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News & Press: Legislative

June 2015: Legislative Update

Tuesday, June 2, 2015   (0 Comments)
Posted by: Leah Call
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Joint Finance Committee (JFC) Action

On May 21, the JFC (on a 12-4 partisan vote) took the following actions on WEDC’s proposed 2015-2017 biennial budget requests:

  1. Deleted the proposed regional revolving loan fund and the $55 million allocation;
  2. Deleted the provisions that would have created additional exceptions to the state open records law;
  3. Deleted the provisions that would have modified WEDC’s reporting requirements for grant and loan recipients;
  4. Removed the Governor from the WEDC Board;
  5. Authorized WEDC’s board to delegate any power or duty to an employee of the Corporation or to a committee established by the board;
  6. Required WEDC’s Board of Directors to revise its unassigned balance policy, to establish its target unassigned balance on June 30 of each year, to be an amount equal to two-twelfths of its estimated annual administrative expenditures for that year.
  7. Reallocated $12 million of the WEDC unassigned balance, placing $11.250 million into a JFC supplemental appropriations (which is likely to be allocated toward other programs, possibly for Historic Tax Credits) and allocated $750,000 for the following:
  • $250,000 to the Midwest Energy Research Consortium, to be used to support the growth, training, and research and development of private companies in the energy, power and control sectors that are headquartered in WI;
  • $250,000 grant to Prosperity Southwest Wisconsin, for a new revolving loan program in the southwest region of the state to promote regional economic development and entrepreneurial start-up activities;
  • $150,000 for the Northcentral Technical College, to purchase commercial stoves, ovens and other equipment for a Culinary Arts program;
  • $100,000 for the Marathon County Economic Development Corporation, to be used for a revolving loan fund to support minority-owned businesses in Marathon County.

 

JFC was expected to wrap up their action on the governor’s budget this week. The outstanding pieces of the budget include general fund taxes, several WEDC tax credit programs and the transportation budget.

JFC will consider the proposed Business Development Tax Credit, a refundable credit that would replace the Jobs Tax Credit and Economic Development Tax Credit. Currently there is an alternative being considered by JFC to convert the Jobs Tax Credit, Economic Development Tax Credit and Enterprise Zones programs to a grant program. Legislators are closely examining all the WEDC tax credit programs and the tax credit programs are at risk for major changes, funding limitations or even elimination.

As of Tuesday June 2, JFC has not announced the next meeting. Legislators are still negotiating the details of the transportation and tax packages. WEDA continues to encourage all members to reach out to their legislators and tell them to preserve funding levels for proposed economic development tax credit and loan programs.

After the JFC finishes its budget review processes, then all of its modifications to the Governor’s budget bill are then incorporated into a substitute amendment. This substituted budget amendment is then sent to the full Legislature, where floor votes are taken in both the Assembly and Senate. The Legislature is expected to take up the budget bill in June, with the final budget bill forwarded to the governor by month end. Then, after a 30-day veto period, the budget bill is signed into law.

LAB’s Audit of WEDC

A few weeks ago, the Legislative Audit Bureau (LAB) released its biennial WEDC audit. Similar to their 2012 and inaugural 2006 audits, the LAB took a comprehensive dive into WEDC’s operations; its contractual agreements; its program accountability measurements; and its financial management systems. The LAB report ignited discussions at the Capitol that focused on the practical, as well as philosophical, economic development policy and programmatic issues. Themes such as performance standards, taxpayer accountability and job creation activities dominated these conversations.

WEDA, who was actively engaged in these discussions at all levels, forged ahead with the League of Municipalities with an offer to collaboratively work with stakeholders to address LAB’s concerns.

Governor Calls for Reforms

Following the release of the LAB report, the governor called on the Legislature to focus its attention toward WEDC reforms – with an emphasis on creating "performance-based” economic development tools. Additionally, the governor also called for the removal of WEDC’s ability to administer or issue any direct economic development loans. As a result, the JFC voted to delete the $55 million Regional Revolving Loan Fund proposal from the budget. These funds will likely be reallocated toward education and worker training programs.

WEDC & WHEDA Merger Called Off

Governor Walker issued a recent press release, citing issues that surfaced from a joint Wisconsin Economic Development Corporation (WEDC) and Wisconsin Housing and Economic Development Association (WHEDA) Board Meeting, halting the proposal to merge these two agencies. The Governor also specifically asked the bill authors to refrain from further advancing the bill.

