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 As governor, he described it as a "seminal moment,” comparable to
Walt Disney World's arrival in Florida in 1971, which brought
billions of dollars in tourism, spawned tens of thousands of jobs,
transformed the economy and created the world’s most-visited
vacation resort.
Today, as Bush leads possible Republican candidates in the 2016 race
for the U.S. presidency, the missed projections and mixed results of
his signature economic policy as governor — a biotechnology gamble
that has yet to pay off — illustrate problems he could face in
explaining his own record while promoting a vision of “real
conservative success."
By nearly all measures, the plan to transform bedroom communities
into biotech corridors by attracting Scripps and other research
institutes has fallen short of expectations, despite $1.3 billion in
state, city and county funding.
Making an early case for his presidential ambitions, Bush has
stressed that government shouldn’t be in the business of picking
winning industries and that market forces should do that job.
"I’m not here to take sides and I don’t think the government should
either," he said in a speech on Feb. 4.
But his Florida record tells another story.
 STATE SUBSIDIES
Bush passed a $310 million incentive package through the state
legislature in 2003 to entice California-based Scripps to open a
branch in Jupiter, a small coastal town of 55,000 people in affluent
Palm Beach County, which invested another $203 million.
The money funded the salaries of scientists over 10 years and paid
for a 350,000 sq.-ft research facility on the Florida Atlantic
University campus and other start-up costs.
It marked the start of a policy to diversify Florida’s $800 billion
economy by pumping money into big non-profit research institutes and
betting that “clusters” of biotech startups and pharmaceutical
companies would form around them on the back of scientific
discoveries, bringing in venture capital and high-paying jobs to six
counties across the state.
Scripps was the first step.
It would create 6,500 jobs in 15 years, Bush said, with 2,800 at
Scripps alone and 3,700 at spin-off companies, while increasing
Florida's gross domestic product by $3.2 billion in that same
period. Another 44,000 jobs would be created as other biomedical
groups built around the Scripps location, leading to the creation of
nearly 500 biotechnology companies.
Three years later, Bush set up an “Innovation Incentive Fund” that
would use state money to propel the biotech industry. It spent $456
million to lure seven more non-profit life-science institutes and a
biotech company, New York-based IRX Therapeutics Inc, to Florida
over the next five years.
With cities and counties kicking in matching funds, Florida spent a
total $1.32 billion, according to data collected by Reuters from
each recipient of state and local subsidies.
By the end of last year, the investments, including the funding of
Scripps, had generated 1,365 jobs, the data showed, just under a
quarter of the original projection of 6,000 direct and indirect jobs
by 2019 and far from the more ambitious target of 44,000.
Wages for the jobs are high, but so, too, is the cost to Florida’s
taxpayers at about $1 million per job.
 Documents obtained by Reuters from Scripps Florida Funding Corp,
which oversees the state's payments to Scripps, show that direct and
indirect contribution to Florida’s economy from the institute
totaled $52.5 million in 2013, far from the originally projected
$3.2 billion by 2019.
The state itself acknowledges that the Innovation Incentive Fund,
set up during Bush’s second term as governor, “does not break even”
when calculating a return based on economic benefits, including
“tangible gains or losses to state revenues,” according to a 2014
report by Florida’s Office of Economic and Demographic Research.
“STRATEGIC ONE-TIME INVESTMENTS”
Florida and biotech industry officials say the investment has reaped
scientific dividends and the 9-year-old Innovation Incentive Fund
still has time to succeed with a goal to produce break-even economic
benefits within a 20-year period.
The institutes were “strategic one-time investments that have
yielded tremendous results for the state,” said Bush’s spokeswoman,
Kristy Campbell. “Florida's investment in recruiting world-class
research institutes to the state has diversified the economy,
created high wage jobs and contributed to significant scientific
research advances,” she said.
Scripps, for instance, has made advances in Florida toward a blood
test to diagnose Alzheimer’s disease before symptoms appear, it
says. Its Florida labs have also discovered a compound that might
protect brain cells against Parkinson’s disease and identified a
pathway in the brain that regulates vulnerability to nicotine
addiction, it adds.
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Scripps declined to say whether it agreed with Bush’s 2003
projections. Its promises to the state were more modest and have
been met, it said. It agreed to hire 545 workers in Jupiter by Dec.
31, 2013. Today it employs 547.
Bush’s 2003 projection of Scripps’ economic impact was produced by
the Florida-based Washington Economics Group, whose president,
Antonio Villamil, was a senior commerce official in the
administration of Bush’s father, President George H.W. Bush.
Washington Economics Group did not respond to requests for comment.
STRUGGLING TO MEET TARGETS
Other recipients of the funds have struggled to meet state targets.
IRX, which develops cancer-treatment therapies, had promised to move
its headquarters to St. Petersburg, Florida by 2011 but is still
based in New York, say state officials who used a claw-back clause
to recover some of the $1.6 million IRX received. IRX declined to
comment.
Torrey Pines Institute for Molecular Studies, which promised the
state in 2006 that it would create at least 189 high-wage jobs over
10 years in the coastal city of Port St. Lucie, has scaled back
workers since 2011. Today, it employs 74, it said.
Democrats have said the biomedical money should have been spent on
other programs such as education.
“We have lots of impoverished communities in Florida that didn’t see
that money,” said Dan Gelber, a Miami-based attorney and former
Democratic state lawmaker who voted against giving money to Scripps
in 2003. “It was economic development money, so there were a lot of
possible uses for that money.”
It’s unclear whether the issue will pose a political headache for
Bush but his economic record as governor will be scrutinized should
he finally declare his candidacy for the presidency.
The use of subsidies could also provide fodder for free-market,
anti-government-spending Republicans who exert a strong influence in
small states that hold early nominating contests to select the
party’s presidential candidate.
"People will ask why were some of these massive incentives given
when the results are mixed," said Matthew Corrigan, author of
“Conservative Hurricane: How Jeb Bush Remade Florida.”
MISJUDGING SCALE OF WORK
Some problems are beyond the state’s control. The 2008 financial
crisis hurt the biotech industry nationwide. Sharp, long-term
federal budget cuts known as "sequestration" caused the National
Institutes of Health, the world’s biggest funder of scientific
research, to reduce its funding of grants for biomedical research
institutes since 2012.
But the state also appeared to misjudge the scale of work needed to
commercialize research and the difficulty of luring venture capital
from bigger centers such as Boston, San Diego and San Francisco that
have consolidated their dominance with a critical mass of top
universities, hospitals, big biotech companies and hundreds of
startups.
"When the governor went after these institutes to come to Florida,
we didn’t realize the amount of infrastructure that needed to be in
place," said Kelly Smallridge, president of Palm Beach County's
Business Development Board.
"You don’t just go and pluck two institutes and put them in a county
and expect the industry overall to thrive and for companies to flock
here," she said of Scripps and the Max Planck Florida Institute for
Neuroscience, both in Palm Beach County.
Today, Florida remains a marginal player when it comes to biotech’s
lifeblood – venture capital. The state remains far out of the top 10
states that attract the most venture funding. Since 2002, it has
received less than 0.7 percent of the venture investments in
biotech.
Of the six companies spun out of Scripps in Florida, only two remain
in the state and one no longer operates.
(Additional reporting by Howard Schneider in Washington and Sarah
McBride in San Francisco, editing by Ross Colvin)
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