07 Sep Green economic plan takes cue from Indiana
Green Bay, Wis – Mark Green’s economic development plan calls for many changes, but perhaps its most sweeping proposal would eliminate the state Department of Commerce and replace it with an economic development corporation.
Amid a series of ideas that include revenue caps, employer incentives, and legal reforms, Green proposes to revamp state government in much the same way that Indiana Gov. Mitch Daniels has done in the Hoosier State. Daniels, a former director of the federal Office of Management and Budget, has established the Indiana Economic Development Corp. to serve the state’s need for speed when it comes to attracting business.
The similarities between the two approaches are striking. Under Green’s plan, the Wisconsin Economic Development Corp. would be led by a 12-member board that would have representatives from various economic sectors, businesses of different sizes, organized labor, and the University of Wisconsin System.
As governor, Green would chair the corporation, which also would include a cabinet level CEO, and he believes the entity would be more nimble in attracting business to the state. “We have to have economic development in Wisconsin that moves at the speed of business, not the speed of bureaucracy,” he said.
This is essentially what Indiana did in Feb. of 2005, when it established the Indiana Economic Development Corp. to replace the Department of Commerce as the state’s lead economic development agency. Indiana’s body also is governed by a diverse 12-member board chaired by Daniels and led by businessman Michael Maurer, who serves as president of the IDEC and as Secretary of Commerce.
Blowing the horn
Maurer recently trumpeted the securing of commitments for nearly 16,000 new jobs in the first eight months of 2006, which surpassed the total for all of 2005. Included in those commitments is a new Honda assembly plant in Greensburg, Ind., that will employ more than 2,000 people.
Green and other critics of Wisconsin Gov. Jim Doyle have said Wisconsin should have made a stronger bid for the Honda plant, where workers are expected to earn an average of $15.64 per hour. “The Honda plant in Indiana was quite a coup for that state,” said Jim Pugh, director of public relations for Wisconsin Manufacturers and Commerce. “They were very aggressive. If that [economic development corporation] is what it takes to get the job done, let’s do it.”
Maurer has touted the speed at which the quasi-government agency can move, but the courtship of business comes with a price. As a carrot, Indiana has promised $238 million in tax and training incentives to companies, and it also has passed tax credits and regulatory changes to improve its business climate.
Mark Cahoon, vice president of government finance and economic development for the Indiana Manufacturers Association, believes the economic development authority model is one that other states should consider. While he said it’s difficult to compare the recent performance of the IEDC with that of the former Department of Commerce, in part because the latter was operating during the most recent recession, he likes the speed at which the economic development corporation can move.
Cahoon compared Departments of Commerce to battleships that are difficult to quickly turn around, whereas the economic development corporation, enacted on a bipartisan vote, can make changes much faster. “It’s very much a top-down decision making process, and if you get the right person in charge, it can change its focus almost on a dime,” Cahoon said.
In Indiana’s case, Maurer was plucked from the private sector to run the corporation after having made his mark in media and banking. Cahoon characterized Maurer as a “highly successful, highly active guy” who had a good track record for building businesses and making them profitable.
Under Doyle, state government has attempted to make regulatory compliance easier for businesses, and he has signed bills to phase in a single sales factor tax and eliminate shareholder liability that critics charged with discouraging outside investment.
When it comes to maintaining and attracting jobs, the Doyle campaign notes that Wisconsin has added 170,000 new jobs over the past four years, a period of economic expansion. Among the state’s more notable investments under Doyle were millions in state funds for plant expansion, equipment upgrades, or job training to assist companies, including $10 million for training and energy assistance for General Motors in Janesville, $3.4 million for a new paper machine at Procter and Gamble, and $3 million for an expansion of the Ripon Foods plant.
The most recent sign of a growing economy was the announcement that Fiscal Year 2006 tax collections exceeded Legislative Fiscal Bureau estimates by $80 million, which the Doyle Administration quickly attributed to the governor’s policies. State general purpose revenue was $12.03 billion, up 5.6 percent from 2005, according to the Department of Revenue. In addition, income growth is expected to grow 4.8 percent in 2006, and average 5.3 percent from 2007 to 2010.
Melanie Fonder, a spokeswoman for the Doyle Campaign, suggested that Green is hardly in a position to tout his job-creating credentials. “The last thing people in Wisconsin want is for Congressman Green to be making decisions about creating jobs in Wisconsin,” she said, citing votes in Congress that sent jobs overseas, increased the federal deficit, and blocked raising the federal minimum wage.
However, the state’s 152 economic development programs, which cost an estimated $152.8 million during the 2005-05 biennium, were scrutinized in a recent Legislative Audit Bureau Report. The report called on the state Legislature to identify duplicative and outdated programs and provide better oversight and improved monitoring.
According to Green’s economic plan, the first order of business for his economic development corporation would be to review the 152 programs and eliminate duplicate and failing projects. The corporation also would review the 26 councils charged with overseeing the programs, with the goal of reducing them to 10 or fewer.
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