AB888: Bill Text

Wisconsin Next Generation Reserve Fund

The bill creates a nonlapsible fund to be known as the "Wisconsin next generation reserve fund" (fund). From the fund, the Reserve Board may make grants, loans, and investments, as set forth below. For short-term management, the fund is included in the state investment fund managed by the Investment Board.

In addition to moneys from other sources, the fund consists of moneys generated from tax revenue collected from "qualifying companies" in the bioscience industry. 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 (DOR) to determine in July 2016 the total amount of withholding taxes due and payable from qualifying companies for 2015. Then, beginning on July 1, 2017, and ending on July 1, 2031, DOR must deposit in the fund an amount equal to 95 percent of the withholding taxes due and payable from qualifying companies the previous year that exceeds the total amount for 2015, except that DOR may not deposit more than $15,000,000 into the fund on July 1, 2017, or more than $50,000,000 on any July 1 thereafter. DOR may not deposit more than a total of $350,000,000 into the fund. However, the Joint Committee on Finance (JCF), under its passive review process, may approve deposits of up to an additional $150,000,000.

Grants, loans, and investments

From the fund, the bill authorizes the Reserve Board to make grants and loans to, and direct investments in, bioscience companies certified by the Reserve Board. The Reserve Board may certify a bioscience company if the Reserve Board determines that the company is headquartered and employs at least 75 percent of its employees in Wisconsin and meets certain other conditions, including that the company is developing biotechnology or bioscience or bioscience research methods and demonstrates the potential to generate high levels of successful investment performance and increase employment in Wisconsin.

Before providing any moneys from the fund to a certified bioscience company, the Reserve Board must enter into a contract with the company that includes all of the following requirements:

1. The company must use a grant, loan, or investment from the fund for research and development related to biotechnology or bioscience or bioscience research methods.

2. The company must match the amount of any grant, loan, or investment from the fund with moneys the company has raised from other sources.

3. During the term of the contract, the company may not relocate its headquarters outside of Wisconsin without the Reserve Board's approval.

Contracting authority

In addition to its general contracting authority, the bill authorizes the Reserve Board to execute a contract with the Investment Board for the Investment Board's advice and services related to the Reserve Board's grants, loans, and investments and for facilities provided by the Investment Board. Under the bill, the Investment Board may also make a loan to the Reserve Board for the Reserve Board's initial operations and administrative expenses.

The bill further authorizes the Investment Board to provide advice, services, and facilities 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, services, or facilities the Investment Board provides.

Reporting and review

The bill requires the Reserve Board to file a detailed annual report with the legislature that includes all of the following:

1. An accounting of the revenue deposited in the fund by DOR.

2. An accounting of all expenditures from the fund by the Reserve Board for any purpose.

3. Information concerning each grant or loan to, or investment in, a certified bioscience company, including a description of the purposes for which the certified bioscience company used or is using the grant, loan, or investment and a statement of the number of employees the certified bioscience company employed on January 1 of the preceding year and the number of employees the company employed on December 31 of that year.

4. An accounting of the internal rate of return realized by the Reserve Board on its total loans to, and investments in, certified bioscience companies.

5. An accounting of the internal rate of return realized by the Reserve Board on each loan to or investment in each certified bioscience company.

Finally, the bill requires the Reserve Board to submit a plan to JCF at the close of each fiscal biennium that shows the grants, loans, and investments the Reserve Board intends to make during the next fiscal biennium. The joint committee on finance may approve, disapprove, or modify and approve the Reserve Board's plan under JCF's passive review process.

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:

AB888,1 Section 1. 15.07 (1) (a) 6. of the statutes is created to read:

AB888,4,3 15.07 (1) (a) 6. The members of the Wisconsin next generation reserve board appointed under s. 15.77 (1) (h) to (j) shall be appointed as provided in that section.

AB888,2 Section 2. 15.07 (4) of the statutes is amended to read:

AB888,4,11 15.07 (4) Quorum. A majority of the membership of a board constitutes a quorum to do business and, unless a more restrictive provision is adopted by the board, a majority of a quorum may act in any matter within the jurisdiction of the board. This subsection does not apply to actions of the government accountability board or the school district boundary appeal board as provided in ss. 5.05 (1e) and 117.05 (2) (a) or the Wisconsin next generation reserve board as provided in s. 15.77 (3).

AB888,3 Section 3. 15.07 (4) of the statutes, as affected by 2015 Wisconsin Acts 118 and .... (this act), is repealed and recreated to read:

AB888,5,6 15.07 (4) Quorum. A majority of the membership of a board constitutes a quorum to do business and, unless a more restrictive provision is adopted by the board, a majority of a quorum may act in any matter within the jurisdiction of the board. This subsection does not apply to actions of the school district boundary appeal board as provided in s. 117.05 (2) (a) or the Wisconsin next generation reserve board as provided in s. 15.77 (3).

