208 VINE STREET, SPOONER-WI 54801
WASHBURNCODVCP@CENTURYTEL.NET OR MQECONOMIC@CENTURYTEL.NET
WWW.WASHBURNCODEVELOPMENT.COM
Spring Newsletter 2010

Presidents Comments: by Louie Villela

We all know how the economy has affected the area and a tough time it has been on many. With that in mind, the W.C.E.D.C. has continued to help struggling and pursue new businesses in and outside of our county. There have been many loans done for the Washburn County Industrial Development Agency, Ltd. over the past year, and that continues to be a strong sign that businesses here are looking to the future as well as just trying to survive.

The new director has been here for almost a year now, and although there have been some growing pains, I feel we are headed in the right direction. However, no new changes come without some struggles and we will continue to work the bugs out until we are satisfied.

As many of you know the W.C.E.D.C. moved to a new location in the past year, and it has worked out wonderfully. This would not have been possible without our membership, and we are very appreciative of the new space.  This facility offers the privacy and security for our clients that just was not available at the old location. A special thanks to Mr. Jerry Thompson who has gone beyond the call of our landlord with providing furnishings and other services, that really were not part of the lease agreement.

In closing I would like to thank all our members for their continued support toward our on-going goals of job creation, retention, growth and preservation of our tax base. Please feel free to stop by anytime with questions or comments.

Also, a reminder, that the Washburn County Economic Development Corporation “Annual Meeting,” is tentatively scheduled for the third Thursday in the month of May. The meeting will be held at the Minong Village Hall and will begin at 4:00P.M. The Village of Minong Hall is located at the south end of the Business Highway 77. All members will receive a notice with exact date, time and location.  Hope to see you there. Remember in order to vote you have to be a member in good standing with your dues paid up to date.

Yours Truly,
Louie Villella
W.C.E.D.C. President

Executive Director's Report

by Dick Hartmann

Since January the WCEDC have been busy making new loans. The WCEDC in conjunction with WCIDA and the Revolving Loan Fund Program (RLF) have closed on five (5) new loans totaling $225,000. As a result of these efforts eight (8) new jobs have been created with seven more scheduled in the coming year. We have also retained Twenty-two new jobs as a result of the loans. The total number of loans in the portfolio that we now manage on behalf of the WCIDA, Ltd. is thirty- seven (37). All the loans have been made to Washburn County businesses and have a total dollar value of $2,000,300.00. A direct result of these loans includes the total number of people employed. There are approximately 215 jobs that have been created or retained as a result of the WCEDC and WCIDA in Washburn County. The amount computes to approximately $9,300 per job created or retained. The revenue realized from these jobs impacts other retail business in the county along with adding to the tax base.

New Loans: PenquinData Workforce Management, Inc. C.E.O. Bridget Kelly - Trego, WI recently relocated to 117 Timberlane in Spooner, just off Highway 70 east of Spooner. PenquinData is a web-based provider of a software solution to run, manage and track all aspects of technical workforce companies. The companies that PenguinData are now concentrating on include cable contracting firms who perform cable TV installations for MSO’s (Multiple System Operators) such as Comcast, Time-Warner, and Charter Communications. As the firm grows they will provide services for other industries which use technical workforces such as electrical contractors, plumbers, and HVAC contractors. Currently PenguinData has three employees in Spooner, two in Milwaukee and one in Texas. They expect to double their size by next year in Washburn County.  The other firm T-Raxx Systems, Inc. makes product for the ever increasing off-road recreation vehicle market. Their product line includes cargo hauling apparatus, dock removal tools and trailers that are functional, affordable, and attractive. The company is run by Scott Benesch and Lyle Eng. Scott is an inventor and Lyle is an accomplished businessman. They are currently located in the Business Incubator at the south end of Spooner. They currently have three employees, but anticipate to expand to 8 by years end.

WCEDC Conducts Business Start-Up Class UW-Superior Small Business Development Center (SBDC) in collaboration with the WCEDC held a “Firsts Steps to Starting Your Own Business.” The 2-hour class was held at the WCEDC Offices back on 3/25. The class was attended by five participants from Spooner, Stone Lake, Danbury and Hayward looking to start businesses in Washburn County.

