Venture Capital Bill Should Be Delayed Until Evidence of Job Creation Produced
Under the guise of job creation, the State Senate is poised to pass Venture Capital Legislation (SB 169) on Tuesday. The companion bill (AB 181) has already passed the Assembly.
Statewide Under the guise of job creation, the State Senate is poised to pass Venture Capital Legislation (SB 169) on Tuesday. The companion bill (AB 181) has already passed the Assembly.
Despite public statements by supporters of the bill that the investment areas were chosen based on job creation potential, open records requests by Citizen Action of Wisconsin to the primary legislative authors have produced no documents indicating the economic basis for these decisions. Citizen Action is calling for a delay in Senate consideration until a solid economic basis for this substantial investment of public dollars is made available.
“We are reasonably proposing that the Senate should not make large investments of public job creation dollars without a solid economic basis that has been shared with all Legislators and the public, ” said Robert Kraig, Executive Director of Citizen Action of Wisconsin. “Legislators and the public have a right to know whether there is a documented economic basis for investing $25 million dollars of taxpayer money with a private fund manager, ” continued Kraig.
“This venture capital legislation has received great fanfare from elected officials of both parties, corporate lobbyists, and various self-described “entrepreneurs” hungry for public dollars to underwrite their various business plans, said Jennifer Epps-Addison, Economic Justice Director for Citizen Action of Wisconsin. “Yet ask any of the legislative promoters of this approach, and not one of them can tell us just how many jobs they expect a venture capital fund to create,” continued Epps-Addison.
There has been wide speculation about the job creation potential of venture capital programs. For example, in a Milwaukee Journal Sentinel opinion editorial dated May 25, 2013, Steve Lyons, President of the Wisconsin Growth Capital Coalition, identified several factors that led to the selection of particular industries and employment sectors included in AB 181 / SB 169. Specifically, the Lyons states, “These sectors were selected for a combination of reasons that include current industry investment trends, “speed-to-market” prospects for companies, short-term job creation prospects, possible return on investment for the state and other limited partners in the fund, and the size of the fund itself.”
However, none of the research that supposedly supports this legislation has been made publicly available, despite specific open records requests by Citizen Action of Wisconsin.
Citizen Action sent open record requests the bill’s authors Senator Darling, Senator Cullen, Representative Kuglitsch, and Representative Clark to determine what information and research sponsors used to draft the legislation. Specifically the author’s were asked to provide, “All information your office (and/or LRB) completed or received on current industry investment trends, “speed-to-market” prospects for companies, short-term job creation prospects, and possible return on investment for the state and other limited partners in the fund as it relates to each industry selected.”
None of the authors thus far have been able to provide any tangible evidence of the venture capital fund’s job creation potential.
“The sponsor’s of this legislation have failed to provide any evidence that the public’s $25 million dollar investment will create a single job, despite a detailed open records request asking for this information,” stated Epps-Addison.
“Absent evidence of job creation potential, this legislation looks like just another corporate give away. AB 181 / SB 169 contains no requirement that investments be made in businesses or industries likely to produce a large number of jobs, let alone good jobs. In fact, job creation is never identified as the primary goal of the venture capital fund. To be good stewards of public resources, the Senate should hold all venture capital legislation until its job creation potential can be clearly demonstrated,” continued Epps-Addison.
“At a time when so many Wisconsin families are struggling to find good jobs, the Legislature has a moral obligation to ensure that scarce public resources for job creation are utilized to expand economic opportunity and security to the greatest number of Wisconsinites,” said Robert Kraig. “Until members of the legislature can back up their assertions with facts, we should not invest $25 million dollars of the public’s money in this scheme,” continued Kraig.
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