The Fox-con is bad enough - now WEDC can't even follow its own rules on it!

Anyone with a drop of honesty shouldn’t have faith that the Fox-con will be a vibrant, successful project, nor should the GOP slush fund known as the Wisconsin Economic Development Corporation (WEDC) be expected to work hard to make sure Wisconsin taxpayers aren’t screwed in the deal (beyond the already-absurd terms that exist in the Fox-con).

But I still didn’t expect to read this yesterday.

Taxpayers could pay Taiwanese tech giant Foxconn for work done outside of Wisconsin unless changes are made to how the state's jobs agency issues tax credits, a state audit shows.

The Legislature's Audit Bureau is recommending the Wisconsin Economic Development Corp. make changes to its procedures to avoid awarding tax credits to Foxconn Technology Group for work that isn't being done in the state.

WHAAAA? Let’s take a look at that audit on Foxconn, and see where LAB came up with that possibility.

In November 2017, WEDC established program policies that were approved by its governing board. Although these policies contain information about how WEDC will award program tax credits, they do not specify how WEDC will ensure that program tax credits are awarded only for the wages of employees who perform services in Wisconsin. WEDC established written procedures that specify in greater detail how it will award program tax credits. WEDC’s governing board does not approve written procedures. These written procedures allow WEDC to award program tax credits for “any employee that does not live in Wisconsin and is designated as ‘remote’, ‘working at home’, or ‘sales’” as long as these employees are paid in the zone. These written procedures do not comply with statutes or WEDC’s contract because they allow WEDC to award program tax credits for the wages of employees who do not perform services in Wisconsin.

WEDC indicated that it intends to award Foxconn program tax credits for the wages of employees who are directed from and paid in the zone. It indicated that it plans to do so based on s. 71.25 (8) (b), Wis. Stats., which pertains to the determination of corporate income taxes and indicates that a corporation’s state payroll includes certain employees who are not residents of Wisconsin and do not perform services in Wisconsin. However, ss. 71.07 (3wm) and 71.28 (3wm), Wis. Stats., and WEDC’s contract require WEDC to award program tax credits based on the zone payroll, which is a subset of the state payroll and includes only the wages of those employees who perform services in Wisconsin. We note that employees who are directed from and paid in the zone may not necessarily perform services in Wisconsin.

When awarding program tax credits, WEDC should ensure that it will comply with statutes and its contract, which require that program tax credits be awarded for the wages of employees who perform services in Wisconsin. WEDC should also modify its written procedures to require it to award program tax credits only for the wages of employees who perform services in Wisconsin. Doing so will ensure that its written procedures comply with statutes and its contract. Given the amount of tax credits that may be awarded through this program, WEDC should provide its modified written procedures to its governing board, which may review them and ensure that they comply with statutes and its contract. WEDC should then follow its modified written procedures when it awards program tax credits.

Oh, were WEDC execs like us supposed to do that?

The LAB audit also noted that WEDC’s contract with Foxconn didn’t even follow WEDC’s own policies, which could leave taxpayers on the hook for payments even if Foxconn fails to live up to its end of the bargain.

First, statutes indicate that WEDC may require a recipient of program tax credits to repay any tax credits that a recipient claimed for a year in which the recipient failed to maintain contractually specified employment levels. WEDC’s policies require a recipient to maintain all created jobs for which it received program tax credits for the duration of its contract with WEDC. However, WEDC’s contract does not require Foxconn to repay any program tax credits if it does not maintain all created jobs during the first five years of the contract.

Second, WEDC’s policies indicate that if award recipients do not create at least a contractually specified minimum number of jobs annually, the program tax credits that could have been awarded for these jobs cannot be carried forward and awarded in future years. However, WEDC’s contract allows unawarded program tax credits for creating jobs to be carried forward, even if Foxconn does not create a contractually specified minimum number of jobs annually. After we identified this discrepancy between the policies and the contract, WEDC indicated that it plans to modify its policies so that they comply with the contract.

I’m absolutely sure these were innocent oversights from WEDC, and they’ll get right on to fixing that. #headdesk

And via this report by Channel 11 in Green Bay, we saw another post-contract complication pop up in a WEDC-assisted handout.

Green Bay Packaging announced in June it was investing $500 million in a new paper mill, which would more than double its production compared to its current 71-year-old mill.

In fast-track votes to start construction and keep the company from moving elsewhere, the state agreed to chip in $60 million in tax credits (via WEDC in a 12-year deal similar to the Kimberly-Clark deal from earlier this month). The city of Green Bay agreed to $23 million in tax assistance and Brown County agreed to $5.3 million for a retention pond and a pipe between the mill and the sewerage district.

And then we found out this week that the pipe can’t be run above the ground, and instead had to be put underground along with a lift station to get people back to ground level.

As a result, the project is now estimated to cost an additional $6.5 million, with Brown County paying another $2.9 million, and GB Packaging will pick up the rest.

“Complications happen,” said Patrick Evans, a Brown County Supervisor who is also running to be Green Bay’s next mayor. “It's the county's fault, so I mean what do you say? No, I'm not going to support this?”

Supervisor James Knieszel doesn't blame the county's engineers because he says they were given an unrealistic timeline to price out the work.

“I also believe that if Green Bay Packaging was using its own money to pay for this infrastructure that you better believe they would have done the work necessary to make sure that $5.3 million was an accurate cost estimate before proceeding,” said Kneiszel.

Yeah, funny how that works, isn’t it? It’s also funny how top GB Packaging executives are sizable donors to Scott Walker and WisGOP.

I’ve got a suggestion. MAYBE WE SHOULD HAVE THESE INCENTIVES DEBATED OUT IN THE OPEN, and allow these contracts to take effect only after an organization like the Legislative Council or the State Legislature and Governor sign off on them. This might increase the chances of these “errors” being caught before we have to change signed contracts, redo deals and spend more money as a result.

Oh, but then it wouldn’t be so easy to use WEDC as the right-wing slush fund of tax dollars that it’s been since Scott Walker invented it in 2011. And now you know why the WisGOP Legislature tried to prevent Tony Evers from making immediate changes in WEDC oversight and governance as part of their Power Grab earlier this month.

END THESE BOONDOGGLES NOW! That goes for both Foxconn and WEDC.

PS- Now add this one to the list.

Business was given $7 mil by WEDC 5 years ago ahead of Walker re-election to move 20 miles from Ill to Kenosha. Tax writeoffs end next year, and owner will turn a nice profit.https://t.co/0DsAxY6EUa#wiunion #wipolitics #wiright #wigov @WisDems

— JakeEdwards (@JakeMadtown) December 20, 2018