Scope Statements
Agriculture, Trade and Consumer Protection
Subject
Revises Subchapter
V of Chapter ATCP 161, relating to economic development grants; financial statements and contract compliance.
Objective of the Rule
This rule implements
2007 Wisconsin Act 125, which requires new accountability measures related to state economic development grants and loans. Under Act 125, DATCP must adopt rules to do all of the following (other agencies that make economic development grants and loans must adopt similar rules):
•
Require persons receiving more than $100,000 in economic development grants or loans to submit verified financial statements to DATCP, and to make supporting documentation available for DATCP inspection.
•
Establish procedures that will allow DATCP to withhold payments to, recover funds from, or impose financial penalties on grant or loan recipients who submit false information to DATCP or fail to honor the terms of a grant or loan contract. The new procedures must include new contract provisions that will allow DATCP to impose penalties on grant or loan recipients who fail to honor contract obligations.
Policy Analysis
DATCP has rules governing its state-funded economic development grant and loan programs. DATCP enters into contracts with most grant and loan recipients, and those contracts include contract terms, conditions, and remedies for noncompliance. However, current DATCP rules and contracts do not include specific Act 125 requirements related to verified financial statements and contract penalties.
DATCP is required to comply with the specific rulemaking and contract requirements in Act 125. Noncompliance is not an option.
Policy Alternatives
If the Department takes no action, it will fail to meet the requirements of s.
93.07 (18) (a) 6. and
7., Stats., of
2007 Act 125. There is no statutory alternative at this time.
Statutory Authority
Comparison with Federal Regulations
•
Federal statutes under
31 USC 6304 require contracts for many federal grants.
•
Many federal grant programs have regulations to ensure grant accountability, including regulations related to grant contracts, contract performance, financial accountability, and remedies for noncompliance.
•
Administering agencies may deny, suspend or terminate payments to grant recipients who fail to comply with grant contract terms.
•
If a grant recipient makes false or misleading statements to obtain a grant or benefit, the agency may collect civil forfeitures and assessments that are well in excess of the fraudulently-obtained grant or benefit payments.
Entities Affected by the Rule
This rule will affect entities that apply for and receive economic development grants or loans from DATCP. DATCP (Division of Agricultural Development) makes economic development grants and loans to a variety of persons including farmers; dairy, meat and food processors; entrepreneurs seeking to develop new agricultural products or markets; agricultural distributors; non-profit local and regional food organizations; educational institutions; agricultural business consultants and others. Funding for these grants and loans comes from both state and federal funding sources.
This rule will affect a number of current DATCP grant programs including:
•
The Agricultural Development and Diversification (ADD) grant program under s.
93.46 (2) (b), Stats. The ADD grant program makes about 10-20 grants a year, mainly to small businesses and start-ups, to promote agricultural development and diversification. The maximum award is $50,000 and matching funds are required.
•
T
he “Buy Local" grant program under s.
93.48, Stats. The “Buy Local" program funds projects to increase local sales of Wisconsin agricultural products. The program made 7 grants in its first year. The maximum award is $50,000 and a 33% “match" is required.
•
The Value Added Dairy Initiative is a cooperative federal-state-private initiative, funded mainly by federal dollars, to promote dairy innovation and grow the state's dairy industry. Over 300 grants have been awarded to dairy farmers, dairy processors and other local organizations. A small number of loans have been awarded to (small- to medium-sized) dairy processors for projects that are not eligible for grants.
•
Grazing Grants. Federal and state dollars fund research, education and technical assistance to support the development and expansion of managed intensive grazing. Recipients include individual farmers, regional conservation and development organizations, educational institutions and others.
Estimate of Time Needed to Develop the Rule
The staff time needed to develop the rules is expected to range from 100 to 200 hours, depending upon the associated complexity. This anticipates a 12-month period for research, rule drafting, and processing the rules through public hearings, communicating with affected persons and groups, legislative review, and adoption. There are no other resources necessary to promulgate the rules. DATCP will use existing staff to develop this rule.
Commerce
Financial Resources for Businesses and Communities, Chs.
