LRB-2641/1
RJM:cmh&kmg:cph
2003 - 2004 LEGISLATURE
June 17, 2003 - Introduced by Senators Hansen, Robson, Chvala, Risser,
Carpenter and Wirch, cosponsored by Representatives Miller, Musser,
Berceau, J. Lehman, Krug, Black, Pocan, Shilling, Zepnick, Turner, Cullen,
Plouff and Morris. Referred to Committee on Economic Development, Job
Creation and Housing.
SB199,1,12
1An Act to amend 20.001 (intro.), 66.1105 (13), 71.07 (2dx) (a) 4., 71.28 (1dx) (a)
24., 71.47 (1dx) (a) 4., 560.70 (2m) and 560.785 (2) (b); and
to create 13.94 (12),
320.926, 20.9265, 560.765 (3) (br) and 560.96 (3) (a) 4. of the statutes;
relating
4to: requiring state agencies, political subdivisions, and housing,
5redevelopment, and community development authorities, as well as subsidy
6recipients, to report on subsidies provided to businesses; requiring certain
7disclosures by business subsidy applicants; prohibiting business subsidies
8under certain circumstances; requiring the Legislative Audit Bureau to publish
9a report on business subsidies and to evaluate their effectiveness; defining a
10full-time job for purposes of development zone tax credits; altering eligibility
11requirements for development zone and technology zone tax credits; and
12providing 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
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 a description of a public purpose for the subsidy (other than
expanding the property tax base), 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 and generally must commit to using certain equipment
purchased through the subsidy in this state for at least five years.
A business that receives a subsidy is required to submit a report as required by
the agency that grants the subsidy, but not later than 24 months after first receiving
the subsidy. The report must be made 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. An agency may utilize its public website to satisfy this
requirement. 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 the secretary of administration.
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 must
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. With certain exceptions, 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, 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. The bill also imposes a requirement, similar to that imposed under the bill
with regard to business subsides, that certain equipment for which a development
zone or technology zone tax credit is claimed generally must be used in this state for
at least five years.
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:
SB199, s. 1
1Section
1. 13.94 (12) of the statutes is created to read:
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13.94
(12) Business subsidies report; compilation and summary. (a) In this
3subsection:
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1. "Business" has the meaning given in s. 20.926 (2).
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2. "Business subsidy" has the meaning given in s. 20.926 (3).
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3. "Grantor" has the meaning given in s. 20.926 (4).
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(b) Annually, by August 1, the legislative audit bureau shall publish a report
8that summarizes the business subsidies provided in the preceding year. The report
9shall include any information and analysis that the legislative audit bureau
1determines is relevant and will assist the legislature in evaluating the cost,
2effectiveness, and equity of investing public moneys in businesses and economic
3development. The report may include any information and data that is available to
4the legislative audit bureau and shall include the reports filed under s. 20.9265 (4)
5(b) and (c) and a compilation and summary of the reports filed under s. 20.9265 (4)
6(a). In each year after the year in which the legislative audit bureau receives the
7report under s. 66.1105 (13), the legislative audit bureau shall include a summary
8of that report in the report under this subsection.
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(c) The portion of the report under this subsection that is the compilation and
10summary of the reports under s. 20.9265 (4) (a) shall include at least all of the
11following information:
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1. The total amount of business subsidies awarded in each county of the state.
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2. Distribution of business subsidies, categorized by subsidy amounts.
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3. Distribution of business subsidy amounts, categorized by the length of time
15over which the subsidy is provided.
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4. Distribution of business subsidies, categorized by type of subsidy, amount of
17subsidy, and public purpose.
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5. The percentage and number of recipients that reached their goals by the
19times specified in their subsidy agreements under s. 20.9265 (2) (a) 6.
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6. The percentage and number of recipients that reached their interim goals,
21if any.
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7. The percentage and number of recipients that did not reach their goals by
23the times specified in their subsidy agreements under s. 20.9265 (2) (a) 6.
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18. The total dollar amount of business subsidies provided to recipients that did
2not reach their goals by the times specified in their subsidy agreements under s.
