Wednesday, July 26, 2017

A $3 billion Fox-conn? And a backdoor way to tolls in Wisconsin?

Well, we got the big DC press conference about Foxconn planning to come to Wisconsin to manufacture LCD screens. Here's the Journal-Sentinel's Patrick Marley with some of the details of the giveaway "incentives package" that the state is planning to give to Foxconn over 15 years.



That "sales tax holiday" is a write-off for businesses that will do construction work on the Foxconn project, which Marley says mirrors a similar provision for work on and around the new Bucks arena in Milwaukee.



Among many questions that arise with announcement is "when do we see an actual bill, and when will the State Legislature vote on it?" According to the Wisconsin State Journal's Mark Sommerhauser, Governor Walker answered that part today.



(Raises hand) Why are we doing a special session for this when we STILL HAVE TO COMPLETE THE STATE BUDGET? Shouldn't we do these things together, given the massive tax handouts and infrastructure that'll be part of it, so we can see how all the pieces fit together?

To ask the question is to answer it. The Walker/WisGOP folks want to (ab)use the special session rules to hide the details of this package, and jam it through as quickly as possible. They don't want it to be taken in as part of the already messy budget deliberations. Not a good sign.

Neither is it a good sign that WE DON'T EVEN HAVE A SITE FOR THE PLANT, only that it'll be "somewhere in Racine or Kenosha County". Given that this plant and related sites are allegedly going to be 1.8 SQUARE MILES, it kind of seems like we might need to have a spot cleared and infrastructure ready to go to handle a facility that could have thousands of people working at it (if we ever get thousands of people working there).

Oh, and here's another red flag.



I mean what could go wrong with that? It's not like there were any problems from WEDC's most recent audit from 2 months ago.
Gov. Scott Walker's troubled economic development agency is still struggling, failing to accurately track jobs its awards are supposed to create and retain, handing out nearly $10 million in bad loans over the last two years and failing to turn over millions in tax credit repayments to the state, an audit released Wednesday shows.
Even before the massive $3 billion price tag with Fox-conn was revealed, State Representative Jimmy Anderson (D-Fitchburg) expressed severe skepticism about the deal. Anderson questioned the priorities of the Walker Administration, and drew a contrast between the huge incentives likely to be given to Foxconn with investments that Walker and WisGOP are choosing not to make.
Wisconsin taxpayers should not be subsidizing private corporations at the expense of our children, schools, and roads. And despite Governor Walker’s alleged fiscal conservatism, the truth is that he is fine with spending money so long as it doesn’t go to you, the real hard-working taxpayers of our state. The Republican-controlled legislature and Governor Walker have consistently asked you to tighten your belt or have rejected other opportunities to create family sustaining jobs, but when a multinational corporation wants a multibillion-dollar handout, Governor Walker more than bends over backwards. All the while, our schools struggle to stay open, Main Street is littered with potholes, and huge numbers of Wisconsinites cannot even drink the water coming out of their taps. That’s not leadership.
Well stated Jimmy. And given our deficit-ridden budgets, you have to wonder what gets hurt in the next few years as Fox-conn racks up its tax write-offs, which adds to that bill. And I can't think that Foxconn would be thrilled with the prospect of looking at a lot of this for the next 5-10 years as Wisconsin falls further behind on highway repairs.



This is why I’m going to make a wacky prediction here- the FoxConn package will include the Trump Administration allowing Wisconsin to put toll lanes on I-94 between Milwaukee and the state line. Wisconsin would need approval from DC to put in tolls, but Trump has indicated that he is fine with tolls as a way to pay for roads, as part of having corporations take on much of the costs of building the roads (and getting a payback for doing so). Note this story from May.
President Donald Trump administration’s proposal for a $1 trillion bill to improve the quality of the nation’s roads and highways will be paid for mostly by private funding that will be stimulated by $200 billion in federal spending, Transportation Secretary Elaine Chao announced Monday.

Speaking at an event in Washington, Chao said the transportation bill will include $200 billion in federal spending that will “be used to leverage $1 trillion in infrastructure investment over the next 10 years.” The remainder of the money would come from private companies that would enter into partnerships with local and state governments to provide financing that is necessary to complete expensive construction projects in exchange for revenue that would be generated by things such as road tolls or rail fares.
Wouldn’t the highway next to Foxconn’s new Wisconsin plant be a perfect spot to try out this scam? This would go along with Trump’s pose about “reinvesting in American jobs” and improving infrastructure, while giving Walker a photo op that makes it look like the state’s going in the right direction on both issues (in reality, it’s not). And it would explain why the press conference was in DC today with Trump and House Speaker Paul Ryan- because they're going to play a role in this deal.

This toll scam might be the only way the State of Wisconsin can come close to fixing the roads in the next decade, especially if the state is giving away $1 billion to $3 billion to Foxconn, which is on top of the $1 Billion deficits the state is facing for both the Transportation Fund and the General Fund. Of course, it doesn’t change the fact that it takes 3-4 years before the state would ever get anything back for the tolls, and would cost hundreds of millions of dollars (that we don’t have) to start up. Which may be where the campaign contributors private sector investors come in.

