Dissent in the WMC Ranks?

The Cap Times had an interesting article yesterday on the growing politicization of the corporate lobby group, Wisconsin Manufacturers and Commerce (WMC).

I've discussed before how many business leaders don't cite taxes as their biggest concern, or even close to their biggest concern, although it's clearly the biggest message coming out of the group that claims to represent their interests.

In a WMC survey last spring, for instance, taxes landed 7th on the list of business concerns behind health care costs, competition, labor shortage, energy, regulation, and economic slowdown. Similarly, a recent survey of biotech companies in Wisconsin listed skilled and educated workers, access to university research, health care costs, and access to investment capital as the top concerns; taxes didn't make the list.

And, in February, Northwestern Mutual Life CEO Edward Zore surprised an audience of business leaders in Milwaukee when he told them: "Taxes for us are not bad."

In yesterday's Cap Times article, a similar sentiment was struck by one of WMC's own board members. According to Randy Smith, president of City Brewing Company in La Crosse, "Sure, taxes are important but they don't make or break us."

Also at issue was the way WMC has a knack for trashing the state's business climate -- which it ties entirely to taxes via rankings by the right-wing Tax Foundation -- while ignoring many of the positive aspects that make doing business and living in Wisconsin viable options. To be sure, when a variety of economic factors are considered, Wisconsin actually ranks as one of the top states for business performance, vitality, and development capacity.

WMC's leadership claims it's not supposed to be a cheerleader for the state, but there's a lot of reasonable middle ground between cheerleading for the state and trashing it. And considering the group's extremely deep pockets, what makes WMC's tunnel vision rhetoric so destructive is that it distracts the state from tackling public policy issues that could significantly help Wisconsin businesses.

With some of those issues -- such as health care reform and investment in university research -- just around the corner in Wisconsin politics, the question becomes: How much more of the WMC trash are members going to be willing to take?

What Really Worries Wisconsin Businesses

Edward Zore -- the CEO of Milwaukee's largest private employer, Northwestern Mutual Life -- recently took the stage in front of other business leaders and told them that if his company was looking for a place to relocate from another city, Milwaukee would not be high on the list.

Once those lines were uttered, much of the audience was surely thinking: Taxes.

But, as the Journal Sentinel explains, "Unexpectedly for many, Zore repeatedly downplayed Wisconsin's tax burden as one of the impediments." "Taxes for us," Zore told the group, "are not bad."

So what are the impediments? While Zore didn't get into too many details, the relative low number of Milwaukee area residents with college degrees was a point he did stress.

Adding to the answer is a recent survey of 68 biomedical firms in the seven-county Milwaukee area. Top issues on the list were skilled and educated workers, access to university research, health care costs, and access to investment capital. Conspicuously absent from the list is taxes.

This news actually fits well with a similar survey completed by the state's corporate lobby group, Wisconsin Manufacturers and Commerce, last spring. This survey was given to 600 manufacturing CEOs in the state, and when asked about "the top business concern facing your company," the executives responded with the following order:

1. Health care costs (35 percent)
2. Competition (16 percent)
3. Labor shortage (12 percent)
4. Energy (10 percent)
5. Regulation (9 percent)
6. Economic slowdown (9 percent)
7. Taxes (6 percent)
8. Other (2 percent)
9. Lawsuit abuse (1 percent)

While there is little doubt that there are some businesses in the state that would place taxes high on the list of concerns, it's clear from these surveys and comments by executives like Edward Zore that taxes are low on the list of concerns for many.

Surveys of the general Wisconsin public often show taxes higher on the list of concerns, but, depending on who's doing the asking, it's not necessarily the highest. According to the right-wing Wisconsin Policy Research Institute, taxes are at the top of the list with 26 percent followed by health care with 16 percent and education with 14 percent. On the other hand, according to the left-wing One Wisconsin Now, health care tops the list at 45 percent, taxes and the economy/jobs are tied for second at 34 percent, and education is third with 31 percent.

What makes all of this important to note is that, if you listen to the state GOP rhetoric, you'd think there was no more pressing or important issue for any business, individual, or family in the state than taxes -- by a long shot. This rhetoric, in turn, drives public policy attention toward that issue and, subsequently, away from others like education and health care that are actually of more concern to most state businesses and at least as much concern to the rest of the public.

To be sure, during the last legislative session over 14,000 hours were spent lobbying on the so-called Taxpayer Protection Amendment. That's over 6,000 hours more than the second heaviest lobbied bill of the session and 9,000 more than the third.

And one night toward the end of the session, our state Assembly spent the entire night -- literally -- trying to find a version of the amendment that was suitable enough for moderate Republicans to support, only to have that version and the original soundly rejected in the GOP-controlled state Senate.

Around the same time as the TP amendment all-nighter, state Sen. Russ Decker (D-Schofield) and Rep. Terry Musser (R-Black River Falls) announced a comprehensive health care reform package designed specifically with employers and employees in mind.

