29 Jun Senate Democrats strip additional Act 255 funding from budget
Madison, Wis. – Lost amid the controversy over its proposed overhaul of the state’s healthcare system was the vote by the State Senate Democratic Caucus to pare back additional funding for the Act 255 tax credit program that was included in the budget approved by the Joint Committee on Finance.
The caucus voted to delete provisions that would increase the maximum annual amount of angel investment and early-stage seed investment tax credits.
According to the Legislative Fiscal Bureau, the change from the budget approved by the Joint Committee on Finance amounts to $7.8 million over the 2007-09 biennium.
The action was part of a $66.1 billion budget approved on a party line vote, with all 18 Senate Democrats voting for it. Democrats hold an 18 to 15 advantage over Republicans in the Senate.
Given previous bipartisan support for Act 255, which has been credited with boosting angel investments in early-stage businesses, the vote caught some by surprise. According to a new report compiled by NorthStar Economics, the Wisconsin Technology Council, and the state Department of Financial Institutions, a total of $102.9 million in early-stage risk capital activity was tracked in Wisconsin last year, an increase of 54 percent over 2005.
Heading for conference?
One of the Republican “nay” votes was cast by State Sen. Scott Fitzgerald. “He voted against the Senate Democrats’ budget because they are cutting money for good programs like this [Act 255] and raising taxes for other reasons,” said Mike Prentiss, a spokesman for Fitzgerald.
State Sen. Ted Kanavas, R-Brookfield, wondered how Senate Democrats could support a pro-growth measure last year, and then fail to support it when they gain the majority. “The Democrats in the State Senate don’t get it,” he said.
Kanavas added that he’s confident the funding will be restored by the State Assembly.
Democrat Russ Decker, chairman of the Senate Committee on Finance, could not be reached for comment.
Even though it was an action taken by fellow Democrats, a spokesman for Gov. Jim Doyle said the Governor views the vote on Act 255 as a mistake, and that he is confident the additional funding will be restored in the final budget. “In the Governor’s time in office, we have increased venture capital and angel capital in this state dramatically,” said Matt Canter, press secretary for Doyle. “That’s not only critical in creating jobs, but the high-paying jobs that are the driver of our economy.”
The State Assembly, which is controlled by Republicans, is expected to craft its own budget over the next two to three weeks. If, as expected, the Assembly passes a different bill, a conference committee comprised of lawmakers from both bodies would meet to resolve those differences.
The most contentious difference promises to be the Democrats’ healthcare reform plan, which would provide every Wisconsin resident under 65 access to comprehensive healthcare coverage and be funded with a $15 billion payroll tax. Critics note that the overall Senate budget calls for an $18 billion tax increase, which is more than double the $14 billion the state now collects from taxpayers.
• Breaking down Wisconsin’s angel capital numbers
• Sen. Ted Kanavas: A heavenly tax cut: Act 255 stimulates economic growth
• Wisconsin building toward the major leagues of venture capital
• Doyle proposes $2M for venture capital center