With capital bill stalled, WEDC looks to $78 million in unspent tax credits
With dim prospects for the passage of a venture capital bill, the Wisconsin Economic Development Corp. is proposing that unused investment tax credits be deployed to help fund promising early-stage Wisconsin companies, according to a report in the Milwaukee Journal Sentinel.
The agency reportedly wants to use some of the $78 million in unspent tax credits under the Act 255 program and to co-invest with Wisconsin angel capital groups. The program would be called ASAP, or the Angel Seed Acceleration Program, a reference to its focus on young companies.
Paul Jadin, chief executive of the WEDC, called the need for more capital “extraordinary,” but a key lawmaker said the prospects for any bill were derailed by a projected $143 million budget shortfall. Sen. Alberta Darling, R-River Hills, who had pushed a measure to create a $100 million capital program, now says the state simply doesn’t have the money.
There is disagreement over whether using the tax credits actually would constitute new spending, but they would have to be monetized to create an investment pool.
Contracted by IB Wisconsin, Tim Cooley, director of capital development for the WEDC, said any unused credits are rolled over into future budgets.
Two weeks ago, when it became apparent that the venture capital measure would be stalled in this legislative session, Cooley said WEDC began to discuss what could be done administratively. That led to the ASAP proposal, but the program cannot be put in effect without legislative approval, he added.
Cooley said the credits could reduce the time it takes for investors to raise money and close deals.
WEDC estimates the program would produce 30 to 60 investments in new business start ups each year.