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News & Press: Legislative

Legislative Update, July 2015

Thursday, July 23, 2015   (0 Comments)
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Budget Passes Legislature and Signed by Gov.

Governor Scott Walker signed the $73 billion-plus state budget on Sunday, July 12, just days after the legislature passed the budget bill and hours before his presidential election announcement. Before signing the budget, the governor issued 104 vetoes – double the number of vetoes he issued in previous budgets.

The roller coaster of events in this year’s state budget saga included several economic development policies that were front and center for much of the budget process. The governor’s original budget proposal included $55 million for a new regional revolving loan fund, merging the Wisconsin Economic Development Corporation (WEDC) and the Wisconsin Housing and Economic Development Authority to form a new state economic development and housing agency and the consolidation of tax credit programs into a new refundable Business Development Tax Credit.

Following a troublesome audit report of WEDC, at the request of the governor, the budget committee, also known as the Joint Committee on Finance (JFC), removed the proposed agency merger from the budget. The audit resulted in many other economic development tools in the budget to be closely examined and ultimately modified significantly by the legislature. 

Most notably, the budget phased out lending at WEDC. The current lending program levels are reduced to $10 million in fiscal year 2015-2016 and $5 million in fiscal year 2016-2017. WEDC cannot originate any new loans as of June 30, 2017. However, WEDC can continue to lend under the Technology Development Loan program, which is capped at $3 million a year.

Also affecting WEDC, the budget committee reduced WEDC’s operations and programs appropriation and reallocated their unassigned balance. JFC placed these funds ($16.3 million in 2015-16 and $12.4 million in 2016-17) in their supplemental appropriation. The governor objected to the placement of these funds in JFC’s supplemental appropriation and directed the funds to instead be allocated to the general fund. However, in his veto he directs the Department of Administration to not allot these funds.

The governor also vetoed a JFC provision to provide $750,000 for WEDC to make grants to specific organization and reallocated these funds back to WEDC to ensure that they have the flexibility to determine which organizations should receive grants.

The budget consolidates the Economic Development Credit and Jobs Tax Credit into one refundable credit, the Business Development Tax Credit. $17 million will be available in 2016 and $22 million in 2017, and each year after for this new credit. Also, the committee adopted the re-estimate of the Jobs Tax Credit: effectively reducing refundable tax credit payments by $3.4 million GPR in 2015-2016, then countered by increased payments of $800,000 in 2016-2017.

The committee repealed the governor’s changes to the Historic Tax Credit program, including the program cap. These moves resulted in maintaining the current program, with the exception of narrowing the pre-1936 buildings provision. Although JFC dialed back the Manufacturing and Agricultural Credit (MAC), from 5.526% to 5.025% for tax year 2015, they did not impact the 2016 value of this credit (7.5%).

In addition to the tough fiscal decisions legislators wrestled with, they also added dozens of non-fiscal items, ranging from the headline grabbing prevailing wage reform and the controversial teacher licensing provision to smaller non-fiscal policy that will only affect small segments of Wisconsinites. Some of these items may have resulted in a closer than expected margin in the Assembly’s final tally, as 11 Republicans jumped ship and voted against the budget. Many of the 11 who voted against the budget are in swing districts heading into the 2016 elections, revealing that there is concern regarding how independent voters might respond to the current budget. Passage in the Senate was largely along party lines (18-15), with only Republican Senator Rob Cowles voting against the budget.

The legislature will be back in session in mid-September and will continue work into the spring. In early September, the Joint Legislative Audit Committee will hold a public hearing on the WEDC audit that was released back in May.

For an all-encompassing summary of the state budget, including details on transportation, health, education, environmental and natural resources, read the Hamilton Consulting Group’s 2015-2017 State Budget Summary.

Economic development tools were threatened and some were curbed this budget cycle. Now, more than ever, WEDA members need to be available for legislators and the public to advocate for the economic growth of our state and the tools that are necessary for success.  As the fall legislative session gets underway, your involvement in legislative advocacy is imperative. To elevate your legislative engagement, attend the August 20 Leaders Fund Golf Outing; participate in the upcoming Legislative Advocacy Training workshop at the September WEDA Fall Conference and, of course, subscribe to WEDA legislative alerts.

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