WisBusiness: High-tech companies could see more boosts from government

By Brian E. Clark

MADISON – What Wisconsin really needs to put its name on the high-tech map is for an entrepreneur to become “filthy rich,” state Sen. Ted Kanavas, R-Brookfield, said Tuesday at a Wisconsin Innovation Network luncheon.

“I mean that in a good sense,” said Kanavas, who co-founded Premier Software Technologies. “We need someone to hit a ‘home run.'”

In the meantime, Kanavas said state government should stimulate nascent businesses and not hold them back by adding burdensome taxes or regulations.

“The economies that are thriving – from Hong Kong to Ireland to Arizona – are the ones that are cutting taxes,” he said.

Kanavas was joined on a luncheon panel by Rep. Terri McCormick, R-Appleton; Marc Marotta, Department of Administration secretary; and Phyllis Wilhelm, economic development director for Madison Gas & Electric.

The event, which focused on the governor’s budget and its effect on high-tech firms, was co-sponsored by WisBusiness.com and Grant Thornton.

Nothing is in the offing that will compare with Act 255, which Kanavas co-authored last session. It went into effect Jan. 1 and gives “angel investors” who put money in risky, early stage companies a 25 percent tax break over two years.

However, Kanavas and the other panelists said a proposal to extend the so-called single sales factor to intangible property will benefit Wisconsin-based software companies such as Epic Systems.

Last year, the governor signed a bill that would end the policy of taxing most companies based on the number of workers they employ. While that benefited firms that make everything from bolts to engines to cranes, it left out some high-tech firms.

McCormick, who chairs the Assembly’s Economic Development Committee, said the “single sales factor gets rid of an incentive for companies to move out of state. It has unanimous support.”

The Appleton legislator also said she supports the governor’s training assistance grants to help companies develop skilled workers.

“But the program needs to be market-driven,” she said. “We need to remember that the private sector creates jobs. Government should stay out of the way or truly help.”

Marotta said he agreed that state programs should not create what he called an “aberration in the market.”

“We acknowledge that our ideas are not always perfect,” he said with a grin. “We are willing to listen. But Wisconsin needs to have enough skilled workers to compete and innovate.”

Marotta also praised McCormick and Kanavas for their leadership in promoting high-tech industry in the state.

“We need more early seed stage investments,” he said and predicted Act 255 might be expanded in coming years.

Marotta said Doyle’s budget has millions for funding the proposed UW-Madison Institute for Discovery, which he said would help retain top faculty so they do not flee to states like California.

That state last year passed Prop. 71, which will pump $3 billion into stem cell research over the next decade.

Marotta said Wisconsin’s budget also has $4.4 billion for transportation infrastructure improvements for roads, harbors, airports and railways.

Marotta said people in Wisconsin residents need to be more confident and optimistic about the future.

“Our state is a leader in growing jobs and income,” he said. “We are a leader in exports to China and Mexico. We have enormous potential here.”

MG&E’s Wilhelm said she is pleased to see the Republican-dominated Legislature and the state’s Democratic governor cooperating on economic development.

“It is good to see collaboration,” she said. “To compete, we must be nimble, flexible and entrepreneurial to grow our economy.”

Kanavas said he is convinced the economy of southeast Wisconsin will improve – based in part on developments coming out Marquette, UW-Milwaukee, the Medical College of Wisconsin and other institutions.

“The destiny of southeast Wisconsin was not written 50 years ago,” he said. “It is being written now by companies that use chemical innovations to spin metal and compete with China.

“The notion that we can’t make this happen is ludicrous,” he said.

“But this is not a revolution,” he cautioned. “It is an evolution, a never-ending battle.”

In a question-and-answer session, James Prudent, chief scientific officer at EraGen Biosciences, asked Kanavas about restrictions on biotech companies sought by some members of the Legislature. EraGen is a Madison molecular diagnostics company.

After the luncheon, Prudent said Wisconsin gained positive publicity when Doyle announced the Institute for Discovery. But it suffered when the Assembly passed a bill recently that would deny research tax credits to companies that work with new stem cell lines.

Kanavas said the state is now in a “dialogue” over what is good science and what is ethical. He also said the Assembly vote was in line with federal regulations.