WEDA Members Make Impact

In light of the intensity of the response at the Capitol to the LAB Audit of WEDC - which threatened the long-term competitiveness of the State’s economic development efforts -WEDA mobilized a response in service to our membership. As part of this effort, WEDA staff, Legislative Committee members and co-chairs worked with Hamilton Consulting to mobilize a concerted messaging campaign intended to communicate the importance of lending as a function of economic development.

WEDA members responded to the call, providing legislators with public lending success stories, illustrating its role in ensuring long-term prosperity for the State. Not only did legislators receive the stories, but also they shared local successes when debating the merits of lending via WEDC. In fact, one JFC member made a point to inform the WEDA legislative team on how much he appreciated having his local economic development professionals share their experiences.

TIF Bills Continue Moving Forward in the Legislative Process

The tax increment financing (TIF) bill package, a product of the 2014 Legislative Council Study Committee on TIF, continues to advance. With WEDA’s support, a number of these TIF bills have moved through the legislative process. Voicing support of the TIF bill package, WEDA staff and legislative committee members, testified at the public hearings. A quick summary is provided below.

Senate Bill 50 - Makes several technical changes including:

  • Modifies the industrial zoning requirements to only apply to industrial use tax increment districts;
  • Changes the maximum review period the JRB has to approve a resolution on a TID from 30 days to 45 days;
  • Amends the notice requirement of the planning commission from a class 2 notice to a class 1 notice when it comes to announcing a notice of amendment; and
  • Deletes obsolete references in the current statute.

Status: Passed Senate unanimously and was messaged to the Assembly.

Senate Bill 51 - Requires a standing Joint Review Board to be established in order for a TID to be created, and remain in existence during the lifespan of the TID. In addition, this bill modifies annual reporting requirements, incorporates penalties for not reporting annually and repeals the DOR process to review industry-specific town TIDs.

Status: Passed Senate unanimously and was messaged to the Assembly.

Senate Bill 52 - Allows any type of TID to be a recipient TID and use tax increments. In addition, this bill excludes small taxing jurisdictions (such as lake, sanitary, or public inland lake districts) from donating to tax increments and removes these entities from the tax increment calculation.

Status: Passed Senate unanimously and was messaged to the Assembly.

Senate Bill 53 - Allows a local entity, after the review and approval of the Joint Review Board, to make project plan amendments as well as extend the life of a TID by five years. Under the bill, the amendments and/or time extension is allowed if the annual or total amount of the tax increments over the life of the TID are negatively impacted by one or more of the following: (1) amendments to TIF law (§66.1105); (2) changes made by DOR to calculate the equalized valuation method; and (3) 2013 Wisconsin Act 145, which reduced technical college levies and replaced the funding with state aid.

Status: Passed Senate Committee on Economic Development and Commerce unanimously and is available for scheduling in the Senate.

Senate Bill 54 - Removes the restriction that property standing vacant may not comprise more than 25 percent of the area in a TID. In addition, this bill removes the requirement that all municipal-owned land within a TID be assessed for property tax purposes and put in the base value calculations.

Status: Passed Senate unanimously and was messaged to the Assembly.

Senate Bill 55 - Increases TID value increments to total equalized value of taxable property in a city or village from 12 percent to 15 percent.

Status: Passed Senate Committee on Economic Development and Commerce unanimously and is available for scheduling in the Senate.

Senate Bill 56 - Replaces the October 1, 2015 deadline for declaring a TID distressed or severely distressed to October 1, 2020.

Status: Passed Senate Committee on Economic Development and Commerce unanimously and is available for scheduling in the Senate.

Senate Bill 57 – Creates an alternative process for redetermining the base value of a TID. 

Status: Passed Senate Committee on Economic Development and Commerce unanimously and is available for scheduling in the Senate.

WEDA to Distribute Legislative Awards

This year WEDA will recognize several legislators for their commitment to promoting economic development policies by awarding the first-ever WEDA Legislative Awards. Legislators receiving the award will have demonstrated components of the following: legislative leadership on WEDA priorities; legislative support of WEDA proposals; utilization of local level economic development officers as reference on legislative issues and proactively engages in discussions and review of long-term policies impacting economic development; recognition of WEDA’s expertise and seeks WEDA’s input on policy matters.

The 2015 WEDA Legislative Awards will be awarded in August at the Leaders Reception.


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