Committee signs off on venture capital bill (UPDATE)
By KEVIN WANG
MADISON, Wis. (AP) – A bill that would put $25 million in state money into Wisconsin startups passed its first hurdle with approval from an Assembly committee Friday despite a recent audit that found a number of problems at the jobs-creation agency that would oversee the money. But it remains unclear when the proposal will reach the floor.
The legislation from Rep. Mike Kuglitsch, R-New Berlin, would put millions in state and private money into a venture capital fund that invests in young Wisconsin companies. The fund would be overseen by the Wisconsin Economic Development Corp., which would hire a fund manager to oversee the investments.
But WEDC has had its own problems since a recent audit found it did not follow state law or adequately track loans it awarded. The audit also said the agency sometimes gave money to companies that didn’t qualify for tax breaks.
Some Democrats on the Assembly Committee on Jobs, Economy and Mining said the state shouldn’t trust WEDC until the agency retraces the bad loans and improves its management.
Rep. Penny Bernard-Schaber, an Appleton Democrat, said she was originally supportive of the proposal but is now suspicious of WEDC’s role in it. She called for the committee to delay the vote for at least one week instead of fast-tracking it. Other Democrats said the state should divert the $25 million to competent agencies.
Some Democrats joined in approving the bill on an 8-6 vote, however, after several amendments, including one that would require the state Legislative Audit Bureau to review WEDC’s contract with a fund manager before submitting a letter to the Joint Finance Committee.
Another amendment from Bernard-Schaber would require the agency to adhere to strict procurement procedures approved by the state. The audit found that WEDC provided some vendors with no-bid contracts, which it could do because it’s not currently subject to state purchasing rules.
The Joint Finance Committee approved tough new requirements Thursday for WEDC, including blocking nearly $60 million in funding until the agency convinces lawmakers that improvements have been made.
The requirements would not affect the $25 million venture capital fund, but the state Department of Administration could have initial custody of it.
All WEDC employees would be subject to state ethics and financial interest disclosure laws. The agency also would have to follow state law setting requirements for making purchases and entering into contracts.
Backers of Kuglitsch’s proposal said ongoing investigations of WEDC should not stop the agency from facilitating the state’s economy. Rep. Jeff Stone, R-Greenfield, said issues such as lack of state loan oversight have existed in Wisconsin even before WEDC’s creation in 2011. He said the agency has improved its performance from the past.
Kuglitsch called Democrats’ complaints political. He blamed Bernard-Schaber for being disingenuous by introducing an amendment while voting against the bill.
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