Now there is a long way to go before we ever see any LCD panels get made in Wisconsin. I would love to be proven wrong on this, and hope that Foxconn chose Wisconsin because it was a good location with a strong work force, and that the incentives that are given out are limited in the final package, potentially making it a worthwhile investment for the state to get involved in. And I hope part of that final package includes something that keeps homeowners and current businesses in the area from being socked with major tax increases at the local level (because you know there will be more subsidies at the local level, and the already-existing taxpayers will be paying the difference).

But if it’s anything I’ve learned in the 6 ½ years of the Age of Fitzwalkerstan, it’s that these guys are never about fiscal responsibility and legitimate, long-term economic development, but instead are all about political poses and other attempts to trick unsuspecting voters into thinking this state is doing fine. This is despite chronic budget deficits and job growth that’s been in the lower half of the US every year that Scott Walker and WisGOP has been in power.

Which makes me wonder this - how desperate are Walker, WisGOP and Trump these days? Sure seems like they feel they need to try to pull a lot of stunts and trick plays like photo ops with Chinese companies as they give the store away. And just like in football, these guys are likely running those trick plays because their current game plan is failing- bigly.

23 comments:

  1. I can't imagine things have looked much bleaker for the Wisconsin Democratic party than they look today. Maybe right after Act 10's passage. Hey, sometimes the darkest days come right before the dawn, right??

    That said, damn glad and proud to be a Wisconsin Republican today!!

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    1. Why? Because you look like desperate fools that are giving out billions in corporate welfare when you can't even fix the roads?

      How dumb do you think Wisconsinites are, Bradley Boy? Especially when we get to see the extra-slimy garbage in the bill that we all know will be there.

      Good luck selling this crap.

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    2. This is about as anti-free market, government-knows-best-how-to-spend-taxpayer-money kind of action you could imagine. If this is what Wisconsin Republicans want these days, then the party has become its own caricature of the DPW.

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    3. The Republicans haven't been fiscally responsible for 40 years. They are corporatists who believe in (ab)using government by funneling resources to their cronies and donors, and away from social goods like education, good wages and a clean environment.

      I can call it lots of things, but I sure can't call it capitalism. And I sure can't call it economically successful in the big picture.

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  2. Sounds like Peter Barca was involved in the development of this proposal. So it's not just a Republi-conn.

    I am getting very tired of my tax dollars going to large corporations who don't need help. I want to see the Memorandum of Understanding and the wage scales. "Average wage" means squat in the context of a large organization-- it only takes a few very highly-paid individuals to skew the mean.

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    1. Agree- the "average wage" spin is another red flag. You can bet the line workers will be making much less than $53K.

      The Bucks arena has worked well with prevailing wage-style work standards as part of the agreement. And Den even considering this giveaway should demand that be included.

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  3. My biggest question here is that given how the Walker administration trumpets that unemployment is as low as it has ever been, why are Foxconn getting a red cent?

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    1. EXACTLY! If there is no one in need of a job, where is the labor force going to come from?

      Do people think a whole bunch of people will want to move to a red state that underpays its workers and deinvests in schools and roads? There were also implications that relaxed enviro regulations was something that is part of this deal (if you read between the lines).

      Unless the "3.1% unrmployment" figure is BS that'll be revised higher...Yep.

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  4. I wonder how the rural resenters up north look at this.

    How many of those 3,000 jobs will go to people in Illinois? How many of those "company suppliers" that Tom Still waxes about will be south of the border? The Tribune had an article looking at how our neighbors to the south stand to benefit:

    http://www.chicagotribune.com/business/ct-foxconn-manufacturing-wisconsin-illinois-0716-biz-20170714-story.html

    I am ambivalent about tolling but, if it's the only way to pay for roads, so be it. Just make sure they're all toll roads. Toll I39 all the way to Marathon County.

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  5. Great post, Jake.

    And you are right on with this angle that the GOP is playing with toll roads.

    Funny how this is all happening in Those Robin Vos and Paul Ryan districts.

    We don't have a State budget passed, but Walker thinks he can call for a special session just to benefit one corporation? Wish a corporation in my area could have the same pull...

    What has WEDC said about this whole scheme so far? Not really interested in my taxpayer dollars benefitting a company elsewhere and sneaking in road privatization.

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    1. I haven't heard about WEDC's thoughts, but given their failures to track jobs and take action against similar, smaller giveaways, I sure don't trust them in this scenario.

      And I find it funny that Vos has held up the budget because of concerns about DOT debt, but has no problem with this $3 billion unfunded giveaway. What a poser.

