SACRAMENTO -- A day after President Bush vetoed expanded federal funding of embryonic stem cell research, Gov. Arnold Schwarzenegger on Thursday authorized a $150 million loan to fund California's stem cell institute, which has been stalled by lawsuits.
Schwarzenegger, a Republican who has been trying to distance himself from the unpopular president as he seeks re-election this year, said the state cannot afford to wait to fund the critical science associated with stem cells.
"I remain committed to advancing stem cell research in California, in the promise it holds for millions of our citizens who suffer from chronic diseases and injuries that could be helped as a result of stem cell research," Schwarzenegger said in a letter to his finance director.
Embryonic stem cells are building blocks that turn into different types of tissue. Scientists hope to use them someday to regenerate damaged organs or other body parts and cure diseases. Some oppose such research because it entails the destruction of human embryos.
Schwarzenegger championed the 2004 initiative in which voters approved creating the California Institute for Regenerative Medicine and authorized spending $3 billion over 10 years for stem cell research. But anti-abortion and anti-tax groups sued soon after it passed, arguing the institute is unconstitutional.
On April 21, a Superior Court judge ruled the institute was a legitimate state agency. But opponents appealed, and the legal wrangling could hold up the institute's financing until at least next year.
Schwarzenegger's loan provides money so the institute can get started in the meantime.
"At one stroke, this will energize stem cell research in California," said Zach Hall, president of the institute.
Dana Cody, an attorney for the Life Legal Defense Foundation who is representing an anti-tax group that filed suit, said Schwarzenegger's decision to provide state money for the agency contradicts his stance as a fiscal conservative.
"If we're successful with our lawsuit, then the state's going to be out of that money," she said, referring to the $150 million loan.
In recent months, a number of philanthropists, including John Doerr, a venture capitalist, Richard Blum, an investment banker who is married to U.S. Sen. Dianne Feinstein, a Democrat, and Eli Broad, a developer, have come to the stem cell agency's aid buy purchasing $14 million in bond anticipation notes to fund it.
In doing so, they agreed to take the risk that the agency could be rejected by the courts and the notes would never be paid back. The agency has commitments from other private investors to buy another $30 million in notes, which cannot be sold on Wall Street because of the risk.
Schwarzenegger's Democratic opponent in November's gubernatorial election, Phil Angelides, who as state treasurer also chairs the stem cell agency's finance committee, took credit for coming up with the idea to sell the bond anticipation notes. Angelides said that in announcing the state loan, the governor was acting tardily and out of selfish political motives.
"For the past year, while I was fighting for immediate funding for the California Institute of Regenerative Medicine, the governor failed to lift a finger to stand up to the anti-research activists who thwarted the will of the voters and blocked Proposition 71," he said, referring to the ballot measure that created the agency.
Schwarzenegger's communications director, Adam Mendelsohn, said the governor acted because of Bush's veto and "because it's the right thing to do to keep California out in front."
Elsewhere, Illinois Gov. Rod Blagojevich, a Democrat, announced Thursday that he is diverting $5 million from the state budget for stem cell research, despite repeated objections from state legislators.
"Investing in research that can save lives and prevent serious illnesses is more than a sound public health strategy, it's our moral obligation," he said.
The money will come out of administrative funds already set aside for the state Department of Healthcare and Family Services, Blagojevich said.
Illinois lawmakers have previously voted against stem cell research, and this spring they did not take up the governor's proposal for $100 million in funding over five years.
