SB525: Bill Text

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:

SB525,1 Section 1. 19.42 (10) (t) of the statutes is created to read:

SB525,4,3 19.42 (10) (t) The members of the innovation fund council established under s. 238.41.

SB525,2 Section 2. 19.42 (13) (q) of the statutes is created to read:

SB525,4,6 19.42 (13) (q) The members of the innovation fund council established under s. 238.41.

SB525,3 Section 3. 20.192 (1) (t) of the statutes is created to read:

SB525,4,14 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:

SB525,4,15 1. In fiscal year 2019-20, 5 percent of the moneys in the innovation fund.

SB525,4,16 2. In fiscal year 2020-21, 5 percent of the moneys in the innovation fund.

SB525,4,17 3. In fiscal year 2021-22, 2 percent of the moneys in the innovation fund.

SB525,4,19 4. In fiscal year 2022-23 and in each fiscal year thereafter, 0.5 percent of the moneys in the innovation fund.

SB525,4 Section 4. 20.192 (1) (y) of the statutes is created to read:

SB525,4,24 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.

SB525,5 Section 5. 20.536 (1) (k) of the statutes is amended to read:

SB525,5,4 20.536 (1) (k) General program operations. All moneys received from assessments made under s. 25.187 (2) and from charges made under s. 25.17 (9), and from assessments or charges made under s. 25.17 (73), for the purpose of conducting general program operations.

SB525,6 Section 6. 25.14 (1) (a) (intro.) of the statutes is amended to read:

SB525,5,10 25.14 (1) (a) (intro.) There is created a state investment fund under the jurisdiction and management of the board to be operated as an investment trust for the purpose of managing the securities of all funds that are required by law to be invested in the state investment fund, the innovation fund, and all of the state's funds specified in s. 25.17 (1), except all of the following:

SB525,7 Section 7. 25.17 (73) of the statutes is created to read:

SB525,5,25 25.17 (73) Have authority to provide advice and services requested by a state agency, as defined in s. 20.001 (1), or authority, as defined in s. 16.417 (1) (b), or business entity owned or controlled by a state agency or authority, relating to managing or administering money and property controlled by the agency, authority, or business entity for any purpose, including economic development in this state. The scope of any advice or services provided to a state agency, authority, or business entity under this subsection shall be defined by agreement between the board and the agency, authority, or business entity. This agreement shall require the cost of any advice or services provided by the board to be paid by the agency, authority, or business entity and the agreement may authorize the board to make assessments against the money and property controlled by the agency, authority, or business entity or to charge the agency, authority, or business entity for the cost of any advice or services provided. All moneys received by the board under this subsection shall be credited to the appropriation account under s. 20.536 (1) (k).

SB525,8 Section 8. 25.90 of the statutes is created to read:

SB525,6,6 25.90 Innovation fund. There is established a separate nonlapsible trust fund designated as the innovation fund. The fund shall consist of all moneys deposited in the fund under s. 73.17, together with all donations, gifts, or bequests made to the fund, all moneys transferred to the fund from other funds, and all income or interest earned by the fund.

SB525,9 Section 9. 73.17 of the statutes is created to read:

SB525,6,23 73.17 Innovation fund. (1) In this section, “qualifying company" means a person whose principal business activity code in the North American Industry Classification System, 2017 edition, published by the federal office of management and budget, is one of the following: 111, 112, 311, 424, 445, 481, 3121, 3364, 4244, 4245, 4881, 221111, 221112, 221113, 221114, 221115, 221116, 221117, 221121, 221122, 221210, 221310, 221330, 237990, 238210, 311221, 311224, 324110, 324191, 325193, 325199, 325220, 325311, 325312, 325314, 325320, 325411, 325412, 325413, 325414, 325998, 326122, 326199, 327331, 332410, 332420, 332911, 332913, 322999, 333111, 333249, 333241, 333242, 333318, 333413, 333414, 333415, 333611, 333612, 333613, 333618, 333991, 333993, 333994, 333995, 333996, 333999, 334111, 334290, 334412, 334413, 334416, 334418, 334419, 334510, 334511, 334512, 334513, 334514, 334515, 334516, 334517, 334519, 335110, 335121, 335122, 335129, 335210, 335220, 335311, 335312, 335313, 335314, 335911, 335912, 335921, 335929, 335931, 335999, 339112, 339113, 339114, 339115, 339116, 511210, 517410, 541320, 541330, 541370, 541380, 541511, 541512, 541519, 541620, 541713, 541714, 541715, 611512, 621491, 621493, 621511, 621512, 622110, or 811219.

SB525,7,3 (2) (a) Before May 1, 2019, the department of revenue shall determine the total amount of withholding taxes due and payable under subch. X of ch. 71 from qualifying companies for calendar year 2017.

