Economic Summit II - Remarks and Speeches

Wisconsin's Economy at the Crossroads:
Building Higher Paying Jobs for the Future

November 26-27, 2001
Midwest Express Center, Milwaukee

Summit Close: Economy at the Crossroads
Jay L. Smith, President
UW Board of Regents
November 27, 2001

I want to add my thanks to the participants and organizers of this year's summit.

At last year's summit, we laid the groundwork for these past two days. The challenge has been to turn that talk into action, and it's starting to happen.

At the outset of this year's summit, we expressed five objectives:

The First objective was to report on what's been done since the December of 2000 - Summit I.
That has been done and done very well. We have learned a great deal over the past two days. Public attention is now focused on Wisconsin's economy so we anticipate that much more will be accomplished.

The Second objective of this summit was to identify a series of benchmarks by which we can measure our goals and progress. We need to be specific and the goals should be ambitious but achievable. David J. Ward and the GMC panel, as well as others, have suggested what some of those benchmarks might be.

There are five benchmarks I strongly suggest we focus on. Our benchmarks and goals should be measurable whenever possible.

Number One. Per Capita Income - as a benchmark goal.

Wisconsin's per capita income is $1400 below the national average. Our goal should be to grow that figure to meet and exceed the national average. Consistent with this goal was our theme for this meeting -- growing higher income jobs for the state. Per capita income is a critical benchmark.

The Wisconsin Technology Council has identified this benchmark with a goal of improving the state from a ranking of 30th to a ranking in the top 15. This is long term - I suggest a short-term goal as well - to get our incomes to the national average by 2007. Such a goal would relieve much of the state's tax burden as well. This is a measurable goal.

Number 2. Federal Dollars - as a benchmark goal.

Many have mentioned this. Wisconsin trails the nation in the amount of federal money that comes back to the state on a per capita basis. We should aim to bring one billion more federal dollars to Wisconsin over the coming two years. This should be locked in as a Wisconsin economic goal. Again, a measurable benchmark goal.

Number 3. Venture Capital Availability - as a benchmark goal.

The amount of venture capital in this state is roughly the same as it was last year at this time - about $170 million. We rank far below our neighboring states in this regard. Another Wisconsin Technology Council goal is to double the amount of venture capital available to Wisconsin-based science and technology businesses over the next two years. This also should be locked in as a Wisconsin economic goal.

Number 4. Percentage of our Adult Population with a College Degree - as a benchmark goal.

Wisconsin dropped three places in the most recent Milken New Economy Ranking on the percentage of adults in the state with a college degree. Only 23.8% of our adult population has college degrees compared to a national average of 26%. Our goal should be to meet and exceed the national average. As Tom Hefty has noted, this is a demand side problem. Branding and aggressive marketing of Wisconsin as a great place to work and live would help us achieve this goal and thereby improve our tax base. This is a complex subject and the timing needs further study but this should be locked in as a benchmark goal.

Number 5. Personal Income Taxes - our last benchmark goal.

The state's personal income tax matters. It matters a lot to businesses seeking to locate here, to workers considering taking positions here, to retirees, to all the state's citizens. Our goal should be to drop our personal income tax by 9% in six years to take us out of the ranks of the top ten. This should be locked in as a benchmark goal. A measurable goal.

Wisconsin should focus on these five important benchmarks by which we can measure our progress. There are others, of course.

A Third objective of this summit was to broaden and strengthen existing partnerships and to get more people involved and working on these issues.

This is happening everywhere across the state. About a thousand people have attended this year's summit. And for every person here, there is 30 or 40 more back home working on these issues. Across this state, we probably have 40,000 people working on economic development in some way.

Many organizations have spent much of the past year focused on economic issues - Competitive Wisconsin, the Wisconsin Technology Council, Wisconsin Manufacturers and Commerce Association, Forward Wisconsin, AFL-CIO, Wisconsin Taxpayers Alliance, Greater Milwaukee Committee, chambers of commerce, many state agencies and the university, to name a few.

Their commitments of time and energy and their willingness to partner with others have been noteworthy. We thank them.

But these groups need to collaborate much more.

We are missing the connective tissue that will knit all these efforts together - we are very dependent on the individuals involved to keep the dialogue going. (I'll come back to this point in a recommendation).

Our Fourth Objective of this summit was to seek specific commitments from the university, business and government leaders on actions they will take to help Wisconsin's economy grow. And we're getting there. It will take all three sectors working together on common goals if we are to take the right path for Wisconsin.
The Governor laid out some specific objectives in his speech last night. His speech contained commitments. Katharine just outlined four very specific commitments for the UW System. The GMC and its CEO panel put forward some very specific recommendations for Milwaukee yesterday afternoon. Many panelists today spoke of concrete steps being taken locally and statewide to address this issue. But we need to press for more involvement from the business community. More venture capital. More higher paying jobs. More R&D money invested here in the state of Wisconsin. I think that will come.

Having said all that, our state economy is in worse shape than it was a year ago. Plans take time to implement and complex organizations don't turn on a dime. But as David J. Ward noted in his presentation, Wisconsin's trend lines don't look encouraging and we don't have the luxury of time to simply study the situation.

There is another partner in the state's economic future that must be more actively engaged: the Wisconsin legislature. We are pleased to see legislators here today and we urge you to be more a part of this process. There is no more important work you can do over the coming session than invest in Wisconsin's economic welfare.

The Governor and legislative leaders should begin the budget process by weighing the long-term implication of spending choices, providing prudent reserves and consciously investing in this state's future.

All of us in business and in the university know that budgets are planning documents. The state should prepare its biennial budgets with that in mind.

A start would be reforming and improving the state budget process. Todd Berry of the Wisconsin Taxpayer's Alliance wrote an excellent white paper for this summit that is on our web site. I urge you to read it. Among other things, he suggests that the present budget timing and atmosphere have an impact on our national reputation. With late budgets and interpersonal and partisan acrimony, he says, word of Wisconsin's fiscal management is spreading and the state's reputation is not positive!

Todd makes several noteworthy recommendations:

Create a Council of Economic Advisors to develop a consensus economic forecast and insist that the Governor and state legislature live within those fiscal limits in setting the biennial budget.
Remove nonfiscal items from the budget process.
Enact changes to ensure that state budgets become law by the beginning of the biennium.

These would help, I think, not only make our budget process go more smoothly, but also free up time in which our legislature could work more productively on the challenges facing this state. The Bottom Line is that we have in hand commitments from government, education and the business sector.

Our Fifth and Last Objective of the summit was to identify the next steps.

Two needs have become clear:

One: To compile and organize this mass of information in ways that it is useful and accessible; and,

Two: To figure out a way to better coordinates the myriad of activities taking place across the state.

As it pertains to the first need, we must collect, digest and organize the information that has come out of this summit as well as other sources of information. We need a compendium of information and plans in one place. In this process, we need to embrace statewide and regional efforts. We need to span political parties, regions, and interest groups. We must capture every good idea - from this state and from other states.

Katharine Lyall and I are committing today to convene a team at the conclusion of the summit that will bring these strands of information together into a comprehensive planning document. We will take the best ideas from this conference and seek input from the public and private sectors to create this document. It won't be created out of whole cloth.

It will include the elements of local and regional plans, the plans of organizations like the Wisconsin Technology Council and recommendations from organizations like the GMC and the WMC. We will work closely with the Governor's Interagency team and we will engage the highest leadership from the state's educational, private and public sectors.

This document, drawn from the most current information we have, will form the final report of this year's economic summit and we will have it on our website by February 1, 2002. That's measurable.

As it pertains to the second need, we must have a mechanism to bring all these organizations together - a means of coordination and collaboration - functions that this summit has helped to serve.

So what might we propose to keep this conversation moving forward and to ensure that new ideas don't get stuck in the Ivory Tower?

Today, we are proposing the creation of an umbrella organization - a nonpartisan entity that will work on a state agenda to strengthen Wisconsin's competitiveness while boosting the standard of living for all residents.

We suggest calling this organization, the Wisconsin Council on Competitiveness. We recommend it be patterned after a very successful national model that brings together the three legs of the stool - government, education and the private sector.

Representing all three legs, it must nevertheless be independent - it cannot be a creature or captive of any one. It must be free to praise or criticize without fear of repercussions.

This statewide organization will keep us focused on the benchmarks we identify and will create and maintain an intelligence network to facilitate information sharing and keep economic development in the public eye. Much like the national council on competitiveness, this new state organization will seek to affiliate other organizations working on economic growth for the state.

So, what can this organization do? It can:

Help coordinate these statewide economic growth efforts
Serve as a clearinghouse for information for all the groups working on this issue across the state
Host the competitive intelligence network
Convene meetings that span regions and interest groups
Monitor benchmarks
Keep us apprised of what other states are doing.
Focus on issues such as cluster economies, workforce development, state budget priorities and brain gain
Organize and conduct future statewide economic summits.

We will ask our summit committee to guide in developing this new effort.

And we invite others who have expertise and an interest in this new initiative to participate. We will work very closely with the Governor's interagency task force and with the state's political leaders in forming this entity. The Wisconsin Council on Competitiveness must fairly represent all of our interests and be the captive of no one interest. We need this attitude to reach our goals.

When all is said and done, the Council on Competitiveness may be subsumed by an existing organization -- one willing to modify its mission -- or it might become a new umbrella organization. There is no pride of authorship here; we want to focus on getting the job done!

But we know that we urgently need something that pulls all these pieces together and makes the whole greater than the sum of its parts. We need something that will keep these discussions and our momentum rolling forward.

In closing, I want to thank all of you for your participation and for making this year's summit another success. But there is hard work ahead. I retire from the Board of Regents next June, after serving for seven years. I will continue to be committed to this work from the private sector.

We'd like to hear from you. Please give us your ideas and your feedback on this meeting by writing us or by visiting our summit website. We need your input. With the energy, wisdom and concern that I have seen here this week, we can and will make great strides.

Tom Still - thank you again. Thank you all for coming and have a safe journey home.