AB741: Bill Text

LRB-2783/3

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2007 - 2008 LEGISLATURE

2007 Assembly BILL 741

January 29, 2008 - Introduced by Representatives Jeskewitz, Strachota, Fields, Hilgenberg, Van Roy, Ballweg, Kerkman, Smith, Mason, Musser, M. Williams, Hahn, Davis, Hraychuck, Mursau, Sheridan, Vos, Owens, Hintz, Petersen, Sinicki, Kramer, Moulton, Garthwaite, Nerison and Lothian, cosponsored by Senators Sullivan, Cowles, Lassa, Vinehout, Roessler, Harsdorf, Lehman and Olsen. Referred to Committee on Jobs and The Economy.

AB741,2,16 An Act to repeal 20.143 (1) (x), 93.47, 234.66, 560.03 (15), 560.038, 560.039, 560.10, 560.11 (1) (b), 560.13 (7), 560.137 (1) (a), 560.137 (1) (c), 560.137 (2) (a) (intro.), 560.137 (2) (bm), 560.137 (2) (c), 560.137 (2) (d), 560.137 (2) (e), 560.137 (2) (f), 560.14 (3m), 560.155 (2) (b) 3., 560.155 (4), 560.17 (5r), 560.17 (6m) (b), 560.205 (3) (c), 560.42 (5), 560.52, 560.55, 560.607 (2), 560.81 (title), 560.81 (1) to (4), 560.82 (5) (a), 560.83 (title), 560.83 (1), 560.83 (5), 560.91, 560.915, 560.925 and 560.935; to renumber 560.137 (1) (b), 560.137 (2) (a) 1., 560.137 (2) (a) 2., 560.137 (3m), 560.138 (5), 560.83 (2), 560.837 (1) (a) and 560.837 (2); to renumber and amend 560.07 (3) (b), 560.17 (6m) (a), 560.80 (5), 560.81 (intro.), 560.82 (1), 560.82 (5) (b), 560.83 (3), 560.83 (4) (a), 560.83 (4) (b), 560.837 (1) (intro.) and 560.837 (1) (b); to amend 20.002 (11) (d) 3., 20.115 (4) (c), 20.115 (4) (r), 20.143 (1) (fm), 20.143 (1) (ie), 20.143 (1) (ig), 20.143 (1) (im), 20.143 (1) (kg), 20.143 (1) (kj), 25.17 (1) (hm), 93.46 (2) (e), 234.03 (2m), 234.265 (2), 234.40 (4), 234.50 (4), 234.60 (2), 234.61 (1), 234.63 (2) (b), 234.65 (1) (b), 560.07 (9), 560.138 (3), 560.14 (3) (c) 8., 560.17 (7) (a), subchapter VII (title) of chapter 560 [precedes 560.80], 560.80 (3m), 560.80 (4), 560.80 (5m), 560.82 (title), 560.82 (2) (intro.), 560.82 (3) (intro.), 560.82 (4) (intro.), 560.82 (4) (a) (intro.), 560.82 (4) (a) 2., 560.82 (4) (b), 560.84 (1) (intro.), 560.84 (1) (b) 1., 560.84 (1) (e) 1., 560.84 (1) (f), 560.84 (2) (a) 1., 560.85 (2), 560.85 (3) (a), 560.85 (3) (b) and 560.905 (2); and to create 13.94 (1) (mm), 23.167, 23.169, 36.09 (1) (am), 36.11 (29r), 38.04 (1m), 38.04 (10m), 41.11 (1g), 41.11 (1r), 84.01 (6m), 84.01 (11m), 93.07 (18), 93.07 (20), 234.032, 234.255, 560.001 (1m), 560.01 (2) (ae), 560.01 (2) (am), 560.01 (2) (as), 560.07 (8) (a), 560.07 (8) (b), 560.07 (8) (c), 560.138 (2m) (intro.), 560.138 (5) (b), 560.139 (3) (title), 560.155 (5), 560.29 (3), 560.80 (5) (a) and (b), 560.80 (5) (c) and 560.82 (1m) (b) and (c) of the statutes; relating to: cleanup and consolidation of Department of Commerce economic development programs, establishing a comprehensive annual reporting requirement, requiring the development of programmatic goals and accountability measures for economic development grants and loans, requiring the exercise of rule-making authority, and making an appropriation.

