ZBB Energy, a Menomonee Falls based green energy company, is in a race to bring new green technologies to market as it finds itself in the center of the debate over whether government financial assistance can launch and sustain a green economy here in the United States.

President Obama visited ZBB Energy back in August of 2010 to promote the green economy and why the federal government should step in to get this sector of the economy off the ground.

“At this plant you’re doing more than making high-tech batteries.  You’re pointing the country towards a brighter economic future,” Obama said.

During his visit, President Obama vowed to create 800,000 green energy jobs by 2012.

ZBB Energy makes batteries specifically designed to store electricity from renewable sources. At least, that’s the plan.  ZBB Energy is in the middle of a major overhaul and currently does not have any products on the market. It plans to launch a new line within weeks.

“The product we’re developing will be the only storage device like it in the world,” Will Hogoboom, CFO, told MacIver News. “We’ve already closed orders for the new product even though it’s not in production.”

Investors and the stock market have not always appeared to share in the President’s optimism.  ZBB Energy stock ended the year at 71 cents a share. The day of Obama’s visit, the stock closed at $.70. Some believe investors are generally weary of green energy companies, especially startups, because these companies have high risk: they incur high overhead and generate low revenue while they attempt to develop new technologies that may or may not be profitable.

That’s where federal and state governments step in, providing those companies with massive tax breaks and loans. Many companies state in their SEC filings they could not survive without this preferred treatment. However, as we’ve seen, government favoritism is not a guarantee of success.

Solyndra, a solar panel manufacturer in California, received a $535 million loan guarantee from the Department of Energy in 2009. Two years later the company was out of business.

ZBB Energy has received significantly less help from the federal government than Solyndra. In June, the IRS awarded it a $14.7 million Clean Energy Tax Credit.  In 2009 it received a $1.3 million stimulus loan.

The stock market has been a consistent challenge for ZBB Energy. In December 2010, AMEX notified ZBB its shareholders’ equity was below the minimum $4 million required to continue being listed. This December, the company announced its shareholders equity was at $4.1 million and it was back in compliance.

However, ZBB’s stock still trends downward. It closed at $5.80 on June 18, 2007, three days after the company executed a 1:17 reverse split. Since then, it’s been downhill. On December 20, 2011 it closed at 74 cents a share and has not broken $1/share since September.

Courtesy of NASDAQ.com

ZBB’s market trouble is reflected in its SEC reports. Its Q3 revenue was at $1.637 million. ZBB’s payroll alone was $60,000 more than that. The total operating loss was $1.696 million.

The company hopes to turn all this around with the release of a new line of batteries, which are in the final stage of testing.

“Once we start actually producing and shipping, it will mean the world to us,” Hogoboom said.

The company has also added a number of new employees. At the time of its overhaul two years ago, ZBB employed 25 people. Today it employs about 60 people and has 7 open positions.

Over the past few months, while developing its new product, the company has also been forging new partnerships. In fact ZBB is opening a new factory in China in the next few weeks.

On December 15th, ZBB announced a new joint venture partnership with an unnamed “global technology company,” to help in product development. That partner is investing $800,000 in the project, and bought $700,000 of ZBB stock.

Company insiders appear to be confident. Hogoboom bought 14,000 shares on December 13. Buoyed by the government investment in the firm, investors purchased 1,307,860 shares over the last six months, all at market value.

To achieve President Obama’s goal to create 800,000 green energy jobs by 2012, the federal government has invested heavily in companies like ZBB. Yet, there is presently no official way to verify the success of such job creation efforts since the Labor Department does not track green jobs. The Bureau of Labor Statistics is in the process of conducting a survey to find out exactly how many green jobs there are in the country and hopes to have that complete by the middle of this year.

Meanwhile, announced expansion projects, a new product line, and large stock purchases have not been enough to give non governmental investors in the market confidence in this green energy “startup.” ZBB’s stock opened at 78 cents a share on December 15, 2011 and closed at 81 cents a share on Jan. 13, 2012.

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[Madison, Wisc...] A Wisconsin Senate committee quickly and quietly approved a bill Monday Morning aimed at cracking down on unemployment insurance fraud.

The Senate’s Labor, Public Safety and Urban Affairs committee unanimously approved SB 219.  Under the bill, anyone who commits unemployment insurance fraud would forfeit payments for those weeks, plus a penalty of 15 percent of the payments.

