Wisconsin Legislature: COMMERCE

5. PHYSICIAN AND HEALTH CARE PROVIDER LOAN ASSISTANCE PROGRAMS FUNDING CONVERSION [LFB Paper 158]

GPR - $777,400
PR 777,400
Total $0

Governor/Legislature: Convert $388,700 annually from GPR to PR for the Physician Loan Assistance Program (PLAP) and Health Care Provider Loan Assistance Program (HCPLAP) and a related contract with the UW Office of Rural Health. The current appropriation used to fund the programs would be converted from GPR to PR. Funding, under the bill, would be provided from tribal gaming revenue provided to the state under the recently completed state-tribal gaming compact amendments. [For more information on the proposed use of tribal gaming revenues, see the summary item relating to Tribal Gaming Revenue Allocations under "Administration -- Division of Gaming."]

The Physician Loan Assistance Program (PLAP) and the Health Care Provider Loan Assistance Program (HCPLAP) programs provide loan repayments for physicians and certain health care professionals who practice in areas in the state which have a shortage of physicians or health care professionals.

[Act 9 Sections: 202, 562, 2957 thru 2964 and 9210(1)]

6. POSITION TRANSFER TO ADMINISTRATIVE SERVICES [LFB Paper 285]

Governor: Provide $482,900 PR and 8.0 PR positions annually and delete $161,400 FED, 3.0 FED positions, $286,200 GPR, 4.5 GPR positions, $35,300 SEG and 0.5 SEG positions annually to reflect the transfer of administrative positions to the Department's administrative services charge-back appropriation. The source of program revenue is fees charged to the Department's programs for administrative services provided.

Further, provide $163,200 PR and $74,600 SEG in 1999-00 and $163,800 PR and $75,000 SEG in 2000-01 in various appropriations to fund increased charges for administrative services performed for the various programs. The increased administrative charges would reflect position transfers, pay plan and fringe benefit costs and position reclassifications. This provision would increase expenditure authority in appropriations that would be charged for the increased costs of administrative services.

Joint Finance/Legislature: Approve the Governor's recommendation. In addition, provide $28,900 PR and $9,200 SEG annually to adjust various appropriations to reflect increased administrative service charges related to the transfer of administrative positions to the Administrative Services Division's program revenue charge-back appropriation.

7. APPLICATIONS DEVELOPMENT POSITIONS

Funding Positions
PR $328,500 3.00

Governor/Legislature: Provide $156,200 in 1999-00 and $172,300 in 2000-01 and 3.0 positions annually for the Administrative Services Division. The positions would be used for applications development and maintenance of the Department’s computer systems. The source of program revenue is fees charged to the Department’s programs for services provided.

8. WISCONSIN DEVELOPMENT FUND -- FUNDING PROVISIONS [LFB Paper 286]

Governor: Provide funding through the Wisconsin Development Fund (WDF) GPR and program revenue repayments appropriations as follows:

a. Annual base level GPR funding of $7,503,800.

b. Annual base level funding of $1,500,000 PR for the program revenue repayments appropriation. [An additional $1,000,000 in annual expenditure authority is provided for the newly created manufacturing extension grants. This funding is reflected under the WDF item #10 for that program.]

c. Authorize the Department to provide an additional $50,000, or a total of $100,000, in WDF funds in fiscal year 1999-00 to a nonprofit organization that provides assistance to organizations and individuals in urban areas. (The funding is the final year of a three-year grant for Reggie White's Wisconsin Urban Hope Initiative that provides entrepreneurial opportunities for individuals in Wisconsin's central cities. State funding is matched by private funds.) The funds must be used in accordance with a memorandum of understanding with DOA that specifies how the monies must be allocated for assistance.

d. Authorize the Department to make a loan of up to $600,000 in WDF funds for a project that includes a pedestrian bridge if all of the following apply: (1) the person submits a plan to the Department detailing the use of the loan and the Secretary of Commerce approves the plan; (2) the person enters into a written agreement with the Department that specifies the loan terms and the conditions for use of the loan proceeds, including reporting and auditing requirements; (3) the person agrees in writing to submit to the Department, within six months after spending the full amount of the loan, a report detailing how the proceeds were used. Loan repayments would be placed in the WDF program revenue appropriation. No loan proceeds could be paid for this purpose after June 30, 2000.

e. Authorize the Department to make a grant of not more than $1,000,000 from the WDF GPR appropriation to a consortium for a manufacturing technology training center if all of the following apply: (1) the consortium is located in the Racine-Kenosha area; (2) the consortium submits a plan to the Department detailing the proposed use of the grant and the Secretary approves the plan; (3) the consortium enters into a written agreement with the Department that specifies the conditions for use of the grant proceeds, including reporting and auditing requirements; and (4) the consortium agrees in writing to submit to the Department, within six months after spending the full amount of the grant, a report detailing how the grant proceeds were used. The Department could not disburse more than $500,000 in grant proceeds in each year of the 1999-2001 biennium. No grants could be paid for this purpose after June 30, 2001.