Analysis by the Legislative Reference Bureau

Pursuant to the recommendations of the Legislative Audit Bureau in Report 06-9, "A Review of State Economic Development Programs," this bill makes a number of changes to the state's economic development programs.

Definition of an economic development program

Under current law, there is no uniform definition of an economic development program. This bill defines "economic development program" as a program or activity having the primary purpose of encouraging the establishment and growth of business in the state, including the creation and retention of jobs, and that satisfies all of the following:

1. The program receives funding from the state or federal government that is allocated through an appropriation under state law.

2. The program provides financial assistance, tax benefits, or direct services to specific industries, businesses, local governments, or organizations.

Cleanup and consolidation

The bill eliminates the following unfunded or inactive economic development programs administered by the Department of Commerce (Commerce): minority nonprofit corporation grants; minority business incubator grants; the industrial building construction loan fund; community-based economic development revolving loan fund grants; low-income rural municipality economic development loans; small business innovative research program grants; and the following technology-based economic development programs: the seed-capital fund, the information exchange clearinghouse, and the manufacturing modernization program.

The bill eliminates the sustainable agriculture grant program administered by the Department of Agriculture, Trade and Consumer Protection (DATCP).

The bill eliminates the beginning farmer program administered by the Wisconsin Housing and Economic Development Authority (WHEDA).

This bill consolidates the following grant and loan programs, administered by Commerce, into one minority business grant and loan program: minority business early planning grants; minority business development grants and loans; minority business development finance and education training grants; and minority business revolving fund grants and loans.

The bill also consolidates the gaming economic development grant and loan program and the gaming economic diversification grant and loan program into one gaming economic development grant and loan program.

Current law authorizes Commerce to award early planning project grants to certain eligible recipients. An "early planning project" is defined under current law as "the preliminary stages of considering and planning the start-up or expansion of a business that will be a minority business." Under current law, eligible recipients include individuals who are minority group members and residents of this state. The bill does not change the definition of "early planning project" or "eligible recipient." The bill transfers to the Minority Business Development Board the authority to award grants and permits the board to award early planning project loans as well as grants.

Changes to reporting requirements

Under current law, Commerce must do all of the following:

1. Submit a biennial report to the legislature on the performance and operations of Commerce in the preceding biennium.

2. Periodically prepare an inventory of existing entrepreneurial assistance programs in Wisconsin.

3. Prepare a report documenting the results of an annual survey of Wisconsin businesses concerning the formation of businesses and obstacles to the formation of businesses in Wisconsin.

4. Prepare employment impact estimates related to industrial development revenue bonding.

5. Submit a report to the State of Wisconsin Investment Board describing the types of investments in businesses in Wisconsin that will have the greatest likelihood of enhancing economic development in Wisconsin.

6. Submit a report to both the Department of Natural Resources (DNR) and the federal Environmental Protection Agency concerning the compliance of the state small business stationary source technical and environmental compliance assistance program with certain federal laws.

In addition, under current law, Commerce must submit reports to the legislature incorporating the following information concerning economic development programs administered by Commerce: job gains due to funds provided to Forward Wisconsin, Inc.; the effects of the State Main Street Program on business revitalization in commercial areas having historic significance; the effectiveness of the Brownfields Grant Program; the operation and effectiveness of the Business Employees' Skills Training Grant Program; the total amount of tax credits claimed under the Early State Seed Investment Credit and Angel Investment Credit programs; a description of the activities of the Business Development Assistance Center; a description of Commerce's activities and the results of Commerce's activities coordinating entrepreneurial assistance programs and intermediary assistance programs offered by state agencies; Commerce's technology-based economic development activities; and the disposition and repayment of moneys distributed under the seed capital fund.

