Governor Walker’s “Continuing Wisconsin’s Comeback” Plan Benefits Commercial Real Estate
On Monday, Governor Walker introduced his comprehensive economic development and jobs plan for the next four year titled “Continuing Wisconsin’s Comeback.” The 60-page plan outlines Walker’s accomplishments during the last four years and describes numerous future initiatives to grow our economy, develop our workforce, transform education, reform government and invest in infrastructure.
Walker’s plan contains numerous provisions that would directly and indirectly benefit the commercial real estate industry. Specifically, the proposed plan would encourage greater economic development and commercial real estate opportunities by:
- Cutting property taxes so that they are lower for the average commercial property owner in 2018 than they were in 2010.
- Improving the business climate by reducing income taxes so they are lower in 2018 than they are today.
- Continuing the Manufacturing and Agriculture Production Tax Credit, which provides a dollar-for-dollar state income tax credit to businesses engaged in manufacturing and agriculture. When the credit is fully phased in starting in 2016, qualifying businesses will effectively pay no state income taxes.
- Maintaining numerous other economic development tax credit and incentive programs, such as the Qualified New Business Venture Program (which provides a 25 percent tax credit to investors who invest in new business ventures), the transferability of tax credits (which allows businesses planning an economic development project to transfer tax credits to another if jobs or economic growth and investment result); the $100 million venture capital fund.
- Expand worker training programs by targeting dual enrollment programs, collaborative projects that have private partners to spread the cost and increase successful employment, and expanding technical college programs that fill high need fields.
- Continuing to streamline government regulations to create more efficient and predictable permitting processes.
- Continuing to invest in infrastructure and roadways to improve the transportation of products and resources throughout the state.
Over the next two months, Governor Walker will be promoting the plan as part of his 2014 election campaign. While many details of the plan have yet to be made available, additional information about various initiatives will likely be released soon.
TIF Study Committee Considers New Changes to Law
Over the last several months, the Wisconsin Legislative Council’s Study Committee on the Review of Tax Incremental Financing (TIF) has been meeting to discuss possible modifications to Wisconsin’s TIF law. The committee has heard testimony from invited speakers with various public and private sector backgrounds who have shared TIF success stories, problems with the current law, and a number of suggestions to both expand and limit the use the TIF.
At the last meeting on September 10th, the committee achieved consensus on a number of proposed changes including to maintain the flexibility of the current “but for” test (one of the essential findings required to create a TIF district), maintain the current definition of “blight” (another essential finding for some TIF districts), and to increase the 12% cap on the total equalized value of taxable property within the municipality, which has affected a significant number of communities in Wisconsin (according to the Wisconsin Department of Revenue, approximately 25% of Wisconsin communities have reached or exceeded this 12% cap).
The committee will meet several more times before wrapping up their discussions and producing a final report that will contain a list of suggested changes to the TIF law for the legislature to consider when the new legislative session begins in January 2015.
NAIOP-WI will continue to monitor the activities of the committee and provide suggestions and feedback on the various proposals.
Tax Extender Deal Possible Post Elections
Almost a year after bipartisan tax provisions important to business expired, Senate Finance Committee Chairman Ron Wyden (D-Oregon) and House Ways and Means Chairman Dave Camp (R-Michigan) are signaling that a deal restoring some of the popular provisions for one year – a so-called “tax extenders” bill, may be in the works after this fall’s congressional midterm elections.
In April, the Senate Finance Committee passed S. 2260, legislation that would have extended expired tax provisions, including 15-year qualified leasehold improvement depreciation, New Markets Tax Credits, and others, through 2015. That bill stalled on the Senate floor mainly over disagreements on amendments. The House passed several bills making certain provisions permanent, but these failed to be taken up by the Senate. With little time remaining on the legislative calendar for 2014, Wyden has made it clear that he will no longer push S. 2260.
As both chairmen work to negotiate the details of a one-year deal, the House is expected to vote this week on a package of both new and previously-passed economic measures, including HR 4718, which would make permanent the bonus depreciation tax extender.
NAIOP’s government affairs team continues to meet with elected leaders and their staffs in an effort to find agreement on tax extenders legislation that would renew 15-year qualified leasehold improvement depreciation, bonus depreciation, and other provisions important to the commercial real estate industry.