AB905: Bill Text

LRB-2658/3

PJK:jld&hmh:pg

2001 - 2002 LEGISLATURE

2001 Assembly BILL 905

March 14, 2002 - Introduced by Representatives Miller, Berceau, Black, Bock, J. Lehman and Pocan, cosponsored by Senators Hansen and Burke. Referred to Committee on Economic Development.

AB905,1,10 An Act to amend 20.001 (intro.), 66.1105 (13), 71.07 (2dx) (a) 4., 71.28 (1dx) (a) 4., 71.47 (1dx) (a) 4., 560.70 (2m) and 560.785 (2) (b); and to create 13.94 (12), 20.926 and 20.9265 of the statutes; relating to: requiring state agencies, political subdivisions, and housing, redevelopment, and community development authorities, as well as subsidy recipients, to report on subsidies provided to businesses; requiring certain disclosures by business subsidy applicants; prohibiting business subsidies under certain circumstances; requiring the legislative audit bureau to publish a report on business subsidies and to evaluate their effectiveness; defining a full-time job for purposes of development zone tax credits; and providing a penalty.

Analysis by the Legislative Reference Bureau

This bill creates reporting and other requirements for subsidies that are provided to businesses by state and local government agencies. Under the bill, a state agency is any office, department, agency, institution of higher learning, or other body in state government. A local government agency is any political subdivision, any housing, redevelopment, or community development authority, or any entity created by any of them. A business includes a nonprofit business if it has at least 100 full-time employees and the ratio of highest-paid employee to lowest-paid employee exceeds ten to one. A subsidy is defined as public improvements that cost at least $25,000 and that exclusively benefit a single business or a defined group of businesses; a grant or contribution of personal or real property if the grant or contribution has a value of at least $25,000; a transfer of property to a business for at least $25,000 below the property's acquisition cost or fair market value; and a loan or payment guarantee of at least $75,000 in value. Specifically excluded are such benefits as tax credits, housing assistance, any assistance provided by the University of Wisconsin System, and assistance for the sole purpose of providing job readiness and training services.

The bill requires every agency that awards or provides a subsidy to a business to develop criteria for awarding business subsidies and prohibits the awarding of any subsidy to a business before the criteria are developed. Although no approval of the criteria is required, the criteria are submitted to the legislative audit bureau (LAB). The criteria must set minimum requirements for a business to meet to be eligible for a business subsidy. The criteria specifically must require that, if job creation is the public purpose of a subsidy, all jobs that are created as a result of the subsidy must pay compensation that is equal to at least 200% of the federal poverty line for a family of two. Health insurance premiums paid by an employer may be counted toward meeting the compensation amount.

The bill requires an agency that grants a subsidy to enter into an agreement with the business receiving the subsidy. The agreement must contain specified information, such as the public purpose for the subsidy, measurable goals for the subsidy, the time by which the goals are to be achieved, any financial or other obligation of the business if it does not achieve the goals by the time set in the agreement, and, if the public purpose is job creation or retention, the number of jobs to be created or retained. In the agreement, the business must commit to continuing operations at the location where the subsidy is to be used for at least five years from when the full amount of the subsidy is received.

A business that receives a subsidy is required to submit a report within 24 months after first receiving the subsidy to the agency that granted the subsidy. Thereafter, the business must submit a report annually until the time that was set in the subsidy agreement for achieving its goals. The information contained in the reports generally addresses the requirements set out in the subsidy agreement. In addition, the business must report on its progress toward achieving its goals and on the wages and cost of health care benefits for each job created or retained as a result of the subsidy. The reports submitted by a business must be kept by the granting agency in a centrally located and easily accessible file that includes the application, subsidy agreement, and all other documents related to the subsidy and that is open to public inspection. If a business fails to submit a report by the time it is due, the granting agency must notify the business within 30 days. If the report remains delinquent for six months after the due date, the granting agency must notify the department of administration (DOA) and take any action for the recovery of the subsidy that is specified in the subsidy agreement. In addition, the business may not apply for another subsidy and an agency may not award another subsidy to the business. If the business eventually submits the report, however, it may apply for and be awarded another subsidy with the approval of DOA.

