MPG/JK/ARG:kjf/emw/amn
2017 - 2018 LEGISLATURE
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
1An Act to amend 20.536 (1) (k) and 25.14 (1) (a) (intro.); and
to create 19.42 (10)
2(t), 19.42 (13) (q), 20.192 (1) (t), 20.192 (1) (y), 25.17 (73), 25.90, 73.17 and
3subchapter III of chapter 238 [precedes 238.40] of the statutes;
relating to:
4creating the innovation fund and economic development programs funded by
5that fund, establishing the Innovation Fund Council, authorizing the State of
6Wisconsin Investment Board to provide certain advice and services to state
7agencies 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
1Section
1. 19.42 (10) (t) of the statutes is created to read:
AB640,4,32
19.42
(10) (t) The members of the innovation fund council established under
3s. 238.41.
AB640,2
4Section
2. 19.42 (13) (q) of the statutes is created to read:
AB640,4,65
19.42
(13) (q) The members of the innovation fund council established under
6s. 238.41.
AB640,3
7Section
3. 20.192 (1) (t) of the statutes is created to read:
AB640,4,148
20.192
(1) (t)
Innovation fund and programs; general program operations;
9grants. From interest earnings of the innovation fund, a sum sufficient to provide
10the grants and other payments under ss. 238.42, 238.43, 238.44, and 238.45 and for
11general program operations and administrative expenses related to the innovation
12fund council and the programs administered under subch. III of ch. 238. Not more
13than the following amounts may be expended under this paragraph for general
14program operations and administrative expenses under subch. III of ch. 238:
AB640,4,1515
1. In fiscal year 2019-20, 5 percent of the moneys in the innovation fund.
AB640,4,1616
2. In fiscal year 2020-21, 5 percent of the moneys in the innovation fund.
AB640,4,1717
3. In fiscal year 2021-22, 2 percent of the moneys in the innovation fund.
AB640,4,1918
4. In fiscal year 2022-23 and in each fiscal year thereafter, 0.5 percent of the
19moneys in the innovation fund.
AB640,4
20Section
4. 20.192 (1) (y) of the statutes is created to read:
AB640,4,2421
20.192
(1) (y)
Innovation fund and programs; additional operational or
22administrative expenses. From interest earnings of the innovation fund, a sum
23sufficient equal to any amount authorized under s. 238.48 (2) for general program
24operations and administrative expenses.
AB640,5
25Section
5. 20.536 (1) (k) of the statutes is amended to read:
AB640,5,4
120.536
(1) (k)
General program operations. All moneys received from
2assessments 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
4general program operations.
AB640,6
5Section
6. 25.14 (1) (a) (intro.) of the statutes is amended to read:
AB640,5,106
25.14
(1) (a) (intro.) There is created a state investment fund under the
7jurisdiction and management of the board to be operated as an investment trust for
8the purpose of managing the securities of all funds that are required by law to be
9invested in the state investment fund
, the innovation fund, and all of the state's
10funds specified in s. 25.17 (1), except all of the following:
AB640,7
11Section
7. 25.17 (73) of the statutes is created to read:
AB640,5,2512
25.17
(73) Have authority to provide advice and services requested by a state
13agency, as defined in s. 20.001 (1), or authority, as defined in s. 16.417 (1) (b), or
14business entity owned or controlled by a state agency or authority, relating to
15managing or administering money and property controlled by the agency, authority,
16or business entity for any purpose, including economic development in this state.
17The scope of any advice or services provided to a state agency, authority, or business
18entity under this subsection shall be defined by agreement between the board and
19the agency, authority, or business entity. This agreement shall require the cost of any
20advice or services provided by the board to be paid by the agency, authority, or
21business entity and the agreement may authorize the board to make assessments
22against the money and property controlled by the agency, authority, or business
23entity or to charge the agency, authority, or business entity for the cost of any advice
24or services provided. All moneys received by the board under this subsection shall
25be credited to the appropriation account under s. 20.536 (1) (k).
AB640,8
1Section
8. 25.90 of the statutes is created to read:
AB640,6,6
225.90 Innovation fund. There is established a separate nonlapsible trust
3fund designated as the innovation fund. The fund shall consist of all moneys
4deposited in the fund under s. 73.17, together with all donations, gifts, or bequests
5made to the fund, all moneys transferred to the fund from other funds, and all income
6or interest earned by the fund.