The fines would be used to set up the unemployment program integrity fund, which would then monitor unemployment insurance fraud in the state.

This move marks a continued effort on the part of the legislature to counter unemployment fraud.  Over the summer the legislature approved a one week waiting period before new beneficiaries could begin collecting benefits.  Supporters said that was an important tool in catching fraudulent claims.

As the MacIver News Service previously reported, unemployment benefit fraud in Wisconsin has skyrocketed over the past few years.  Between 2008 and 2010, the amount of fraudulent payments shot up from $21 million to $78 million. The number of cases increased 130 percent. The amount of overpayments over $1,000 that were intentionally concealed went from $9.25 million in 2007 to $40.5 million in 2010, a 338 percent increase.

Even with the cases of fraud increasing, few people have been successfully prosecuted for it.  In order to face punitive action, a person must have fraudulently received more than $5000 in benefits and committed 5 acts of concealment. In 2010, 2,169 people met those requirements, yet only 31 of them were prosecuted. That resulted in 11 convictions.

[Madison, Wisc…] A MacIver News investigation that revealed recent state employee retirees cashed in an average of 43 weeks of unused sick leave is prompting legislative calls for reform.

“It shows yet again how out of whack public sector benefits in Wisconsin have been compared to the private sector,” said Assembly Speaker Jeff Fitzgerald (R-Horicon). “The Assembly will be taking a look at reforming this.”

MacIver examined data provided by the Wisconsin Department of Employee Trust Funds (ETF). Nearly 2,700 new retirees had an average of 1,716.65 sick hours banked, the equivalent of nearly 43 40-hour work weeks, each.

For most State of Wisconsin employees, sick leave accrues at the rate of five hours every two weeks, to a maximum of 16.25 days a year. Unused sick leave hours accumulate from year to year and are converted at retirement to pay post-retirement health insurance premiums for the retiree and their eligible dependents. Sick leave credit conversion accounts have no cash value and do not accrue interest over time.

“The underlying problem here is that state employees get 16 and a quarter sick days each year,” said State Senator Glenn Grothman (R-West Bend). “This would be unheard of in the private sector and whether the employees are using these days for family leave or are just banking the days for their retirement, it is out of line.”

According to the ETF, the average cash value of unused sick leave under the primary six leave conversion program for the 2,699 retirees who left state service between January 1 and September 25 is $97,779.93.

The total value of unused sick leave converted by retirees through the main sick leave conversion program for that period was $263,908,031.07.

There were 1,865 new retirees who also qualified for an additional, supplemental credit accrual program ( through September 8 ). Cumulatively those who participated in the supplemental program converted $78,207,954.40 worth of sick leave.

The combined value of the payouts from the two sick leave conversion credit programs available to state employees who retired so far this year is a staggering $342,115,985.47.

“When I first read those numbers my jaw dropped,” said freshman State Representative Michelle Litjens (R-Oshkosh). “You need to have a certain number there, but maybe we need to start thinking about a cap.”

Wisconsin has two different programs for retiring state employees to convert their unused sick leave into health insurance payments.

Every state worker is enrolled in ASLCC (Accumulated Sick Leave Conversion Credit Program). That program takes the number of unused sick hours an employee has and multiplies it by their highest basic hourly pay rate.

People who have worked for the state for over 15 years are also enrolled in SHICC (Supplemental Health Insurance Conversion Credit Program). This program takes the employee’s ASLCC amount and matches a certain portion of it.

Upon a retiree’s death, surviving spouses and dependents are eligible to use credits from both programs.

Both sick leave conversion programs are pre-funded. State agencies pay ETF 1.2 percent of payroll as part of their fringe benefit rate based on what actuaries say is needed to fund the programs.

Speaker Fitzgerald promises change.

“This just another example that proves what we did through collective bargaining reform wasn’t radical, but necessary,” said Speaker Fitzgerald. “[W]e should lead by example and take a closer look at the benefits legislators have.  Representative Howard Marklein is already working on a bill to do just that.”

President Obama’s jobs plan, currently on life support in Washington, DC, would either only provide funding for laid off public workers for less than one year or would cover three years’ worth of compensation for less than a third of the promised jobs, a MacIver News analysis found.

