Milwaukee Biz Blog

Tom Barrett has implied that he would not remove his children from their Milwaukee schools if he were to run for governor and that he would want to spend some time in Milwaukee if he was elected. I suggest that not only could this be a good idea for the governor, it would be a great idea for the rest of the elected state officials as well.

Spending time outside Madison would allow our legislators to spend more time in their districts talking to local businesses, having coffee with seniors, getting involved with the local schools, and getting to know the real problems and the real opportunities in their districts throughout the state.

I have served on a school board, city council, or as mayor of a community in this state almost continuously since 1982, and I can count on one hand the number of times an elected official actually came to a meeting or sat down to talk with the local elected officials. I have seen countless pieces of legislation passed that would have no doubt benefited from the input of these local officials.

Specifically, the qualified economic offer (QEO) for teachers, tax incremental financing (TIF) laws and many of the grants and loans for business all slightly missed their intended mark. Just a little insight could have prevented errors that have had to be fixed or have cost the state real tax dollars, new business or great teachers.

Wisconsin was founded on the ideal of a part-time legislature in touch with their respective communities. While legislators retain residences in their district, the "in touch" factor is, in most cases, simply not there

Ken Harwood is an alderman for the city of Verona, a former mayor of Neenah and a member of the Neenah School Board. He currently edits the WisconsinDevelopment.com newsletter and maintains the FutureWisconsin.com websites.

Gov. Jim Doyle will not seek a third term in office. I am not sure what that means for the state, but I do know we need to focus on jobs and the economy as we move forward. Before you think this will become partisan, I should also suggest that no party has a lock on the pro-business economy. In fact, the most successful times in recent history were when no one party was in control.

Let's look at the Clinton years. A strong conservative influence in the House and Senate offset the pressure for a more liberal agenda from the White House. We ended up with less spending, a balanced budget, stable taxes and a pretty fair environment for business.

When one party comes into power, either party, we see deficit spending, programs that are rushed to implementation, partisanship of the worst kind and policy that caters to the next election instead of the best interest of the country. This is true at both the federal and state levels. When an agenda can be moved forward without the benefit of negotiation and compromise, the electorate looses. Finally, frustration sets in and the pendulum swings in the other direction.

This will not change, but an open election does provide us with an opportunity to move forward a pro-business agenda. Again, not a Republican or Democratic agenda, but a level playing field that allows businesses in the state to grow and thrive.

Here are a few basic ideas we should ask our candidates to consider:

A balanced budget
Deficit spending places demand on future budgets and creates an unstable environment for business. Even when programs are pro-business, companies are concerned about an unstable tax future. When some suggest that Wisconsin is a high-tax state, the numbers for business suggest we are not even in the top 10, but business remains concerned that taxes in the state are a moving target. Deficits and instability may be worse than higher taxes.

Prioritized spending
We often look at each program we fund with tunnel vision. A program that seems great may not look as good if we actually see the other programs that have to be shelved to pay for it. Of course, the solution now is often to fund both, (see rule one). I have rarely heard of cost justification when considering government spending. In fact, I am not sure the legislature even has a way to measure the success, or lack there of, of the programs they fund.

Spend one-time money once
This one drives me crazy. A state gets a $ 1 million to improve a program. The state hires 20 new employees. In year two of the program, we still have the employees and no money to pay for them. Of course, more recently we have seen one-time stimulus monies spent on already funded programs to shift funds for other uses (see rule one).

Offer regional solutions
The state must allow and encourage communities to work together to secure business. Regions need to provide incentives, infrastructure and transportation to secure new companies and support the growing ones. Wisconsin will never have a Silicon Valley as long as we are pairing community A against community B in the competition to secure companies. In fact, in the most recent battle for IBM, the winner was Dubuque, Iowa (1,300 jobs, adaptive reuse of a historic building and proximity to the university). How depressing is that?

Remember the horse you rode in on
Wisconsin has led the country in the production of milk, paper, beer, cheese and corn, among other thinks. We have recently lost beer and milk, we will loose paper and cheese is at risk. While bio, technology and ethanol sound good, it makes little sense to chase these while losing the businesses that have made the state strong in the first place.

Conclusion
Politicians tend to work with those who make reasonable suggestions and offer real solutions. While I was working on a campaign a few years back, the candidate told me that he listened to people with money but he worked with those who had good ideas. I think we need to offer good ideas in the upcoming election and support the candidates who seem to be working with us.

Ken Harwood is the editor of Wisconsin Development News and founder of The FutureWisconsin Project. He is also the former mayor of Neenah and is currently an alderman in Verona. He is a member of the Madison Area Transportation Planning Board.

There are four things in the economy that the federal government has failed to stimulate.

Retirement funds
Babyboomers are now in their 60s. They were ready to retire and return to their hippie, free spirit lives of the past, creating tens of millions of jobs for the generations replacing them, and millions more jobs for those who cater to their dreams of beaches, travel and multiple homes. They woke up this year to IRAs, pensions, and investments reduced by as much as half. They now have no faith in a Social Security system that now must be on the very bottom of the legislative to do list. Finally their last remaining perk, subsidized health care, will soon be shared by everyone. Where are the tax incentives for those who want to retire but lost huge sums in the markets?
Their solution: I'll work a few more years. No new jobs, no spending, no investment and we can't really blame them.

