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LRB-5356/1
AG/JK/MPG:amn&wlj
2017 - 2018 LEGISLATURE
March 9, 2018 - Introduced by Representatives Genrich, Anderson, Berceau,
Crowley, Ohnstad, Spreitzer, C. Taylor and Vruwink, cosponsored by
Senators Hansen, Bewley, Carpenter, Miller and Ringhand. Referred to
Committee on Colleges and Universities.
AB1010,1,6 1An Act to create 16.75 (3r), 36.25 (54), 71.05 (6) (b) 53., 71.05 (6) (b) 54., 71.26
2(1) (ab), 71.26 (2) (a) 13., 71.26 (2) (a) 14., 71.26 (2) (a) 15., 73.17 and 238.147
3of the statutes; relating to: providing loans, loan guarantees, tax benefits, and
4procurement preferences to employee-owned companies, establishing a center
5for employee ownership in the University of Wisconsin System, and granting
6rule-making authority.
Analysis by the Legislative Reference Bureau
This bill requires the Board of Regents of the University of Wisconsin System
to establish and maintain a center for employee ownership to provide education and
outreach to inform business owners about the benefits of employee ownership
successions, including providing initial consultations to business owners exploring
the possibility of transferring full or partial ownership to employees. In addition, the
bill requires the Wisconsin Economic Development Corporation to establish an
economic development program to make employee ownership loans or loan
guarantees to finance an eligible transaction. Under the bill, an “eligible
transaction” is the transfer of shares of a corporation or member interests of a limited
liability company to an employee stock ownership plan, an employee ownership
trust, or a direct share ownership plan.
The bill also provides certain income and franchise tax benefits to an
employee-owned business, such as excluding from taxation the income of an

employee ownership trust. Under the bill, an employee ownership trust has the
exclusive purposes of creating employee ownership by obtaining and holding shares
or member interests of an employer and of promoting the financial and nonfinancial
interests of all tenured employees. The bill defines “tenured employee” to mean any
employee or independent contractor who has provided at least 1,000 hours of service
to the employer within the immediately preceding 12-month period.
Finally, the bill provides that the Department of Administration must attempt
to ensure that 5 percent of the total amount expended to procure tangible personal
property and services is paid to businesses in which a certain percentage of the
employer stock or membership interest is held by an employee stock ownership plan
or employee ownership trust or held through a direct share ownership plan.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB1010,1 1Section 1. 16.75 (3r) of the statutes is created to read:
AB1010,2,22 16.75 (3r) (a) In this subsection:
AB1010,2,33 1. “Direct share ownership plan” has the meaning given in s. 73.17 (1) (a).
AB1010,2,44 2. “Employee ownership trust” has the meaning given in s. 73.17 (1) (e).
AB1010,2,55 3. “Employee stock ownership plan” has the meaning given in s. 73.17 (1) (f).
AB1010,2,66 4. “Qualified transfer” has the meaning given in s. 73.17 (1) (h).
AB1010,2,77 5. “Tenured employee” has the meaning given in s. 73.17 (1) (i).
AB1010,2,118 (b) 1. The department, any agency to which the department delegates
9purchasing authority under s. 16.71 (1), and any agency making purchases under s.
1016.74 shall attempt to ensure that 5 percent of the total amount expended under this
11subchapter in each fiscal year is paid to businesses that satisfy any of the following:
AB1010,2,1412 a. A percentage, as established by the department by rule, of employer stock
13or membership interest, of the type required for a qualified transfer, is held by an
14employee stock ownership plan or employee ownership trust.
AB1010,3,6
1b. A percentage, as established by the department by rule, of employer stock
2or membership interest, of the type required for a qualified transfer, is held through
3a direct share ownership plan where the ownership stake of the direct share
4ownership plan is calculated by determining the smallest amount of such stock or
5membership interest held by a tenured employee, multiplied by the total number of
6tenured employees.
AB1010,3,107 c. A percentage, as established by the department by rule, of nonprofit
8corporation membership, with voting power equal to or in excess of that class of
9membership having the greatest voting power, is held by all tenured employees as
10a class, and the tenured employees vote as members on a one person, one vote basis.