AB888,4 Section 4. 15.07 (5) (am) of the statutes is created to read:

AB888,5,9 15.07 (5) (am) Members of the Wisconsin next generation reserve board, $50 per day.

AB888,5 Section 5. 15.77 of the statutes is created to read:

AB888,5,14 15.77 Wisconsin next generation reserve board; creation. (1) There is created a next generation reserve board, to be known for statutory purposes as the Wisconsin next generation reserve board. The board shall consist of the following members:

AB888,5,16 (a) One member who has expertise in agriculture and is recognized for outstanding knowledge and leadership in bioscience or bioscience research.

AB888,5,20 (b) Two members who, at the time of appointment, serve in senior management positions at bioscience companies headquartered in this state that employ fewer than 50 employees, including any affiliate, and who, in addition to any other responsibilities, have responsibilities related to the financing of the companies.

AB888,5,24 (c) One member who, at the time of appointment, serves in a senior management position at a bioscience company headquartered in this state that employs at least 50 employees, including any affiliate, and who, in addition to any other responsibilities, has responsibilities related to the financing of the company.

AB888,6,5 (d) One member who, at the time of appointment, serves in a senior management position at a company headquartered in this state that develops or manufactures medical devices and employs fewer than 50 employees, including any affiliate, and who, in addition to any other responsibilities, has responsibilities related to the financing of the company.

AB888,6,10 (e) One member who, at the time of appointment, serves in a senior management position at a company headquartered in this state that develops or manufactures medical devices and employs at least 50 employees, including any affiliate, and who, in addition to any other responsibilities, has responsibilities related to the financing of the company.

AB888,6,14 (f) One member who, at the time of appointment, either has at least 5 years of experience directly investing in bioscience companies in this state, or represents a group of individual investors that has at least 5 years of experience directly investing in bioscience companies in this state.

AB888,6,16 (g) One member who, at the time of appointment, has at least 3 years of experience in the merger and acquisition of bioscience companies.

AB888,6,17 (h) One member appointed by BioForward, Inc.

AB888,6,20 (i) One member who has expertise in bioscience or bioscience research, who shall be appointed by the Board of Regents of the University of Wisconsin System and who shall serve as a nonvoting member at the pleasure of the Board of Regents.

AB888,6,24 (j) One member who has expertise in bioscience or bioscience research, who shall be appointed by the Wisconsin Association of Independent Colleges and Universities and who shall serve as a nonvoting member at the pleasure of the association.

AB888,7,2 (k) The executive director of the investment board, or his or her designee, who shall serve as a nonvoting member.

AB888,7,4 (2) The members of the board identified in sub. (1) (a) to (h) shall be appointed for 4-year terms.

AB888,7,7 (3) A majority of the voting members of the board constitutes a quorum for the purpose of conducting its business and exercising its powers and for all other purposes. Action may be taken by the board upon a vote of a majority of a quorum.

AB888,6 Section 6. 19.42 (10) (Lm) of the statutes is created to read:

AB888,7,13 19.42 (10) (Lm) The members of the Wisconsin next generation reserve board who are appointed by BioForward, Inc., by the Board of Regents of the University of Wisconsin System, and by the Wisconsin Association of Independent Colleges and Universities and the executive director of the Wisconsin next generation reserve board.

AB888,7 Section 7. 19.42 (13) (km) of the statutes is created to read:

AB888,7,19 19.42 (13) (km) The members of the Wisconsin next generation reserve board who are appointed by BioForward, Inc., by the Board of Regents of the University of Wisconsin System, and by the Wisconsin Association of Independent Colleges and Universities and the executive director of the Wisconsin next generation reserve board.

AB888,8 Section 8. 20.195 of the statutes is created to read:

AB888,7,22 20.195 Wisconsin next generation reserve board. There is appropriated to the Wisconsin next generation reserve board for the following program:

AB888,8,4 (1) Assistance to certified bioscience companies. (q) General program operations and loans, grants, and investments. From the Wisconsin next generation reserve fund, a sum sufficient to make loans and provide grants to, and make investments in, certified bioscience companies as provided in ch. 555 and for general program operations and administrative expenses. Not more than the following amounts may be expended under this paragraph for general program operations and administrative expenses:

AB888,8,6 1. In fiscal year 2017-18, 5 percent of the moneys in the Wisconsin next generation reserve fund.

AB888,8,8 2. In fiscal year 2018-19, 5 percent of the moneys in the Wisconsin next generation reserve fund.

AB888,8,10 3. In fiscal year 2019-20, 2 percent of the moneys in the Wisconsin next generation reserve fund.

