2017 - 2018 LEGISLATURE
SENATE SUBSTITUTE AMENDMENT 1,
TO SENATE BILL 525
December 11, 2017 - Offered by Senator Darling.
1An Act to amend
20.536 (1) (k), 179.85, 180.1504 (2), 238.02 (4) and 238.04 (7); 2
and to create
19.42 (10) (t), 19.42 (13) (q), 20.192 (1) (t), 20.192 (1) (y), 25.14 3
(1) (a) 20., 25.17 (1) (hq), 25.17 (73), 25.90, 73.17, 178.0901 (3) (e), 178.1003 (6), 4
179.11 (1) (e), 179.82 (9), 180.0202 (1) (j), 180.1503 (1) (k), 181.0202 (1) (h), 5
181.1503 (1) (i), 182.01 (7), 183.0202 (7), 183.1004 (8), 185.05 (1) (n), 193.215 6
(2) (a) 5. and subchapter III of chapter 238 [precedes 238.40] of the statutes; 7relating to: creating the innovation fund and economic development programs
8funded by that fund, establishing the Innovation Fund Council, authorizing the
9State of Wisconsin Investment Board to provide certain advice and services to
10the Wisconsin Economic Development Corporation, requiring certain
1information to be included in business formation filings, and making
Analysis by the Legislative Reference Bureau
This substitute amendment creates a nonlapsible fund to be known as the
“innovation fund" (fund). From the interest and income of the fund, the Wisconsin
Economic Development Corporation may provide financial assistance in various
contexts, as set forth below. The State of Wisconsin Investment Board manages the
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 substitute
amendment as “qualifying companies." Under the substitute amendment, a
qualifying company is identified by the company's principal business activity code
under the North American Industry Classification System (NAICS).
The substitute amendment 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.
The substitute amendment also requires corporations, limited liability
companies, limited partnerships, limited liability partnerships, and cooperatives to
identify their NAICS codes when filing their business formation documents with the
Department of Financial Institutions or, with respect to foreign entities, when filing
with DFI for authorization to conduct business in this state. DFI must make these
NAICS codes available to DOR upon request, which availability may be established
by providing access to an electronic database.
Innovation Fund Council
The substitute amendment requires WEDC to establish an Innovation Fund
Council to advise WEDC with respect to the use of fund moneys for the financial
assistance provided under the substitute amendment and perform other duties as
determined by WEDC. The advisory council consists of the following seven members:
1. One member of the board of directors of WEDC who serves as chairperson
of the council and is appointed by the chairperson of the board of directors of WEDC.
2. The executive director of the Investment Board or his or her designee.
3. The managing director of the Wisconsin Alumni Research Foundation, Inc.,
or his or her designee.
4. Four members appointed by the chairperson of the board of directors of
WEDC to serve terms of not more than four years, as determined by the chairperson.
At least three of those members must have significant experience working in or with
a key industry cluster in Wisconsin and at least one must have significant experience
in early stage investing. All of those members must have access to national networks
of stakeholders in their respective industries.
Economic development programs supported by the fund
Under the substitute amendment, subject to certain additional limitations and
requirements set forth in the substitute amendment, WEDC administers the
following economic development programs using interest and income of the fund:
1. WEDC may provide financial assistance 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 provide financial assistance 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 provide financial assistance 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 provide financial assistance 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
The substitute amendment further authorizes WEDC to expend interest and
income of the fund to partially fund any financial assistance WEDC provides under
a program WEDC administers to support business accelerators in Wisconsin. The
substitute amendment also authorizes WEDC to use interest and income of the fund
to partially fund any financial assistance 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 substitute amendment authorizes the Investment Board to consult and
provide advice and services to WEDC relating to the fund and economic development
programs funded by it. The Investment Board may charge WEDC for any
consultation, advice, or services the Investment Board provides.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
19.42 (10) (t) of the statutes is created to read:
(t) The members of the innovation fund council established under 2
19.42 (13) (q) of the statutes is created to read:
(q) The members of the innovation fund council established under 5
20.192 (1) (t) of the statutes is created to read:
(t) Innovation fund and programs; general program operations;
From interest and income of the innovation fund, a sum 9
sufficient to provide financial assistance under ss. 238.42, 238.43, 238.44, and 238.45 10
and for general program operations and administrative expenses related to the 11
innovation fund council and the programs administered under subch. III of ch. 238. 12
Not more than the following amounts may be expended under this paragraph for 13
general program operations and administrative expenses under subch. III of ch. 238:
1. In fiscal year 2019-20, 5 percent of the moneys in the innovation fund.
2. In fiscal year 2020-21, 5 percent of the moneys in the innovation fund.
3. In fiscal year 2021-22, 2 percent of the moneys in the innovation fund.
4. In fiscal year 2022-23 and in each fiscal year thereafter, 0.5 percent of the 18
moneys in the innovation fund.
20.192 (1) (y) of the statutes is created to read:
(y) Innovation fund and programs; additional operational or
From interest and income of the innovation fund, a sum 22
sufficient equal to any amount authorized under s. 238.48 (2) for general program 23
operations and administrative expenses.
20.536 (1) (k) of the statutes is amended to read:
(k) General program operations.
All moneys received from 2
assessments made under s. 25.187 (2) and from charges made under s. 25.17 (9), and
3from assessments or charges made under s. 25.17 (73),
for the purpose of conducting 4
general program operations.
25.14 (1) (a) 20. of the statutes is created to read:
(a) 20. The innovation fund established under s. 25.90.
25.17 (1) (hq) of the statutes is created to read:
(hq) Innovation fund (s. 25.90);
25.17 (73) of the statutes is created to read:
Have authority to consult and provide advice and services to the 11
Wisconsin Economic Development Corporation relating to the innovation fund and 12
the economic development programs funded by the innovation fund. The scope of any 13
consultation, advice, or services under this subsection shall be defined by agreement 14
between the board and the Wisconsin Economic Development Corporation and shall 15
include the board's consultation with the Wisconsin Economic Development 16
Corporation concerning the board's investment of the fund. This agreement shall 17
require the cost of any consultation, advice, or services provided by the board to be 18
paid by the Wisconsin Economic Development Corporation, and the agreement may 19
authorize the board to make assessments against the money and property controlled 20
by the Wisconsin Economic Development Corporation or to charge the Wisconsin 21
Economic Development Corporation for the cost of any consultation, advice, or 22
services provided. All moneys received by the board under this subsection shall be 23
credited to the appropriation account under s. 20.536 (1) (k).
25.90 of the statutes is created to read: