California will join eight other states in allowing companies to carry forward for 20 years their net operating losses (NOL). The measure, which was inserted in California's upcoming budget after the original bill died in August, is not specific to biotech firms but is particularly useful to them, because of the long timeline for drug development. Still, inclusion of the measure came only after a lengthy stalemate, as California is facing a budget shortfall and any lost revenue for the state is unattractive. A compromise was struck that suspends the benefit until after 2010, although losses set to expire before then would be carried forward to 2011. Only profitable companies are eligible, so biotechs failing to move into the black will not benefit. California, home to the largest biotech cluster in the world, is often seen as a leader for the biotech community, but in this case, it is behind the curve, as Connecticut, Delaware, Florida, Hawaii, Idaho, Iowa, Kentucky and Pennsylvania already provide the 20-year NOL carryover for all firms. “I think this might be the example of California trying to catch up to what other states are doing,” said Patrick Kelly, vice president, state government relations and alliance development at the Biotechnology Industry Organization in Washington, DC. “This is not an instance where it is on the cutting edge or pushing the policy.”