March 24, 2021
I would like to thank the Committee on Economic and Workforce Development and Chairman Feyen for inviting me to testify today.
I last appeared before you when I was just a few weeks on the job, almost 17 months ago. Since that time, I have learned an incredible amount about WEDC, and its role in developing Wisconsin’s economy. Of course, in the past year, Wisconsin was swept up in the COVID-19 pandemic, and we have learned even more about what is critical for a functioning, strong, resilient economy.
Today, I want to review WEDC’s traditional programming, and then review what we did in the last year in response to the pandemic. Finally, we can discuss how we move forward into economic recovery.
As the state’s lead economic development agency, WEDC works to keep Wisconsin’s economy thriving. We support our industries, businesses and communities, help to make projects a reality, initiate entrepreneurship and innovation and educate Wisconsin’s companies on how to expand into global markets. Most importantly, WEDC is working throughout the state, with our own regional economic developers, and the incredible network of local economic developers in communities and counties.
WEDC’s programs, where we invest taxpayers’ dollars, fall into three broad categories. The first category, tax incentives support our larger businesses and manufacturers making major capital and job investments. The second category assists community projects to revitalize areas and businesses seeking to grow their markets. And third, WEDC works with entrepreneurs steering their businesses from start-ups to maturity.
For example, in Fiscal Year 2020, WEDC staff:
- Worked with more than 34 Main Street and 72 Connect Communities to help revitalize their downtowns;
- Awarded more than $49 million in Community Development projects; and,
- Authorized more than $9.7 million in Business Development tax credits to help Wisconsin businesses expand during the economic downturn.
- Authorized more than $30.9 million in Qualified New Business Venture credits for investors in 46 businesses, provided more than $1.2 million in Capital Catalyst matching grants to organizations that help entrepreneurs, and provided $2.1 million in Technology Development Loans to tech businesses.
These figures show that even during the pandemic, WEDC continued to carry out its traditional economic development work. But given the extraordinary circumstances of the last year I want to share with you the specific support WEDC has provided to navigate our state through COVID-19.
When the pandemic started, WEDC worked to make sure Wisconsin qualified immediately for federal Economic Impact Disaster Loans so businesses would have access to emergency funds in the earliest, most uncertain days of the pandemic.
WEDC also acted quickly to reallocate internal resources and create the Small Business 2020 program, which deployed $5 million to 765 small business borrowers among the state’s Community Development Financial Institutions. Many of these were underbanked businesses who needed immediate help. Next, WEDC created the Ethnic Minority Emergency Grants, which allocated $2.2 million to 890 diverse microbusinesses in $2,500 grants.
Since then, and throughout the past year, WEDC’s service has evolved. We:
- Provided over $240 million in federal CARES Act assistance to more than 60,000 small businesses through the We’re All In grants program, including:
- $65.3 million to over 26,000 small businesses in We’re All In Phase 1 Grants
- $133.4 million to nearly 27,000 small businesses in We’re All In Phase 2 Grants
- The Phase 1 & Phase 2 grants were allocated to businesses with fewer than 20 full-time employees and less than $1 million in annual revenue.
- $40.1 million to over 2,000 small businesses in We’re All In for Restaurants Phase 3 Grants.
- $3.8 million to 227 small businesses in We’re All Innovating Contest awards.
- Developed and provided how-to guides to assist small businesses to reopen safely and protect employees, customers, and the community at large. These guides provided specific information about different types of businesses – such as restaurants, construction sites, and gym and fitness facilities. WEDC now has 17 industry-specific guides, many of which are translated into multiple languages.
- Established the Focus Forward digital platform to give small businesses trusted information to help them adapt to the new business environment.
- Added personal protective equipment to WEDC’s Wisconsin Supplier Network, helping manufacturers and users connect to get necessary safety gear.
- And WEDC created the Main Street Marketplace, an e-commerce website so shoppers anywhere can patronize more than 400 Main Street businesses around the state.
We also created the “We’re All In” campaign, first supporting public health measures, and then shifted to a “buy local” message to encourage everyone to support their hometown businesses.
This work was completely different than WEDC’s traditional work – in a typical year, WEDC makes about 300 financial awards to communities and businesses. Last year, we made more than 60,000. We accomplished our work by listening to business owners, guiding them through application processes, and teaming up with the Department of Revenue and other partners to deploy the funds. There is no way this could have happened without the work and commitment of WEDC’s dedicated staff.
However, an ongoing Harvard University study of the pandemic’s economic impact shows that the total number of small businesses in Wisconsin dropped by nearly a third between January 2020 and February of this year. This research is echoed by a survey conducted by the University of Wisconsin, Oshkosh, and by information on the ground from my regional team.
Many of these business failures were tied to the specific nature of the pandemic, which caused customers to stay away from restaurants, bars, entertainment venues, tourism-related businesses, and other public-facing businesses. Because they are most often in these sectors, many of these businesses were minority owned. Losing these small businesses is especially costly because entrepreneurship is one of the best ways to build wealth, both for individuals and for the community at large.
Long before the pandemic hit, we also knew that many rural communities faced their own challenges. The Governor, as part of his state of the state address, established the Blue Ribbon Commission on Rural Prosperity and created the Office of Rural Prosperity at WEDC. In December, the Commission issued its report, which identified challenges including an aging and declining rural population, absence of affordable housing, and lack of access to medical care. With the pandemic, the gaps in rural broadband became especially acute as work, classes, and health care all moved online. We learned that broadband is every bit as essential to our daily lives as other utilities, such as water and electricity.
Throughout the pandemic, Wisconsinites showed courage, ingenuity, and just plain grit. Businesses innovated, pivoted, and looked after their employees and customers. We saw restaurants convert overnight to curbside pickup and delivery service. We watched distilleries become experts in making hand sanitizers. Wisconsin companies found new ways to fight the COVID-19 virus, deliver training to workers online, and virtually connect students to teachers and patients to doctors.
At WEDC, economic development is ultimately about people. It’s about having the opportunity to participate in the economy and removing obstacles that keep Wisconsinites on the sidelines. It’s about making sure that Wisconsinites have the skills and abilities to work for the companies that need them to grow and thrive. And if a Wisconsinite wants to start a business, we are here to support them.
Governor Evers’ budget strongly supports our work in economic development, providing $200 million for WEDC to provide additional assistance to small businesses, targeting $10 million for diverse businesses, and $8 million supporting our community partners in economic development.
The budget also provides a $100 million venture capital fund to invest in those businesses that have already started to establish themselves but might otherwise head toward the coasts in search of much-needed growth funding. Finally, the budget incorporates recommendations of the Governor’s Blue Ribbon Commission on Rural Prosperity, most notably by providing $200 million in funding for broadband to help close the digital divide.
Over the past year and a half, I have had the opportunity to lead WEDC during an incredible time. With the support of the WEDC Board, its committees, and the WEDC staff, I believe we have met the challenge. There is much to discuss, and I look forward to your questions. Thank you for the opportunity to serve in this capacity.