In a column in the Milwaukee Journal Sentinel and in subsequent remarks, including those made during a recent visit to Wisconsin’s largest city, US Department of Labor Secretary Hilda Solis said “The president’s jobs bill would give Wisconsin $536 million to reverse layoffs of up to 7,400 educators and first responders.”

According to her own figures, the Jobs bill would therefore provide $72,432.43 per job.

However, the average annual compensation for educators in Wisconsin is often much higher, for example, the current average annual compensation for a Milwaukee Public School System teacher is $101,091. Research conducted by PolitiFact noted that two years earlier, eight school districts in Milwaukee County had average teacher compensations in excess of $100,000 per year: Greendale, Greenfield, Shorewood, Cudahy, Fox Point, South Milwaukee, Franklin and Nicolet. Statewide the average figure for public school teachers’ annual compensation for the 2009-2010 school year was $86,297.

However, as the Carolina Journal discovered, Sections 204-209 of the bill include “Maintenance of Effort” provisions requiring states to “meet the requirements” of the law for an additional two years. A White House spokeswoman told Carolina Journal that the bill includes no unfunded mandates. (The Carolina Journal is a project of the North Carolina based John Locke Foundation.)

Unless states pick up the funding for these jobs after the first year, it’s unclear how the teachers and first responders supported by the Obama Jobs plan could be paid.  If the jobs bill is expected to cover all three years, then the total number of jobs ‘created or saved’ by the bill should be reduced by a factor of three, meaning for three years the bill could reverse the layoffs of 2,467 teachers and first responders.

Again, this figure does not account for the discrepancy in average compensation for teachers and the average salary allotment figured by the White House

Moreover, Milwaukee Public Schools issued more than 500 layoffs this year after unions there refused to reopen existing labor contracts that had been negotiated under the previous collective bargaining laws. Milwaukee, therefore, had by far the most layoffs of any district in the state, so it stands to reason that a disproportionate number of ‘saved’ public sector jobs would be in the more expensive MPS district.

In either case, the numbers provided by the Administration do not appear to add up.

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[Madison, Wisc...] The Wisconsin Department of Revenue says it did not shut down Roll Your Own (RYO) tobacco stores across the state this week, but store owners and their machine distributor contest that claim.

RYO tobacco stores sell loose tobacco to customers, who then are able to rent time on a machine that rolls it into cigarettes.  Customers say they can save up to 50 dollars per cartoon by making their own cigarettes after purchasing tobacco on their own.

On Thursday, DOR sent a notice to RYO stores warning them to apply for additional permits, certification, and submit to additional taxes.

On Monday, many RYO stores closed their doors after visits by DOR agents.

“We have not been shutting them down, but we have been going on site to make sure they have the materials we sent out,” said Stephanie Marquis, DOR spokesperson.  “We haven’t been going out and actually shutting them down.”

However, Paul Carne, who is the authorized distributor of RYO machines in Wisconsin, clarified that point.

“They shut down the machines [not necessarily the stores]” he said.

Some stores that offer RYO also sell other products and were able to remain open.  Many others had no other option but to shut their doors.  Carne said stores that remain open were told to come into compliance or remove the machines within 30 days.

According to the DOR State law requires RYO retailers to:

State law requires RYO retailers to:

• Obtain both manufacturer and distributor permits from the Wisconsin Department of Revenue. A retailer needs the cigarette manufacturer permit because its business involves producing cigarettes with loose tobacco, as well as a distributor permit to ensure that all cigarette packages the customer leaves the retail premises with are affixed with the appropriate Wisconsin cigarette tax stamps.
• Sell more than 50% of the RYO cigarettes wholesale to other retailers or vending machine operators, and retailers cannot own, control or operate these other entities. This is necessary only if retailers wish to continue selling RYO cigarettes directly to customers.
• Obtain certification from the Wisconsin Department of Justice to be placed on its approved directory of cigarettes for sale in Wisconsin in order to comply with state law and regulations.
• Obtain certification from the Wisconsin Department of Safety and Professional Services that these cigarettes meet the fire safety performance standards.

“Under state law, if a retailer or the retailer’s customer operates a RYO machine on the retailer’s premises to make cigarettes with loose tobacco, the retailer is both a cigarette manufacturer and distributor,” DOR told store owners. “Retailers who fail to meet the above requirements could face fines, penalties, permit revocation, imprisonment, and/or seizure of the tobacco and other personal property used in this activity.”

