(Published January 28‚ 2004)

COLUMBIA, S.C. (AP) - A bill calling for the state to borrow about $500 million for college research and economic development projects cleared the Senate Wednesday.

The bill also sets up a state-run venture capital operation to encourage startup business, expands college programs and protects two-year colleges from being shut down.

"For the research schools, it sends a clear signal that the state and the General Assembly understand the importance of the role that research universities can play in generating jobs," Clemson University President James Barker said. "We're very happy."

So was Sen. Phil Leventis, D-Sumter, who argued for and won approval for the University of South Carolina's Sumter campus to move into the ranks of the state's four-year colleges.

The legislation calls for:

- Up to $250 million in borrowing, mostly for the state's three research universities: Clemson, the Medical University of South Carolina and the University of South Carolina. The schools would split about $220 million and "have to match dollar for dollar whatever money they get," said Senate Finance Committee Chairman Hugh Leatherman, R-Florence. The funds are supposed to be used for research projects aimed at creating jobs.

- $30 million from that borrowing would go to the state's other 30 colleges and technical schools based on enrollment and the amount of work their existing buildings need.

- Pharmaceutical companies would become eligible for the same range of economic development incentives that manufacturers already get. Their investments now would qualify for borrowing of around $250 million that could buy land, prepare the site, build training facilities and teach workers.

- The state would set up a venture capital fund using money from banks, insurers and others in the private sector. A state-run board would hire an investment manager to decide what companies would receive investments. If that portfolio of companies makes money, the investors get a dividend and money goes back into the venture capital fund. If they lose money, they write off losses over several years on state income taxes.

- Colleges get more flexibility to buy land, give bonuses and do other things to reduce reliance on state funding, Barker said.

- Senators agreed to keep colleges from shutting down USC regional campuses without their approval. Gov. Mark Sanford wants USC's two-year Salkehatchie and Union campuses shut down and favors USC-Sumter cutting expenses through more cooperation with a neighboring technical college.

"The governor has clearly indicated the concerns that he has with certain parts of this bill," Sanford's spokesman Will Folks said.

This bill became fodder for a filibuster by Sen. John Kuhn, R-Charleston, that kept senators from wrapping up much of their work last year.

"I'm still not happy with the idea of borrowing in the middle of recession," Kuhn said. But the delay in passing the bill "showed what we could do to a bill to improve it." It now has spending safeguards, Kuhn said.

For instance, the state Commerce Department would have to certify the research projects are economically viable, Kuhn said.

Parts of the bill already have been through the House, which could accept the Senate's changes and send the bill to Sanford or disagree and send it to a conference committee to work out the differences.

In the end, Sanford will have to decide whether he'll veto it all.

"It's unfortunate that bills we need from an economic development standpoint are made to suffer by political tack-ons," Folks said.