LRB-3190/1
MPG/ARG/JK:ahe
2015 - 2016 LEGISLATURE
February 9, 2016 - Introduced by Representatives Kahl, Danou, Zepnick,
Jorgensen, Sinicki, Subeck, Brostoff, C. Taylor, Berceau, Considine,
Kolste, Ohnstad, Pope, Wachs and Spreitzer, cosponsored by Senators
Miller, Ringhand, Hansen and Erpenbach. Referred to Committee on Jobs
and the Economy.
AB888,1,8
1An Act to amend 15.07 (4), 20.536 (1) (k) and 25.14 (1) (a) (intro.);
to repeal and
2recreate 15.07 (4); and
to create 15.07 (1) (a) 6., 15.07 (5) (am), 15.77, 19.42
3(10) (Lm), 19.42 (13) (km), 20.195, 25.17 (73), 25.17 (74), 25.90, 73.17, 230.08
4(2) (yo) and chapter 555 of the statutes;
relating to: creation of the State of
5Wisconsin Next Generation Reserve Board and Wisconsin next generation
6reserve fund, authorizing the State of Wisconsin Investment Board to provide
7certain advice, services, and facilities to state agencies and others, requiring
8the exercise of rule-making authority, and making appropriations.
Analysis by the Legislative Reference Bureau
This bill creates the Wisconsin Next Generation Reserve Board (Reserve Board)
as an independent agency in the executive branch of state government. The primary
functions of the Reserve Board are to make grants and loans to, and make direct
investments in, Wisconsin bioscience companies.
Composition of the Reserve Board
The Reserve Board is composed of 12 members as follows:
1. One member, appointed by the governor for a four-year term, who has
expertise in agriculture and is recognized for outstanding knowledge and leadership
in bioscience or bioscience research.
2. Three members, appointed by the governor for four-year terms, who serve
in senior management positions at Wisconsin bioscience companies and have
responsibilities related to the financing of their respective companies, two of whom
are from companies that employ less than 50 employees, and one of whom is from a
company that employs 50 or more employees.
3. Two members, appointed by the governor for four-year terms, who serve in
senior management positions at Wisconsin companies that develop or manufacture
medical devices and have responsibilities related to the financing of their respective
companies, one of whom is from a company that employs less than 50 employees, and
one of whom is from a company that employs 50 or more employees.
4. One member, appointed by the governor for a four-year term, who either has
at least five years of experience directly investing in bioscience companies in
Wisconsin, or represents a group of investors that has that experience.
5. One member, appointed by the governor for a four-year term, who has at
least three years of experience in the merger and acquisition of bioscience companies.
6. One member who is appointed by BioForward, Inc., a private bioscience
association in Wisconsin, for a four-year term.
7. Two nonvoting members who have expertise in bioscience or bioscience
research, one of whom is appointed by the Board of Regents of the University of
Wisconsin System and serves at the pleasure of the Board of Regents, and one of
whom is appointed by the Wisconsin Association of Independent Colleges and
Universities and serves at the pleasure of the association.
8. The executive director of the State of Wisconsin Investment Board
(Investment Board), or his or her designee, who also serves as a nonvoting member.
The bill requires that the Reserve Board hire an executive director who has
expertise in private equity investment.
Wisconsin Next Generation Reserve Fund
The bill creates a nonlapsible fund to be known as the "Wisconsin next
generation reserve fund" (fund). From the fund, the Reserve Board may make
grants, loans, and investments, as set forth below. For short-term management, the
fund is included in the state investment fund managed by the Investment Board.
In addition to moneys from other sources, the fund consists of moneys
generated from tax revenue collected from "qualifying companies" in the bioscience
industry. Under the bill, a qualifying company is identified by the company's
principal business activity code under the North American Industry Classification
System (NAICS). The bill directs the Department of Revenue (DOR) to determine
in July 2016 the total amount of withholding taxes due and payable from qualifying
companies for 2015. Then, beginning on July 1, 2017, and ending on July 1, 2031,
DOR must deposit in the fund an amount equal to 95 percent of the withholding taxes
due and payable from qualifying companies the previous year that exceeds the total
amount for 2015, except that DOR may not deposit more than $15,000,000 into the
fund on July 1, 2017, or more than $50,000,000 on any July 1 thereafter. DOR may
not deposit more than a total of $350,000,000 into the fund. However, the Joint
Committee on Finance (JCF), under its passive review process, may approve deposits
of up to an additional $150,000,000.
