Although Gov. Jim Doyle was greeted with polite, albeit subdued, applause at the Milwaukee 7 Council Meeting Thursday, the tension in the room at the Manpower Inc. headquarters was palpable.
Doyle was attempting to reconcile the details of his proposed state budget with southeastern Wisconsin's business community.
Actually, the M7 leadership has agreed to endorse much of Doyle's plan, including:
A biotech machinery and equipment property and sales tax exemption.
An increase in the amount of angel investor tax credits to $25 million annually.
The creation of a new tax credit of 10 percent of full-time payroll costs for businesses relocating to Wisconsin.
The creation of an income tax credit for businesses that increase their research and development spending to more than 125 percent of their prior three-year average.
The creation of a capital gains exemption for up to $10 million in gains reinvested into a new business venture.
The creation of a Wisconsin Venture Fund to connect businesses and entrepreneurs to capital and seed funding.
An authorization for the creation of a Regional Transit Authority to levy up to .5 percent sales tax to create a dedicated funding source for regional transit (paving the way for the Kenosha Racine Milwaukee passenger train).
Spending $517 million to accelerate the reconstruction of the Interstate 94 north-south corridor between Milwaukee and the Illinois state line.
Spending $2.4 million to add a railcar and increase capacity on Amtrak's Milwaukee-to-Chicago Hiawatha service.
The authorization for the University of Wisconsin Board of Regents to create a University of Wisconsin-Milwaukee School of Public Health and a UWM School of Freshwater Science.
The transfer of $63 million from the state's transportation fund to the general fund for pupil transportation costs.
The business leaders also listened attentively as Doyle, fresh from a trip to Spain, explained how high-speed rail that would connect Chicago through Milwaukee and Madison and eventually the Twin Cities could be an economic catalyst for the entire region. Such connections will be crucial to the United States competing with other countries that are investing in high-speed rail service, Doyle said.
However, the M7 brass is not buying all of what Doyle came to sell them Thursday. The M7 leadership is opposed to Doyle's plan to increase taxes from "throwback sales," or sales shipped from a taxable state to a non-taxable state from the existing rate of 50 percent to 100 percent.
Michael Grebe, chair of the M7 Regional Policy Subcommittee and new chairman of the Greater Milwaukee Committee, said the M7 is studying several other provisions in the Doyle budget and is likely soon to officially oppose them. Among those planks in Grebe's crosshairs:
The extension of prevailing wage requirements to all private projects receiving any public funds.
The enactment of combined reporting, which would require Wisconsin-based businesses to pay taxes on their combined revenues, even from out-of-state ventures, rather than just those revenues generated in Wisconsin.
The elimination of the state income and franchise tax deduction for qualified domestic production activities.
An increase in capital gains taxes.
An increase in income taxes for individuals making more than $225,000 and couples making more than $300,000.
The combined reporting provision probably draws the most ire from the M7 folks, who are wondering why Wisconsin would do anything to discourage businesses from putting their headquarters here.
The combined reporting provision would have a severe impact on a business such as Marshall & Ilsley Corp., which has many banks in Arizona and Florida.
Doyle said the combined reporting provision, which was first proposed by Republican Gov. Tommy Thompson years ago, would affect only 13 percent of Wisconsin's businesses. However, the Metropolitan Milwaukee Association of Commerce leadership believes those businesses are among the "drivers" that bring net gains of dollars to Wisconsin's economy.
In balance, Doyle's budget is "anti-business," Grebe said after hearing the governor speak Thursday.
"The tax increases overwhelmingly are more negative than positive," Grebe said.
Doyle acknowledged that Wisconsin, like nearly every other state, faces some "tough choices" in its budget. The choices would be far worse without federal support from President Barack Obama's American Recovery and Reinvestment Act, Doyle said.
The state is cutting its budget by $2.2 billion and reducing the state government workforce by 10 percent, Doyle said. Despite the recession, the state must continue to provide adequate funding for four key priorities, Doyle said: education, health care, public safety and economic development.
To soften the blow, Doyle announced the state will kick in $500,000 to the M7 cause.
"We have to get people back to work," Doyle said.
Steve Jagler is executive editor of BizTimes in Milwaukee and is past president of the Milwaukee Press Club. BizTimes provides news and operational insight for the owners and managers of privately held companies throughout southeastern Wisconsin.
Steve has won several journalism awards as a reporter, a columnist and an editor. He is a graduate of the University of Wisconsin-Milwaukee.
When he is not pursuing the news, Steve enjoys spending time with his wife, Kristi, and their two sons, Justin and James. Steve can be reached at steve.jagler@biztimes.com.