But while the fledgling TP amendment continued to grab front page headlines and take up time at the Legislative Fiscal Bureau -- which was even able to dedicate an entire section on its website to all of the analyses it did of the amendment -- the Decker/Musser bill touched off articles in only two newspapers in the state, the Capital Times and the Wausau Daily Herald.

None of this is to say that public revenue, in any form, shouldn't garner policy or press attention, but rather the amount of attention it has generated in the past is not on par with the level of concern that exists in the state, at least in relation to other issues that are at least as important.

And much of the attention is being driven by incessant GOP rhetoric that should be, ideally, toned down or, if necessary, neutralized by an equally incessant level of Dem noise on the issues that actually top the list of business concerns and those that share the top of public concerns.

Wisconsin Makes the Honor Roll!

Take that, WMC!

Countering the right-wing claims about how bad Wisconsin is for business, the (truly) nonpartisan Corporation for Enterprise Development (CFED) recently ranked Wisconsin as one of the top states in the country for performance, business vitality, and development capacity.

The differences between the business rankings by the CFED and the business rankings by the Tax Foundation, a favorite of conservatives, couldn't be starker.

While Wisconsin is ranked 38th in the country in the Tax Foundation rankings, it's ranked 7th for performance, 18th for business vitality, and 16th for development capacity in the CFED rankings. While Wyoming is ranked 1st in the Tax Foundation rankings, it's ranked 15th/45th/25th in the CFED rankings. While Alaska is ranked 3rd in the Tax Foundation rankings, it's ranked 42nd/48th/43rd in the CFED rankings.

You get the idea.

So why the big differences?

The easy answer, of course, is methodology. The Tax Foundation, predictably, focuses solely on taxes. The CFED rankings, on the other hand, take into account a number of factors such as average annual pay growth and greenhouse gas emmisions on the performance side, manufacturing investment and start-up business job creation on the business vitality side, and energy costs and patents issued on the development capacity side.

In other words, while the Tax Foundation looks at one factor and makes assumptions (or, more accurately, others make assumptions) about how that impacts business performance, the CFED rankings rate how businesses are actually performing in the states and how they are poised to perform in the future.

To be sure, if the Tax Foundation rankings were simply used for what they are -- a tax ranking -- that would be fine. Who can fault them for doing what they set out to do?

But that's not the only way the Tax Foundation rankings -- and others like it that focus solely on taxes -- are used. Instead, these rankings are used as rhetorical ammunition to help craft public policy.

"High taxes are driving businesses out of the state!" went the common charge during the (second) TABOR drive last spring. While TABOR failed miserably (twice, I might add), it's bound to be back at some point. And, in the meantime, corporate lobby groups like WMC will continue to use business tax rankings to push special interest policies under the threat that businesses won't be able to survive in the state without them.

What's most unfortunate is that these tactics derail public policy from focusing on initiatives that would really help business in the state such as comprehensive health care reform and putting state resources into creating more university spinoff companies.

The latter, it just so happens, is one of the areas that the CFED study found Wisconsin could use significant improvement. And it's not that the opportunities for improvement aren't ripe for the picking in Wisconsin -- they are.

For Madison, improvement means opening the gates on stem cell research. For Milwaukee, improvement means committing funds to Chancellor Santiago's research initiative. For Stevens Point, improvement means putting resources into promising research on developing and manufacturing alternative energies from renewable resources like wood chips.

Indeed, when the Journal Sentinel covered a study that exposed the growing economic disparities between Madison and Milwaukee, just about everyone agreed -- including a researcher from the Wisconsin Taxpayer Alliance, which published the study -- that what helps Madison get a big leg up economically is the UW.

The same could be true throughout the state. After all, Wisconsin has one of the most highly rated public university systems in the country. There's absolutely no reason the state should rank so low in university spinoffs; but, the fact remains, the UW hasn't received a lot of fiscal love from the state legislature in recent years (I even heard GOP legislator Alberta Darling say that very thing recently).

Now, if this post turns out like others like it, at least one anonymous commenter will read this section and claim that I'm advocating a tax increase. That's not true. What I'm talking about here is prioritization.

Heading into the '07-'09 budget process, for instance, the state will be dealing with accounting for millions of dollars in new tax breaks that were promised in the last legislative session. And most of these tax breaks are not the kind that will help you and me, but rather the kind that the Recess Supervisor astutely called "boutique tax credits and exemptions" in a recent post. In other words, they're special interest handouts.

Perhaps this upcoming budget cycle is shot because of these promises that already have been made. But when it's all said and done, and the regular business of the legislature kicks into gear, the special interests will again come with their hands out for more.

And, when that happens, let's hope our elected officials are looking at the most appropriate studies in terms of our state's business needs.

UPDATE: The WMC line, from WisBusiness: " 'But this sounds like it is weighted more toward quality of life factors rather than hard economics,' [a WMC spokesperson] said, noting that the WMC will continue to push for lower taxes as well as regulatory and liability reform."

Sorry, WMC. These measures include quality of life factors and hard economics; and, if anything, it's weighted toward the latter, regardless of how good news "sounds" to your organization.

LATE UPDATE: Sen. Mary Lazich (R-New Berlin) peddles the latest Tax Foundation rankings for 2007.