AB640,9
7Section
9. 73.17 of the statutes is created to read:
AB640,6,23
873.17 Innovation fund. (1) In this section, “qualifying company" means a
9person whose principal business activity code in the North American Industry
10Classification System, 2017 edition, published by the federal office of management
11and budget, is one of the following: 111, 112, 311, 424, 445, 481, 3121, 3364, 4244,
124245, 4881, 221111, 221112, 221113, 221114, 221115, 221116, 221117, 221121,
13221122, 221210, 221310, 221330, 237990, 238210, 311221, 311224, 324110, 324191,
14325193, 325199, 325220, 325311, 325312, 325314, 325320, 325411, 325412, 325413,
15325414, 325998, 326122, 326199, 327331, 332410, 332420, 332911, 332913, 322999,
16333111, 333249, 333241, 333242, 333318, 333413, 333414, 333415, 333611, 333612,
17333613, 333618, 333991, 333993, 333994, 333995, 333996, 333999, 334111, 334290,
18334412, 334413, 334416, 334418, 334419, 334510, 334511, 334512, 334513, 334514,
19334515, 334516, 334517, 334519, 335110, 335121, 335122, 335129, 335210, 335220,
20335311, 335312, 335313, 335314, 335911, 335912, 335921, 335929, 335931, 335999,
21339112, 339113, 339114, 339115, 339116, 511210, 517410, 541320, 541330, 541370,
22541380, 541511, 541512, 541519, 541620, 541713, 541714, 541715, 611512, 621491,
23621493, 621511, 621512, 622110, or 811219.
AB640,7,3
1(2) (a) Before May 1, 2019, the department of revenue shall determine the total
2amount of withholding taxes due and payable under subch. X of ch. 71 from
3qualifying companies for calendar year 2017.
AB640,7,84
(b) Subject to par. (d), on July 1, 2019, and on each July 1 thereafter, ending on
5July 1, 2033, the department of revenue shall deposit into the innovation fund an
6amount equal to 95 percent of the amount of withholding taxes due and payable
7under subch. X of ch. 71 from qualifying companies in the previous calendar year that
8exceeds the amount determined under par. (a).
AB640,7,119
(c) A person who is subject to withholding taxes under subch. X of ch. 71 shall
10indicate to the department of revenue whether it is a qualifying company for
11purposes of this section in the manner determined by the department.
AB640,7,1412
(d) The department of revenue may not deposit into the innovation fund more
13than $50,000,000 in any fiscal year, and the total amount deposited may not exceed
14$500,000,000.
AB640,10
15Section
10. Subchapter III of chapter 238 [precedes 238.40] of the statutes is
16created to read:
AB640,7,1918
Subchapter III
19
innovation
AB640,7,20
20238.40 Definitions. In this subchapter:
AB640,7,21
21(1) “Council” means the innovation fund council established under s. 238.41.
AB640,7,22
22(1m) “Eligible regulatory applicant” means any of the following:
AB640,7,2323
(a) An entity that has received a grant under s. 238.42 or 238.43.
AB640,7,2524
(b) Any business, institution of higher education, technical college, or public
25utility that is a member of an industry cluster partnership.
AB640,8,3
1(c) Any business, institution of higher education, technical college, or public
2utility that participates in a business accelerator, business incubator, or technology
3pilot program facilitated by an industry cluster partnership.
AB640,8,4
4(2) “Fund” means the innovation fund.
AB640,8,12
5(3) “Industry cluster partnership" means a nonprofit organization, including
6its subsidiaries and affiliates, whose primary purpose, or whose subsidiary's or
7affiliate's primary purpose, is to assist in developing and supporting a regional
8concentration of industry-specific private sector businesses in this state and to foster
9industry-specific research and development, worker skills training, and market
10development at institutions of higher education in this state, including technical
11colleges, for the purpose of transferring to the private sector, and commercializing,
12technology developed at those institutions that is related to relevant industries.
AB640,8,18
13238.41 Innovation fund council.
(1) Establishment. The corporation shall
14establish an advisory council to be called the “innovation fund council.” Except as
15otherwise provided under this section or in policies and procedures adopted by the
16corporation to govern the council's business, the council shall be subject to s. 15.09.
17The council shall advise the corporation concerning the use of fund moneys and the
18economic development programs administered under this subchapter.
AB640,8,20
19(2) Membership. The council shall consist of the following members, to serve
20staggered 3-year terms:
AB640,8,2121
(a) One member appointed by the executive director of the investment board.
AB640,8,2322
(b) One member appointed by the managing director of the Wisconsin Alumni
23Research Foundation, Inc.
AB640,9,224
(c) One member appointed by the governor who currently serves in a senior
25management position at a manufacturing company headquartered in this state that
1employs at least 250 employees in this state, including any affiliate, and that
2engages in research and development.
AB640,9,73
(d) One member appointed by the governor who currently serves in a senior
4management position at a manufacturing company headquartered in this state that
5employs fewer than 50 employees in this state, including any affiliate, and who, in
6addition to any other responsibilities, has responsibilities related to the financing of
7the company or of its product development activities.
AB640,9,118
(e) One member appointed by the governor who currently serves in a senior
9management position at a technology company headquartered in this state that
10employs at least 250 employees in this state, including any affiliate, and that
11engages in corporate research and development.
AB640,9,1612
(f) One member appointed by the governor who currently serves in a senior
13management position at a technology company headquartered in this state that
14employs fewer than 50 employees in this state, including any affiliate, and who, in
15addition to any other responsibilities, has responsibilities related to the financing of
16the company or of its product development activities.
AB640,9,2017
(g) One member appointed by the president of the University of Wisconsin
18System who has experience in collaborations among universities and industries to
19conduct innovative, fundamental research in science, engineering, technology, and
20other areas of interest to industry.