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Nearly $200M Proposed for New Economic Development Corp in WI Budget

March 09, 2011

Established to focus solely on job creation and replace the state's Department of Commerce, Wisconsin's new public-private partnership would receive nearly $200 million over the next two years for operating expenses and to administer economic development programs. Lawmakers also will consider measures to improve existing tax programs focused on enhancing angel investments and eliminating capital gains taxes during the upcoming legislative session. Gov. Scott Walker unveiled the 2011-13 biennial budget amid a turbulent political climate centered on a budget repair bill for the current fiscal year that involves a controversial provision changing collective bargaining laws.

The newly-established Wisconsin Economic Development Corporation (WEDC) would receive $98.8 million in FY12 and $97.5 million in FY13 for operating expenses and administration of programs aimed at job creation. This includes ongoing funding for regional economic development organizations. Although specific details were not mentioned, Gov. Walker said in his budget address, the seven regional economic development efforts around the state will work hand-in-hand with new public-private efforts at the state level.

The proposed budget eliminates the Department of Commerce and transfers economic development funds and the administration of tax credit certification to the WEDC. Funding for programs and functions unrelated to job creation previously administered under the Department of Commerce would be transferred to other departments, according to budget documents.

Several provisions to existing tax credit programs are outlined in the executive budget, including an option to allow tax-option corporations that are non-operating entities to claim angel investment credits for investments in new business ventures. To attract more investors, the governor wants to modify the capital gains tax to include a 100 percent exclusion for capital gains on Wisconsin-based capital assets held for five or more years and include a 100 percent capital gains tax deferral for gains reinvested in Wisconsin-based businesses.

Higher education funding would be reduced by $250 million over the biennium to help fill the $3.6 billion projected deficit. The budget also would reorganize the University of Wisconsin-Madison as a public authority to provide for greater flexibility in order to compete in the global teaching and research marketplace, according to budget documents. State aid to technical college districts would be reduced by $71.6 million over the biennium.

Gov. Walker's 2011-13 executive budget documents are available at: http://www.doa.state.wi.us/debf/execbudget.asp?locid=166.

The budget repair bill, introduced last month to help fill an immediate deficit of $137 million, is headed for passage in the Assembly, reports the Milwaukee-Wisconsin Journal Sentinel. The measure also would require state employees to pay about 5.8 percent toward their pension and 12 percent of healthcare benefits and changes provisions to the state's collective bargaining laws. The bill was passed in the Senate yesterday by a vote of 18-1 after a committee stripped some financial elements, which allowed them to pass the measure with the presence of a simple majority, according to the news article. Some of the Senate Democrats had fled the state to avoid voting on the controversial measure. Read more: http://walker.wi.gov/journal_media_detail.asp?locid=177&prid=5622.

Wisconsinstate tbed, tax credits, state budget, higher ed