Wednesday, July 25, 2012

Past is prologue- meet WEDC's corrupt Hoosier cousin IEDC

As someone who was living in Indiana when Mitch Daniels came to power in 2005, I recognize a good pay-to-play privatization scam when I see one. I've mentioned the desire that Walker has to turn Wisconsin into the Hoosier state in the past (and how Indiana underperformed Jim Doyle's Wisconsin with those policies in place), and this desire was reiterated in the notorious "divide and conquer" conversation Scotty had when he was literally kissing up to billion-heiress Diane Hendricks.
Hendricks: - and become a right-to-work (state)? What can we do to help you?

Walker: Well, we're going to start in a couple weeks with our budget adjustment bill. The first step is, we're going to deal with collective bargaining for all public employee unions, because you use divide and conquer. So for us the base we've got for that is the fact that we've got - budgetarily we can't afford not to. If we have collective bargaining agreements in place, there's no way not only the state but local governments can balance things out. So you think city of Beloit, city of Janesville, any of the school districts, that opens the door once we do that. That's your bigger problem right there.

Hendricks: Which state would you mirror? Is there any state that's already . . .

Walker: Well, (Indiana Gov.) Mitch Daniels, did - now, see the beautiful thing is, he did it in Indiana, he had it by executive order that created the unions years ago, and so when he came in about a week after he eliminated through executive order. In Wisconsin, it's by the statute. So I need lawmakers to vote on it.
And that's part of the reason I had alarm bells going off when Scott Walker announced the creation of the Wisconsin Economic Development Committee (WEDC) in 2011. Look at the language that is lifted directly from any press release IEDC gives when they hand out their tax breaks to companies.
About IEDC:
Created by Governor Mitch Daniels in 2005 to replace the former Department of Commerce, the Indiana Economic Development Corporation is governed by a 12-member board chaired by Governor Daniels. Dan Hasler serves as the chief executive officer of the IEDC.

The IEDC oversees programs enacted by the General Assembly including tax credits, workforce training grants and public infrastructure assistance. All tax credits are performance-based. Therefore, companies must first invest in Indiana through job creation or capital investment before incentives are paid. A company who does not meet its full projections only receives a percentage of the incentives proportional to its actual investment. For more information about IEDC, visit
You can see that WEDC is a carbon copy of IEDC, right down to the folding of the Department of Commerce and the Governor's appointed crony board.

And I bet this'll stun you, but the IEDC has been beset by corruption and lies about its effectivness. Here's an excellent in-depth report from Eyewitness News 13 in Indianapolis showing that Daniels and IEDC inflated the number of jobs created on its tax-credit funded projects, and left out companies that got breaks but didn't come through on jobs.
Only a fraction of job commitments announced by the Indiana Economic Development Corporation have resulted in actual Indiana jobs, according to an independent IEDC program review obtained by Eyewitness News.

The review, presented to the IEDC audit committee earlier this month, is part of an audit that examines how state job numbers are collected, tracked and announced by IEDC. The numbers presented in the audit offer a stark contrast between the job realization figures cited by Governor Mitch Daniels and his job creation agency and those reported by auditors and WTHR. It also presents statistics in a manner that allows state leaders to still cite high levels of job creation, even though the realization figures suggest otherwise...

And nowhere does the audit report mention the 98,683 total new job commitments announced by IEDC from 2005 to 2009. Using that number – which IEDC and the governor have repeatedly promoted in their press releases, speeches and annual reports – the audit data suggests, so far, only 38% of jobs announced by IEDC have resulted in actual jobs. While that percentage is expected to increase in coming years (some of the companies are not expected to fulfill all of their job commitments for several more years), the overall numbers show IEDC's real job realization statistics are much lower than the agency portrays to the public by citing far more limited data....

Why does IEDC boast that 800 companies will bring 98,683 jobs to Indiana in its press releases and annual reports, but then omit 200 of those companies from its jobs data when calculating its job realization numbers?

Despite repeated requests from Eyewitness News, the agency has not yet explained its justification. So far, IEDC has also not granted WTHR's request to speak directly with members of the Crowe Horwath audit team that helped prepare the report. The auditors are contractually prohibited from speaking about the audit without written permission from IEDC.

But sources close to IEDC tell WTHR the agency chooses to include only "reporting companies" in its job realization numbers because those companies are more likely to have been successful in creating jobs. Companies that are required to report their job-creation data to the state have formally accepted a state incentive package (which often includes tax breaks and training grants offered by IEDC) and that shows a higher level of commitment to create jobs that have been promoted by IEDC.
Nice transparency, eh? And you thought it only happened in Fitzwalkerstan.

Much like Wisconsin, Indiana also had a cronyist hack in charge its EDC at the time of that report, Mitch Roob, who quit his job at IEDC last September to go through the revolving door to a medical services firm. Roob also was part of a notorious scandal where Indiana's welfare-intake program took case workers off the street, and instead services were sold off to IBM in a call center-type system, (with some of the business sub-contracted to Roob's old employer in Texas). It failed so badly that the state had to take it back over within 3 years, at huge cost to taxpayers. In fact, there was just a lawsuit last week where the Indiana's attempts to get $170 million back from IBM was turned down. Sound like a familiar plan to you? It should.

And IEDC's cronyism and giveaways continue to draw fire, including an Indianapolis Star report last month that shows IEDC handed out tax credits to two different California companies whose owners had bankruptcies and tax liens in their recent past. And when local officials in Madison, Indiana expressed skepticism about giving away local tax dollars to help the previously-bankrupt Mynette Boykin locate a promised business in town, IEDC told them to back off.
At first, it seemed as though she was simply going to be making parts of a generator. Then it appeared that was going to be one of several unspecified "other products." Then, at the last session, she talked about how her company was also going to make batteries.

So council members kept asking questions. And some thought the answers were inadequate.

By the last executive session May 21, it became clear the project lacked majority support on the council.

Regardless, IEDC official Wanda Heath was there, and she addressed the council for the first time. She sounded irritated. "You could tell she wasn't happy," said Councilman Darrell Henderson, a Democrat.

She also made it clear that she felt that Madison council members weren't doing their job properly.

"She said, 'You guys are moving way too slow; you're making Madison look bad; this process should never take this long; no business is ever going to come to Madison being treated like this,' " said Councilman Rick Berry, a Republican.

"I really thought that was out of order," another councilman, Republican Jim Lee, said.
Sure makes you wonder if IEDC and Ms. Boykin had another investment in mind- a nice payoff to their well-connected buddies at the Indiana Statehouse, and a good "job creator" headline in the unsuspecting media. Regardless of whether anything actually happened and if it crowded out more legitimate businesses from growing.

So when you see the deceptions and cronyism that have wracked IEDC, and then you know that WEDC has already been afflicted with sketchiness and budget deficits in its short existence, you have a right not to trust either Daniels or Walker's plans. Then combine with the fact that Wisconsin lost more jobs than any other state last month, and you can see where WEDC and Walker staffers might be itchy on the trigger finger when it comes to making for a good photo op that costs us all a helluva lot more in the end.

After all, when you're Scott Walker and want to be like Indiana, why wouldn't you make backroom deals like the corrupt corporatist Hoosier you idolize, Mitch Daniels?

No comments:

Post a Comment