State’s economic development structure in place: Question is how best to use it

Gov. Scott Walker and Democratic challenger Mary Burke have staked out major differences in their approach to job creation and economic growth, but the candidates appear to agree on one significant item: Reinventing the state’s flagship economic development agency was the right thing to do.

Walker took heat early in his term when the Wisconsin Economic Development Corp. ran into accounting troubles tied to its transition from a traditional state agency to a quasi-public authority, but he stuck with the decision. Businesswoman Burke is a former Commerce Department secretary who could have called for turning back the clock to how things worked during her tenure — but she has persistently declined to do so.

That campaign trail consensus isn’t surprising in light of recent history. The move to remake the former Commerce Department has bipartisan roots dating to the 2010 campaign for governor, when the “Be Bold Wisconsin” report was issued, and even to 2006, when a legislative audit portrayed a patchwork quilt of state economic development programs.

Full disclosure: As one of the authors of the “Be Bold Wisconsin” report, I confess to long believing that a quasi-public structure for state economic development efforts would be more effective than a traditional government platform. The old Commerce structure blended economic growth strategies with many oversight tasks, such as building safety codes, petroleum tank regulation, and inspections of elevators and carnival rides. That made it hard to focus on the core task — helping Wisconsin attract, retain, and grow companies and jobs.

During the 2010 campaign for governor, Walker and his Democratic opponent, Milwaukee Mayor Tom Barrett, both embraced an overhaul of the Commerce Department. The goal was the creation of a more nimble, responsive agency that could make development decisions — quickly — without undue political influence or red tape.

Problems emerged in late 2011 when the transition from Commerce was fast-tracked by Walker and the Legislature. With only six months to change tires on a moving car, accounting for some public dollars fell through the cracks. The agency recovered over the next few years, however, by strengthening internal controls and bringing in bankers to tighten its underwriting on loans.

Meanwhile, the agency has put more people in the field to respond to business inquiries, increased its overseas trade representative program from four to 36 nations, and developed a mix of programs — such as Capital Catalyst, Seed Accelerator, and IdeaAdvance — to work with emerging companies. It has divisions that focus on entrepreneurship and innovation as well as larger industry “clusters,” two of which — water technology and energy, power, and controls — have shown recent progress.

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Whether it was the old Commerce Department or the new WEDC, the agency always had talented people on its staff. However, it lacked the ability to be quick on its feet and the money to actually dance on the same floor with states that spend a lot more on economic development.

Money is still part of the problem, but so is the fact that Wisconsin policymakers have disagreed over what clusters are most important.

Some legislators and interest groups will insist that manufacturing, agriculture, and tourism are Wisconsin’s hallmarks, but others will point to federal and private studies that show those sectors aren’t expected to add many high-wage jobs over time.

Some experts say Wisconsin should be focusing more on higher-paying, higher-growth industries such as financial services, business services, life sciences, and technology. Those sectors are predicted to create more jobs nationally over the next four to six years.

No matter who is elected governor Nov. 4, the real challenge is not the structure of WEDC — which will work better the longer it’s in place — but setting priorities for where Wisconsin should place its long-term economic development bets. That process must engage and inform elected policymakers as much as the agency itself.

The WEDC structure has been built with help from Democrats, Republicans and, most importantly, the business community. The question for the next four years is how best to put it to work for Wisconsin.

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