The Wisconsin Development Fund (WDF) consists of eight programs: (1) technology development grants and loans; (2) customized labor training grants and loans; (3) major economic development grants and loans; (4) Wisconsin trade project; (5) employe ownership assistance grants; (6) manufacturing assistance grants; (7) revolving loan fund capitalization grants; and (8) the rapid response fund. The WDF is funded through both a general purpose revenue (GPR) and a program revenue (PR) appropriation. The GPR appropriation is the primary source of funding for the WDF program.

The program revenue repayments appropriation was established to operate similar to a revolving loan fund. Amounts received from WDF loan repayments are credited to the repayments appropriation and these monies can be used to fund WDF grants and loans. The program revenue repayments appropriation is a continuing appropriation and, consequently, unappropriated and unexpended amounts remain in the appropriation balance and can be used to fund future grants and loans.

Under a provision of 1997 Wisconsin Act 27 (the 1997-99 biennial budget), the Department was authorized to provide financial assistance from the WDF to a nonprofit organization that provides assistance to organizations and individuals (Reggie White's Urban Hope Initiative). A total of $50,000 annually was required to be allocated to the project in 1997-98, 1998-99 and 1999-00. Commerce was required to enter into a memorandum of understanding with DOA that specified how Commerce could use the monies allocated for assistance. A grant of $100,000 was awarded in 1997-98 under this provision.

Act 27 also authorized the Department to provide loans from the WDF totaling not more than $1,200,000 for projects that included a pedestrian bridge. Loans could not be made for this purpose after January 1, 1999.

Joint Finance: Include provisions and, in addition:

a. Authorize Commerce to make grants from the Wisconsin Development Fund to municipalities that participate in the Main Street Program to fund revitalization and other activities related to participation in the program. The total annual amount of grants that could be made would be limited to $250,000 and Commerce wold be required to promulgate rules to administer the program.

b. Authorize the Department to make a grant of $100,000 for pedestrian enhancements to the city square in Menasha. A 100% local match would be required before this funding could be expended.

Assembly: Include Joint Finance provisions with the following modifications:

a. Require Commerce to provide $1 million in 1999-00 from the Wisconsin Development Fund GPR appropriation to the Wisconsin Housing and Economic Development Authority (WHEDA). Authorize WHEDA to utilize the funding for administrative expenses and start-up capital for a nonprofit, nonstock biotechnology development finance company to invest in new or existing biotechnology companies in Wisconsin.

b. Delete the Joint Finance provision that would authorize Commerce to make a grant of $100,000 in 1999-00 for pedestrian enhancements in the City of Menasha from the Wisconsin Development Fund and instead authorize the Department to make the grant from the community-based economic development program (CBED).

Senate: Modify Joint Finance provisions as follows:

a. Decrease annual funding for the Wisconsin Development Fund (WDF) by $1,000,000 GPR. Further, increase annual funding by $390,000 PR to reflect a reestimate of loan repayments available for awards in 1999-00. As a result, the annual amounts appropriated for the WDF would be $9,393,800 ($6,503,800 GPR and $2,890,000 PR) a $390,000 increase (4.3%) over base funding levels.

b. Create a Business Employes' Skills Training Program under the Wisconsin Development Fund (WDF) to provide $1 million annually in grants and loans to certain businesses to train employes. Commerce could make awards to a business if all of the following applied:

1. The business is located in Wisconsin and has 35 or fewer full-time employes or $2.5 million in gross annual income in the preceding year;

2. The business uses the funds to provide skills training or other education that are related to the needs of the business to current or prospective employes;

3. The business submits a plan to commerce detailing the proposed use of the funds and the Secretary of Commerce approves the plan;

4. The business enters into a written agreement with the Department that specifies the conditions for the use of financial assistance, including reporting, auditing and repayment requirements;

5. The business agrees in writing that, before providing training or other education to a current or prospective employe with the funds, the business will enter into a contract with the employe under which the business agrees to retain the employe and the employe agrees to work for the business for at least one year after the employe's training or education is completed;

6. The business agrees in writing to submit a report detailing how award proceeds were used within six months after spending the full amount of the proceeds.