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  6. If you look at the bright side of all this, with deals of this magnitude, we are going to see whether this thing is going to sink or swim really fast now aren't we?! It almost reminds me of someone on the farm who just got an expensive rebuilt engine put in their pickup truck and gets so obsessed with all the power, they floor the gas and blow the whole engine apart!! I hope we know what we're doing with huge deals like this people! If not, Jake from the LP is like the auto mechanic that's going to tell us all "everyone get out of the way...she's going to blow!!"
    It will be interesting to see how much Illinois benefits from the Foxconn deal. They obviously couldn't do much to land the deal because they couldn't offer much of anything as far as financial incentives because they are going bankrupt so there definitely isn't any extra money laying around to offer lush incentives. It might all depend on how many of their residents land better paying jobs at the facility near the border since WI will need to cut a big check for the state reciprocity deal which could get interesting considering people were worried about the amount of the check being too large already due to Illinois raising the tax rate. Where are the funds going to come from if the amount doubles due to the new plant?? So again, in the end, all these big deals will help us fully realize the pros and cons of what life is truly going to be like to live in full blown(out?) Fitzwalkerstan a lot sooner than we ever realized and faster than we ever could have imagined! Everyone by now should be so incredibly excited to finally get the answer(sign?) they've all been waiting so long for!!

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    1. All good points, except that Illinois people working in Wisconsin would reduce that huge reciprocity check, so I suppose that's a positive...if that would happen.

      But if these giveaways speed up the state's fiscal implosion, and it happens before the 2018 elections, I could go along with it. That may be what it takes to wake the last of these dopes up to how we've been getting robbed since 2011

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    2. I'm guessing most Illinois residents that would take the Foxconn jobs would probably move to WI because the jobs probably wouldn't pay high enough to financially make sense to live in IL with higher taxes. The strangest part about the Foxconn state incentives being offering is that you would think the plan would be to secure more tax money in advance of offering these kinds of deals. Isn't this like someone trying to save their cake and eating it too? A plan where you cut taxes to the bone, take out a bunch of debt with interest to pay for transportation costs for less work that the very businesses you're trying to land will use even more of. And to add insult to injury, the one thing that isn't being done is trying to offer relief to low wage workers to allow them to afford to take the jobs that the state is paying so much money to bring in to begin with. The real question is how hard it will be for them to compete for workers possibly with other companies and states. If the wages are higher, there could be a negative effect on other businesses in the area that could be starved for workers or the new plant could be starved for workers if other employers can afford to offer more than they can. The other real question is how well WI can compete with other states for workers, especially if other states offer higher wages, so at present, there are a lot of unanswered questions and unknowns as we are definitely charting new territory in this project.

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  7. That sound you hear this morning in Dane county isn't Wingra Stone blasting at 1 of their pits, it's the sound of all the Progressive heads exploding.

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    1. It ain't just us, little guy. Anyone who has a clue about public finance sees the insanity of this corporate welfare and says "How can this be worth it?" Especially in a state that is as broke as ours, with no budget

      And some people are stupid enough to still think the GOP is the "fiscally responsible" party?

      Hey Jeff- your dead-end self is from the 920. Let's delay hwy 10-441 for 2 more years if you think this is so great.

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  8. Well, maybe next time they can go after a medical marijuana dispensary or a wind turbine plant... LOL! Welcome to the Governor's Race of 2018, Dems. How's the water feel today? Donations flowing in yet?

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    1. I'll take those things over this Louisiana-style corporate welfare any day.

      In fact, if the Dems want to win in 2018, they will call out this garbage and point out that Walker and WISGOP would rather give away the state to corporates than invest in schools and roads. Combine that with Trump/Walker's history of empty promises, and this is an easy one to win on.

      "How dumb do the Republicans think we are?"

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  9. Foxconn is a manufacturer that would have very little Wisconsin income tax. The tax credits Wisconsin is offering must be refundable to be of value to them. The capital investment incentives alone could result in negative total corporate tax receipts for the year in which they are refunded. How will the State budget for that.

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    1. This is a great point. Those credits have to be refundable due to the already-huge M&A giveaway. It is obvious double-dipping.

      And we have no money lying around to give away. Not in this budget, and not in future ones

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  10. Take a look at comments in this Washington Post story on the Fox-con. The overwhelming majority are laughing their asses off at Wisconsin for taking such a bad deal from a shady company who has often failed to follow through on its plans.

    I am tired of these ALEC-GOP clowns turning my state into a declining joke. And all the WisGOPs and other pro-corporate supporters have to defend it is "Clap louder! C'mon!" NO SALE

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  11. Under Obama and Doyle Wisconsin lost the Janesville GM plant to Mexico, with Trump and Governor Walker 13,000 high tech jobs are coming to Wisconsin. Thank God the public unions recall attempt was a failure. Thank you Scott Walker.

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    1. Are you this weak and stupid in real life? Obama wasn't even president when GM moved out, you dope.

      Hilarious that a pathetic cheerleader like you buys this crap at face value. No wonder why you settle for a shitty job in a shitty town and end up jealous of anyone who didn't peak at age 18. Enjoy paying your higher taxes and hitting more potholes as a result of this SCAM.

      You'll never own your failure, will ya jeffy?

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