Wisconsin Gov Proposes Tax Credits for R&D, Funding for University-based Research

Gov. Jim Doyle unveiled last week several proposals to boost university-based research and commercialization efforts in emerging fields and encourage private industry R&D and job growth through the creation of several new tax credits.

The governor's 2009-11 biennial budget dedicates $8.2 million in FY11 to the Wisconsin Institute for Discovery for research in biotechnology, nanotechnology and information technology. First proposed by Gov. Doyle in 2004 as part of the Grow Wisconsin plan, the Institute was established to strengthen the state's position in science and technology (see the Nov. 22, 2004 issue of the Digest). A private donation of $50 million in 2006 launched the project, which was followed by a $50 million donation from the Wisconsin Alumni Research Foundation and matched by $50 million from the state. Construction is estimated to be completed in 2010.

The budget also includes $8 million over the biennium to establish University of Wisconsin (UW) Bioenergy Initiatives at the Madison, Stevens Point and River Falls campuses. These initiatives will explore the potential of bioenergy through biomass process, converting biomass into energy products, developing a sustainable energy economy, and developing enabling technologies for bioenergy research, according to budget documents. Another $2 million in FY10 would be allocated to establish the Wisconsin Genomics Initiative, a collaboration of the Marshfield Clinic, Medical College of Wisconsin, University of Wisconsin School of Medicine and Public Health, and UW-Milwaukee announced last October (see the Oct. 20, 2008 issue of the Digest).

In addition to the proposed R&D investments within the state's institutes of higher education, Gov. Doyle is recommending $15 million to fund competitive salaries for high-demand faculty at UW campuses and $25 million to establish a funding base for Wisconsin Covenant Grants. The first class of eligible students, who may receive loans and subsidies for maintaining a B grade average, will enter into the higher education system in the fall of 2011. An initial endowment of $40 million was pledged in 2007.

Budget documents note that no additional funding is available to expand the efforts of the UW System Growth Agenda, which was funded by the legislature last biennium (see the Oct. 31, 2007 issue of the Digest).

Several tax credits aimed at stimulating the state's economy through job creation and investments in R&D are recommended in the budget proposal. They include:

• Raising the cap on Act 255 tax credits for angel investments from $1 million to $4 million (see the Feb. 11, 2009 issue of the Digest). This is expected to reduce the general fund taxes by $7 million in FY11;
• Providing income tax credits to business that increase R&D spending to more than 125 percent of their average spending on R&D over the previous three years. This credit is expected to reduce income tax revenue by $5 million in FY11;
• Creating a Jobs Tax Credit that encourages businesses to locate in Wisconsin and create high-wage jobs by providing a tax credit for 10 percent of full-time payroll costs, up to a statewide total of $10 million per year beginning in 2012; and,
• Exempting purchases of machinery and equipment in the biotechnology industry beginning in 2012, reducing sales tax by $5 million per year in the 2012-14 biennium.

To encourage business growth in emerging fields, Gov. Doyle wants to create a venture network fund assisting entrepreneurs in obtaining capital. Under the proposal, the Department of Commerce would provide grants to research institutions and nonprofit organizations to expand access to capital networks and create networks and events that connect businesses with capital. The fund also would be used to provide matching grants to fund new business ideas. The governor recommends $1.4 million each fiscal year to establish the fund.

Gov. Doyle's 2009-11 budget is available at: http://www.doa.state.wi.us/debf/execbudget.asp?locid=3.