AB640: Bill Text

CORRECTED COPY

LRB-4608/1

MPG/JK/ARG:kjf/emw/amn

2017 - 2018 LEGISLATURE

2017 Assembly BILL 640

November 14, 2017 - Introduced by Representatives Neylon, Rohrkaste, Crowley, Fields, Genrich, Horlacher, Krug, Mursau, Ohnstad, Tusler, Zepnick and Goyke, cosponsored by Senators Darling, Wanggaard, Feyen, Johnson and Olsen. Referred to Committee on Small Business Development.

AB640,1,7 An Act to amend 20.536 (1) (k) and 25.14 (1) (a) (intro.); and to create 19.42 (10) (t), 19.42 (13) (q), 20.192 (1) (t), 20.192 (1) (y), 25.17 (73), 25.90, 73.17 and subchapter III of chapter 238 [precedes 238.40] of the statutes; relating to: creating the innovation fund and economic development programs funded by that fund, establishing the Innovation Fund Council, authorizing the State of Wisconsin Investment Board to provide certain advice and services to state agencies and others, and making appropriations.

Analysis by the Legislative Reference Bureau

Innovation fund

This bill creates a nonlapsible fund to be known as the “innovation fund" (fund). From the interest earnings of the fund, the Wisconsin Economic Development Corporation may make grants, and payments under certain contracts, as set forth below. For short-term management, the fund is included in the state investment fund managed by the State of Wisconsin Investment Board.

In addition to any donations, gifts, or bequests made to the fund, any moneys transferred to the fund, any moneys deposited in the fund by WEDC, and any income or interest earned by the fund, the fund consists of moneys generated from tax revenue collected from a specific class of companies, referred to in the bill as “qualifying companies." 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 to determine before May 1, 2019, the total amount of withholding taxes due and payable from qualifying companies for calendar year 2017. Then, on July 1, 2019, and on each July 1 thereafter, ending on July 1, 2033, DOR must deposit in the fund an amount equal to 95 percent of the withholding taxes due and payable from qualifying companies that exceeds the total amount calculated for calendar year 2017. DOR may not deposit more than $50,000,000 into the fund in any fiscal year and may not deposit more than $500,000,000 in total into the fund.

Innovation Fund Council

The bill requires WEDC to establish an Innovation Fund Council to advise WEDC with respect to the use of fund moneys to make grants and to make payments under certain contracts, as set forth below. The advisory council consists of the following 11 members:

1. One member appointed by the executive director of the Investment Board.

2. One member appointed by the managing director of the Wisconsin Alumni Research Foundation.

3. One member appointed by the governor who serves in a senior management position at a manufacturing company headquartered in Wisconsin that employs at least 250 employees and engages in research and development.

4. One member appointed by the governor who serves in a senior management position at a manufacturing company headquartered in Wisconsin that employs fewer than 50 employees and who has responsibilities related to the financing of the company or of its product development activities.

5. One member appointed by the governor who serves in a senior management position at a technology company headquartered in Wisconsin that employs at least 250 employees and engages in corporate research and development.

6. One member appointed by the governor who serves in a senior management position at a technology company headquartered in Wisconsin that employs fewer than 50 employees and who has responsibilities related to the financing of the company or of its product development activities.

7. One member appointed by the president of the University of Wisconsin System who has experience in collaborations among universities and industries to conduct innovative, fundamental research in science, engineering, technology, and other areas of interest to industry.

8. One member appointed by the president of the Wisconsin Association of Independent Colleges and Universities who has experience in collaborations among universities and industries to conduct innovative, fundamental research in science, engineering, technology, and other areas of interest to industry.

9. Two members appointed by the governor who have experience working for industry cluster partnerships. Under the bill, an industry cluster partnership is defined as a nonprofit organization whose primary purpose is to assist in developing and supporting a regional concentration of industry-specific private sector businesses that share a common interest in fostering research and development, worker skills training, and market development.

10. One member appointed by the governor who has at least five years of experience in the investment activities, merger, and acquisition of technology or manufacturing companies.

Economic development programs supported by the fund

Under the bill, subject to certain additional limitations and requirements set forth in the bill, WEDC administers the following economic development programs using interest earnings from the fund:

1. WEDC may award grants to businesses and other entities headquartered in Wisconsin for the development or deployment of new technologies, components, systems, or processes to solve or significantly improve upon local problems identified by WEDC with the advisory council's concurrence.

2. WEDC may award a grant to businesses and other entities headquartered in Wisconsin for the development or deployment of a new technology, component, system, or process to solve or significantly improve upon a problem affecting a significant portion of Wisconsin or the nation identified by WEDC.

3. WEDC may award grants to early stage businesses for the purpose of facilitating rapid prototype development and pilot testing of potentially marketable new technologies, components, or products.

4. WEDC may make payments under contracts with industry cluster partnerships. WEDC may award a contract to an industry cluster partnership only if it meets certain conditions and may award only one contract per year.

The bill further authorizes WEDC to expend interest earnings from the fund to partially fund any grant that WEDC provides under a program WEDC administers to support business accelerators in Wisconsin. The bill also authorizes WEDC to use interest earnings from the fund to partially fund any grant that WEDC provides to match or partially match grants made by the federal small business administration or under the federal Small Business Technology Transfer Program.

Additional contracting authority for the Investment Board

The bill authorizes the Investment Board to provide advice and services 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 or services the Investment Board provides.

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:

AB640,1 Section 1. 19.42 (10) (t) of the statutes is created to read:

AB640,4,3 19.42 (10) (t) The members of the innovation fund council established under s. 238.41.

AB640,2 Section 2. 19.42 (13) (q) of the statutes is created to read:

AB640,4,6 19.42 (13) (q) The members of the innovation fund council established under s. 238.41.

AB640,3 Section 3. 20.192 (1) (t) of the statutes is created to read:

AB640,4,14 20.192 (1) (t) Innovation fund and programs; general program operations; grants. From interest earnings of the innovation fund, a sum sufficient to provide the grants and other payments under ss. 238.42, 238.43, 238.44, and 238.45 and for general program operations and administrative expenses related to the innovation fund council and the programs administered under subch. III of ch. 238. Not more than the following amounts may be expended under this paragraph for general program operations and administrative expenses under subch. III of ch. 238:

AB640,4,15 1. In fiscal year 2019-20, 5 percent of the moneys in the innovation fund.

AB640,4,16 2. In fiscal year 2020-21, 5 percent of the moneys in the innovation fund.

AB640,4,17 3. In fiscal year 2021-22, 2 percent of the moneys in the innovation fund.

AB640,4,19 4. In fiscal year 2022-23 and in each fiscal year thereafter, 0.5 percent of the moneys in the innovation fund.

AB640,4 Section 4. 20.192 (1) (y) of the statutes is created to read:

AB640,4,24 20.192 (1) (y) Innovation fund and programs; additional operational or administrative expenses. From interest earnings of the innovation fund, a sum sufficient equal to any amount authorized under s. 238.48 (2) for general program operations and administrative expenses.

AB640,5 Section 5. 20.536 (1) (k) of the statutes is amended to read: