On Wednesday, Feb. 12, the Director of the Wisconsin Legislative Fiscal Bureau (LFB) briefed the Assembly Republican Caucus on the status of our state's economy and its impact on our state budget. While there was some positive news about the economy in the first part of 2007, the overall picture is sobering. In short, due to the downturn in the national economy, the state is facing a $652 million shortfall. Governor Doyle, as required by state law, is expected to introduce a budget repair bill in the coming weeks.
You can find a copy of the LFB memo that I received at the briefing at the Web site: http://www.legis.state.wi.us/lfb/index.html
According to the LFB, despite the weakness in the housing market, high energy prices, and disruptions to credit markets, the national economy continued to expand throughout 2007. In addition, LFB noted the labor market was very resilient in 2007. LFB stated personal income grew by 6.2 percent compared to last January's estimate of 5.1 percent, which reflects higher than anticipated growth in both jobs and wages. That's the good news.
The bad news is that economic growth slowed significantly in the fourth quarter and the current forecast assumes that the economy has begun to contract. Positive growth is expected to resume in the third quarter of 2008, in part due to the effects of interest rate cuts and the federal stimulus package; however when the federal stimulus package wears off, economic growth is uncertain.
Now more than ever, Wisconsin residents need both sides of the political aisle to come together and work in a bipartisan fashion to fix this serious budget issue. I applaud Governor Doyle for taking a significant first step by asking state agencies to cut an additional $111 million. In addition, I am encouraged that the Governor has stated he is committed to working with the State Legislature to solve the problem without raising taxes.
Ultimately, it is important we are proactive as a state to pass a number of measures designed to stimulate economic growth. As I stated in last week's column, Assembly Republicans are reaching across the aisle and working with Governor Doyle to pass a series of family and business friendly policies, which include reforming our tax structure and providing incentives that will encourage in-state research and development.
DAIRY MANUFACTURING COOPERATIVE INVESTMENT TAX CREDIT
As you know, the economic impact of the dairy industry in Wisconsin is significant. Every year the dairy industry puts over $20 billion into our state's economy, which works out to $39,000 per minute. Throughout Wisconsin, 160,000 people are employed in the industry. Clearly, Wisconsin's dairy industry remains an engine for the state's economy.
Dairy cooperatives process nearly 80 percent of the state's milk supply and manufacture about 50 percent of Wisconsin's cheese. These cooperatives, however, face stiff national and international competition. At the same time, our cooperatives have limited equity capital, which places constraints on making major investments in new plants and equipment.
While we were successful in creating the Dairy Manufacturing Facility Investment Tax Credit in the 2007-09 state budget, cooperatives are not able to take advantage of this investment incentive because they are tax exempt organizations, and the current credit cannot be passed through to the cooperative's producer members.
Therefore, I have introduced Assembly Bill (AB) 763, which will allow members of a dairy cooperative to claim the Dairy Manufacturing Facility Investment Tax Credit for modernization or expansions of the dairy cooperative's processing plants.
It is anticipated that providing this tax incentive for the producer owners of cooperatives has the potential to spur the building of a new commodity cheese plants and significant reinvestment in the modernization of current cooperative dairy production facilities so they can continue to compete in the global marketplace, create higher wages for their employees and more income for farm families that supply their milk.
AB 763 is swiftly making its way through the legislative process. The bill has already passed through the Assembly Agriculture Committee, with a unanimous 10-0 vote in favor. I will continue leading this bill forward, along with other measures designed to stimulate our economy.
- Wisconsin State Rep. Brett Davis, R-Oregon, serves the 80th Assembly District, which includes all of Green County and portions of Rock, Dane and Lafayette counties.
You can find a copy of the LFB memo that I received at the briefing at the Web site: http://www.legis.state.wi.us/lfb/index.html
According to the LFB, despite the weakness in the housing market, high energy prices, and disruptions to credit markets, the national economy continued to expand throughout 2007. In addition, LFB noted the labor market was very resilient in 2007. LFB stated personal income grew by 6.2 percent compared to last January's estimate of 5.1 percent, which reflects higher than anticipated growth in both jobs and wages. That's the good news.
The bad news is that economic growth slowed significantly in the fourth quarter and the current forecast assumes that the economy has begun to contract. Positive growth is expected to resume in the third quarter of 2008, in part due to the effects of interest rate cuts and the federal stimulus package; however when the federal stimulus package wears off, economic growth is uncertain.
Now more than ever, Wisconsin residents need both sides of the political aisle to come together and work in a bipartisan fashion to fix this serious budget issue. I applaud Governor Doyle for taking a significant first step by asking state agencies to cut an additional $111 million. In addition, I am encouraged that the Governor has stated he is committed to working with the State Legislature to solve the problem without raising taxes.
Ultimately, it is important we are proactive as a state to pass a number of measures designed to stimulate economic growth. As I stated in last week's column, Assembly Republicans are reaching across the aisle and working with Governor Doyle to pass a series of family and business friendly policies, which include reforming our tax structure and providing incentives that will encourage in-state research and development.
DAIRY MANUFACTURING COOPERATIVE INVESTMENT TAX CREDIT
As you know, the economic impact of the dairy industry in Wisconsin is significant. Every year the dairy industry puts over $20 billion into our state's economy, which works out to $39,000 per minute. Throughout Wisconsin, 160,000 people are employed in the industry. Clearly, Wisconsin's dairy industry remains an engine for the state's economy.
Dairy cooperatives process nearly 80 percent of the state's milk supply and manufacture about 50 percent of Wisconsin's cheese. These cooperatives, however, face stiff national and international competition. At the same time, our cooperatives have limited equity capital, which places constraints on making major investments in new plants and equipment.
While we were successful in creating the Dairy Manufacturing Facility Investment Tax Credit in the 2007-09 state budget, cooperatives are not able to take advantage of this investment incentive because they are tax exempt organizations, and the current credit cannot be passed through to the cooperative's producer members.
Therefore, I have introduced Assembly Bill (AB) 763, which will allow members of a dairy cooperative to claim the Dairy Manufacturing Facility Investment Tax Credit for modernization or expansions of the dairy cooperative's processing plants.
It is anticipated that providing this tax incentive for the producer owners of cooperatives has the potential to spur the building of a new commodity cheese plants and significant reinvestment in the modernization of current cooperative dairy production facilities so they can continue to compete in the global marketplace, create higher wages for their employees and more income for farm families that supply their milk.
AB 763 is swiftly making its way through the legislative process. The bill has already passed through the Assembly Agriculture Committee, with a unanimous 10-0 vote in favor. I will continue leading this bill forward, along with other measures designed to stimulate our economy.
- Wisconsin State Rep. Brett Davis, R-Oregon, serves the 80th Assembly District, which includes all of Green County and portions of Rock, Dane and Lafayette counties.