The maximum award would be $10,000 of which one-half would be required to be a grant and one-half a loan. In making awards, the Department would be required to give preference to businesses in industries with severe labor shortages and to consult with DWD to determine those industries. Commerce would be required to award at least 30% of total awards to businesses in counties with populations under 100,000, unless an insufficient number of such businesses qualified. A separate program revenue appropriation for loan repayments would also be created.

c. Require Commerce to make an annual grant of up to $100,000 from the Wisconsin Development Fund (WDF) to the Wisconsin Procurement Institute (WPI) if certain conditions were met.

d. Authorize Commerce to make grants from the Wisconsin Development Fund (WDF) to municipalities and nonprofit organizations to fund costs related to conducting public retail markets. Require Commerce to promulgate rules to administer the program.

e. Require the Department of Commerce to provide an additional $250,000 GPR annually from the Wisconsin Development Fund (WDF) to the Southeast Wisconsin Technology Training Initiative.

Conference Committee/Legislature: Adopt the Joint Finance provisions with the following modifications:

a. Authorize Commerce to use up to $1 million in 1999-00 from the Wisconsin Development Fund (WDF) for administrative expenses and start-up capital for a nonprofit, nonstock biotechnology development finance company to invest in new or existing biotechnology companies in Wisconsin. Commerce would be required to organize and maintain a nonprofit, nonstock biotechnology development finance company to invest in new or existing biotechnology (technology relating to life sciences) companies in the state. The company would be prohibited from engaging in political activities. The finance company would be allowed to invest in eligible biotechnology companies by purchasing stock, convertible securities, evidences of indebtedness, warrants, subscriptions, partnership interests or membership interests. However, the finance company would be limited to a total investment in any one biotechnology company of $200,000 or 49% ownership, whichever was less.

The board of directors of the biotechnology development finance company would consist of nine members, including: (a) the Executive Director of WHEDA (or designee); (b) the Secretary of the Department of Commerce (or designee); (c) the Secretary of the Department of Administration (or designee); (d) the Executive Director of the Investment Board (or designee); (e) the President of the UW System (or designee); (f) the President of Forward Wisconsin, Inc. (or designee); and (g) one representative each of the state's biotechnology research community, biotechnology industry, and venture capital industry. Initially, the Governor would appoint the final three representatives for five-year terms. The company would specify in its bylaws a method of reappointing or filling vacancies for the three public members. The biotechnology development finance company would also be required to annually provide a report on its activities to the Governor and to the appropriate standing committees in the Legislature.

The biotechnology development finance company could invest in a biotechnology company if all of the following apply:

1. The biotechnology company has certified that the project plans conform to all applicable environmental, zoning, building, planning or sanitation laws;

2. There is a reasonable expectation that the biotechnology company will be successful;

3. Private industry has not provided sufficient capital required for the project;

4. Other investment in the project is unavailable in the traditional capital markets, or capital has been offered on terms that would preclude the success of the project;

5. The biotechnology company reports sufficient financial data about the project, which may include a periodic audit of the project's financial records, to the biotechnology development finance company;

6. The proceeds of the purchase will be used solely in connection with the costs of the project, which may include planning and design, land purchases, feasibility studies, equipment, and working capital, among other costs; and

7. The biotechnology company is able to manage its project responsibilities.

Commerce is required to enter into contract with the biotechnology company to make use of the company's services and to advise, assist and provide administrative services necessary to the biotechnology development finance company. Commerce could assign employes or contract with private or state agencies to perform administrative services.

c. Require Commerce to make an annual grant of up to $100,000 from the Wisconsin Development Fund (WDF) to the Wisconsin Procurement Institute (WPI) if all of the following conditions are met:

1. The Wisconsin Procurement Institute uses the grant proceeds to further its efforts to secure federal government contracts and create jobs in the state.

2. The WPI submits a plan to Commerce for each grant detailing the proposed use of the grant and the Secretary of Commerce approves the plan.

3. The WPI enters into a written agreement with Commerce that specifies the conditions for use of the grant proceeds, including reporting and auditing requirements.

4. The WPI agrees in writing to submit to the Department, within six months after spending the full amount of the grant, a report detailing how the grant proceeds were used.

