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SAN FRANCISCO -- California's Supreme Court declined on Wednesday to review a lower court decision backing the state's stem-cell research institute, clearing the way for the state to sell up to $3 billion in debt to finance research grants.

Gov. Arnold Schwarzenegger applauded the decision, and a spokesman for state Treasurer Bill Lockyer said his office aims to begin selling the general obligation debt as soon as possible.

"Today's action by the California Supreme Court is a victory for our state because potentially life-saving science can continue without a shadow of legal doubt," Schwarzenegger said in a statement.

"This decision reaffirms voters will to keep California on the forefront of embryonic stem cell research," Schwarzenegger said.

Lockyer in a statement said the court's decision "strongly affirmed" the constitutionality of the institute, known as the California Institute for Regenerative Medicine.

Voters approved Proposition 71 in 2004 to set up the institute, which opponents had challenged in a long-running lawsuit in state court, delaying the sale of the bonds.

"At this point, the treasurer intends to move as expeditiously as possible to issue Prop. 71 bonds," Lockyer spokesman Tom Dresslar told Reuters.

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Voters approved the institute amid controversy over whether the state should sell bonds to back research using embryonic stem cells.

Many scientists believe research into the cells may lead to medical breakthroughs to treat and cure various diseases. Opponents say adult stem cells should be used to avoid entangling the research in abortion politics.

The institute had been funding research with money from private grants, bond anticipation notes and a state loan pending the outcome of the court challenge.

Robert Klein, chairman of the institute's governing board, on a conference call with reporters said the San Francisco-based institute had won a "great victory" assuring funds for embryonic stem-cell research in California over the next decade.

"We're authorized right now ... to go out with a $250 million bond issue," said Klein, noting it could be sold as soon as July with challenges in state court exhausted. "We have a clear road ahead of us."

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