Washburn County’s Unemployment Rate Continues to Rise

According to the State Department of Workforce Development (DWD) the February unemployment rates dropped in 22 Wisconsin counties, 12 cities and four metropolitan statistical areas (MSAs) according to the latest statistics available. The indications are that Wisconsin’s economy as a whole may be stabilizing and moving toward recovery. The seasonally adjusted Unemployment Rate for the State as a whole was 8.7% or the same as the previous month, and is still 1.0% more than a year ago. Wisconsin, when compared to the nation is still better off. The current national seasonally unadjusted unemployment rate for the nation is 9.7% also the same as it was the previous month and is 1.5% greater than a year ago.

WCEDC is Now a 501(c)(3) Non-Profit Corporation On April 9, 2010 the Washburn County Economic Development Corporation received a letter from the IRS designating it's status. Now all contributions/memberships to the WCEDC are Federal Tax deductible.

The WCEDC Executive Director continues to meet with local units of government providing information on their services and development tools. Also meeting area businesses to let them know about WCEDC and its services. Meeting with area businesses that wish to expand, improve or retain their operations as well as perspective businesses that wish to relocate here.

Washburn County February non-seasonally adjusted rate is 11.8% up from 11.6% a month ago and up from a December rate of 10.1% a jump of 1.7%, this rate is the same has remained the same as the previous year, which indicates the seasonal flux in unemployment. As compared to the nation the State of Wisconsin is 1.7% below the national average. The national rate is unchanged from the previous month and 1.5% of where it was last year at this time. State Department of Workforce Development Secretary Gassman said, “We remain optimistic that Wisconsin’s economy will continue to show improvement, opening up greater employment opportunities for many hardworking families who have been out of work through no fault of their own.”

(See attached Spreadsheet below which shows Washburn County and how it compares to its neighbors)

WISCONSIN BUSINESS TAX ADVANTAGES OVER NEIGHBORING STATES

According to a comparative property tax study for the 2009 Tax Year, the National Association of Industrial and Office Properties (NAIOP) concluded that Minnesota tops all other states in the region.

Property tax paid by business and industry in Wisconsin on the other hand ranked much lower than taxes paid by Minnesota businesses. Wisconsin’s taxes were found to be lower than all of Minnesota’s neighbors with the exception North Dakota.

The study compared property tax for businesses in Minnesota paid on similar businesses in competing states. Small firms with 99 or fewer employees occupying 70,000 square feet of single tenant buildings adjacent to or competing with Minnesota. The buildings surveyed were similar in age, type of construction, and land area. This data is obtained on annually adjusted taxes, tax rates and valuations at the local jurisdictional level.

Minnesota’s tax burden was estimated at $128,975 (which computes to $1.84/sq. ft..) as compared to $59,545 ($0.85/sq. ft.) for a similar structure in Wisconsin. This amount is 2.16 times higher for Minnesota. The highest taxes paid in the study were from Illinois ($2.75/sq. ft.) 3.23 times higher than Wisconsin. Wisconsin in the study ranked 9th overall. North Dakota was 11th ($0.78/sq. ft.).

NEW HEALTH CARE REFORM AND YOUR BUSINESS

The following, are highlights and milestones of the recently passed Federal Health Care Reform Act, as provided with informa-tion from the Law Firm STOEL RIVES, LLP.

April 1, 2010 The recent health care reform bill passed by the U.S. Congress has significant mandated changes for employyers, group health plans, insurers and individuals. The following is a chronology of mandated events under the new legislation.

Effective Immediately Qualifying small business with less than 25 full-time employees and whose employees have annual wages less than $50,000 may be eligible for tax credits to assist in the purchase of health insurance for their employees. Coverage for dependent children may qualify for tax free status through the tax year in which the child turns age 26.

Effective Date Upon Issuance of Regulations employers with more than 200 employees must enroll them into health insurance plans offered by the employer.

Effective June 20, 2010 A temporary insurance program will reimburse participating employment-based plans for a portion of the cost of providing health coverage to early retirees and eligible dependents (end January 1, 2014).

