Saturday, January 14, 2012

Report of business creation for WI last year omits dissolved businesses

New businesses created don't make up for net deficit in WI for 2011

At first glance, it seems as though there was a welcomed change in the direction Wisconsin was heading under the leadership of Gov. Scott Walker. But upon further examination, it's more of the same from his administration -- more spin to cover up more bad news.

A report released by the Department of Financial Institutions showed that there were more new businesses formed in 2011 than in 2010.

33,190 new businesses were formed last year, 732 more than the 32,458 new businesses that were formed in 2010, a total growth of 2.3 percent in the category.

That's a positive sign, albeit one that hardly justifies billions of dollars in tax breaks for corporations for such little change from the year before -- the 2.3 percent increase between the two years came as the state gave away $2.3 billion in revenues in the form of tax breaks. Regardless, it IS an improvement, and it should be treated as such, right?

Ordinarily, it'd be something worth cheering about. Unfortunately, the press release from the DFI and other news outlets fail to point out the fact that these numbers simply show the number of businesses created -- they don't mention any businesses that have dissolved or disappeared. When you look at those numbers, an entirely different picture is painted (PDF).

In 2011, 6,069 businesses filed Articles of Dissolution -- official documents signaling they no longer plan to be a business from that point on. But the big number comes from the number of businesses which faced Administrative Dissolution -- the state itself having to dissolve companies that were no longer in operation but failed to make that claim themselves. That number totaled 36,427 businesses, bringing the total number of businesses that "closed-shop" in 2011 in Wisconsin to 42,496.

To be fair, 2,259 businesses filed Certificates of Reinstatement as well, which are used to reinstate businesses that were shut down due to Administrative Dissolution. But that total still leaves the state with a net loss of 7,047 businesses last year.

This omission shouldn't be overlooked, by the media or the administration (PDF), and should be interpreted for what it is: a failure in terms of both business and job growth for the state of Wisconsin.

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