By Brian E. Clark
WisBusiness.com
MADISON – When Gov. Jim Doyle delivered a $2 million check two weeks ago to the founders of the biotech start-up company Cellular Dynamics International, he used the event to tout his Grow Wisconsin 2005 plan.
But with research on human embryonic stem cells such a high-profile and controversial topic – the state Senate voted to ban therapeutic cloning that same week – news about Doyle’s economic development program got short shrift.
WisBusiness.com editor Brian E. Clark interviewed Wisconsin Commerce Secretary Mary Burke about Grow Wisconsin 2005 and what she thinks it could mean for the state’s economy.
Brian Clark: What are the highlights of Grow Wisconsin 2005?
Mary Burke: That somewhat depends on where you are in the state. But the important thing is that it builds on the original Grow Wisconsin and the progress we’ve made in the last couple of years.
We lost 80,000 manufacturing jobs in the ’90s and 20 percent of our workforce is in that sector. But we have gained 140,000 jobs in the state in the past few years. And there are a lot of companies out there that have figured out how to compete effectively on a global basis. We need to make sure those lessons, plus our support, gets all around the state.
Now that the economy is doing better and we have additional resources, we have to keep moving forward to be competitive as a state and growing our jobs. Really, the work never ends.
But we are the only state in the upper Midwest that over the past five years has had a net in-migration of people. Our unemployment rate is also falling and is lower than the national average.
Clark: What is being done in the manufacturing arena?
Burke: We have created a Manufacturing Competitiveness Council to promote the high-end manufacturing sector. The governor is proposing legislation to fund a $1.5 million initiative to help manufacturers compete, adopt new technology and improve manufacturing processes.
It builds on what we have. It doesn’t duplicate the Wisconsin Manufacturing Extension Partnerships, which help manufacturers cut costs and be more innovative. Both the state and federal government support the MEP program. Commerce already puts $850,000 annually into MEP. The Grow Wisconsin 2005 agenda adds $1.5 million for the competitiveness initiative and it would be up to the council to determine how to spend that money to become more competitive.
Clark: What about business incubator funding?
Burke: The additional money that comes from WHEDA (Wisconsin Housing and Economic Development Authority) and will put $30 million into business incubator funding. I was out at the Tech Center across from the Madison Area Technical College (MATC) recently for the groundbreaking of their third building. That really has made a tremendous impact on Madison for helping getting new businesses started and creating jobs. Those are the sorts of things we need to be doing in the state.
There are plans for an incubator that would focus on nanotechnology that would be in Eau Claire and bring together universities, the tech colleges and businesses in that area. That is something we want to help support more.
There are a lot of different initiatives throughout the state. With funding, we want to help move these from ideas on paper to really happening. The incubator is an important area in terms of entrepreneurism.
Clark: Talk a little about the Youth Apprenticeship Program.
Burke: The governor is calling for new legislation to double the state’s investment in that program by providing an additional $1.1 million. That gets back to the manufacturing area and is how a lot of kids get into manufacturing. There is a concern that we may not have the workforce in the future to support manufacturing. So this is a program to make sure more kids get exposed to that so they can make good job decisions.
Clark: What is happening with the Enterprise Development Zones?
Burke: This program is the biggest in terms of numbers for us at Commerce. It was approved by the Legislature about a decade ago and at that point it had 81 zones with $243 million in income tax credits. A zone was defined as a company.
So if you came to Commerce and said you were starting a company that would invest $100 million and create 500 new jobs, you’d also ask what the state could do for you – especially since Kansas was offering you incentives. Then Commerce could say we’ll make you and enterprise development zone and you can have $3 million in income tax credits to apply to future earnings based on the number of jobs you create.
It was great and it was a good program. But we ran out of zones and only used half the tax credits over the last 10 years because smaller projects didn’t create enough jobs to warrant the entire $3 million. So we had to go back to the Legislature every year to ask for more zones targeted to distressed areas.
It really handcuffed Commerce. The governor was able to increase the number by 17 zones and was able to change the definition of a zone. It no longer has to be a company, it can be a geographic zone. It’s a great change.
Several weeks ago, we were in Milwaukee at the old Tower Automotive site in the central city in a good working-class neighborhood. It is a 150-acre site that used to employ 8,000 people. But now it is empty. There are well-built industrial buildings and is a lot of space. The governor has designated it an EDZ so businesses locating there that are creating jobs can get $3 million tax credits. There are $170 million in credits available in that program.
Clark: What about venture capital and angel investor tax credits?
Burke: Those programs are very effective. I’ve talked to a number of companies that have said they helped them raise the money they needed to expand. They are also getting new investors who might not have been able to get into this before.
What we have to make sure is that they are as easy to access as possible and effective. We want to make sure that program is used to the fullest (extent) possible.
Clark: Grow Wisconsin will also be investing in electronic patient record technology?
Burke: Yes. That benefits everyone in the state, not only from a cost perspective. I’ve read reports that say that 20 percent of medical costs are due to errors. It should also improve the quality of care. By making it electronic, you should have faster, more efficient and more accurate access to records, improving both care and the cost situation. We want to make this accessible throughout the state.
Clark: What is being done to raise average per capita income, an area where Wisconsin lags some of its neighbors?
Burke: We need to continue to build skills because highly skilled workers earn more money. We have made great strides in the past two years and we will continue to grow faster than the national average and close that wage gap.
Two or three years ago, the gap was something like $1,600 per capita. And Minnesota, a neighbor to whom we are often compared, is higher than the national average.
The governor really wants to see by the end of this decade that we are at the national average. A gap of just $800 multiplied by 5.5 million people means more than $4 billion to our state’s economy. That means a lot for our infrastructure and funding our schools. That makes a huge difference to our tax base.
We want all areas of the state to prosper. There isn’t one formula. It needs to be based on what each area has to offer. It could be natural resources. But we need to foster the entrepreneurial climate that will create businesses and jobs. To do that, we need more high-speed access all over the state.
Clark: The governor’s plan also calls for a sales tax exemption for raw materials in bio-manufacturing?
Burke: We have that in other areas of manufacturing, so we feel it is important – especially with all that’s going on in that area in our state – that that cluster of industry be supported as much as we can.
Clark: Any other thoughts?
Burke: We must continue to invest in education. We need to do more with the tech colleges, investing more at the university and certainly in our K-12 system.
We need to build on what has been done particularly in the entrepreneurial areas. We need to build on that. There was $500,000 put into the Milwaukee-area Biomedical Technology Alliance and the governor has restored another $2 million and is seeking more.
We are also working to do more with minority business development. The atmosphere now is good to make things happen in that area. While there are no specific new initiatives, we will make sure we will use the tools we have. That means using partnerships between businesses and local communities and building on what is already going.
We also will support regional initiatives, like in the Milwaukee area, where eight counties have come together to strengthen economic development by working together. We have put $500,000 into that over two years. But we are not the major funder, we require lots of local support. Our funding it just to get these regional initiatives started.
Finally, we are hoping for bipartisan support in the Legislature. There are 18 actions in the 2005 agenda. Some are done, but we hope we can work with the Legislature for economic progress. I hope so. It’s hard to understand how anyone could be against creating high-paying jobs. But $5 million was cut last budget for training assistance grants. Lots of employers have unfilled jobs they could have filled training assistance. So we shall see.