Josh Winrich, owner of Holy Smokes Stores in La Crosse, Eau Claire and Tomah, told the MacIver News Service this came as a surprise.  He believed the RYO industry’s lobbyist had sat down with government officials earlier this month and came to an agreement.

“They actually said we were clear and if we followed a set of rules, they would leave us alone,” Winrich said.  “Obviously that wasn’t the case.”

Winrich said the DOR had not visited his stores at that time, but he was taking precautionary action.

“We’re open because we sell other products as well,” he said.  “I decided just going to voluntarily shut down my machines today, so they don’t completely shut me down.”

Winrich said in trying to get more tax revenue from operations like his, the state risks losing thousands of dollars it currently collects.

“I paid the state close to three thousand dollars in sales tax last month,” he said.  “And the state’s not going to get that money once they shut us down.”

Winrich also said his business keeps more money in the local economy, than if customers just bought pre-manufactured cigarettes.

“We employ 7-8 people, who spend their money here in town, and our customers have more money to spend too,” Winrich said.

On Friday Smoke Free Wisconsin applauded the state’s decision to go after RYO stores.

“Wisconsin must stand by the health of our citizens and no longer allow these products to be sold at the current, cheap price,” said Maureen Busalacchi, executive director of Smoke Free Wisconsin. “We applaud Governor Walker’s administration and the Department of Revenue for addressing this issue and making the right move for Wisconsin.”

Carne said RYO lawyers are meeting with state officials hoping to resolve the situation.

“I’m optimistic they will be open again soon,” he said. “But I’m sure there are folks on the other side that are optimistic they’ll stay shut down.”

According to DOR there were 50-100 RYO stores in Wisconsin before enforcement actions began this week.

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[Madison, Wisc...] If you are covered under the Wisconsin Retirement System, and you retire, you begin drawing a pension.  However, some government employees in Wisconsin then reenter the workforce and collect both pension and salary.

One Wisconsin lawmaker wants to put an end to this practice, which is commonly referred to as ‘double dipping.’

Rep. Stroebel

Representative Duey Stroebel (R-Saukville) first became aware of the problem when he sat on the Cedarburg School Board.  He recently finished drafting a bill eliminating double-dip retirement, which is currently being circulated for co-sponsors.

“When you decide to un-retire and take a job with another Wisconsin Retirement System employer for more than halftime, then your pension should be abated for that time,” Stroebel told the MacIver News Service as he explained his bill.  “When you re-retire, you’re pension starts back up again.”

Stroebel said double dipping strains the state’s retirement fund jeopardizes the fund’s stability.

“We’re very solvent and we take pride in that, but it comes at a price.  There’s a huge infusion of cash from taxpayers,” he said.

Although this practice has been going on for years, Stroebel believes there is more potential for abuse now that Act 10 is in effect.  Wisconsin teacher retirements doubled over the summer, as teachers sought to dodge making pension and health insurance contributions under the new law.

Stroebel told the MNS the bill does not seek to punish retirees, but only to ensure they are actually retired if they are drawing a pension.

“It pretty much says when you’ve retired, great.  Enjoy your retirement.  Enjoy your pension,”  Stroebel said. “You’ve earned it.”

However, Stroebel says his bill enhances the solvency of the WRS and allows other residents a better chance to begin a new career in Wisconsin public service.

- click to enlarge -

National and state liberal groups, led primarily by public employee labor unions, have pumped well in excess of $14,000,000 into the Wisconsin state senate recall elections.

MacIver News’ staff complied this graphic of this unprecedented spending using official reports on file with the Wisconsin Government Accountability Board (Totals are accurate as of 8/8/11).

These figures include direct contributions from political action committee to candidates, coordinated independent expenditure campaigns, and individual third party expenditures. The overall effort, however, is likely much larger. Member-to-member communications and issue advocacy totals are not required to be reported to the Wisconsin Government Accountability Board and are therefore not included in this total.

Supporters on both sides of this month’s state senate recall elections are emphasizing the importance of absentee ballot programs. Nowhere is that push more evident than of Wisconsin’s college campuses where left-leaning organizations made a concerted effort to get out the youth vote.

