"Free market"? WEDC throwing $60 mil at GB Packaging, and corporates still want K-C bailout

While there doesn't seem to be much appetite by State Senators to go back to the Capitol to vote on a $110 million Foxconn-like package to bail out Kimberly-Clark and keep jobs in Wisconsin, that doesn't mean the "free market" types in Wisconsin's corporate community aren't trying.

The New North economic development organization is among the group that wants to see the plant stay, although they don’t limit themselves to having the Kimberly-Clark bailout be the way that it’s done.

A great amount of effort has been put forth by local and state elected officials and by the Wisconsin Economic Development Corporation [WEDC] to find an effective legislative solution. We applaud that work, and are hopeful that final steps can be taken to save the jobs, most of them union-affiliated.

Keeping quality manufacturing jobs in Northeast Wisconsin is a critical priority.

Retaining this facility also assures continued indirect job and economic impacts related to purchased services, supplies, and materials provided to this plant by Wisconsin firms (estimated at 32 million dollars per year). It would be a huge win for Northeast Wisconsin to save this legacy manufacturing facility from closure and prevent the resultant jobs loss.

Do we want to lend these guys a hand?

Along the same lines, Kathi Seifert chairs the Fox Cities Chamber of Commerce, and specifically said that the Kimberly-Clark bailout package should be supported, in order to keep the jobs in the Appleton area .

“The Fox Cities Chamber of Commerce is dedicated to ensuring a strong and vibrant local economy and is grateful to elected state officials and the WEDC for their support of the Kimberly-Clark Cold Spring facility through proposed legislation. The Kimberly-Clark Cold Spring manufacturing plant not only provides approximately 400 family sustaining jobs, but stands as a representation of what the Fox Cities was built on – ingenuity, hard work and quality.

The Fox Cities – also known as the Paper Valley – is rooted in the paper industry. Our community relies on consumer products manufacturing companies, like Kimberly-Clark, to provide high-paying jobs, not only as a direct employer, but through their greater economic impact. The Fox Cities Chamber of Commerce is urging the Wisconsin Senate to concur with AB 963 to ensure the protection of our local economy. The fight for jobs is greater than ever and we can’t afford to lose jobs to states who are more than happy to provide the economic conditions companies require.”

That last sentence strikes me as ominous, as it appears to be in favor of a race to the bottom when it comes to giving away tax dollars to corporations and allowing other Foxconn-like favors for companies that put a gun to the head of communities and threaten to leave.

Oh wait, this is a Chamber of Commerce I’m talking about. Their central focus these days is all about extorting as much as they can from taxpayers and citizens without having to put any of their own skin in the game. A K-C bailout would be right in line with that mentality. And that was confirmed when the right-wing oligarchs at Wisconsin Manufacturers and Commerce also joined the call to have legislators and WEDC help out Kimberly-Clark.

But do we even need a Foxconn-like bailout bill to go through the Legislature. Let me remind you that Scott Walker's WEDC
recently set aside $60 mil for jobs at Green Bay Packaging.

– The Wisconsin Economic Development Corporation (WEDC) announced today it is providing Green Bay Packaging with $60 million in tax credits over 12 years to support the company’s plan to build a new paper mill in Green Bay – a project expected to create 200 jobs.

Governor Scott Walker recently joined company officials and community leaders to announce the construction of a new recycled paper mill and an expansion of the Green Bay shipping container division. Green Bay Packaging’s $500 million investment will be one of the largest economic development projects in state history and the largest ever in Brown County.

“This project will provide an economic boost to Green Bay, the region and the entire state,” said Mark R. Hogan, secretary and CEO of WEDC, the state’s lead economic development organization. “WEDC is proud to support this company’s investment in Wisconsin and the many family-supporting jobs it will bring with it.”

This is the state’s side of tax-funded incentives to Green Bay Packaging totaling a reported $88 million, with local taxpayers shelling out another $28 million.

Green Bay would create a tax increment financing district that would return up to $23 million in property taxes to the company once the new mill opens. The city also will deed its evidence-storage building, near the company's Quincy Street mill, to the company.

Brown County would spend $5.3 million on infrastructure to create a Fox River papermaking corridor.

Seems like quite a price tag for what will be at most 800 jobs (about $111,000 a job, if you do the math), but you could argue that it’s better to try to keep a current employer than rolling the dice on a company like Foxconn that didn’t even have a presence here until billions of state and local tax dollars were thrown at it.

And if WEDC’s got $60 million in a current program that it can throw at Green Bay Packaging, why can’t it throw similar amounts of money to Kimberly-Clark? It wouldn’t require the Legislature to get back into session, unless Walker’s buddies have handed out too many tax credits already, and wouldn’t require changing a number of environmental laws or setting up a brand new enterprise zone where 17% of salaries and 15% of capital investments are written off.

But there's one other facet of these papermaking subsidies that needs to be pointed out. Wisconsin already gives a major tax break to these companies before WEDC gives them a dime. Jon Peacock of the Wisconsin Budget Project reminds us about the state's "big giveaway" - the Manufacturing and Agriculture tax credit which is costing the state hundreds of millions of dollars a year.

Although the proponents of the proposed subsidies refer to them as “tax credits,” that is misleading because manufacturers already receive a state tax credit that eliminates almost all of their state income taxes. There are essentially no restrictions on that credit; manufactures like Kimberly Clark and Harley Davidson can claim the current credit even if they lay off workers, shut down factories, or ship jobs overseas. Wisconsin’s Manufacturing and Agriculture Credit will cost the state an estimated $324 million this fiscal year, which is far more than state policymakers anticipated when the provision was quietly slipped into the 2011 budget bill. This massive expense—which is more than all the tuition and fees combined paid by students in Wisconsin’s technical college system—was supposed to make Wisconsin very attractive to manufacturers, but that doesn’t seem to be working.

The number of manufacturing jobs in Wisconsin increased by less than 1% from December 2015 to December 2017, compared to a national increase of nearly 1.7%. Corporations like Kimberly Clark and Harley Davidson are scaling back their Wisconsin workforce, and doing so without jeopardizing their eligibility for the generous Manufacturing and Agriculture Credit….

Proponents of corporate subsidies sometimes attack the critics of corporate welfare by contending that they do not care about workers and job growth. That’s a lot like saying parents do not care about the safety of their family if they don’t buy a luxury car with all the latest safety features. State budgets, like family budgets, require setting priorities after weighing the pros and cons of many different spending options. Wisconsin can ill afford to throw money at the most politically powerful corporations, at the cost of being able to make investments in areas like education, transportation and health that would deliver a much larger boost in economic growth.

Lastly, it’s interesting how these paper companies in the 920 gather a lot of Walker’s attention and are deemed worthy of consideration for public funding. Contrast that to 3 years ago, when the Oscar Mayer site in Madison was also in need of updating and in danger of closing. Walker and WEDC did little to try to keep Oscar Mayer in Madison, and backed off entirely after being told to do so by officials at WMC.

Of course, the Oscar Mayer plant and its Madison corporate headquarters announced their closure in November 2015, and are now gone from the city’s east side. And all WEDC has done to help get new jobs and activity in the 67 acres of land that the pant used to sit on is give $500,000 last month to help redo some utility work at the old plant. Not exactly the tens of millions being thrown at Fox Valley paper plants. Funny how that works out.

I'm Ok with ways to preserve and modernize the state's struggling paper industry. But letting Scott Walker's Administration and local governments throw tens of millions of dollars at Green Bay Packaging and Kimberly Clark seems like a less-than-optimal way to do it. Especially since we let these companies get so many write-offs to begin with.