Annually, by April 1, every agency that received a report during the previous calendar year from one or more businesses that received subsidies must submit a report to LAB that summarizes the information submitted to the agency in the businesses' reports. In addition, the department of commerce must annually, by June 1, file a report with LAB that provides specified information about the development zone and technology zone programs, which are administered by the department of commerce and under which businesses located in areas of the state designated as development or technology zones receive tax credits for certain activities, such as job creation. Also, an agency that provides assistance under a statute that specifies the recipient or the amount must file a report with LAB that identifies the recipient, the amount, and the statute under which the assistance was provided. Annually, by August 1, LAB is required to publish a report for the previous calendar year that compiles and summarizes the reports received from the agencies that granted business subsidies; that includes the report received from the department of commerce on the development and technology zone programs; that includes the reports or specific assistance provided under statutes; and that, every other year, summarizes the biennial report of the department of commerce on the social, economic, and financial effects of tax incremental financing projects. The report published by LAB must provide information about the total amount of business subsidies awarded in each county; the distribution of business subsidies, categorized by various characteristics, such as type, amount, and public purpose; the number and percentage of subsidy recipients that achieved their goals within the time set, and the number of jobs created as a result of business subsidies, shown by wage bands. In the report, LAB must compare and evaluate the effectiveness of each business subsidy or program under which business subsidies are provided and include recommendations for improving the programs.

In addition to the reporting requirements, the bill imposes other requirements related to business subsidies. The bill requires every applicant for a business subsidy to reveal in the application whether the applicant has been found in a court or administrative proceeding to have violated any federal or state environmental or labor law. The bill requires that, before a business subsidy is awarded, the agency awarding the subsidy must hold at least one public meeting on the subsidy in the political subdivision in which the applicant proposes to conduct the project for which the subsidy is to be awarded. The bill prohibits an agency from awarding to an applicant a business subsidy that is in the form of a grant, loan, loan guarantee, or contribution of personal or real property if the applicant intends to use the business subsidy to subsidize any portion of the cost of moving its business operations within the state from one political subdivision to another, unless the political subdivision from which the business will be moved consents to the move, or to this state from another state with which this state has entered into an agreement related to businesses moving from one state to another.

Under the development zone programs under current law, businesses may be certified by the department of commerce for tax credits on the basis of, among other things, the number of full-time jobs that are created in a development zone. A full-time job is defined as a regular, nonseasonal full-time position in which an individual is required to work at least 2,080 hours per year and for which the individual receives pay that is equal to at least 150% of the federal minimum wage and benefits that are not required by federal or state law. The bill changes the definition of full-time job with respect to pay for purposes of the development zone programs, and makes the pay that is required consistent with that required under the bill for business subsidies that have job creation as the public purpose. Instead of 150% of the federal minimum wage, a full-time job must pay compensation that is equal to at least 200% of the federal poverty line for a family of two. Health insurance premiums paid by the employer may be counted toward the compensation amount.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB905, s. 1 Section 1. 13.94 (12) of the statutes is created to read:

AB905,4,3 13.94 (12) Business subsidies report; compilation and summary. (a) In this subsection:

AB905,4,4 1. "Business" has the meaning given in s. 20.926 (2).

AB905,4,5 2. "Business subsidy" has the meaning given in s. 20.926 (3).

AB905,4,6 3. "Grantor" has the meaning given in s. 20.926 (4).

AB905,5,4 (b) Annually, by August 1, the legislative audit bureau shall publish a report that summarizes the business subsidies provided in the preceding year. The report shall include any information and analysis that the legislative audit bureau determines is relevant and will assist the legislature in evaluating the cost, effectiveness, and equity of investing public moneys in businesses and economic development. The report may include any information and data that is available to the legislative audit bureau and shall include the reports filed under s. 20.9265 (4) (b) and (c) and a compilation and summary of the reports filed under s. 20.9265 (4) (a). In each year after the year in which the legislative audit bureau receives the report under s. 66.1105 (13), the legislative audit bureau shall include a summary of that report in the report under this subsection.