Effective for Plans Starting October 1, 2010 or Later Plans cannot place lifetime limits on coverage.  Adult children must be covered until age 26.  Annual dollar limits on coverage must comply with guidance from the U.S. Sec. of HHS, these limits will be issued by June 20, 2010.  Plans cannot have pre-existing condition exclusions for children under age 19.  New plans must provide preventative services and immunizations without cost sharing.  New plans must meet internal and external review procedure standards for claims.  Nondiscrimination rules formerly applicable only to self-funded plans are now applicable to new insured group plans.

Effective Janaury 1, 2011 Employers must report the value of employer-provided health coverage on employees W-2.  Non-perscription drugs cannot be reimbursed tax-free through Health Savings Accounts (HSA's).  Non-perscription drugs cannot be reimbursed through FSA (Flex Plans).  The tax on HSA distributions not used for qualified medical expenses will go to 20%.

Effective 24 Months After Enactment (March 2012)  Plans must provide particpants a 4-page summary of benefits, per regulations that will be issued (03/11).  Plans must provide a 60 day prior notice to any change.

Effective Janaury 1, 2013 The Medicare Part A (hospital insurance) tax rate earnings over $200,000 ($250,000 for married couples filing jointly) will increase from 1.45% to 2.35% (only the employee portion) and there will be a 3.8% tax on unearned income for high income taxpayers.  There will no longer be a tax deduction for employers who receive Medicare Part D retiree drug subsidy payments. Health FSA contributions will be limited to $2,500 per year.

Effective Janauary 1, 2014  Plans cannot have pre-existing condition exclusions for adults (19 and over).  Plans cannot have annual dollar limits.  Employers are required to separately report the value of an employees health benefits to the federal government.  Waiting periods for coverage will be limited to 90 days.  Employers can offer rewards of up to 30% of coverage for participating in wellness programs and meeting health-related standards.  Children must be covered until age 26 even if they have access to their own employer coverage.  Employers that have more than 50 employees and don't offer coverage must pay a $2,000 fee per full-time employee or a $3,000 fee per employee receiving the tax credit  (lesser of 2).  Employers that offer coverage must offer low-income employees a "free choice voucher" that the employee can use to apply the value of the employer-provided coverage to the cost of enrolling in a state-based Health Benefits Exchange.

Effective January 1, 2018  An excise tax will be imposed on health insurance issuers and plan administrators of employer-sponsored health plans with annual aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage.  The tax will be equivalent to 40% of the value of the plan that exceeds the limits (vision and dental are excluded if provided under a separate policy).

Jobs Bill Signed Into Law

Back on the 18th of march the President signed a new jobs bill into law.  The job creation measure had been passed by Congress one day earlier.  According tot President Obama, "It is the first of what I hope will be aseries of jobs packages that help to continue to put people back to work across America.  The $17.6 billion legislation is intended to spur hiring nationwide.  One of the more prominent portions of the bill will provide a tax "holiday" for the rest of the year by exempting the employer share portion for new employees until 12/31/10.  The measure grants employer exemptions for the 6.2% Social Security payroll contribution for every new worker hired, from the date of enactment until years end (9 months from April 1, 2010).  The one caveat is that the nw employee has been out of work for at least 60 days.  The fderal government would reimburse the Social Security Trust Fund for the lost revenue.  There is also an additional $1,000 corporate income tax credit for every new employee kept on for a full year (52 weeks beyond the hire date).

Business experts are split as to whether the payroll provision will boost hiring.  A spokeperson for the National Federation of Independent Business said that tax breaks will likely help companies that had planned to do some hiring because now it is cheaper for them to do so.  The bill also makes it easier for businesses to write-off new equipment purchases by providing an extension to the already existing write-off law.  The legislation authorizes the transfer of $20 billion into the Federal Highway and Mass Transit funding programs to further stimulate the increase of new construction jobs.  The bill that was passed by the Senate back in February, was modified by the House and required the second Senate vote.  The House is also currently considering a $140 billion package previously passed by the Senate that contains a series of industry friendly tax breaks, such as a credit for research and development and it would also extend COBRA insurance benefits and Unemployment Compensation Insurance benefits through the rest of the year.  This unfortunately will have to wait until after the Spring Recess.  The next big Senate priority item will be to look at providing struggling small businesses with help to increase the availability of funds to the nation's small business lenders.