California voters overwhelmingly agreed Tuesday to put up $3 billion in seed money for stem-cell research that not only could lead to innovative new medical treatments but could also save the Golden State's science industry as well.

By approving Proposition 71 by a comfortable margin Tuesday, California moved to ensure that the biotechnology companies of the Bay Area and the Los Angeles-San Diego corridor remain financially healthy and less likely to move their enterprises and their jobs offshore.

The funds available now for stem-cell research in California will dwarf what any other country in the world is spending, declared Daniel Perry, president of the Coalition for the Advancement of Medical Research. Prop 71 was a bold initiative and voters should be applauded for their courage, and we predict that other states will scramble to follow California's lead.

Much of the media and political focus on Prop 71 prior to Election Day dealt with the moral debate over the use of embryonic stem cells in scientific research and the possible political ramifications of Gov. Arnold Schwarzenegger's seeming break with the Bush administration over government funding for such work.

In a move seemingly aimed at mollifying the conservative Christian cadre of the Republican Party, the Bush administration in 2001 had put strict limits on the types of stem-cell research eligible for federal grants.

Schwarzenegger, however, embraced Prop 71, which not only allows research on all types of stem cells, including embryonic cells, but established a state-run foundation that would use the bond revenues to pay for such research over 10 years.

California companies and the state's research universities stand to be first in line for the financial largesse, which should help maintain the biotech sector's job base; the state would be paid back in the form of patent royalties from products developed through the funded research.

However, Prop 71's legacy could actually prevent the kind of shakeout in the industry that sent the Silicon Valley computer and technology sector reeling in the late 1990s.

Robust as it is now, California's biomedical industry faces profoundly serious threats to its continuing prosperity, David Gollaher, president and chief executive officer of the California Healthcare Institute, said in a statement supporting Prop 71. State government policy on incentives for investment will be critical to meeting these serious new challenges.

The $3 billion raised by Prop 71 was portrayed by some critics as nothing more than a slush fund for the biotech industry and for university scientists looking for enough gravy-train grants to eventually allow researchers to coast into comfortable retirements in Pasadena, Palo Alto and La Jolla.

There were predictions that stem-cell research would turn into a dead end that would simply not produce the kinds of so-called medical miracles that were touted at the beginning of the biotech revolution and have thus far appeared few and far between.

In addition, the measure was challenged as not having the kinds of guarantees that the fruits of the research funded by Prop 71 would even help disease-stricken taxpayers who will nonetheless be on the hook for the $3 billion bond measure and an additional $3 billion in interest over the next decade.

Strikingly, it was the mind-boggling economics of the measure that were the basis of most of the organized opposition to Prop 71 rather than the moral aspects of using stem cells taken from human embryos.

Stem-cell research is a valuable tool in developing treatments for a wide variety of medical conditions and to help reduce health disparities that disproportionately affect seniors, the indigent and some ethnic groups, said Deborah Burger, president of the California Nurses Association. But Prop 71 is fraught with substantial loopholes that could aggravate those disparities ... and could permit wealthy corporate giants to hijack the benefits of the publicly funded research.

The other side of the coin is that while Prop 71 indeed has no guarantees of success, it is a form of bridge funding that will maintain the existence of the biotech clusters that the industry says are needed to support the overall health of the life-sciences sector.

The concept of clustering is simply the grouping of companies involved in biotech within the same metropolitan area. The proximity allows companies to interact with each other, attract scientists and skilled workers and develop technical and financial infrastructures geared toward biotech.

Some analysts see clustering in 2004 as vital to the biotech industry and to California.

Clusters of existing and emerging science-based technologies are crucial factors in shaping the economic winners and losers of the first half of the 21st century, stated a report issued this year by the Milken Institute, a Santa Monica think tank that monitors California's economy. To create an international advantage in a knowledge-based economy, clustering innovative activity is imperative.

The Milken report ranked biotech clusters in the United States and determined that seven of the top 12 locales for biotech research were in California, including top-ranked San Diego and No. 9 Oakland, a city not often thought of as a hotbed of scientific research.

In a worst-case scenario, investment in California biotech would wither in the coming years and one-by-one cause companies in the industry's clusters to fold their tents. Without these robust clusters, the biotech focus could move to the other side of the Pacific, where China and India are poised to scoop up the jobs California could not maintain.

Like many states, California has long offered biotech companies tax breaks and low-priced land in order to coax them into remaining in California. Prop 71 now joins that list of incentives available to an industry that is considered to be a vital cog in the state's 21st-century economy.

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