A venture capital bill is neededbut details matter
There are two general types of economic development efforts that state government participates in:
--Those that are intended to expand or retain jobs in Wisconsin or attract jobs from outside.
--Those that are intended to assist start-up companies, some with new ideas for products or services, by investing ďventure capitalĒ in them.
Jobs are the ultimate goal, of course, but these venture capital efforts are about building a new economy with new jobs at companies that start from scratch. It is about helping companies that may not exist yet but rather are an idea in someoneís head. If we have a climate where venture capital is available, when that scientist or that engineer is ready to go, the capital will be there to help get started.
I believe that properly structured and administered by nonpoliticians, the venture capital bill will be our most important long-term jobs legislation of the year. We hope to be able to vote for such a bill.
But it is important that we do this responsibly:
--A responsible venture capital bill must ensure that private venture capital dollars are invested before we commit public dollars.
--A responsible bill should use privately issued bonds to generate dollars to invest in promising companies at a ratio of at least two or three private-sector dollars for each publicly guaranteed bond dollar.
--The Legislature should reject any proposal that uses a certified capital company (CAPCO) investment structure.
The Legislature has enacted numerous laws that give companies income tax credits, and there are more such proposals in the pipeline. The dilemma, and the choice we make, with income tax credits is that we take tax dollars that could be used for schools or health care and give them directly to private companies. Thatís not to say itís the wrong choice, but itís one that must be made carefully.
We should not put public dollars where private dollars donít want to go. The Legislature should reject any plan that presumes government can make better decisions with your money than investors can with their own money.
In 1997, the Legislature approved a $50 million handout to CAPCOs with very few accountability requirements.
As the Milwaukee Journal Sentinel has reported, millions of dollars remain unaccounted for, and the millions that are accounted for created very few jobs.
I realize the immediate need for jobs in Wisconsin. In January, the Legislature passed bills that will provide immediate help to create, attract and retain jobs in Wisconsin. I voted for most of them. A venture capital bill is an effort not often seen in the Legislatureóenacting something that will create jobs further down the road, in the one- to five-year range. Governors and legislators too often canít see past the next election, so long-term thinking and planning is a refreshing change.
This legislation will help spur additional new-economy jobs in start-up companies that do not exist in Wisconsin today, supplementing our existing jobs and businesses.
Sen. Tim Cullen, D-Janesville, represents most of Rock County and the Whitewater area in the state Senateís 15th District. Contact him by phone at 1-800-334-1468 or (608) 266-2253; by email at sen.cullen@legis.Wisconsin.gov or by writing to him at P.O. Box 7882, Madison, WI 53707-7882.