Will Wisconsin Rise Again?

The Badger State keeps rising in the Chief Executive Best States/Worst States list, and that’s got Wisconsin businesses cheering—as well as investing. Nevertheless, CEOs and entrepreneurs there are worried that an election recall this summer of their champion, Governor Scott Walker, could upend the great improvements made in the state’s business climate in just two years.

Wisconsin leapt to 20th place in our Best States/Worst States list this year from 24th last year, one of only eight states that enjoyed a rise of at least four spots. That followed a phenomenal 17-place leap in last year’s list, where it occupied the doldrums of 41st place. Wisconsin also fared well by other gauges last year, especially in how it treated entrepreneurs. The state ranked 4th last year in tax costs on new firms, as calculated by the Tax Foundation, and a Kauffman Center Index of Entrepreneurial Activity showed Wisconsin with the 7th largest rise last year among the handful of states that did better at all.

“There’s now a keen focus on making sure we’re competitive to be a place where businesses can create jobs and wealth,” said Mary Ellen Stanek, director of asset management for Milwaukee-based brokerage Robert W. Baird & Co. Stanek, who is a member of Milwaukee 7, a public-private, economic-development partnership of seven counties, points out that neighboring Illinois faces ”big challenges in terms of tax rates and the overall climate for business.”

The reasons are as simple as they are bold. As soon as he took office in January 2011, Walker, a Republican governor elected on a fiscal-responsibility platform, moved aggressively to close the state’s $3.6-billion budget deficit without raising taxes. His centerpiece was slashing costs by restricting collective-bargaining rights and organizing powers of Wisconsin’s powerful government-employee unions.

Despite wild labor protests that drew gobs of national media attention and catalyzed Big Labor across America, Walker squeaked the measures through the newly Republican-heavy state legislature.

“Things definitely are moving and improving in the right direction,” said John Shannon, CEO of Quick Cable Corp., a 140-person company in Franksville, Wisconsin that supplies the power-storage industry. “More taxes take money out of our businesses that we can use to develop new products and markets and jobs.”

Wisconsin executives say the new public-private economic-development commission created by Walker is much nimbler and more responsive than the previous government bureaucracy. Furthermore, entrepreneurs have been favored by, among other things, streamlining of a Qualified New Business Tax Credit for angel investments in start-ups.

The move recently helped raise $16.5 million for Quintessence Biosciences, a Madison-based startup developing cancer-fighting drugs. The credit helped immensely “because investors looked at it as risk-mitigation or encouragement for their investment,” said Laura Strong, president and COO.

Executives such as Richard Meeusen, CEO of Badger Meter, have gotten behind an e”ort to leverage Wisconsin as a national water-technology hotspot, thanks to the state’s location between Lakes Michigan and Superior and a legacy of water-based industries, such as brewers and tanners, that continues with those such as Badger Meter, a Milwaukee-based maker of water meters. “Now, we can combine our historic and strategic advantages with a business climate that puts us on a more level playing field,” Meeusen said.

Shannon and others worry still about this summer’s recall election. “This very committed opposition may recall Walker and put someone else in,” he mused, “and then we’ll have the pendulum swinging abruptly the other way.”