Comm 104—
Subject
Creates Chapter
Comm 100 and revises Chapters
Comm 107,
112 and
118, relating to tax benefits for job creation, capital investment, employee training, and corporate headquarters.
Objective of the Rule
This rulemaking is primarily intended to (1) consolidate five of the Department's job-development-zone tax-credit programs into a single, statewide program, to be consistent with the portions of
2009 Wisconsin Act 2 that address these programs; and (2) establish procedures for implementing sections
560.701 to
560.706 of the statutes, as enacted in
2009 Act 2, relating to tax benefits for job creation, capital investment, employee training, and corporate headquarters. This rulemaking may also include updating the current rules to make them consistent with current industry and administrative practices, and with any pending legislation affecting these programs and activities.
Policy Analysis
The Department has various rules for administering several economic development programs, but those rules typically do not include the expected rule text for targeting these tax benefits for job-creation, capital investment, employee training, and corporate headquarters, to where they will have the most impact.
The alternative of not promulgating these rules would result in chapters Comm 107, 112, and 118 continuing to be inconsistent with overriding, recently enacted criteria in
2009 Wisconsin Act 2; and would conflict with the directive in Act 2 to promulgate rules for implementing sections
560.701 to
560.706 of the statutes.
Statutory Authority
Comparison with Federal Regulations
In researching federal tax incentives, the Department and the Department of Revenue found that there are no tax credits at the federal level that are exactly like the corresponding credits in
2009 Wisconsin Act 2. The following two federal tax credits may apply to the activities under section
560.702 of the Statutes which will be addressed by the proposed rules, but these federal tax credits are structured differently than the credits in Act 2.
Job creation that is eligible for tax benefits under section
560.702 (1) of the Statutes may also qualify for the federal consolidated Work Opportunity Tax Credit – which includes tax credits for an employer that hires an individual who is: (1) a qualifying Hurricane Katrina employee, (2) a member of a qualifying family with long-term or recent receipt of Temporary Assistance to Needy Families payments, (3) a qualifying food stamp recipient, (4) a qualifying veteran, (5) a qualifying ex-felon, (6) a resident of a designated community, (7) a qualifying summer youth employee, (8) a qualifying recipient of vocational rehabilitative services, or (9) a qualifying recipient of Supplemental Security income.
Capital investments that are eligible for tax benefits under section
560.702 (2) of the Statutes may also qualify for the federal Investment Credit – which includes tax credits for any qualifying rehabilitation of older structures, solar or geothermal energy equipment, advanced coal projects, and gasification projects.
Entities Affected by the Rule
These rules may affect any entity that desires to receive these tax benefits.
Estimate of Time Needed to Develop the Rule
The staff time needed to develop the rules is expected to range from 200 to 400 hours, depending upon the associated complexity. This includes research, rule drafting, and processing the rules through public hearings, legislative review, and adoption. There are no other resources necessary to promulgate the rules.
Commerce
Financial Resources for Businesses and Communities, Chs.
Comm 104—
Subject
Revises Chapter
Comm 129, relating to tax credits for angel investments and early stage seed investments.
Objective of the Rule
This rulemaking is primarily intended to update chapter Comm 129 to make it consistent with the portions of
2007 Wisconsin Act 20 and
2009 Wisconsin Act 2 that address tax credits for angel investments and early stage seed investments, as regulated by the Department under section
560.205 of the Statutes. This rulemaking may also include updating chapter Comm 129 to make it consistent with current industry and administrative practices, and with any pending legislation affecting these tax credits.
Policy Analysis
The Department has various rules for administering several economic development programs, but those rules do not include the expected rule text for determining (1) which businesses are eligible to become certified as a qualified new business venture for angel investments, (2) which angel or early stage seed investments qualify for corresponding tax credits, (3) the maximum amount of the tax credits, and (4) transferability of the early stage seed investment tax credits.
The alternative of not promulgating these rule changes would result in chapter Comm 129 continuing to be inconsistent with overriding, recently enacted criteria in section
560.205 of the Statutes.
