Legislative Update, March 2017
Sunday, March 26, 2017
By Michael Welsh, WEDA Director of Legislative Affairs
Last month, Gov. Scott Walker unveiled his 2017-19 state budget proposal (AB 64 / SB 30). The $76 billion, two-year tax and spending plan for the state touches on all facets of state government, from programs that provide health care for the poor and funding of state highway projects to financing for K-12 education and everything in between. The budget also includes numerous tax provisions and economic development policies of interest to WEDA.
The nearly 1,000-page budget document will be modified over the next several months as the Legislature works to reshape the governor’s proposal before they send it back to his desk for final approval. The WEDA Government Affairs Team has and will continue to meet with lawmakers during the budget process to request certain changes to the bill and ask for several of the governor’s budget proposals to be retained.
One area where WEDA fully agrees with Gov. Walker’s budget plan is in regards to the Wisconsin Economic Development Corporation (WEDC). The governor definitely illustrated his confidence in WEDC and its mission to expand economic development opportunities throughout Wisconsin. The governor’s budget bill includes the following WEDC-related provisions that are supported by WEDA:
- WEDC Lending Program – The budget bill as introduced would reestablish WEDC's capital lending program. Under the provision, the Corporation would be authorized to originate new loans, but only with proceeds of repaid loans. The proposal does not allocate new state funding and would preclude WEDC from offering forgivable loans. WEDA views the proposal as a positive step, as the loan program is a key component of WEDC’s economic development toolbox. The program provides a critical financing option for new and expanding businesses and helps fuel private sector investment.
- WEDC Base Funding – The budget bill would restore WEDC’s base funding, providing $6.3 million in the second year of the biennium. This is not new money, but rather the restoration of WEDC’s base funding, without which the Corporation’s ability to provide critical and timely economic development assistance to Wisconsin businesses would be limited. The budget also modifies WEDC's funding structure to rely more heavily on SEG funding, and therefore reduce the state's GPR funding commitment.
WEDA’s Government Affairs Team will continue to actively advocate for these proposals to support WEDC’s critical economic development mission and enhance their ability to improve the state’s business climate.
In addition to the WEDC provisions, the budget bill also includes a handful of tax policies that have grabbed the attention of WEDA. A provision to boost the Angel and Early Stage Seed Tax Credit is certainly a positive development. The proposal would increase the limit on investments eligible
for the tax credit program from $8 million to $12 million for each qualifying business. This key improvement to the tax credit will expand opportunities for Wisconsin businesses to attract much-needed capital.
Historic Tax Credit
There is a change to another important tax credit program that causes a great deal of concern for WEDA. The governor has included a provision in his budget that would diminish the positive impact of the Historic Tax Credit program. The proposal would limit historic tax credit awards to $10 million annually and require credits be awarded competitively based on job creation potential. It would also require credits to be repaid if job creation goals are not met. While WEDA is open to Historic Tax Credit reform, the proposed cap would significantly limit the effectiveness of the program. Furthermore, the Historic Tax Credit is a critical community development tool, but not necessarily a job creation program. Tying the credit to job creation is not a practical benchmark and will only serve to discourage businesses from utilizing this effective economic development tool.
The WEDA Government Affairs Team has met with key legislators to express our concerns with the proposed modifications to the Historic Tax Credit and will continue to ask the Legislature to remove the provision from the budget bill.
Other budget-related issues of interest to WEDA and its members, ranging from workforce development to infrastructure, will also be closely monitored throughout the budget process.
If you would like additional information on the state budget bill, please contact WEDA at email@example.com.