Friday, December 15, 2017

New roads, electric bills, and local subsidies. Hidden costs of the Fox-con

We haven’t checked back on what’s happening with the Fox-con recently. And we probably should, because we are finding out that a lot of unadvertised costs and changes are rippling out that go beyond what we were told during the debate over the bill a couple of months ago.

I had a post ready to explain some of these added costs, but then we saw this blockbuster story from the Wisconsin State Journal tonight, which summarizes the mess in totality.
Wisconsin has converted several local roads near the future Foxconn factory in Racine County into state highways to access state road repair and improvement funding, a new state report has disclosed.

But the move could siphon $134 million from other highway projects around the state, according to a Legislative Fiscal Bureau memo.

Gov. Scott Walker says savings from other road projects will help cover those costs....

The fiscal bureau memo to Assembly Minority Leader Gordon Hintz, D-Oshkosh, now reveals the previously unknown cost of local road improvements on top of the $252.4 million in state bonding that was authorized to pay for the nearby expansion of Interstate 94.
None of the plans for the state to take over these roads nor the extra costs that state taxpayers would pay were revealed during the debate of the Fox-con package in the Legislature. The Walker Administration claims that they have the extra money in the DOT budget, but the $100 million in "savings" that Walker flack Tom Evenson references in the article seems to be no different than what was carried over into the 2017-19 budget to begin with, and built into the figures for the next 2 years.

Which leads the LFB to indicate that this $134 million in extra road-building costs for the Fox-con would take away from other road projects in the state,
...fiscal bureau analyst John Wilson-Tepeli explained in the memo that because the roads in Racine County were local roads when the 2017-19 budget was adopted it is "unlikely" that the work was accounted for in the state highway rehabilitation fund during the budget debate.

"Therefore, the use of state highway rehabilitation funding to complete this work near the Foxconn site would likely result in the delay of other, previously planned rehabilitation projects on state highways," Wilson-Tepeli wrote.
An example of this new taxpayer-funded road construction near the Foxconn campus was detailed in a Milwaukee Journal-Sentinel report today about a brand-new road in Racine County being created to deal with the added traffic that will result from the plant.
State transportation officials unveiled plans Thursday for a new two-mile road east of I-94 aimed at easing traffic congestion near Foxconn’s planned $10 billion manufacturing complex in Racine County.

The Department of Transportation revealed plans for the road, dubbed “Wisconn Valley Way,” at a public meeting to provide details of planned upgrades to I-94 and state roads near the Taiwan company’s proposed facility…
The road will have two lanes in each direction with adjacent bike and pedestrian paths on both sides is expected to cost $20 million to $30 million and is planned for completion in 2019. The road will be paid with existing state transportation funds, officials said.
Let me remind you that this money is being shelled out while projects like the Zoo Interchange and US 10-441 in Appleton are being delayed because allegedly there isn’t enough money available to pay for those projects, and statewide highway development and rehabilitation is being cut in the 2017-19 budget. But throwing $134 million more down into the “Wisconn Valley” near Foxconn? NO PROBLEM!

There was another story out this week showing how everyday Wisconsinites will end up paying for added infrastructure from the Foxconn plant, this time in the form of higher electricity rates and in buildings being knocked down.
American Transmission Co. plans to make $140 million in upgrades to its power line system between Racine and Pleasant Prairie to meet increased electrical demand from Foxconn and related development.

The project would include a new substation to serve Foxconn’s Mount Pleasant campus, new electric transmission lines and modifications to existing transmission lines, structures and substations, according to a description of the project posted on the utility’s website…

Plans also call for the addition of a second 345-kilovolt transmission circuit to the existing transmission line between Racine and Mount Pleasant. Crews would replace 19 structures along the route, but no new right-of-way would be required.

ATC says the project’s $140 million cost would be spread across roughly 5 million residential customers over a 40-year period. That would amount to about 70 cents per year.

Getting power to Foxconn’s campus, which the company projects could ultimately employ 13,000 people, is just one of the infrastructure challenges related to the project.
That $8.40 a year is a direct subsidy from Wisconsinites to Foxconn to help in the start-up costs of their plant. And of course, this is on top of the bags of cash that Foxconn and its contractors will get from the state for constructing the plant and hiring people, because the write-offs are more than any taxes that Foxconn would ever pay.

And let’s not forget that Racine County and other local governments are on the hook for major borrowing and infrastructure upgrades related to the Fox-con, while other people are being bought off/driven off their land as part of eminent domain measures in and around the plant site. And those who remain will be the only ones paying property taxes until the Foxconn property can be worth enough to close the massive TIF district that was created solely for the campus (if that ever happens).

We already knew the Fox-con was a massive scam from the absurd $3 billion+ price tag of the incentives. But add in the local subsidies and Foxconn-related public works projects that will disproportionately benefit one small sliver of the state’s economy, and the foolishness of the Fox-con gets compounded.

It’s time to get some responsible leadership into office at the Capitol that can stop this madness and get an economic strategy that goes beyond “giving away everything to a few connected corporations at the expense of everyone else.” And if it doesn’t happen in 2018, giveaways like the Fox-con may make us too fiscally screwed to ever return this state to making investments that help ALL Wisconsinites, instead of the failing cronyism that we see today.


  1. You forgot to include, although hard to quantify at this point, the legal costs of lawsuits brought by people who have to sell their homes for FoxConn to be built. There are probably other lawsuits that creative lawyers can come up with.

    1. And the environmental remediation that'll have to be done after Foxconn packs up and leaves.

      By the way, there's a bill being heard next week in committee that would further deregulate wetlands and redefine "navigable streams."