SB525,7,8 (b) Subject to par. (d), on July 1, 2019, and on each July 1 thereafter, ending on July 1, 2033, the department of revenue shall deposit into the innovation fund an amount equal to 95 percent of the amount of withholding taxes due and payable under subch. X of ch. 71 from qualifying companies in the previous calendar year that exceeds the amount determined under par. (a).

SB525,7,11 (c) A person who is subject to withholding taxes under subch. X of ch. 71 shall indicate to the department of revenue whether it is a qualifying company for purposes of this section in the manner determined by the department.

SB525,7,14 (d) The department of revenue may not deposit into the innovation fund more than $50,000,000 in any fiscal year, and the total amount deposited may not exceed $500,000,000.

SB525,10 Section 10. Subchapter III of chapter 238 [precedes 238.40] of the statutes is created to read:

SB525,7,17 Chapter 238

SB525,7,19 Subchapter III innovation

SB525,7,20 238.40 Definitions. In this subchapter:

SB525,7,21 (1) “Council” means the innovation fund council established under s. 238.41.

SB525,7,22 (1m) “Eligible regulatory applicant” means any of the following:

SB525,7,23 (a) An entity that has received a grant under s. 238.42 or 238.43.

SB525,7,25 (b) Any business, institution of higher education, technical college, or public utility that is a member of an industry cluster partnership.

SB525,8,3 (c) Any business, institution of higher education, technical college, or public utility that participates in a business accelerator, business incubator, or technology pilot program facilitated by an industry cluster partnership.

SB525,8,4 (2) “Fund” means the innovation fund.

SB525,8,12 (3) “Industry cluster partnership" means a nonprofit organization, including its subsidiaries and affiliates, whose primary purpose, or whose subsidiary's or affiliate's primary purpose, is to assist in developing and supporting a regional concentration of industry-specific private sector businesses in this state and to foster industry-specific research and development, worker skills training, and market development at institutions of higher education in this state, including technical colleges, for the purpose of transferring to the private sector, and commercializing, technology developed at those institutions that is related to relevant industries.

SB525,8,18 238.41 Innovation fund council. (1) Establishment. The corporation shall establish an advisory council to be called the “innovation fund council.” Except as otherwise provided under this section or in policies and procedures adopted by the corporation to govern the council's business, the council shall be subject to s. 15.09. The council shall advise the corporation concerning the use of fund moneys and the economic development programs administered under this subchapter.

SB525,8,20 (2) Membership. The council shall consist of the following members, to serve staggered 3-year terms:

SB525,8,21 (a) One member appointed by the executive director of the investment board.

SB525,8,23 (b) One member appointed by the managing director of the Wisconsin Alumni Research Foundation, Inc.

SB525,9,2 (c) One member appointed by the governor who currently serves in a senior management position at a manufacturing company headquartered in this state that employs at least 250 employees in this state, including any affiliate, and that engages in research and development.

SB525,9,7 (d) One member appointed by the governor who currently serves in a senior management position at a manufacturing company headquartered in this state that employs fewer than 50 employees in this state, including any affiliate, and who, in addition to any other responsibilities, has responsibilities related to the financing of the company or of its product development activities.

SB525,9,11 (e) One member appointed by the governor who currently serves in a senior management position at a technology company headquartered in this state that employs at least 250 employees in this state, including any affiliate, and that engages in corporate research and development.

SB525,9,16 (f) One member appointed by the governor who currently serves in a senior management position at a technology company headquartered in this state that employs fewer than 50 employees in this state, including any affiliate, and who, in addition to any other responsibilities, has responsibilities related to the financing of the company or of its product development activities.

SB525,9,20 (g) 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.

SB525,9,24 (h) One member appointed by the president of the Wisconsin Association of Independent Colleges and Universities, Inc., 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.

SB525,10,2 (i) Two members appointed by the governor who have experience working for industry cluster partnerships.

SB525,10,5 (j) One member appointed by the governor who has at least 5 years of experience in the investment activities, merger, and acquisition of technology or manufacturing companies.

SB525,10,10 238.42 Innovation through competition. (1) Local challenges. (a) The corporation, in collaboration with the council, may identify local problems affecting one or more regions within the state that, in the corporation's opinion, are susceptible to being solved over time through private sector innovation and the development and use of new technologies, components, systems, or processes.

SB525,10,15 (b) The corporation may solicit grant applications from and award grants to businesses headquartered in this state, or coalitions of such businesses or of such businesses and institutions of higher education, for the development or deployment of a new technology, component, system, or process to solve or significantly improve upon a local problem identified under par. (a).

