Photo by Michelle Stocker, The Capital Times

Gov. Scott Walker is proposing to let the Wisconsin Economic Development Corp. give out business loans again after the current budget phases out WEDC’s main loan program.

WEDC is still currently authorized to issue loans under its Business Opportunity Loan Fund, though that authority will go away in June under the 2015-17 budget.

Walker’s budget proposal would establish a loan program at WEDC and require the agency to use money it’s already recovered instead of pumping new state dollars into the program, giving WEDC officials “a real incentive to recoup” dollars it loans out, Walker said Monday.

But Joint Finance Committee co-chairs Sen. Alberta Darling and Rep. John Nygren said they’re waiting on Legislative Audit Bureau papers on the guv’s budget as well as feedback from WEDC to weigh in on the proposal.

Nygren, R-Marinette, said he looks forward to hearing WEDC “make the case for why this loan program is needed.”

And Darling, R-River Hills, noted it’s important to know how WEDC would be “responsible” and “accountable” with the loans, and added it’s necessary to review the LAB papers on the budget.

WEDC Secretary and CEO Mark Hogan has previously said he’d be open to re-establishing the agency’s loan program. He said WEDC was pleased to see the loan program included in the guv’s budget.

“It provides us with additional flexibility as we work with businesses seeking to grow in Wisconsin and complements our other economic development programs,” Hogan added.

WEDC’s technology loan program is still in place, but the agency is in the process of phasing out its Business Opportunity Loan Fund. Lawmakers decided to phase out the program after audits and news reports highlighted questionable loans the agency gave out and criticized its management of the program.

WEDC spokesman Mark Maley noted that WEDC has made “significant improvements in its underwriting and monitoring of loans since the organization’s early days,” and he added it continues looking for ways to improve.

Walker said because his proposed loan program will not use new state money, but dollars WEDC has already brought back in, it encourages the corporation to “recoup dollars.”

“So it gives them a real incentive to recoup dollars, to make sure the dollars are not forgivable but rather dollars that go into producing the number of jobs and the type of capital investment that are warranted in the program,” Walker said.

The guv’s budget item would also prohibit WEDC from offering forgivable loans, a provision Darling said she agrees with. She added that when WEDC was first formed out of the old Commerce Department in 2011, the transition resulted in WEDC inheriting a profile of loans that “was not desirable.”

Walker’s WEDC budget also calls for limiting the historic rehabilitation credit.

His two-year plan calls for annual awards under the historic rehab tax credit to $10 million, and awarding them on a competitive basis.

In addition, Walker’s plan would:

*Allow WEDC to reallocate expired or decertified enterprise zone tax credits. These coveted credits are designed to create incentives for existing business expansion or relocating major business operations to Wisconsin. WEDC spokesman Mark Maley said the agency is currently conducting an analysis of its existing zones to see when they expire and the “potential impact of the governor’s proposal on this program.”

*Require WEDC to continue its Fab Labs grant program at $500,000 in each year of the biennium. Walker touted that provision in his rural schools budget announcement early this month. The program supports science, technology, engineering, arts and math education in public school districts.

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