While the nation laughs at the Fox-con, here comes Foxconn 2 tomorrow

As the rest of the nation noted the massive subsidies coming to Amazon from its new East Coast headquarters in Northern Virginia and New York City, the inevitable comparisons to Wisconsin’s own “business development” boondoogle came up.

Has no one learned anything from the FoxConn debacle in Wisconsin?

— Chris Hayes (@chrislhayes) November 13, 2018

Compared to Wisconsin's outrageous subsidy to Foxconn, this Amazon one is not bad.

WI is giving Foxconn $3 billion dollars for 13k jobs paying $54k/avg per year. $230k per job.

Amazon is giving $573m for 25k jobs paying $150k/avg per year. $23k per job.

Literally 90% less. https://t.co/IjbK5RtyFO

— Land Johnston (@LandJohnston) November 13, 2018

...Here's another way to think about the scale of Walker's Folly. Foxconn would have to create 100,000 jobs to match the $48K per job ratio. https://t.co/2nkuu2f0ct

— Lign in drerd un bakn beygl (@gnarlytrombone) November 13, 2018

But even people from all corners are saying “don’t be like Wisconsin and Foxconn”, the Joint Finance Committee is scheduled to hold a hearing tomorrow on a proposed incentives package to keep a Kimberly-Clark plant open near Appleton – aka “Foxconn 2”.

The Legislative Fiscal Bureau’s writeup of the plan reiterates that the Kimberly-Clark package mirrors the one given to Foxconn, in that it will pay Kimberly-Clark cash in the form of a refundable tax credit if they keep people employed at their plants.

PPMC Payroll Tax Credit. A certified claimant could claim a refundable income or franchise tax credit equal to 17% of the eligible payroll for the taxable year for full-time employees employed by the claimant. "Eligible Payroll" would mean the amount of state payroll that is attributable to wages paid by the claimant to full-time employees, but would not include the amount of wages paid to any full-time employee that exceeds $100,000. A "full-time employee" would mean an individual who is employed at either of the two specified manufacturing facilities in a job for which the annual pay is at least $30,000 and who is offered retirement, health, and other benefits that are equivalent to the retirement, health, and other benefits offered to an individual who is required to work at least 2,080 hours per year. "State payroll" would mean the amount of payroll apportioned to this state as determined under the old corporate apportionment statutes. …

Any change in the number of employees retained by Kimberly-Clark Corporation and average earnings of those employees would affect the estimated 15-year total for refundable PPMC payroll tax credits. For example, based upon recent media reports, it is anticipated that 500 employees with average annual earnings of $70,000 may be retained at one facility (1050 Cold Spring Road) specified under the bill. Assuming that WEDC entered into a contract with Kimberly-Clark Corporation that allowed the company to cease operations at one of the facilities so long as 500 employees were retained at the other facility, it is estimated that PPMC payroll credits would increase GPR expenditures by $6.0 million annually over a 15-year period, totaling $89.3 million (assuming employment levels remain at 500 with annual earnings of $70,000 over the 15-year period).

The fiscal notes submitted by WEDC and DOR did not indicate any significant capital expenditures that might occur at either of the two facilities. However, any significant capital expenditures that might be authorized under a contract between the company and WEDC would be eligible for refundable PPMC capital expenditure credits of up to 15% of such expenditures, and certain expenditures eligible for the capital expenditure credits would also be exempt from state and local sales and use tax.

Oh? So this Kimberly-Clark bailout could cost us MORE than $6 mil a year for 15 years if they choose to put in more machines or fix up their facility at a later time? Well, do we have any way to get our money back if K-C doesn’t hold up their end of the bargain?

Clawback Provisions. WEDC would be required to revoke a PPMC certification if the business does any of the following: (a) supplies false or misleading information to obtain credits; (b) leaves the state to conduct substantially the same business outside the state; (c) ceases operations in the state and does not renew operation of the business or a similar business in the state within 12 months; (d) fails to retain at least 93% of its full-time employees at the two specified facilities who were identified as being such employees in the base year, as determined by WEDC; or (e) fails to retain at least 93% of its employees employed in a full-time capacity in this state, but not at the two specified facilities, who were identified as being such employees in the base year, as determined by WEDC. In addition, WEDC could require a business to repay any PPMCs the business claims for a year in which it failed to maintain employment levels or a significant capital investment in property required by contract between WEDC and the business.

I can’t tell if this means they have to keep 93% of their employees that they claimed to WEDC when they wanted to get their tax credits in a given year, or if it means they have to keep at least 465 jobs open for all 15 years. Seems like an important item to get right.

But let’s be real and ask "why are we thinking of doing this in the first place?" Kimberly-Clark already got a massive tax write-off from the state in the form of the M&A “Big Giveaway”, so their state taxes are near-zero. They also got help from the GOP Tax Scam in DC, which the company themselves said was a reason for these proposed layoffs in the first place, because it gave them enough fiscal flexibility to restructure and “allocate significant capital to shareholders”.

More, more more?

Kimberly-Clark also apparently has received concessions from the workers’ unions at the plants if they do stay open. How much more help do they need…or deserve? Instead, why aren’t we giving incentives to allow all papermakers in the state to modernize and become more energy efficient? That’s what was in a bill proposed by Fox Valley Dems earlier this year, and it seems like a much better plan than giving away tens of millions of dollars to one company.

Given that there weren’t enough votes in the State Senate to pass this Kimberly-Clark bailout before the election, I’m not sure what’s going to change now that a new governor is coming into power within 8 weeks, as what incentive do Dems have to back any more Walker jobs schemes when Scotty is heading out the door?

With the next budget tough enough as it is, and the original Fox-con looks worse by the day, there are a lot of better sources to use tax dollars on than for a greedy corporation that already is getting a ton of breaks. But let’s see what the public hearing has to offer anyway, because it might be a good preview of how things are going to run (or not run) in these next 2 years of split power in Wisconsin government. The circus is back at the Big Top in Madison, folks!