WEDC is looking to reallocate $8 million in early stage tax credits to a program aimed at expanding company locations or bringing in new ones.
Dems are slamming the request to the Legislature’s Joint Finance Committee, calling it yet another “giveaway” to large companies. The committee meets today to vote on approving the request. The agency, though, notes the early stage tax credits are once again being underused and that the money would go to a program that’s working.
The move would shift $8 million allocated toward WEDC’s early stage business investment program, instead moving the funds to WEDC’s business development tax credit program.
Joint Finance has authorized such requests in the past, including a nearly $7 million one in 2010 to the WEDC’s predecessor, the Commerce Department. That’s because the early stage program has continually been underused, averaging about 40 percent of the annual limit over the past 11 years.
Rep. Chris Taylor, a Madison Dem who’s a member of Joint Finance, said that shows the state needs to reach out to more early stage companies and investors.
“We certainly have brilliant entrepreneurial minds here,”” she said. “If we’re not using it, why aren’t we advertising it more? Why aren’t we reaching out to more businesses that qualify?”
But WEDC spokesman Steven Michels countered the agency’s team constantly works with startups and organizations — and that usage of the early stage tax credits has gone up.
In 2015, the agency verified about $18 million in tax credits of the annual limit of $30 million, or almost 61 percent. That’s up from 30.7 percent in 2014 and 21.8 percent in 2013, according to the Legislative Fiscal Bureau.
“There’s a significant upward trend,” Michels said.
Michels also dismissed concerns from Dems on the reallocation to business development tax credits. The agency says the $10 million in tax credits under the program are expected to create 1,885 new jobs, retain 2,729 jobs and bring about $314 million more of capital investments.
“The leverage this tax credit is creating is huge, through jobs as well as capital investment,” WEDC spokesman Steven Michels said. “A giveaway is an improper way to characterize it. It’s an investment that the state is seeing a return on.”
Taylor, though, noted the business development tax credits are refundable, while the early stage ones are not. That, she said, means a company that’s already paying no state income taxes could get money under the program.
“I think it’s completely irresponsible,” Taylor said. “It’s another corporate giveaway on the backs of working families and kids.”
— By Polo Rocha,