Wednesday, June 04, 2008

Let's talk business

State Senator Ted Kanavas takes a look at a study of the business climate in the Milwaukee area and the gap in the recognition of the problem.

It’s Always Darkest before It’s Totally Black

Will the last business in Milwaukee please turn out the lights? Just when we thought the news about the business climate in Milwaukee and, by extension, southeastern Wisconsin couldn’t get any worse, it gets worse.

Last week, the Lakeland College Center for Economic Education released a study showing that only 49 percent of the Milwaukee businesses surveyed ranked the community’s business climate as “very favorable” or “favorable”. Other cities in the study used for comparison purposes were Denver (75.5%), Green Bay (73.8%) and Raleigh-Durham/Chapel (RDCH) Hill, North Carolina (77.5%).

The news is equally bad at the other end of the spectrum, with 27 percent of Milwaukee businesses describing the business climate as “unfavorable” or “very unfavorable”. This compares to 11.2% in Green Bay , 9.5% in Denver and 8% in RDCH.

If those statistics haven’t scared you, this one should. Nearly one in five Milwaukee businesses have considered moving out of the city because of the unfavorable regulatory or business climate. Green Bay was second at 14%, compared to only 10% in RDCH and 8.5% in Denver .

If the business community is this upset about life in Milwaukee , then community and state leaders must know about it, right? According to the study’s authors, the disconnect between the business owners’ perceptions and the perceptions of elected officials is one of the main reasons for the bad business climate in Milwaukee .

The study’s authors surveyed the aldermen in Milwaukee and more than half of them cited low fees and cost compliance as a reason to do business in Milwaukee . High cost compliance was most frequently cited by businesses as a problem for those doing business in the city.

None of the aldermen thought government regulation was a serious problem for businesses in the city; 23.5% of the businesses thought it was a “very serious” problem. 36% of the businesses disagreed with the statement that Milwaukee goes out of its way to create a favorable business climate; only one alderman disagreed with that statement.

The study includes suggestions about how to improve this situation, but doesn’t really identify the problem with the business climate in Milwaukee and in Wisconsin as a whole. Mayor Barrett and Governor Doyle and their pals in state and local government see business as a never-ending source of tax revenues and continue to heap expensive regulation on the backs of businesses that can barely make it as it is.

The Democrats in Madison and Milwaukee fail to realize that the only way we are going to reverse our spiraling economy is to encourage Wisconsin businesses to stay here, grow new businesses organically and attract businesses from other states and countries. These businesses provide much-needed jobs and capital for an economy that has been flat-lining for a few years now.

A perfect example of how incentives for business can work is the film industry tax credit that recently became law in Wisconsin . Because of that tax credit, millions of dollars in new revenue have come to the state and the program has just gotten started. Since it is a tax credit, the state doesn’t lose any income, it merely earns less new income than it would have without the tax credit. Of course, without the tax credit, the film companies would have taken their business elsewhere.

Who opposed these innovative business incentives? Democrats in Madison kept them from being enacted more quickly and possibly attracting more film business to the state, costing us millions of dollars. Why did they oppose the business tax credits? Fundamentally, they do not believe in giving businesses a break and they do not understand the critical need for economic growth. They do not understand that incentives bring business to the state that would otherwise not be here, providing new jobs and revenue when we desperately need it.

The film industry tax credit model works for a variety of business types if we are forward-thinking enough to employ it. Businesses are telling the Democratic elected officials in Milwaukee and Madison that there is a serious problem. Republicans in Madison showed the Mayor and the Governor how to solve the problem. Are they going to lead, follow or get out of the way? Wisconsin cannot afford to wait much longer for them to figure that out.

Blog Note from JW: The Wisconsin Policy Research Institute has a five step plan for turning around the economy in southeastern Wisconsin.
1. Increase the Flow of Capable Workers Into High-End Manufacturing.

2. Increase the Number of High School Graduates

3. Increase the Number of College Graduates

4. Lower the Crime Rate in Milwaukee

5. Increase the Downtown Milwaukee Population

You can join in the discussion over at the Wisconsin Institute for Leadership, too.