SB525,10,22 (c) Each grant under par. (b) shall be made from the appropriation under s. 20.192 (1) (t). In awarding the grants, the corporation shall give priority to applicants that, in the corporation's opinion, present the most compelling potential solution to the problem and the most credible business case for eventually marketing a solution that solves or significantly improves upon the problem and that demonstrates a potential to increase jobs in this state or reduce costs to the state or a political subdivision of the state.

SB525,11,2 (2) Grand challenges. (a) The corporation may identify problems affecting a significant portion of the state or nation that, in the corporation's opinion, are susceptible to being solved over time through private sector innovation and the development and use of new technologies, components, systems, or processes.

SB525,11,7 (b) The corporation may solicit grant applications from and award grants to businesses headquartered in this state, or coalitions of such businesses or of such businesses and institutions of higher education, for the development or deployment of a new technology, component, system, or process to solve or significantly improve upon a problem identified under par. (a).

SB525,11,14 (c) Each grant under par. (b) shall made be from the appropriation under s. 20.192 (1) (t). In awarding the grants, the corporation shall give priority to applicants that, in the corporation's opinion, present the most compelling potential solution to the problem and the most credible business case for eventually marketing a solution that solves or significantly improves upon the problem and that demonstrates a potential to increase jobs in this state or reduce costs to the state or a political subdivision of the state.

SB525,11,21 (3) Maximizing grant funds. Using available and feasible mechanisms, such as matching funds, the corporation shall undertake to maximize the impact of grants awarded under this section with the understanding that many grants under this section might not immediately result in the development of a marketable technology, component, system, or process but that the grants are an important contribution to future innovation and manufacturing growth in this state and an important method of fostering a culture of private sector collaboration and innovation.

SB525,11,24 238.43 New product research and development. (1) Definition. In this section, “early stage business” means a business that satisfies all of the following conditions:

SB525,11,25 (a) The business satisfies s. 238.15 (1) (a) to (g), (k), (kn), and (L).

SB525,12,2 (b) At the time it receives a grant under this section, the business has less than 100 employees.

SB525,12,4 (c) At the time it receives a grant under this section, the business has been in operation in this state for not more than 10 consecutive years.

SB525,12,6 (d) The business has not received aggregate private equity investment in cash of more than $10,000,000 before it receives a grant under this section.

SB525,12,10 (2) Grants. (a) From the appropriation under s. 20.192 (1) (t), the corporation may make grants to early stage businesses for the purpose of facilitating rapid prototype development and pilot testing of potentially marketable new technologies, components, or products.

SB525,12,14 (b) The corporation may make a grant to an early stage business under this section only if the early stage business is a member of an industry cluster partnership and agrees to consult with the industry cluster partnership concerning expenditures of the grant moneys.

SB525,12,21 (3) Maximizing grant funds. Using available and feasible mechanisms, such as matching funds, the corporation shall undertake to maximize the impact of grants awarded under this section with the understanding that many grants under this section might not immediately result in the development of a marketable technology, component, or product but that the grants are an important contribution to future innovation and manufacturing and technology growth in this state and an important method of fostering a culture of private sector collaboration and innovation.

SB525,13,5 238.44 Capacity building through industry cluster partnerships. (1) Contract application. Any industry cluster partnership in this state may apply for a contract under this section. In addition to any other information the corporation requires, the application shall include a business plan for the applicant that sets forth measurable economic development and business-related goals and the specific programming the applicant intends to implement to achieve those goals. The business plan shall demonstrate to the corporation's satisfaction how the applicant plans to be without need of corporation funding within 10 years after first receiving a payment under a contract under this section.

SB525,13,9 (2) Contract payments. From the appropriation under s. 20.192 (1) (t), the corporation may make payments to industry cluster partnerships subject to contracts under this section. The corporation may not enter into more than one contract per industry under this section each year.

SB525,13,13 (3) Award of contract; termination. (a) Subject to pars. (b) to (f), the corporation may award a contract under this section only to an industry cluster partnership that submits an application under sub. (1) and for which the corporation has evaluated all of the following:

SB525,13,16 1. Evidence that the industry cluster partnership will strongly support the further development of existing regional concentrations of industry-specific businesses in this state.

SB525,13,20 2. Evidence that the industry cluster partnership has raised funding or funding commitments from sources other than the corporation and the state that equal at least 10 percent of the annual amount the industry cluster partnership is requesting from the corporation.

SB525,13,23 (b) The corporation may not contract under this section with an industry cluster partnership unless the industry cluster partnership is headquartered in this state.

SB525,14,5 (c) The corporation may not contract under this section with an industry cluster partnership unless the industry cluster partnership is governed by a board of directors with members from the public and private sectors who represent the businesses within the applicable industry, including businesses in the industry cluster partnership, and who represent the interests necessary to ensure a collaborative, strategic approach to supporting economic development, job growth, and the development of marketable products and services in the applicable industry.