Federal funding should be a separate issue. There are plenty of people who would like the government to ban embryonic stem cell research altogether, regardless of who's paying the tab, and a lot of those people are using the federal funding debate as a platform to promote their ideas. Personally, I regard any restrictions whatsoever on any kind of stem cell research as dangerous Luddite-ism. But I'm no fan of government funding for anything that can realistically be done by the private sector, and this is certainly private sector doable.
If there's anything I find scarier than Luddites managing to get this type of research banned altogether, it's the prospect of government providing it heavy funding and then ending up owning many of the key patents. This would put the government in a stronger position to implement full-blown socialized medicine, by withholding the treatments developed by these methods from use by anyone outside the government health system, or requiring big royalty payments for such uses.
Actually, the Luddites are the ones who prefer to use embryonic stem cells (for which there have been no successful animal models proving their use in curing human diseases) than the more advanced, and useful, adult stem cells.