Scott Walker tries again to cut tax breaks for historic preservation

Advocates for historic preservation say they’ll fight Gov. Scott Walker over his proposed capping of a popular tax credit program used to restore and maintain historic properties.

Walker proposed in his state budget released this week to limit the Historic Rehabilitation Tax Credit program to no more than $10 million a year. He called for the same limit two years ago, but was brushed back by the Legislature after a forceful lobbying effort by a coalition of development, municipal and historic preservation groups.

The same coalition is regrouping for another fight this year. Wisconsin Realtors Association lobbyist Tom Larson said he was surprised Walker was trying again given the broad support shown for the tax breaks.

“We demonstrated our case very well last session and showed this program is an important economic development program throughout the state, especially in more urban areas,” Larson said.

Larson and other advocates of the program say it’s vital to maintaining the integrity of historic neighborhoods and buildings by providing needed capital to undertake often expensive projects. The coalition two years ago commissioned a study to show that the tax credits helped increase revenue to the state and spur other economic development.

In just the first three months of the current fiscal year, $11.6 million has been promised to 12 projects in the program, based on data on the Wisconsin Economic Development Corp. website. Last year, $51.6 million was awarded to 34 projects. And in 2015, 48 projects were granted $80.4 million in credits.

Just because a project has been awarded a certain amount in credits doesn’t mean that’s how much will ultimately be claimed once the work is completed.

The awards have been spread throughout the state. This year alone projects in Appleton, Watertown, Kenosha, La Crosse, Stevens Point, Racine and Milwaukee have been awarded money. Similarly, last year projects were located in Madison, Oshkosh, Sheboygan, Janesville, Green Bay and Milwaukee.

“Capping this program will hurt local communities and prevent companies from hiring and retaining skilled Wisconsin workers,” said Democratic Senate Minority Leader Jennifer Shilling. And Assembly Democratic Minority Leader Peter Barca called the tax credit program “an excellent investment in local communities.”

The Legislature’s budget-writing Joint Finance Committee rejected Walker’s call for a cap on credits in 2015. Bob Delaporte, spokesman for committee co-chair Republican Sen. Alberta Darling, had no comment on the proposal. “We’re still digging into the budget,” he said.

Rep. John Nygren, the other co-chair, said the tax credit had successfully revitalized local businesses, but that the program “has potential to become costly.” He didn’t say whether he would support the governor’s proposal.

Only property built before 1936 that is on the state or national register of historic places or identified by the Wisconsin Historical Society is eligible. Other property that is in a historic district that is on the state or national registers and determined by the state to be historically significant or connected to a building can also qualify.

Walker’s budget proposal would require the money to be competitively awarded on the basis of job creation potential, benefit to the state, projected impact on the local economy, likelihood the project would happen without the credits and number of credits given out in the area in prior years. If the promised jobs aren’t created, the tax credit awarded could be retrieved by the state.

The change is projected to save the state $3 million in the first year of the budget and $14 million in the second.

Ironically, it was Walker who in 2013 increased the tax credits from 10 percent to 20 percent of a project’s cost. That is on top of a 20 percent federal credit. There is no limit on how much can be awarded.