The WPI provides marketing, education and consulting services to state businesses.

e. Require the Department of Commerce to provide an additional $250,000 GPR annually from the Wisconsin Development Fund (WDF) to the Southeast Wisconsin Technology Training Initiative. In addition, require that the written agreement between the consortium and Department include a provision that requires 60% of the grant proceeds to be awarded to Racine County and 40% of the grant proceeds to be awarded to Kenosha County.

f. Require the Department of Commerce to make a loan of $1.5 million from the WDF to City Brewery in the City of La Crosse if all the following apply:

1. The proposed recipient submits a plan to the Department of Commerce detailing the proposed use of the loan and the Secretary of Commerce approves the loan;

2. The proposed recipient enters into a written agreement with the Department of Commerce that specifies the loan terms and conditions for use of the loan proceeds, including auditing and reporting requirements; and

3. The proposed recipient agrees in writing to submit to the Department of Commerce, within six months after spending the full amount of the loan, a report detailing how loan proceeds were used.

No loan proceeds could be paid under these provisions after June 30, 2001.

Under these provisions, total annual funding for the WDF would be $10,003,800 ($7,503,800 GPR and $2,500,000 PR).

Veto by Governor [B-18 thru B-21]: Veto provisions as follows: (a) delete authority to provide grants for Main Street Program municipalities and public retail markets; (b) limit the grant to the Wisconsin Procurement Institute to a one-time grant of $100,000; (c) delete the required grant of $1,000,000 in 1999-00 and authority for establishing and administering a biotechnology development company; (d) delete provisions that establish the total amount of the grant for the Racine-Kenosha consortium at $1,500,000 and that limit disbursements to $750,000 annually and request Commerce and the consortium to reach a financial assistance agreement that meets the fundamental goals of the Governor's initial proposal; and (e) delete the requirement that the loan to City Brewery in La Crosse be $1,500,000 and request Commerce to work with brewery owners to develop a financial assistance agreement that will ensure job creation and retention in La Crosse.

[Act 9 Sections: 196, 204, 2931 thru 2933, 2980m, 9110(4),(5),(6e)&(7bt)]

[Act 9 Vetoed Sections: 196, 204, 2937d, 2937f, 2980m, 2983c and 9110(5)&(7bt)]

9. WISCONSIN DEVELOPMENT FUND -- ADMINISTRATIVE PROVISIONS [LFB Paper 287]

Governor: Make the following modifications to Wisconsin Development Fund (WDF) administrative provisions:

a. Authorize the Department to charge the 1.5% loan origination fee on all WDF awards of $100,000 or more. The Department indicates that applying the loan origination fee to more WDF awards and reducing the threshold amount at which it would be imposed would have raised an additional $23,500 over the past year.

b. Authorize the Department to expend up to 1% of the moneys appropriated under the WDF GPR appropriation for (1) evaluations of proposed technical research projects that apply for technology development grants and loans; and (2) evaluation costs, collection costs, foreclosure costs and other costs, excluding staff salaries, that are associated with administering the WDF loan portfolio. Current law provisions, which give authority to the Development Finance Board to use this funding for certain evaluations and grants, would be deleted.

c. Change the definition of job used for the WDF to mean a position providing full-time equivalent employment.

The WDF currently consists of eight programs: (1) technology development grants and loans; (2) customized labor training grants and loans (CLT); (3) major economic development grants and loans (MED); (4) Wisconsin trade project; (5) employe ownership assistance grants; (6) manufacturing assessment grants; (7) revolving loan fund capitalization grants; and (8) rapid response fund loans. Commerce is authorized to charge a 1.5% loan origination fee on CLT and MED awards over $200,000. Fees are used to fund administrative expenses.

The Development Finance Board is currently authorized to expend or encumber up to 1% of the amount appropriated for the WDF GPR appropriation for: (1) evaluations of proposed technology development grant or loan projects; and (2) grants to small businesses for preparing proposals for the federal small business innovative research program. Under WDF provisions, a job is defined to mean a regular, nonseasonal full-time position in which an individual, as a condition of employment, is required to work at least 2,080 hours per year, including paid leave and holidays.

Joint Finance: Delete provision "a." lowering the award threshold for the origination fee. Rather, increase from 1.5% to 2.0%, the current origination fee that applies to MED and CLT grants and loans in excess of $200,000. Estimate additional revenues at $32,500 annually.

Senate: Delete Joint Finance provisions that would have increased, from 1.5% to 2.5%, the loan origination fee applied to Wisconsin Development Fund (WDF) major economic development and customized labor training grants and loans. Instead, restore the Governor's recommendation to apply the current 1.5% origination fee to most WDF grants and loans of $100,000 or more. This provision would reduce program revenues by $10,600 annually.

Conference Committee/Legislature: Include Joint Finance provisions.

[Act 9 Sections: 2985, 2993, 2996 and 2998]