AB905,5,7 (c) The portion of the report under this subsection that is the compilation and summary of the reports under s. 20.9265 (4) (a) shall include at least all of the following information:

AB905,5,8 1. The total amount of business subsidies awarded in each county of the state.

AB905,5,9 2. Distribution of business subsidies, categorized by subsidy amounts.

AB905,5,11 3. Distribution of business subsidy amounts, categorized by the length of time over which the subsidy is provided.

AB905,5,13 4. Distribution of business subsidies, categorized by type of subsidy, amount of subsidy, and public purpose.

AB905,5,15 5. The percentage and number of recipients that reached their goals by the times specified in their subsidy agreements under s. 20.9265 (2) (a) 6.

AB905,5,17 6. The percentage and number of recipients that reached their interim goals, if any.

AB905,5,19 7. The percentage and number of recipients that did not reach their goals by the times specified in their subsidy agreements under s. 20.9265 (2) (a) 6.

AB905,5,22 8. The total dollar amount of business subsidies provided to recipients that did not reach their goals by the times specified in their subsidy agreements under s. 20.9265 (2) (a) 6.

AB905,5,24 9. The number of jobs created as a result of business subsidies, shown by wage bands.

AB905,6,2 10. Fringe benefits paid or otherwise provided as a result of business subsidies, shown by wage bands.

AB905,6,8 (d) The compilation and summary of the reports under s. 20.9265 (4) (a) shall be presented in a manner that allows for comparisons across time periods and among grantors and, in addition, shall include sufficient information to enable comparisons between wages paid and fringe benefits provided by new jobs created as a result of business subsidies and wages paid and fringe benefits provided by comparable jobs in each area in which the new jobs are created.

AB905,6,15 (e) In addition to summarizing and compiling the reports specified in par. (b), the legislative audit bureau shall include in the report under this subsection a comparison and evaluation of the effectiveness of each business subsidy, or program under which business subsidies are provided, in achieving a public purpose and recommendations for improving the programs. The legislative audit bureau is not required to compare and evaluate under this paragraph the programs included in the reports filed under s. 20.9265 (4) (b) and (c).

AB905,6,19 (f) The legislative audit bureau may develop a report form for the manual or electronic submission of the report required under s. 20.9265 (4) (a) to ensure that the appropriate data is collected to enable the legislative audit bureau to satisfy the requirements under this subsection.

AB905,6,20 (g) The report under this subsection is open to public inspection.

AB905, s. 2 Section 2. 20.001 (intro.) of the statutes is amended to read:

AB905,6,23 20.001 Definitions and abbreviations. (intro.) In Except as otherwise provided, in this chapter terms and abbreviations have the following meanings:

AB905, s. 3 Section 3. 20.926 of the statutes is created to read:

AB905,7,2 20.926 Definitions for business subsidy awards and reports. In this section and s. 20.9265:

AB905,7,3 (1) "Agency" means a state agency or a local government agency.

AB905,7,4 (2) "Business" means:

AB905,7,5 (a) Any person engaged in a business enterprise for profit in this state.

AB905,7,8 (b) Any organization or enterprise operating not for profit in this state that has at least 100 full-time positions with a ratio of highest-paid to lowest-paid employee that exceeds 10 to one, determined on the basis of full-time equivalent positions.

AB905,7,9 (3) (a) Except as provided in par. (b), "business subsidy" means:

AB905,7,13 1. Public improvements that cost at least $25,000, that are made to buildings or lands owned by the state or a political subdivision, and that exclusively benefit a single business or a defined group of businesses at the time the improvements are made.

AB905,7,15 2. Any of the following that has a cost to an agency or the state of at least $25,000 and that is given to a business by an agency:

AB905,7,16 a. A grant.