AB1010,3,2111 2. Except as provided under sub. (7), the department, any agency to which the
12department delegates purchasing authority under s. 16.71 (1), and any agency
13making purchases under s. 16.74 may purchase materials, supplies, equipment, and
14contractual services from any business specified in subd. 1. a., b., or c. submitting a
15qualified responsible competitive bid that is no more than 5 percent higher than the
16apparent low bid or competitive proposal that is no more than 5 percent higher than
17the most advantageous proposal. In administering the preference for businesses
18specified in subd. 1. a., b., and c. established in this paragraph, the department, the
19delegated agency, and any agency making purchases under s. 16.74 shall maximize
20the use of businesses specified in subd. 1. a., b., and c. that are incorporated under
21ch. 180 or that have their principal place of business in this state.
AB1010,2 22Section 2. 36.25 (54) of the statutes is created to read:
AB1010,3,2523 36.25 (54) Center for employee ownership. (a) The board shall establish and
24maintain a center for employee ownership at a location within the system
25determined by the board.
AB1010,4,1
1(b) The center for employee ownership shall do all of the following:
AB1010,4,42 1. Provide education and outreach to inform business owners about the benefits
3of employee ownership successions and the provisions of ss. 16.75 (3r) (b), 71.05 (6)
4(b) 53. and 54., 71.26 (1) (ab) and (2) (a) 13., 14., and 15., 73.17, and 238.147.
AB1010,4,55 2. Organize workshops and conferences on employee ownership successions.
AB1010,4,76 3. Prepare and distribute materials concerning employee ownership
7successions.
AB1010,4,98 4. Provide initial consultations to business owners exploring the possibility of
9transferring full or partial ownership to employees.
AB1010,4,1110 5. Provide a referral service to help business owners find legal, financial, and
11technical advice in connection with employee ownership successions.
AB1010,4,1412 6. Partner with key organizations, such as professional and trade associations,
13financial institutions, unions, economic development organizations, and other
14nonprofit entities, to promote employee ownership successions.
AB1010,4,1515 7. Support the growth of associations of employee-owned companies.
AB1010,4,1716 (c) In addition to its responsibilities under par. (b), the center for employee
17ownership shall do all of the following:
AB1010,4,1918 1. Provide access to information regarding government rules and regulations
19that relate to employee ownership.
AB1010,4,2120 2. Develop, in partnership with appropriate state and local government
21agencies, proposals for changes in policies to promote employee ownership.
AB1010,4,2322 3. Conduct investigations, research, studies, and analyses on the subject of
23employee ownership.
AB1010,3 24Section 3. 71.05 (6) (b) 53. of the statutes is created to read:
AB1010,5,8
171.05 (6) (b) 53. For taxable years beginning after December 31, 2016, income,
2including all gains not excluded from taxation under subd. 9., derived from a
3qualified transfer, as defined in s. 73.17 (1) (h), except that the amount of income
4derived from the qualified transfer to a direct share ownership plan, as defined in s.
573.17 (1) (a), that may be excluded under this subdivision may not exceed the amount
6of income derived in the taxable year from the smallest amount of shares or member
7interests transferred to a tenured employee, as defined in s. 73.17 (1) (i), multiplied
8by the number of all tenured employees.
AB1010,4 9Section 4. 71.05 (6) (b) 54. of the statutes is created to read:
AB1010,5,1510 71.05 (6) (b) 54. For taxable years beginning after December 31, 2016, income
11derived from shares or member interests distributed through a direct share
12ownership plan, as defined in s. 73.17 (1) (a), except that the amount of the income
13that may be excluded under this subdivision may not exceed the amount of income
14derived in the taxable year from the smallest amount of shares or member interests
15distributed to a tenured employee, as defined in s. 73.17 (1) (i).
AB1010,5 16Section 5. 71.26 (1) (ab) of the statutes is created to read:
AB1010,5,1817 71.26 (1) (ab) Employee ownership trust. Income of an employee ownership
18trust, as defined in s. 73.17 (1) (e).
AB1010,6 19Section 6. 71.26 (2) (a) 13. of the statutes is created to read:
AB1010,5,2220 71.26 (2) (a) 13. For taxable years beginning after December 31, 2016, minus
21the amount of the interest income derived from an employee ownership loan, as
22defined in s. 73.17 (1) (d).
AB1010,7 23Section 7. 71.26 (2) (a) 14. of the statutes is created to read:
AB1010,6,324 71.26 (2) (a) 14. a. For taxable years beginning after December 31, 2016, minus
25the amount of contributions to an employee ownership trust, as defined in s. 73.17

1(1) (e), or to a direct share ownership plan, as defined in s. 73.17 (1) (a), including
2contributions applied to repayment of principal and interest on an employee
3ownership loan, as defined in s. 73.17 (1) (d).
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