Policies aimed at bringing new business to Wisconsin often get bogged down because of the risky nature of investments, Rep. Rob Wittke says.
Wittke, R-Caledonia, made the comments during a Wisconsin Tech Council luncheon in Madison this week while talking about a pair of new bills to update the state’s investor tax credit program. He said Wisconsin’s government often has a hard time understanding how best to funnel capital to boost the state’s economy.
The amount of risk associated with business investment is generally much higher than other areas, which is a scary thing for many policymakers who’ve never owned a small business or tried to invest in innovation, Wittke said.
He referenced a call with an investor while working on the bills who questioned why Wittke’s colleagues aren’t jumping to add what he called a “small amount of money” to the investor tax credit program.
“I said, ‘Well, how many investments do I have to make until I get even one small successful one?’ And he said, ‘Well, probably 10. Nine of them will fail and one will be successful.’ And I said, Well, there’s your problem,” Wittke said. “That building over there, that kind of risk brings heart attacks to people. They want sure investments with their money.”
One of the bills would raise the investment cap for qualified tax credits under the Qualified New Business Venture program to $20 million from $12 million. The bill would also eliminate the 51% test that requires at least 51% of a QNBV’s employees be employed in Wisconsin.
The other bill would modify the definition of what qualifies as a bona fide angel investment by the Wisconsin Economic Development Corporation. The proposal would include, in addition to the purchase of an equity interest or any other expenditure, a convertible note or simple agreement for future equity.
The bills haven’t been circulated for cosponsorship yet, but Wittke’s office told WisBusiness they expect to send memos out next week.
The state’s investor tax credit program hasn’t been updated since first being passed roughly 20 years ago.
Other challenges getting bills passed and signed into law include informing everyone involved, figuring out who will champion a proposal and formulating a strategy to handle opponents, Steve Lyons, president of SJL Government Affairs & Communications, said.
“You build a coalition of groups that support your efforts, and the groups that are mad or don’t like it, you need to find a way to get them to neutral, or make this not their big, pressing issue, to fight your bill,” he said. “So there’s a whole chess game behind the bill.”
Educating lawmakers and staffers is also a big hurdle for lobbyists and others pushing for policy changes, Mark Austinson, vice president of SJL, said.
“Because, as a staffer or a legislator, you’re a mile wide and an inch deep on all these issues,” Austinson said. “So to understand the need and the benefit of what these policies bring, It’s tough.”
Watch the luncheon here.