AB888,8,12 4. In fiscal year 2020-21 and in each fiscal year thereafter, 0.5 percent of the moneys in the Wisconsin next generation reserve fund.

AB888,8,15 (r) Additional operational or administrative expenses. From the Wisconsin next generation reserve fund, a sum sufficient equal to any amount authorized under s. 555.06 for general program operations and administrative expenses.

AB888,9 Section 9. 20.536 (1) (k) of the statutes is amended to read:

AB888,8,20 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) or (74), for the purpose of conducting general program operations.

AB888,10 Section 10. 25.14 (1) (a) (intro.) of the statutes is amended to read:

AB888,9,2 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 Wisconsin next generation reserve fund, and all of the state's funds specified in s. 25.17 (1), except all of the following:

AB888,11 Section 11. 25.17 (73) of the statutes is created to read:

AB888,9,17 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).

AB888,12 Section 12. 25.17 (74) of the statutes is created to read:

AB888,9,25 25.17 (74) Have authority to provide facilities to any 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, in accordance with any agreement between the board and the agency, authority, or business entity. This agreement shall require the cost of facilities provided by the board to be paid by the agency, authority, or business entity. All moneys received by the board under this subsection shall be credited to the appropriation account under s. 20.536 (1) (k).

AB888,13 Section 13. 25.90 of the statutes is created to read:

AB888,10,7 25.90 Wisconsin next generation reserve fund. There is established a separate nonlapsible trust fund designated as the Wisconsin next generation reserve fund. The fund shall consist of all moneys deposited in the fund under ss. 73.17, 555.02 (2) (c) and 555.03 (3), 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.

AB888,14 Section 14. 73.17 of the statutes is created to read:

AB888,10,15 73.17 Wisconsin next generation reserve fund. (1) In this section, "qualifying company" means a person whose principal business activity code in the North American Industry Classification System, 2012 edition, published by the federal office of management and budget, is one of the following: 311221, 311224, 325193, 325199, 325220, 325311, 325312, 325314, 325320, 325411, 325412, 325413, 325414, 334510, 334516, 334517, 339112, 339113, 339114, 339115, 339116, 541380, 541711, 541712, 621491, 621493, 621511, 621512, or 622110.

AB888,10,18 (2) (a) In July 2016, 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 2015.

AB888,10,23 (b) Subject to par. (d), on July 1, 2017, and on each July 1 thereafter, ending on July 1, 2031, the department of revenue shall deposit into the Wisconsin next generation reserve 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).

AB888,11,3 (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.

AB888,11,6 (d) The department of revenue shall not deposit into the Wisconsin next generation reserve fund more than $15,000,000 on July 1, 2017, or $50,000,000 on any July 1 thereafter, and the total amount deposited may not exceed $350,000,000.

AB888,11,19 (e) After the department of revenue deposits a total of $350,000,000 into the fund under par. (d), and subject to the requirements of this paragraph, the department shall continue depositing moneys into the fund under par. (b), not to exceed an additional total amount of $150,000,000 in deposits. Before the department continues those deposits, the department shall notify the joint committee on finance in writing that the department intends to do so. If, within 14 working days after the date of that notice, the cochairpersons of the committee do not notify the department that the committee has scheduled a meeting to review the continuation of deposits into the fund, the department shall continue those deposits. If, within 14 working days after the date of that notice, the cochairpersons of the committee notify the department that the committee has scheduled a meeting to review the department's continuation of deposits into the fund, the department may continue those deposits only upon approval of the committee.

AB888,15 Section 15. 230.08 (2) (yo) of the statutes is created to read:

AB888,11,22 230.08 (2) (yo) The executive director and administrative assistant of the Wisconsin next generation reserve board.

AB888,16 Section 16. Chapter 555 of the statutes is created to read:

AB888,11,24 CHAPTER 555

AB888,12,2 Wisconsin next generation RESERVE board

AB888,12,3 555.01 Definitions. In this chapter:

AB888,12,4 (1) "Board" means the Wisconsin next generation reserve board.

AB888,12,6 (2) "Certified bioscience company" means a person certified by the board under s. 555.03 (2).

AB888,12,9 (3) "Qualifying company" has the meaning given in s. 73.17 (1), except that "qualifying company" does not include a business that has as its principal business activity the operation of a hospital as defined in s. 50.33 (2).

AB888,12,11 (4) "Fund" means the Wisconsin next generation reserve fund established under s. 25.90.

AB888,12,15 555.02 Wisconsin next generation reserve fund. (1) Executive director. The board shall employ an executive director who has expertise in private equity investment. In reviewing candidates for executive director, the board shall consider all of the following:

AB888,12,17 (a) The extent of the candidate's experience and expertise in private equity investment.

AB888,12,19 (b) The candidate's investment experience related to start-up bioscience companies.