The economic development reporting requirements under current law are not uniform: some reports are required annually, others biennially or periodically; some reports are due in January, others in March, September, October, and December.

The bill eliminates all but the following separate reports required of Commerce:

1. A biennial report to the legislature on the performance and operations of Commerce in the preceding biennium.

2. A report to the State of Wisconsin Investment Board identifying recommended investments to enhance economic development in the state.

3. A report on the effects of the State Main Street Program.

4. A report regarding the business development promotion activities conducted by Forward Wisconsin, Inc.

The bill requires Commerce to annually submit a comprehensive report assessing economic development programs administered by Commerce to the Joint Legislative Audit Committee and to the appropriate standing committees of the assembly and the senate. The bill also restores a requirement, repealed under 2007 Wisconsin Act 20 (the budget act), that Commerce evaluate certified capital investments made under Subchapter II of Chapter 560, 2005 statutes.

In addition, under the bill, each of the following entities must submit to the legislature a comprehensive annual report detailing its economic development activities within the preceding fiscal year: 1) the University of Wisconsin System; 2) DATCP; 3) DNR; 4) WHEDA; 5) the Department of Tourism; 6) the Technical College System; and 7) the Department of Transportation. The comprehensive reports of all eight entities are due to the legislature by October 1 of each year.

The state entity annual reports must include information about the number of grants and loans made by each entity in each year; the amount of each grant and loan; the name of the recipient of each grant and loan; and the sum total of all grants and loans received by each recipient. The seven enumerated state entities must collaborate with Commerce to make the reported information available to the public on the Internet.

Programmatic goals and benchmarks

The bill also requires Commerce and the seven enumerated state entities to establish specific goals for each of the economic development programs administered by each entity; quantifiable benchmarks for the program goals; and methods for evaluating the projected or anticipated results of the program. Commerce and the other seven entities must independently verify the accuracy of information reported by the recipient of an economic development grant or loan.

Commerce and the seven enumerated state entities must promulgate the following rules governing economic development grants and loans:

1. A requirement that the recipient of an economic development grant or loan of at least $100,000 submit to the administering state entity a verified statement signed by both an independent accountant licensed or certified by the Accounting Examining Board in the Department of Regulation and Licensing and the director or principal officer of the recipient. The rule must also require the recipient of such a grant or loan to make available for inspection the documents supporting the verified statement.

2. Policies and procedures for the administering state entity to recoup economic development grant or loan payments, withhold future grant or loan payments, and impose a fine or penalty upon the recipient of an economic development grant or loan or tax benefits which submits false or misleading information to the administering state entity has failed to comply with the requirements of a contract entered into with the administering state entity and which has failed to provide a satisfactory explanation to the administering state entity for the failure to comply.

Audit by the Legislative Audit Bureau

The bill requires the Legislative Audit Bureau to prepare a financial and program evaluation audit of state economic development programs administered by the eight state entities no later than July 1, 2012.

For further information see the state 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:

AB741, s. 1 Section 1. 13.94 (1) (mm) of the statutes is created to read:

AB741,6,5 13.94 (1) (mm) No later than July 1, 2012, prepare a financial and performance evaluation audit of the economic development programs administered by the department of commerce, the University of Wisconsin System, the department of agriculture, trade and consumer protection, the department of natural resources, the Wisconsin Housing and Economic Development Authority, the department of tourism, the technical college system, and the department of transportation. In this paragraph, economic development program has the meaning given in s. 560.001 (1m). The legislative audit bureau shall file a copy of the report of the audit under this paragraph with the distributees specified in par. (b).

AB741, s. 2 Section 2. 20.002 (11) (d) 3. of the statutes is amended to read: