is approved by voters, MTI will issue a request for proposals to solicit applications, Whitney added.

STABILIZING FUNDS

More than $53 million has been disbursed in 42 grants since the technology asset fund was established in 2007, according to MTI records. The fund received an initial $50 million in bond funding and another $3 million in 2009, said Whitney. Funding was provided in four cycles, the last in 2015, when the fund made awards totaling $4.85 million to eight companies and leveraged $12 million in private investment, according to MTI.

One of the 2015 grants, a $1.75 million award to The Jackson Laboratory in Bar Harbor allowed the company to set up an experimental mouse breeding lab in Ellsworth. Jackson Laboratory scaled up the project and broke ground last year on a 135,000-square-foot facility. The $75 million project is expected to create 365 new jobs, according to Jackson Laboratory.

“It is a major project for the state, that is the kind of thing MTAF investments help generate, that is the type of impact that program can have,” Whitney said.

More than half the funding awarded through the technology asset fund went to Jackson Laboratory or the University of Maine, according to MTI records. Jackson Laboratory received five grants worth $10.3 million, while the University of Maine system received 19 grants worth approximately $22.6 million.

A $1.75 million Maine Technology Institute award to The Jackson Laboratory in Bar Harbor helped the firm set up an experimental mouse breeding lab in Ellsworth. This 2014 photo shows mice genetically modified for research on degenerative disorders such as ALS in the firm’s Bar Harbor laboratory. Bar Harbor, ME on Thursday, August 28, 2014. Luntz’s lab provides genetically modified ALS mice to research labs around the world, and also conducts their own ALS research. File photo/Whitney Hayward

Inconsistent state funding for research and development is one of the problems technology businesses face, said Catherine Renault, principal and owner of consulting firm Policyworks LLC and director of the Maine Office of Innovation under Gov. John Baldacci.

“The biggest problem we have in Maine is that we don’t do this consistently, it is episodic,” Renault said. Maine also tends to focus on developing research capacity, with less emphasis on developing and commercializing products, Renault added.

“There is a whole spectrum from basic research to where it gets into the economy,” she said. “Our investment in the state is uneven across the spectrum.”

Maine’s spending on research and development lags behind the nation and other New England states. The state’s total research and development investment in 2014 was $596 million, approximately 1.1 percent of gross domestic product, ranking it 37th in the U.S. The U.S. average spending on research and development is 2.8 percent of GDP, while the average for New England is 4.7 percent, according to the Maine Development Foundation.

In its 2017 Measures of Growth report, the foundation pointed out that private-sector spending on research and development in Maine was significantly lower than the national average, while nonprofit spending was 13 percent of the total, second-highest nationally. The goal is for research and development to reach 3 percent of Maine’s GDP by 2020. Using that measure, the state would have had to invest $1 billion more in 2014 to reach the 3 percent goal that year, according to the report.

“Maine spends about 1 percent of its GDP on research and development, we are consistently rated at the bottom of most states,” said Jeff Marks, executive director of Environmental and Energy Technology Council of Maine, also known as E2Tech. “This seems like a small step to take, but an important one to help raise our game a little bit.” Increasing research and development is top of the agenda for most E2Tech members, and a consistent funding source is important to reach those aims, Marks said.

The remaining $5 million in the bond would be used to recapitalize the Maine Venture Fund, administered by the Finance Authority of Maine. The fund invests in small businesses that show the potential for growth and public benefit. Managing Director John Burns said the fund started in 1995 and now invests in about 25 Maine businesses with a $13 million revolving fund.

The fund’s board of directors helps determine what companies to put money into, and it weighs factors including return on investment, economic developm, Burns said.

Qualifying businesses have to employ 50 people or fewer and have gross sales of $5 million or less in the last year. The fund is aimed at technology, manufacturing and science companies, among others.

The bond money may allow the fund to make more and larger investments, Burns said.

Peter McGuire can be contacted at 791-6325 or [email protected]

Twitter: @PeteL_McGuire