Wednesday, November 8, 2017

The Fox-con slips through, but the cracks are visible

Even though the GOP-run State Legislature voted 8 weeks ago to approve the incentives deal with Foxconn and change enterprise zone and environmental laws in the process, the state’s actual contract with the Asian company still had yet to be approved until today. And that last step is where the Fox-con is looking even more sketchy.

The Fox-con package in the Legislature allowed the Wisconsin Economic Development Corporation (WEDC) to be the ones to finalize the agreement with Foxconn, and oversee the development on the property in Racine County. The problem with this, as Bruce Murphy documents in Urban Milwaukee, is WEDC won’t let people know what’s in the contract before it becomes official. Amazingly, this includes the people that have to vote to allow WEDC to go ahead with finalizing the contract.
That led everyone to assume board members would be voting on a copy of the contract they were being given at the next meeting of the WEDC [Board]. Wrong.

“We’ve now been told we’re not going to vote on the contract, only on the staff review of the contract,” Carpenter tells Urban Milwaukee.

This would mean that no public officials would have voted on the final contract with Foxconn before it is signed.

“I would like us to vote in open session so everyone can explain their vote,” Carpenter says. He also intends to ask if board members can make amendments to the contract, Carpenter says. But given that they aren’t even voting on the actual contract, that seems unlikely.

As for the staff review of the contract, it keeps changing, Carpenter says, and has been given to board members in various pieces, with additional exhibits and amendments, rather than in one complete document. “It becomes very difficult to understand the changes being made,” he complains.
If WEDC can’t give a straight-up copy of the complete contract and refuses to allow an open debate as to what Wisconsinites may or may not be on the hook for with the Fox-con, then it’s clearly a bad deal that cannot stand up to scrutiny.

The Fox-con is clearly disliked by the majority of the Wisconsin public, as evidenced by Governor Scott Walker not even mentioning Foxconn at his re-election announcement on Sunday, and avoiding questions from the media on this week’s taxpayer-funded campaign tour around the state.

Another tell that the Fox-con is rightfully recognize as corrupt BS came last week when Senate GOP Leader Scott Fitzgerald and Assembly Speaker Robbin’ Vos said that the contract language should be made available to WEDC Board members. There is no way they would have said that unless polling came back to the GOP that the average voter isn’t buying the Fox-con and its large price tag.

Oddly, Vos reversed his position yesterday and now seems to favor WEDC keeping negotiations secret, claiming that changes will allow taxpayers to be protected in the final agreement with Foxconn. I’m sure that change in opinion has nothing to do with Wee Wobbin’ not wanting people to ask too many questions about the huge pork project going into his district, and what the real motivation behind this Fox-con truly is.

EDIT- Well, looks like the Foxconn contract got approved by the WEDC Board 8-2. The tax credit situation is basically the same as we knew from the Legislature's package, but I was more interested in this part, which goes over how the state can get its money back if Foxconn doesn't deliver the jobs that were promised.
The company will be eligible to receive up to $10 million in job credits starting in 2018 if it creates 1,040 jobs in the state. To receive any credits next year, the company must create at least 260 jobs. But if the company doesn’t earn the credits in a given year, they can be carried forward into subsequent years.

Within five years, the state can reclaim any credits it pays out if the company provides false information, leaves the state or ceases operations and doesn’t restart within a year. Those violations could result in the company owing as much as $965 million if they occur in the years after 2022. Also after that point, if the company employs fewer than 6,500 workers the state can reclaim a sliding scale ranging from $500 million in 2023 to $250 million in 2032.

Compliance with the terms will be audited by an independent accountant based on a sample of the company’s workforce at the end of each year.
There's 6 years between now and 2023, so we might be out billions before we even can try to get our money back. And relying on "a sample of the company's workforce" seems pretty damn imprecise when we are dealing with such a big-money project. I want payroll records, and to have them publicly displayed.

The contract allegedly claims that Foxconn Chairman Terry Gou and his holding company will personally put up 25% of any penalties, but good luck making them pay that, and even so, that's just a business write-off for them. In addition, this also isn't promising.
After 2032 the deal ends and the state would have no recourse should the company reduce its Wisconsin workforce. The nonpartisan Legislative Fiscal Bureau anticipates the state will recover the $3 billion in lost tax revenue by 2042.
So in 15 years, Foxconn could be taking the advice of this Wisconsinite.

And that reality, along with the horrible record of WEDC in its inability to track job creation in its other handouts, makes this the theme song for me when it comes to the Fox-con.


  1. This truly makes us lose faith in the political system. How is Foxconn going to help people in Rice Lake? It won't.

    Yes, I understand the distiction between skepicism and cynicism, but Wisconsin's political process as it moves now does not encourage people not with the in-crowd to participate in politics. Katherine Vinehout, an ELECTED Dem public official, describes the dysfunction of Wisconsin politics ( Why does it have to be this way??? It doesn't. I'm glad Sykes is off the radio, but am very skeptical in his new identity at (MS)NBC.

    Our DPW will supposedly help a Dem defeat Paul Ryan, a huge race where Ryan is very vulnerable. Let's see that it happens, rather than wondering why deals like Foxconn slip through.

    1. Agree that the only way these crooked scams end is if there is a political price to be paid by it. And if I was a Dem, I'd definitely be asking outstate Wisconsin why they are paying for the Fox-Con

  2. I am always surprised at the ads the blog gets. The one to the right of the text is Trump and Kapernick themed. The advert below this comment box is a Walker campaign ad.

    1. In fairness, I don't control that. It's a Google analytics thing, so it must be based on what you visit and where you live.

      Of course, I get a small bit if cash for each ad click, not that I would encourage such TomFoolery

  3. Some of the ads are based on content, Jake -- like the one at the bottom of the page is for a certain unnamed occasional governor's reelection campaign. Sorry, no clicks on that, no moolah for you!