For example, Fair Wisconsin, the state LGBT lobby, launched “Vote Naked” earlier this year to register students for absentee ballots for the recall elections.

Fair Wisconsin’s push earlier this year was: “Whether you’re at your parent’s house, your trip abroad, working 24/7 or actually NAKED, you too can participate in these historic elections…. A Students for Fair Wisconsin organizer will come to your door within a few days with a completed absentee ballot request form for you to sign.  We’ll even deliver your form right to your City Clerk’s office.”

Sen. Grothman

“The absentee ballot provisions are there for permanent residents, to make sure those otherwise occupied have the ability to cast a vote in elections where they live,” said State Senator Glenn Grothman (R-West Bend). “A dorm contract that expires in May or a lease that begins in September does not qualify you to vote on August 9. The law is not there to simply make things easy to cheat.”

Using Facebook and other social media tools, Fair Wisconsin targeted students to register to vote absentee.

At UW-River Falls, Fair Wisconsin solicited many students to register to vote absentee. However not all the applications were completed correctly. City Clerk Lu Ann Hecht stated “We received applications where the requester was not registered in River Falls or was not registered at the RiverFalls address listed on the application.”

Such errors are not uncommon with third-party absentee vote drives, several clerks told us.

Nevertheless, in River Falls, dozens of students were able to register for an absentee ballot, including 24 students who gave mailing addresses in Minnesota. Of these, 22 registered with phone numbers with a Minnesota area code, one did not provide a phone number, and one gave a North Dakota area code.

Laremy Ellsworth lives in rural Minnesota between the towns of Dover and St. Charles.

On May 9, according to records from the River Falls City Clerk, Ellsworth registered for an absentee ballot for River Falls, WI, using an address 2 blocks north of UW-River Falls. A check of county records indicates he voted once in River Falls during the November 2008 presidential elections.  Casual voters like Ellsworth hare the prime targets for absentee vote programs.  Organizers generally believe voters like him would be more willing to vote if the process were much simpler.

But should Ellsworth be voting in an August election in Wisconsin?

On May 10th, Ellsworth posted on his facebook wall that he “will be out of this **** hole” in “less than a week.” Four days later, Laremy Ellsworth graduated from UW-River Falls.

But, before he left Wisconsin, Elsworth registered to have his absentee ballot mailed to Dover, MN.

In total 22 students who lived in the UW-River Falls dorms, and two UW-River Falls students who lived off campus registered for absentee ballots to be sent to Minnesota. Twenty one of these students had never voted before in a Wisconsin election, and the remaining three, like Ellsworth had only voted in the 2008 presidential election.

“Absentee voters should be reminded that they will face prosecution if they vote in the August 9 election without a permanent residence in the district on that date.” said Grothman.

A cross check of the Minnesota voters list with absentee ballot requests from three western Wisconsin campuses found eight voters who requested to vote absentee in the upcoming Wisconsin recalls who are currently registered to vote as Minnesota residents.

Two of those students requesting absentee ballots, Nicholas Gerhard Newman and Frederick Daniel Wolter voted in Minnesota as recently as November 2010.

Under Wisconsin Statutes 12.13 and 12.60, anyone who votes at any election if that person does not meet the necessary residence requirements is guilty of a Class I felony. Under 6.10(8) No person gains a residence in any ward or election district of this state while there for temporary purposes only.

“It is up to the clerks, the Government Accountability Board, the District Attorneys and the Attorney General to make absolutely certain that no one is voting at a college campus who is not a permanent resident there,” Grothman said. “This is not a game.”

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[Madison, Wisc]  Wisconsin’s efforts to crack down on unemployment fraud took a serious blow Tuesday when the State Senate voted to eliminate a recently passed one-week waiting period for benefit recipients.

Unemployment benefit fraud in Wisconsin has skyrocketed over the past few years.  Between 2008 and 2010, the amount of fraudulent payments shot up from $21 million to $78 million. The number of cases increased 130 percent. The amount of overpayments over $1,000 that were intentionally concealed went from $9.25 million in 2007 to $40.5 million in 2010, a 338 percent increase.

A bill, amended and passed by the State Senate Tuesday afternoon could eliminate a newly instituted waiting period on the receipt of unemployment benefits that state officials say is a crucial part of the effort to root out fraud.

The waiting period became law as a part of the recently passed state budget. State officials advocated for the waiting period in order to investigate fraud and prevent overpayments.

