Early next year, biotech executive Bonnie Reinke plans to hire clinical staff to start testing a promising surgical heart monitor her Middleton company has developed.
She got a big boost in October when the start-up, Eso-Technologies, raised $1 million in October in private capital.
With more private financing, Reinke said, she could hire four to eight more workers to run the trials and possibly move up the date when she hopes the company can start marketing the monitors. But finding investors has been difficult in the midst of the current lending crisis.
“It’s been very brutal,” Reinke said.
Now, state lawmakers are considering a series of modest steps to boost the state’s economy and help businesses like Reinke’s. The measures, which include additional tax incentives for small businesses and tech firms, seek to reverse a two-year slide that has left Wisconsin with an 8.2 percent unemployment rate.
“A lot of energy is going to go into jobs in the next few months,” said Assembly Speaker Mike Sheridan, D-Janesville, who represents one of the hardest-hit communities in the state. The Democratic-controlled Senate also is preparing a slate of economic development proposals.
Republicans say the proposals don’t go far enough and are too late, coming after Democrats hiked state taxes by more than $2 billion over two and a half years to help erase a more than $6 billion state budget shortfall.
“Our focus should be on jobs and I haven’t seen a lot from the other side on this issue,” said Assembly Minority Leader Jeff Fitzgerald, R-Horicon. “Unfortunately we’ve done some things in this Legislature that have added to that job loss.”
The state has lost 156,000 jobs since the start of the recession in December 2007. Economist David J. Ward of NorthStar Economics in Madison, who calls himself an “optimist,” doesn’t expect real job growth in Wisconsin until late summer 2010 at the earliest.
“What state government has to do is create the climate and the confidence to invest in your state,” Ward said.
Investing in ‘proven programs’
As a down payment on that, a Senate committee last week unanimously endorsed an up to $15.8 million measure that would:
• Add $3 million in 2010 to existing tax credit programs for investors in early-stage companies, increasing those credits in later years by $4 million.
• Create a regulatory ombudsman to help businesses navigate the state’s permitting and approval process.
• Add $1 million for the Wisconsin Development Fund for loans and grants to attract and retain businesses.
• Create a $2 million incentive program for businesses that pay for university or technical college tuition for poor employees.
“(The bill) invests our scarce state economic development resources in proven state programs that have a track record for success and innovative programs we believe will be just as successful,” said its author, Sen. Julie Lassa, D-Stevens Point.
Eso-Technologies’ innovation is a surgical heart monitor for patients that would be inserted through their esophagus. Current monitors must be inserted through an artery in a patient’s leg, an invasive process that leads to thousands of patient complications and deaths each year, Reinke said.
John Neis, the managing director of Venture Investors in Madison, said he wants to see legislators offer even more incentives, noting that venture capital investing nationwide has dropped to just one-fifth of what it was before last year’s crash.
“I know the state’s cash strapped, and I can say nothing but that I’m appreciative,” Neis said. “I wish they could be taking a bolder initiative.”
Revisiting the capital gains tax
In the Assembly, Rep. Peter Barca, D-Kenosha, is heading up a partnership of lawmakers and business leaders holding hearings around the state to find ways to boost the economy — similar to an initiative by Republican lawmakers earlier this year.
Assembly proposals being considered would:
• Partially roll back a provision of the state budget bill that subjected a greater portion of capital gains to taxation. That provision, which lowered the percentage of capital gains excluded from taxes from 60 percent to 30 percent, amounted to a two-year tax increase of $242 million on investors and property owners.
• Use $350,000 in state grants to expand a revolving loan fund program for small businesses in Milwaukee to other parts of the state.
• Make sure businesses have a one-stop office in state government to learn about how to follow the regulations that affect them.
Barca, a former Midwest regional administrator for the U.S. Small Business Administration, said Assembly Democrats would work closely with colleagues in the Senate to settle on an approach to getting capital to small businesses and streamlining regulations.
“We’ve got plenty of ideas,” Barca said. “We’ve got to figure what we can afford.”