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Michigan State University is among the institutions set to lose biotechnology funding. Credit: B. MCNEA/MSU

A project to turn Michigan into a biotechnology powerhouse is being gutted to help keep the state out of debt.

The Life Sciences Corridor — established in 1999 with settlement money from a multistate lawsuit against the tobacco industry — provides nearly $50 million a year in research funding to Michigan's major research universities and biotechnology start-ups (see Nature 400, 391; 199910.1038/22601). In the long term, the project is intended to help lessen the state's economic reliance on the motor industry.

But in February, Michigan's governor, Jennifer Granholm, chopped the programme's 2003 budget down to $32.5 million as part of a package of cuts to address the state's $285-million shortfall. The deficit is projected to grow dramatically, and on 6 March Granholm proposed cutting all but $20 million from the programme in 2004.

Supporters of the project were surprised by the governor's decision. “In terms of creating jobs and sources of revenue, this was a rather creative proposal,” says Frank Press, a former president of the National Academy of Sciences and now a consultant with the Washington Advisory Group in Washington DC, which advised on early project planning. “To regress now is short-sighted.”

The Life Sciences Corridor was set up as a 20-year project to foster the sort of growth in commercial biotechnology that has surrounded universities in other states, notably California and Massachusetts.

Nearly half of the programme's annual budget, administered by the Michigan Economic Development Corporation, has gone to fund basic research at public institutions such as Michigan State University, with the rest helping private start-up companies or public–private collaborations.

So far the fund has been involved in some 50 Michigan start-ups. The declining economy has made the project's job even more important, says its managing director, Raili Kerppola. “We have been playing the critical role of providing seed capital to new companies while private-sector investment has pretty much shut down,” he says.

Grants from the Life Sciences Corridor are given in lump sums, so previous awards will remain untouched, Kerppola says. But far fewer awards will be made this year.

Granholm said that cuts were a “tough choice” forced by Michigan voters' resistance to tax increases.