Budget aids economic development zones

No one got exactly what they wanted from the arduous process that yielded the $54 billion two-year state budget.

That includes Commerce Secretary Mary Burke, who had hoped the spending plan signed into law this summer would increase funding for agencies that support smaller manufacturers and create a $5 million grant program for companies that bring at least 100 new jobs to struggling areas.

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Neither of those proposals survived the back-and-forth between Democratic Gov. Jim Doyle and the Republican-controlled Legislature. Still, Burke believes the final budget is good for business and will help communities that haven't kept pace with the rest of the state's economic recovery.

"There's a lot of states with bigger economic development budgets than ours," Burke said. "Our priority here at Commerce is to really support companies so that they can be as innovative as possible and that they are looking to increase their competitiveness."

The budget increases the number of economically depressed areas eligible for enterprise development zone tax credits from 81 to 98. Changes to the program also allow multiple businesses within a zone to be eligible for tax credits instead of just one company.

Burke said Commerce can "spread those tax credits amongst small- and medium-sized companies" considering locating in economically distressed communities. Businesses are eligible for up to $3 million in tax breaks for expanding operations or building in the zones and providing full-time jobs that pay at least $9.75 an hour.

According to the governor's office, the projects supported by the program have created more than 17,000 jobs, retained more than 27,000 jobs and generated more than $1.8 billion in private investment since 1995.

So where is the money coming from in such tight budget times to give out more tax credits?

Since the program was authorized 10 years ago, the Commerce Department bumped up against the limit on the number of zones but still had more than $120 million in tax credits it hadn't given out, Burke said.

"We really need more zones because this is how we can really attract companies to the state. We can help them invest additional dollars to create more jobs," she said.

The budget also puts $2 million into job training programs at technical colleges that will directly benefit businesses dealing with a shortage of skilled workers.

"The jobs are actually waiting, that's the great part," Burke said.

The budget also helps technology companies by changing state tax laws so software companies are no longer taxed based on a combination of factors including payroll, property and sales. Now the state's tech companies operate under the same rules as Wisconsin manufacturers � paying taxes based on sales alone � and Republican legislators who backed the change said it will help Wisconsin-based firms compete nationally and around the world.

But Republicans criticized Doyle's decision to veto $2 million for the Biomedical Technology Alliance, a research cooperative including UW-Milwaukee, Medical College of Wisconsin, Marquette University and Milwaukee School of Engineering. The veto leaves the group with $500,000 in state funds, which Sen. Ted Kanavas, R-Brookfield, called "a huge setback for southeastern Wisconsin."

Doyle contended in his veto message that the state needs the money to fund a Commerce program aimed at startup businesses and technology transfer centers.