Mortgages
Our stimulus was quick to come to the aid of lenders who made less than brilliant loans to consumers they convinced to buy more home than they could afford. Now we guarantee or forgive their debt and make even more low cost capital available to them. Why then did we not ask these same lenders to show the same compassion to the same people they made the loans to in the first place? Where are the laws asking these institutions to allow people to stay in the homes, they said they could afford, at least until there is some hope on the horizon?
Their solution: Foreclosure, foreclosure, foreclosure. Screw them, they are the problem, not us. We'll take their home sell it for pennies on the dollar, and mess up the housing market. Oh, and don't come to us asking for a loan unless you already have money. The wounded - shoot them.

Employment
Our government has poured billions into automotive companies seeking to stay afloat and promising to "tighten their belts." These companies then immediately, same press release in fact, laid off tens of thousands of workers. Belt tightening is a 20-percent, across the board pay reduction. You know, every employee. Firing tens of thousands is taking off your belt and throwing it over a tree branch. Where is the federal carrot that says keep your workers employed and we'll help build an economy that needs new cars again?
Their solution: small and lean means return to profit, and less mouths to feed means more food for the rest of us. The reality is unemployed workers fan the fire of economic chaos. New cars: Who needs them?

Consumer debt
Our government has said banking officials receiving stimulus monies must cap their salaries at $500,000. Yet our government turned a blind eye to the same banks charging the $37,000 a year health care worker 28-percent interest on her credit card debt and $39 late fees because she gets paid on the first and they want their money on the 27th, and that date is a moving target. Where was the provision in the laws restricting penalties and interest charged to the consumer?
Their solution, we need the 28-percent because so many people default on their debt. Well duh, you were unable to make payment on loans with interest rates in the sub 3-percent range. Not to get scriptural here but "do unto others." Consumer stimulus - not our problem.

I am not against revitalizing our economy, but to do it, we need to put politics aside and look at the problem from the bottom up. Consumers and employment come first. Companies and institutions second. We need to stop worrying about Rick's corporate jet and start worrying about Tom's 1997 Malibu.

Ken Harwood is the editor of Wisconsin Development News and founder of The FutureWisconsin Project. He is also the former mayor of Neenah and is currently an alderman in Verona. He is a member of the The Madison Area Transportation Planning Board.

Forbes Magazine just ranked the "Best States For Business," and I for one am outraged at the 44th-place ranking Wisconsin received.

And before we all point the proverbial finger at someone else for this, we need to take a long hard look at ourselves. We are not good at doing what need to be done to attract new business to the state and promote and nurture the businesses that are already here.

How is it that the state with the 8th-best quality of life ranking (in the same article) cannot be more attractive to business? High taxes? Not really. We are up there, but so are states ranked in the top 10. Growth? Not as bad as some. Production? Nope, we do well here.  Marketing? No, we spend a fair amount.

The numbers don’t tell the story. We do.

The real problem is that we are far better at complaining than we are at promoting. Virginia, Utah and Washington, the "leaders" and movers on the list, are committed to talking about their success stories. These states promote their quality of life, they encourage business to visit and test the waters, they respect growth and they have enlisted their existing businesses as partners in all out self-promotion. We seem to enlist our businesses to complain about the status quo. It now appears that other sates are hearing the message and staying away.

So, how do we fix this? Simple. First, change the message. Second, change the messenger. We cannot rely on Madison or a public relations firm to repair the damage. We need to fix this.

I issue a personal challenge to all of us. Call someone outside the state and tell them why Wisconsin is in fact a great place to do business. Then quietly call your state and local officials and tell them to prove you right!
 

Ken Harwood of Verona, Wis., is a commercial real estate broker with Park Towne Development. He is the Editor of News and Notes and www.WisconsinDevelopment.com, both electronic news outlets for economic development in the state. He also is the former mayor of Neenah and is currently a member of the Verona City Council. He may be reached at editor@WisconsinDevelopment.com.

Free tuition for all University of Wisconsin students is unrealistic for the simple fact that it raises taxes in a state whose residents, if not thepoliticians, know that it is already on the high end on the tax scale.

We can accomplish the objective, which is to keep students in Wisconsin after graduation, however, with a much better and actually workable solution.

First, the state would make student loans available to any student enrolled in the UW or the technical college systems. The loans would be made at slightly above market yet fair rates (keep reading) and would be easily available through any participating loaninstitution.

The state would fund the loans from a variety of currently available funds or simply borrow the money. Upon graduation, or leaving the system, the student would receive an annual statement based on a long-term repayment schedule.

Let's say 20 years, just for the sake of argument. Annual payments would be required or a person would be in default of theloan, so this would not be a free ride, but once again keep reading.

Finally, students would be able to deduct the interest portion of the loan from the bottom line on their state tax return. The net effect is that students would be able to attend UW or state technical campuses and would have 20 years to repay the state interest-free, as long as the student wasan employee in the state and paid state income tax.

The cost to the state would be the interest on the original loan. This brings me back to the above-market rate used to establish the loans. A student leaving the state would be repaying the state at a higher rate than the actual cost of the loan and thus subsidizing the loan of the student who remains in the state.

This is not a no-cost option, but exponentially less expensive than the free tuition option. It benefits all Wisconsin students not just a select few and it providesneeded new revenues to the university and tech systems in the state.

The incentive to remain in the state after graduation would be high and the real opportunity for our students to pursue a post-secondary education would be exceptional.

Verona City Councilman Kenneth Harwood is a sales and marketing executive for Conservancy Place, a multi-use development planned by Park Towne Corp. in Madison. He also is the former mayor of Neenah and a former local government liaison to the governor. Additional information is available at www.conservancyplace.com.