Tax credit bill sails through Senate
MADISON—A bill that would allow a transfer of tax credits between companies sailed through the state Senate earlier this week, and its co-author in the Assembly hopes for similar success in her chamber as early as next month.
“You never know, because some people just don’t like tax credits and want to do economic development a different way,” said Amy Loudenbeck, R-Clinton, an author of the bill.
“I’m not going to sell it as the be-all and end-all to economic development, but it could be another tool that gets some projects off the ground.”
Loudenbeck said the Assembly could possibly vote on the bill in February. If it passes, it would go to Gov. Scott Walker for his approval.
As part of its economic development toolbox, the state for years has provided income tax credits if companies meet benchmarks spelled out in economic development contracts.
Forward Janesville has long maintained that the income tax credits are of little value to many companies because they don't generate enough income to make the credits meaningful. The group has argued that companies involved in the transfer of tax credits would have a relationship that creates jobs and fosters investment on the local level.
For example, Company A might want to lease space from the more established Company B. Company B makes improvements to its facility to accommodate Company A and therefore assumes a degree of risk. As a way to mitigate that risk, Company A—if it doesn't have sufficient income to use awarded tax credits—would transfer them to Company B.
Senate Bill 449 passed Wednesday on a 32-0 vote.
It would allow the transfer of tax credits if the original recipient is a company that either is headquartered in Wisconsin or plans to move to the state and base the majority of its employees here.
It further mandates that the original recipient increase its Wisconsin workforce by 10 percent or make a significant capital investment in its Wisconsin operation.
The last two conditions were missing from Senate and Assembly bills that kicked around the Capitol for the last two years before dying.
Sen. Tim Cullen, D-Janesville, said at the time the legislation was too vague.
Cullen said he wasn't against the transfer of the credits. Instead, he was concerned the tax credits could be transferred with no assurance that they paid any dividends, such as new jobs or new capital investment, to Wisconsin taxpayers.
“The problem was that the (Wisconsin Economic Development Corp.) could issue a waiver on the tax credit transfers that wiped out the responsibility to deliver what the tax credits were given for in the first place,” Cullen said.
Cullen said he was pleased the bill passed the Senate on Wednesday.
The bill was originally written to benefit a development project in Rock County.
Both Cullen and Loudenbeck said the bill is no longer tied to any specific project.
If passed, both lawmakers said the tax credit portability law would appeal to economic development interests around the state.
In addition to Forward Janesville, support for the legislation has been registered from the city of Milwaukee and its chamber of commerce, Xcel Energy, the Wisconsin Economic Development Association and the Wisconsin Realtors Association.
“This is a different bill, and there's a lot more understanding of it,” Loudenbeck said. “The last time, it just didn't get any traction for a variety of reasons. It has since been thoroughly vetted.”