O'Connell: State-backed investment funds could improve business climate
By Brian E. Clark
MADISON – Leaders of Wisconsin Way say the state is on the wrong track for economic growth and prosperity. In fact, one leader of the group says Wisconsin is digging itself into a fiscal hole that may be hard to correct without some big changes.
To redirect its course, Wisconsin needs to significantly beef up investment in fledgling businesses and regional development groups, revamp the state’s tax code and streamline government, according to the organization’s recently released “Draft Blueprint for Change.”
Among other proposals, the group has proposed two new investment funds that could pump several hundred million dollars into the economy in coming years.
“We have not put ourselves in a place to succeed in the years to come, so we need to take some action ... if we want to be a successful and attractive state in 10, 20 or even 50 years down the road,” said Mark O’Connell, executive director of the Wisconsin Counties Association.
Though the state is facing a $5 billion-plus deficit, he said it can’t afford to wait to implement structural changes.
“I don’t think we have the luxury of waiting at all,” he said. “You won’t find the answers to our multi-billion deficit problem in this draft blueprint, though. It’s not designed to do that.
“But these difficult economic times amplify the need for us to think differently and put ourselves in a position to succeed in the future so we don’t have another $3 billion or $5 billion problem in five or seven years,” he said.
O’Connell said the blueprint stresses the needs to invest in people, education, infrastructure, tax structure and commerce.
“We need businesses to be doing well here and making a lot of money to raise our per capita income,” he said. “To do that, we need to create an environment where commerce can grow.”
O’Connell said he would like to boost venture capital and angel investment for young Wisconsin companies by allowing individuals to put tax refunds into a state Venture Capital Mutual Fund for start-ups and then let them reap the rewards – if the start-ups are successful – with major tax benefits.
“Those venture capital dollars are hard to get here, in fact many studies show us we lag behind other states, including our neighbor Minnesota,” he said.
A second fund would use state money to partner with regional development groups, he said. Working with the Wisconsin Investment Board, this Economic Development Fund could raise up to $150 million over five years.
“We have a state Commerce Department that does a lot of very good things,” he said. “But some of the most beneficial economic activities are occurring on a regional basis ... including groups like THRIVE, Seven Rivers, NW Regional Planning Commission and New North.
“So one of the ideas that came from the citizenry was to take that energy ... and invest in the regional groups to provide them dollars so that they can do more of the good things they are doing,” he said.
“People told us ‘feed that, foster it, grow it,’” he said.
In addition to the counties, other organizations involved with Wisconsin Way include the Wisconsin REALTORS Association, the Wisconsin Education Association Council, the Wisconsin Transportation Builders Association, the Wisconsin Transportation Development Association, the League of Wisconsin Municipalities, Wood Communications Group and League of Wisconsin Municipalities.
The group formed in the spring of 2007 and has held nearly 30 forums around the state. It will present its recommendations to the Legislature next fall, O’Connell said.
Though the Badger State has a highly respected higher education system, he said 90 percent of the fastest growing jobs here do not require a college degree.
“We have a low per capita personal income and… we have a less than average education level for our populace,” he said. “In essence, we are not putting ourselves in a position to succeed.
O’Connell said the state’s economy is inconsistent with the tax structure, relying far too much on property taxes.
“It relies far too much on things you can touch and feel and drop, even though our economy -- which now has an emphasis on manufacturing -- is likely to grow in the ‘new millennium’ knowledge-based arena,” he said.
Because of that, the state’s coffers won’t grow with the economy and won’t give us the dollars we need to invest in our communities to make them attractive to the smart young wealth-makers of tomorrow, he said.
O’Connell said all the members of Wisconsin Way agree that government has a responsibility to create an environment so the private sector can employ people and create wealth.
In the economy of tomorrow, he said the state must do all it can to keep and attract “smart people” and make them want to live here.
“If we do that ... we can draw in businesses that can move almost overnight,” he said.