Tech-based economic development items in state budget debated

Wisconsin lawmakers continue to debate the state’s 2007-2009 budget bill, which includes a number of provisions of interest to the tech community. The budget is now in the hands of a “conference committee,” made up of Democratic and Republican leaders from both the Senate and the Assembly. Those leaders will resolve differences in budget items contained in four versions of the $57-billion document: The governor’s proposal, the Joint Finance Committee recommendations; the Senate bill and the Assembly bill.

Here are some specific items of interest; others will be noted as developments occur.

To contact your legislators about one or more of these proposals, follow this link: http://waml.legis.state.wi.us/

Questions? Contact Tom Still, president, Wisconsin Technology Council, at 608-442-7557.

 The BioMedical Technology Alliance. Gov. Jim Doyle proposed $2.5 million to fund this initiative involving Milwaukee-area research institutions. The Joint Finance Committee reduced that amount to $500,000, and the Senate concurred. The Assembly removed the appropriation altogether.

 Sales and use tax exemptions for certain biotech research equipment purchases. The governor’s bill, the Joint Finance Committee and the Senate included $7.8 million in tax exemptions; the Assembly deleted the proposal.

 The governor proposed $30 million in grants and loans for alternative energy solutions as a part of his two-year budget bill. That proposal failed to clear the Legislature’s Joint Finance Committee, but was reinstated in the Senate. The Assembly removed the language.

 Doyle proposed an expansion of the Act 255 tax credits for investments in qualified new business ventures. The Joint Finance Committee concurred, but the Senate removed the expansion in credits. The Assembly voted to return to the Joint Finance Committee version, with some minor changes. Here is a Legislative Fiscal Bureau analysis of the Act 255 tax credits as they stand:

Current law:

The angel investment tax credit can be claimed under the individual income tax and is equal to 12.5 percent of the claimant’s bonafide angel investment made directly in a qualified new business venture in a tax year.

The 12.5 percent tax credit can be claimed for two years, beginning with the tax year as certified by the Department of Commerce. Consequently, the total tax credit is 25 percent of the amount invested. Unused credit amounts can be carried forward up to 15 years to offset future tax liabilities. The maximum aggregate amount of angel investment tax credits that may be claimed for a tax year is $3 million. The maximum total amount of tax credits that can be claimed for all tax years is $30 million.

The early stage seed investment credit can be claimed under the individual income and corporate income and franchise taxes and is equal to 25 percent of the claimant’s investment paid in the tax year to a fund manager that the fund manager invests in a business certified by Commerce (qualified new business venture). Unused credit amounts can be carried forward up to 15 years to offset future tax liabilities. The maximum aggregate amount of early stage seed investment tax credits that can be claimed for a tax year is $3.5 million. The maximum total amount of tax credits that can be claimed for all tax years is $35 million.

The Joint Finance budget would make the following modifications to these tax credits:

a. Increase the total amount of angel investment tax credits that can be claimed for all tax years by $17.5 million, from $30 million to $47.5 million. For tax years beginning after December 31, 2007, the aggregate amount of tax credits that could be claimed each year would be increased by $2.5 million, from $3 million to $5.5 million. The maximum amount of investment that could be used as the basis for a tax credit would be increased from $500,000 to $2 million.

b. Increase the total amount of early stage seed investment tax credits that could be claimed for all tax years by $17.5 million, from $35 million to $52.5 million. For tax years beginning after December 31 2007, the aggregate amount of tax credits that could be claimed each year would be increased by $2.5 million, from $3.5 million to $6 million. 

Assembly: Adopt the Joint Finance provision. In addition, modify angel investment tax credit provisions to allow qualified investments in businesses engaged in the construction of power plants that derive energy from renewable resources to be eligible for the credit if the business meets all of the other eligibility requirements. The maximum annual limit on total angel investment tax credits ($3 million under current law; $5.5 million under the bill) would not be changed. As a result, there would be no fiscal effect.

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