Grants, loans, and investments
From the fund, the bill authorizes the Reserve Board to make grants and loans
to, and direct investments in, bioscience companies certified by the Reserve Board.
The Reserve Board may certify a bioscience company if the Reserve Board
determines that the company is headquartered and employs at least 75 percent of
its employees in Wisconsin and meets certain other conditions, including that the
company is developing biotechnology or bioscience or bioscience research methods
and demonstrates the potential to generate high levels of successful investment
performance and increase employment in Wisconsin.
Before providing any moneys from the fund to a certified bioscience company,
the Reserve Board must enter into a contract with the company that includes all of
the following requirements:
1. The company must use a grant, loan, or investment from the fund for
research and development related to biotechnology or bioscience or bioscience
research methods.
2. The company must match the amount of any grant, loan, or investment from
the fund with moneys the company has raised from other sources.
3. During the term of the contract, the company may not relocate its
headquarters outside of Wisconsin without the Reserve Board's approval.
Contracting authority
In addition to its general contracting authority, the bill authorizes the Reserve
Board to execute a contract with the Investment Board for the Investment Board's
advice and services related to the Reserve Board's grants, loans, and investments
and for facilities provided by the Investment Board. Under the bill, the Investment
Board may also make a loan to the Reserve Board for the Reserve Board's initial
operations and administrative expenses.
The bill further authorizes the Investment Board to provide advice, services,
and facilities to any state agency or authority or a business entity owned by an
agency or authority. Under the bill, the Investment Board may provide advice or
services related to the management or administration, for any purpose, including
economic development, of money or property that an agency, authority, or eligible
business entity controls. The agency, authority, or eligible business entity must
contract with the Investment Board and pay the Investment Board for any advice,
services, or facilities the Investment Board provides.
Reporting and review
The bill requires the Reserve Board to file a detailed annual report with the
legislature that includes all of the following:
1. An accounting of the revenue deposited in the fund by DOR.
2. An accounting of all expenditures from the fund by the Reserve Board for any
purpose.
3. Information concerning each grant or loan to, or investment in, a certified
bioscience company, including a description of the purposes for which the certified
bioscience company used or is using the grant, loan, or investment and a statement
of the number of employees the certified bioscience company employed on January
1 of the preceding year and the number of employees the company employed on
December 31 of that year.
4. An accounting of the internal rate of return realized by the Reserve Board
on its total loans to, and investments in, certified bioscience companies.
5. An accounting of the internal rate of return realized by the Reserve Board
on each loan to or investment in each certified bioscience company.
Finally, the bill requires the Reserve Board to submit a plan to JCF at the close
of each fiscal biennium that shows the grants, loans, and investments the Reserve
Board intends to make during the next fiscal biennium. The joint committee on
finance may approve, disapprove, or modify and approve the Reserve Board's plan
under JCF's passive review process.
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:
AB888,1
1Section
1. 15.07 (1) (a) 6. of the statutes is created to read:
AB888,4,32
15.07
(1) (a) 6. The members of the Wisconsin next generation reserve board
3appointed under s. 15.77 (1) (h) to (j) shall be appointed as provided in that section.
AB888,2
4Section
2. 15.07 (4) of the statutes is amended to read:
AB888,4,115
15.07
(4) Quorum. A majority of the membership of a board constitutes a
6quorum to do business and, unless a more restrictive provision is adopted by the
7board, a majority of a quorum may act in any matter within the jurisdiction of the
8board. This subsection does not apply to actions of the government accountability
9board or the school district boundary appeal board as provided in ss. 5.05 (1e) and
10117.05 (2) (a)
or the Wisconsin next generation reserve board as provided in s. 15.77
11(3).
AB888,5,6
115.07
(4) Quorum. A majority of the membership of a board constitutes a
2quorum to do business and, unless a more restrictive provision is adopted by the
3board, a majority of a quorum may act in any matter within the jurisdiction of the
4board. This subsection does not apply to actions of the school district boundary
5appeal board as provided in s. 117.05 (2) (a) or the Wisconsin next generation reserve
6board as provided in s. 15.77 (3).
AB888,4
7Section
4. 15.07 (5) (am) of the statutes is created to read:
