Paper council: Ease taxes, restrictions It says moves are necessary to keep its state industry strong By Ray Barrington News-Chronicle A look at how to strengthen the paper industry in Wisconsin, issued by its trade group, focuses on government relations, taxes, and energy cost and supply as the major issues. The report, to be released today by the Wisconsin Paper Council, is a followup to the February report by the paper-industry group looking at the state of the industry. That report cited the need to control costs and the fact Wisconsin papermakers are making paper at a higher cost than others in the global market. To fix that, investment will be necessary, and changes will have to be made to lure that investment, said Georgia-Pacific vice president and West Mill manager Russ McCollister, chairman of the council. "The industry is not looking for any breaks in terms of compliance in environmental regulations or any of those issues. We're looking for the state to become more competitive in attracting investment," he said. "The bottom line is this: The industry is extremely important to Wisconsin because of its size and the wealth it creates, but that wealth and size has been starting to shrink." The report, compiled after meetings of industry officials and those with a stake in the paper industry, has three high-priority recommendations: 1. Adoption of a sales-tax exemption for fuel and electricity used in manufacturing. 2. Rapid implementation of regulatory reform initiatives, including New Source Review air-quality regulatory changes, permit streamlining, and innovative alternatives to the "command and control" system, like the Paper Council's Systems Approach. The New Source Review program is a preconstruction permitting program for large industrial sources. The council's report said the EPA's rules are confusing and often conflicting. 3. Initiatives relating to the cost, availability and reliability of energy. "By adopting reasonable measures within those three issue areas, we believe the process can begin to ensure the viability of the paper industry in Wisconsin," the report says. To be competitive, McCollister said, Wisconsin has to compete with other papermaking states as well as foreign countries. Right now it isn't, in large part because its assets are among the oldest in the region. "The first reason we're not competitive is because those folks who have board rooms outside of Wisconsin have many options to choose from," McCollister said. "We're not winning at that game." He said if he wanted to put a new paper machine in his mill, it would take nine to 12 months just to get permits. "In six of the 14 states Georgia-Pacific is in, we could get those permits in 60 days or less," he said. Assembly Speaker John Gard, R-Peshtigo, said that length of time was "just unacceptable." "I think we need to do whatever we can to make the state as competitive as anywhere else. Regulation-wise we unnecessarily drag out permit applications and make people jump through hoops." McCollister said Wisconsin needs to start incentive packages. "Can you name one? I can't," he said. "We need to provide some incentives in the near term to attract some of the renewal we need in industry. And that's not unique to the paper industry." "We've been focusing on the state budget, so we haven't been able to get into that," Gard said. "But we should try to put an economic-development package together that's attractive not only to the paper industry but a lot of other folks." The issues got a sympathetic ear from state Sen. Rob Cowles, R-Green Bay. Cowles, chairman of the Senate Energy and Utilities Committee, and Gard have been working on the issue of payments to municipalities for public utilities. Cowles has co-authored a bill, SB 180, to change the way municipalities and counties collect money for power-generating plants. Right now, utility property is subject to state tax only, not local property taxes. Municipalities get payments from the state based on the value of the property. Cowles' bill would change that to payments based on generating capacity instead of plant value. The new calculation would affect only facilities beginning operation after Dec. 31. It would provide incentives for building on or next to a brownfield (used land) area or a shuttered plant or building a facility that uses renewable energy (solar or wind power, for example.) "With the economy being down, there hasn't been the energy demand in the past few years," Cowles said. "As the economy picks up, that's going to change." McCollister said the state does not have the energy infrastructure to meet energy demands. "In the last five years (in six Midwestern states), the cost to both consumers and commerce has gone from being the most competitive to ranking about fourth," he said. As for regulatory issues, Cowles has asked for a legislative audit of the Department of Natural Resources' air-quality division. "There's no question that getting a permit for water works well," he said, "but the air division is slow. We need to get the permits out to paper companies and others as soon as possible." He said the paper industry "has an excellent record on environmental issues; they exceed their permits in every way." "We're not asking for relief," said McCollister. "Control, administration and a lack of timeliness hurts most in our area." Cowles, however, wasn't sure a request for a sales-tax change would fly with legislators. Companies get an income-tax credit for sales taxes on fuel and electricity. "They're asking for $9 million; I can't see that happening in this budget. Maybe down a few years, it may be more reasonable," he said. The Department of Revenue estimates the current credit is worth about $22 million; the sales-tax exemption would be worth $31 million. McCollister said the paper industry has not done a good job of telling its own story. "Very few elected and public officials understood where the paper industry was; they did not know there was a problem," he said. That sparked the Paper Council's studies of the state of the industry and what to do to improve it. "In the short term, a few months to a year, we can put some things in to help turn it around and cause corporate investors to give us a look," McCollister said. "In the longer term, 2-4 years, we can look at other issues. "In the next four years, we have to send a clear and positive message to all business that is either here or thinking about coming to Wisconsin that we want you, that we can be as good if not better than anyone else, and that we can be responsible to our communities and our environment." Paper Council suggestions A summary of the Wisconsin Paper Council's suggestions for keeping its industry strong in the state covers seven key areas. Recommendations in each area are: Government: Change from tax credits to dropping sales taxes on fuel and electricity; examine, reduce or eliminate fees where feasible; review and create incentive programs to encourage investment; streamline and review environmental regulations. Infrastructure: Assure affordable, cost-based electric and gas supplies; work with the state on energy efficiency initiatives; work on sharing of electricity within a company; assure state commitment of multiple uses of public forest resources; examine options to increase availability of clean wastepaper for recycling. Research and development: Identify research needs; develop center for collecting and disseminating research from universities and private institutions. Public relations: Develop networks of support. Education: Formalize relationships with educational institutions; develop work-education programs to bring educators into paper-industry facilities. Economics: Evaluate training needs and training assistance programs. Partnerships: Encourage stakeholders' participation, work with local business groups and officials to encourage investment in state. FYI A complete copy of the report can be found at www.wipapercouncil.org under "latest news."