Opening Wisconsin for Business

 Michael Theo  |    March 03, 2011

Governor Walker says Wisconsin is (now) open for business. To demonstrate what he means, the governor called the legislature into a special session on jobs just moments after he was sworn into office. In the month since, the legislature has been busy reviewing ten separate special session bills offered by the governor. These bills include issues like tort reform to stem frivolous lawsuits; tax deductions for contributions to health savings accounts; income and franchise tax breaks for small businesses and businesses moving to Wisconsin; and requiring super majorities in both houses of the legislature to pass any tax increases.

While Walker campaigned on all of these issues, two of his bills epitomize his call for creating a more business-friendly government focused on creating jobs in Wisconsin. These bills deal with regulatory reform and the creation of an aggressive economic development agency.

Regulatory Reforms

Businesses have long cited Wisconsin’s overly-aggressive regulatory climate as an impediment to locating or expanding operations here. In the fall of 2010, the Wisconsin Manufacturers and Commerce conducted a survey of top CEOs in the state to gauge the extent of this problem. They found:

  • 95 percent of CEOs say Wisconsin‚Äôs regulations are more expensive than other states.
  • 72 percent cite the state‚Äôs regulatory burden as a ‚Äúsignificant‚ÄĚ factor impacting their company‚Äôs ability to retain employees.
  • 62 percent characterize the cost of complying with Wisconsin‚Äôs regulations as ‚Äúvery costly.‚ÄĚ

Simply put, Wisconsin business leaders view the state’s current regulatory climate as hostile.

To address this, Governor Walker introduced regulatory reform legislation that would provide enhanced certainty, consistency and accountability in the administrative rulemaking and enforcement processes, while at the same time maintaining the authority and responsibility of regulatory agencies to enforce statutes passed by the legislature. The WRA supported this legislation, which included:

Separation of powers ‚Äď Clarifies that an agency‚Äôs broad statement of authority does not override the specific regulatory framework set forth in state statutes. This change will prevent agencies from imposing regulations and requirements beyond legislative intent, including real estate related issues like municipal wells, sprinklers, and subdivisions near state highways.

Gubernatorial accountability ‚Äď Requires the governor to approve all administrative rules before they are sent to the legislature for review. This change makes Wisconsin‚Äôs top elected official directly accountable to the public for regulations adopted by the executive branch of government, for which he is responsible. This will ensure that regulations, such as the wind siting rules, are affirmed by an elected official prior to going into effect.

Economic impact analysis ‚Äď Requires every state agency to prepare a detailed economic impact analysis before submitting any proposed rule. This change will encourage all agencies to focus on jobs and the economy as they design new rules and regulations. Hopefully, this will result in rules and regulations that strike a better balance between promoting economic development and the other competing state interests.

Venue for challenging rules ‚Äď Authorizes legal challenges to administrative rules to be brought in the circuit court for the county where the plaintiff resides. The current requirement that all challenges take place in Dane County is a disincentive for private citizen challenges and unfair to property owners and businesses located in the other 71 counties.

A New Economic Development Agency

In a separate bill, Governor Walker proposed to transform the existing Department of Commerce into a new public-private partnership whose sole mission is to promote economic development and job creation. The current non-economic development functions of the existing department will be reassigned to other departments or eliminated.

The new entity, called the Wisconsin Economic Development Corporation, will be governed by a board nominated and chaired by the governor and staffed by a CEO who is also appointed by the governor and approved by the state senate. The board is charged with developing and implementing economic programs to provide business support and expertise and financial assistance to companies that are investing and creating jobs in Wisconsin and to support new business start-ups and business expansion and growth in Wisconsin.

Successfully expanding economic development and creating new jobs will benefit both residential and commercial real estate markets, and thus the WRA supported this legislation. However, if significant regulatory duties are moved from the Commerce Department to the Department of Regulation and Licensing (DRL) as a result of this legislation, regulatory structures at DRL relating to real estate licensees will have to be revised and modernized to ensure continued consumer protection and regulatory responsiveness. The WRA is working with the Walker administration to address these issues.

It didn’t take long for Governor Walker to provide the details of what he means when he says Wisconsin is open for business. These changes should provide both the substance and symbols needed to energize business and job growth in Wisconsin.

Michael Theo is Senior Vice President of Legal and Public Affairs for the WRA.

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