320.9265 (2) (a) 6.
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9. The number of jobs created as a result of business subsidies, shown in
5separate wage bands, as defined in s. 20.926 (10).
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10. Fringe benefits paid or otherwise provided as a result of business subsidies,
7shown in separate wage bands, as defined in s. 20.926 (10).
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(d) The compilation and summary of the reports under s. 20.9265 (4) (a) shall
9be presented in a manner that allows for comparisons across time periods and among
10grantors and, in addition, shall include sufficient information to enable comparisons
11between wages paid and fringe benefits provided by new jobs created as a result of
12business subsidies and wages paid and fringe benefits provided by comparable jobs
13in each area in which the new jobs are created.
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(e) In addition to summarizing and compiling the reports specified in par. (b),
15the legislative audit bureau shall include in the report under this subsection a
16comparison and evaluation of the effectiveness of each business subsidy, or program
17under which business subsidies are provided, in achieving a public purpose and
18recommendations for improving the programs. The legislative audit bureau is not
19required to compare and evaluate under this paragraph the programs included in the
20reports filed under s. 20.9265 (4) (b) and (c).
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(f) The legislative audit bureau may develop a report form for the manual or
22electronic submission of the report required under s. 20.9265 (4) (a) to ensure that
23the appropriate data is collected to enable the legislative audit bureau to satisfy the
24requirements under this subsection.
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(g) The report under this subsection is open to public inspection.
SB199, s. 2
1Section
2. 20.001 (intro.) of the statutes is amended to read:
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220.001 Definitions and abbreviations. (intro.)
In Except as otherwise
3provided, in this chapter terms and abbreviations have the following meanings:
SB199, s. 3
4Section
3. 20.926 of the statutes is created to read:
SB199,7,6
520.926 Definitions for business subsidy awards and reports. In this
6section and s. 20.9265:
SB199,7,7
7(1) "Agency" means a state agency or a local government agency.
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8(2) "Business" means any of the following:
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(a) A person engaged in a business enterprise for profit in this state.
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(b) An organization or enterprise operating not for profit in this state that has
11at least 100 full-time positions with a ratio of highest-paid to lowest-paid employee
12that exceeds 10 to one, determined on the basis of full-time equivalent positions.
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13(3) (a) Except as provided in par. (b), "business subsidy" means any of the
14following:
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1. Public improvements that cost at least $25,000, that are made to buildings
16or lands owned by the state or a political subdivision, and that exclusively benefit a
17single business at the time that the improvements are made.
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2. Any of the following that has a cost to an agency or the state of at least
19$25,000 and that is given to a business by an agency:
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b. A contribution of personal or real property or infrastructure.
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2m. Any transfer of property to a business by an agency for at least $25,000
23below the property's acquisition cost or fair market value at the time of the transfer,
24whichever is greater.
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3. A loan of at least $75,000 that is given to a business by an agency.
SB199,8,1
1(b) "Business subsidy" does not include any of the following:
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1. Assistance for the sole purpose of providing job readiness and training
3services.
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2. Housing assistance.
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3. Energy conservation assistance.
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4. A reduction or deferral of any tax or fee, including tax credits under ch. 71,
7general tax reductions, and tax reductions resulting from conformity with federal
8law.
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5. General changes in the tax incremental financing laws and other general tax
10law changes.
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6. Worker's compensation and unemployment compensation.
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7. Payment to a person from an agency for the purchase of goods or services.
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7m. Payments made under ch. 32.
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8. Funds from bonds issued for the benefit of any institution, facility, or
15organization described in section
501 (c) (3) of the Internal Revenue Code that is
16exempt from federal taxation under section
501 (a) of the Internal Revenue Code.
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9. Assistance for a consortium, as defined in s. 560.60 (3).
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10. Any assistance provided by the University of Wisconsin System.
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11. Assistance provided by the department of transportation, except for
20assistance provided under s. 84.185 or any similar programs.
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12. Federal loan funds provided through the U.S. economic development
22administration.