“[The waiting period] actually ends up saving us about $50 million a year, because if you look at the first week when a termination or a resignation occurs, it gives the department the opportunity to evaluate what is that particular employee owed, if anything,” said Department of Workforce Development Secretary Scott Baumbach. “It cuts down on over payments.  It cuts down on fraud.”

Even with the cases of fraud increasing, few people have been successfully prosecuted for it.  In order to face punitive action, a person must have fraudulently received more than $5000 in benefits and committed 5 acts of concealment. In 2010, 2,169 people met those requirements, yet only 31 of them were prosecuted. That resulted in 11 convictions.

However, on Tuesday Democrats argued, and many Senate Republicans agreed, that the one-week delay punished the unemployed.

When the State Senate passed a bill that authorizes the use of federal funds to extend unemployment benefits by 13 weeks, they amended the bill to rescind the new waiting period.

The Senate approved the extension Tuesday by a vote of 30-3, with Republican Senators Grothman (West Bend), Lazich (New Berlin) and Zipperer (Pewaukee) voting no.

Senator Robert Jauch (D-Poplar) called the one-week waiting period “a 55 million dollar highway robbery of workers.”

Andrew Welhouse, spokesman for Senate Majority Leader Scott Fitzgerald (R-Juneau) said that even though the Senate approved the amendment, the bill is still a work in progress.

“It was put in because our senators are trying to work together to get to the right answer to help people who are out of work and struggling,” Welhouse said.  “There are still a lot of discussions back and forth between the Assembly, the Governor’s Office, and the Senate about this specific issue.”

The Assembly is expected to take up the measure Wednesday.

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[Madison, Wisc...] A Senate amendment passed Tuesday afternoon could eliminate a proposed one-week waiting period on unemployment benefits, which could cost the state in excess of $50 million a year from unemployment benefit fraud and lost administrative savings.

The bill before the Senate Tuesday would allow the state to accept federal funds to extend unemployment benefits to recipients for another 13 weeks.  That extension would be funded mostly by the federal government, but would also require a contribution from Wisconsin employers. It would not, however, add to the loan balance with the feds.The Senate approved the extension Tuesday by a vote of 30-3, with Republican Senators Grothman (West Bend), Lazich (New Berlin) and Zipperer (Pewaukee) voting no after the body added an amendment removing a required one-week delay in receiving benefits.

The amendment undid a change in state law that was included in the just-passed state budget.  That amendment could cost between 41 and 56 million dollars, annually. The Assembly had been expected to approve the plan on Wednesday. Governor Scott Walker had indicated he was prepared to sign the original proposal, which was recommended by the Unemployment Insurance Advisory Council earlier this year.

“The extended benefits will help the worker out.  The one-week waiting period actually helps the department out,” Secretary Scott Baumbach, Department of Workforce Development, told the MacIver News Service earlier.  “It actually ends up saving us about $50 million a year, because if you look at the first week when a termination or a resignation occurs, it gives the department the opportunity to evaluate what is that particular employee owed, if anything.  It cuts down on over payments.  It cuts down on fraud.”

During the floor debate, Democrats criticized the waiting period.

“The one week waiting period was a 55 million dollar highway robbery of workers without any recommendation from the advisory council,” said Senator Bob Jauch (D-Poplar).

However, Baumbach explained to the MacIver News Service, “It doesn’t mean that the employee loses a week.  It actually shifts to the back end.”

Andrew Welhouse, Senate Majority Leader Fitzgerald’s spokesman, said even though the amendment was approved by the Senate, it is not yet set in stone.
“It was put in because our senators are trying to work together to get to the right answer to help people who are out of work and struggling,” Welhouse said.  “There are still a lot of discussions back and forth between the Assembly, the Governor’s Office, and the Senate about this specific issue.”

Senator Rich Zipperer, (R – Pewaukee) objected to the change, saying “this will increase the cost of the bill without any plan to pay for it.  We are trying to restrain spending and pass balanced budgets in Wisconsin and this change goes in the other direction.”

The Department of Workforce Development hoped the $50 million could be used toward paying back the $1.3 billion the state burrowed from the federal government for unemployment benefits.  As MNS reported earlier, Wisconsin’s unemployment reserve fund has been insolvent for over two years.

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