Three departments joined in common development effort

David Fettig | Managing Editor

Published December 1, 1989  | December 1989 issue

Wisconsin's economic development program used to consist of three separate departments involving training, technological development and capital expenditures.

The state's 1987-89 budget bill, however, fused those divisions into one department, the Wisconsin Development Fund (WDF), and appropriated $21 million for the department's work. WDF's budget was increased to $29 million in the current biennium.

According to Phil Albert, director of the Wisconsin Bureau of Development Finance, the merger has introduced some economies of scale to state government.

"With one administrative board, rather than two or three, there have been some increased efficiencies," Albert said.

Now, one board consisting of three state officials and five representatives of private business and labor sit on the board of the Development Fund and make decisions regarding specific projects.

Those decisions affected over 60 projects in the 1987-89 biennium, about $17 million in state funds and the possibility of about 10,000 new jobs within the next five years, according to state reports. Like many other states, job creation is the primary criterion for project approval.

Wisconsin economic development funds are nearly all distributed as participatory loans with private developers—every dollar of state funds must be matched by at least one dollar from a private lender, Albert said—and of those loans, about 25 percent total less than $250,000.

While one department and one board now administer Wisconsin's Development Fund, the three divisions that were merged into the WDF still exist within the larger department. Their purposes are as follows:

Technology Development Fund: to provide assistance to businesses embarking on a research project to develop a new product or process or to improve an existing product or process. In order to be eligible, applicants must supply at least a 25 percent match of funds and must form an alliance with a higher educational institution.

Customized Labor Training Fund: to meet critical manpower needs of businesses when the training is not available through existing federal, state and local resources. This is not an employment program, but one where a business may apply for a loan or a grant to ensure proper training of workers.

Major Economic Development Fund: to increase productivity, lead to significant capital investment or to create or retain jobs. Funds are available for projects—including a governing body, business or consortium of a business and higher educational institution—that are unable to secure financing elsewhere.

"We feel (the WDF) has been successful," Albert said. "But, to be fair, there are mixed opinions out there."

Indeed, the Wisconsin Department of Development is undergoing its first audit by the State Legislature to determine whether the WDF is attaining its goals. While other state development departments are frequently scrutinized by their legislatures, Albert said this is the first time Wisconsin has initiated an audit.

But, like other states, Albert maintains the audit, which will be completed in February, is politically motivated. Tommy Thompson, Wisconsin's governor, is a Republican and decidedly pro-business, Albert said, and he said the success of the WDF has inspired the Democrats in the Legislature to investigate its merits. Besides, he said, 1990 is an election year for the governor's office, and he believes the audit is an early attempt to campaign.

All politics aside, however, Albert remains confident that Wisconsin's merged Development Fund will survive the audit unscathed and in three to five years the results will be obvious.

"I believe the current audit will prove that (the WDF) has met its goals," he said. "We let the market drive the applications for funds."

And the best judge of the effectiveness of the WDF will be time, Albert said. In three to five years, when the market has weighed the results of those loans in increased jobs and capital investment, Albert said Wisconsin will really begin to realize the benefit of the WDF.