Madison- Gov. Scott Walker is setting aside $25 million in his two-year budget bill to boost venture capital investment in the state but isn’t putting forward a plan for doing that.
The Republican governor got praise for the financial commitment from Tom Still, president of the Wisconsin Technology Council and a member of the Wisconsin Growth Capital Coalition, which has been pushing for such an investment proposal.
Venture capital legislation failed to pass the Legislature last session because Republicans in the Senate and Assembly could not agree on a proposal. The measure was especially controversial because of debate over certified capital companies, or CAPCOs.
CAPCOs are for-profit entities that sell tax credits to raise money to invest in businesses. The governmental entity offering the credits determines what type of businesses the CAPCO can invest in. Critics point to CAPCO programs such as the one that operated in Wisconsin in which the private entities profit but promised jobs and economic development fail to materialize.
A program in the late 1990s that awarded $50 million in state tax credits to CAPCOs found that while two of the three funds generated nearly 1,000 jobs, the third fund “appears to have performed poorly and at significant cost to taxpayers,” according to a report from the Wisconsin Capital Growth Coalition.
So, $50 million for 1,000 jobs? So $50,000 per job. Why not just spend the $50,000 per job directly? Hell, why not spend $1,000 per job and quit gouging people for health care and salary concessions?
Walker made it clear in an interview CAPCOs are not part of his proposal.
Walker said the $25 million would be in addition to other proposed economic development measures he announced in early February, which included millions of dollars in tax credits for startup companies.
The governor said the money initially would be housed in the state Department of Administration as a “placeholder” until the program can be established. Critics in the Legislature have been hesitant to give more money to WEDC, the public-private entity that has suffered from mismanagement during its brief existence, including failing to follow federal regulations and its own policies in making loans, failing to track repayment of millions in taxpayer-financed business loans and high staff turnover.
This kind of thing drives me nuts. We’re shuffling money around, subsidizing businesses to bring jobs while killing jobs that actually exist. And every single company can blackmail the public by saying they’ll go somewhere else. In the end, we’re spending more than is necessary because there’s no money to spend on what we need.
And then we plead poverty and demand another round of cuts.