“There is no way you’re going to change that ! It’s been going on for years,” a senior official told me early last year. “ That” was the giving away of grants and loans to well-connected businesses - with few strings attached. It has been going on for years!
Thanks to the hard work of the Legislative Audit Bureau, many details of the state’s failures were made public in an audit. Thanks to the efforts of a bipartisan working group, the old way of doing business can be a thing of the past.
Last week, the Assembly Committee on Jobs and the Economy and the Senate Committee on Economic Development held a joint public hearing. The two committee chairs, Senator Julie Lassa (D – Stevens Point) and Representative Pat Strachota (R – West Bend) brought forward two bills that will change the way businesses receive help from state taxpayers.
No longer will Western Wisconsin businesses wonder what happened to money the state allocated for business development. The details of every program and every business helped will appear on the internet – just like Minnesota and Illinois do now.
All businesses applying for help will be held to the same standards. Like any good business manager does, the state will require goals, benchmarks and evaluation – to make sure the business accomplished what was promised and the people’s dollars were wisely invested.
It seems simple – fund what works and don’t fund what is not working. But the simple truth is the state had no idea if dollars were wisely invested. For example, the audit showed that:
While helping small business is an important priority, the auditors could not determine the size of the companies in more than half of the awards.
Auditors could not identify the type of business in more than a third of the awards.
For over $2 million worth of grants and loans, the auditors could not identify in what counties the dollars were spent.
Eight counties – accounting for 21% of all loans to economically distressed counties - met NONE of the criteria for an economically distressed county.
Only ten businesses received 22% of the total amount of grants and loans. While SMALL businesses – which accounts for 70% of all business in our state – received only 29% of the state’s economic development grants and loans.
The audit indicated major problems with a lack of data related to the effectiveness of economic development programs. The state did not know if those awarded planning grants actually launched their businesses; whether the businesses created expected jobs; or whether the new business development zone actually helped create new businesses.
Our state dollars are very short and the list of needs very long. The state provides vital services to its people and, yet when resources are tight, the tendency is to cut services across the board. By wisely investing in state services and tracking effectiveness of programs, we can target dollars to those programs that are most effective.
We can only know what works if we collect the information to determine our success or failure. This bill provides the Legislature with information for a comprehensive evaluation of state investment in economic development programs.
Credit goes to Representative Sue Jeskewitz (R – Menomonee Falls) and Senator Jim Sullivan (D - Wauwatosa), the co-chairs of the Audit Committee. They worked with five other legislators, including myself, and staff, including the Department of Commerce for nearly a year to solve these problems.
Working with the group has indeed been a pleasure. In my first year of service as Senator, I can think of no better example of Republicans, Democrats; Representatives, Senators and women and men coming together to solve a problem for the people of our state. This is indeed our sacred obligation.
Setting standards for programs to grow businesses is not a hot topic. The hearing was quiet and deliberative – as were the long hours spent with the working group. Change happened slowly. But it did happen. And the change will make a big difference in how wisely the state’s money is invested. Sometimes big changes happen quietly. With a hard working group of people doing what people elected them to do.