Corporate profits keep trickling down. To Wall Street, not Main Street

Yes, by all means, let’s give corporate America another tax cut, since it’s really hard for them to get by in today’s economy. I mean, look at what measures the biggest name in American retail has to go these days.

Walmart is sweetening the pot for shareholders before its annual meeting, using the oldest trick in the book.

The retailer on Tuesday morning announced that it had authorized up to $20 billion in stock buybacks over the next two years. That's a massive amount of capital to be allocated for repurchases, which are frequently used by companies to boost shares during times devoid of other positive catalysts.

Not that Walmart will need to fall back on that tactic quite yet. In Tuesday's release, the company also reaffirmed its earnings guidance for 2018, an encouraging sign given mounting pressures in an industry operating increasingly at the whim of Amazon…
And investors seem to like what they're seeing out of Walmart. Its stock rose as much as 4.4% on Tuesday, after climbing nearly 2% on Monday's announcement.

After all, why invest any of that $20 billion in employee wages or offering health care benefits, when you can give it back to Wall Street gamblers and raise your stock price without increasing actual dollars invested in the stock?

Interestingly, Wal-Mart is somewhat behind the game on the stock buyback tactic, as Yardeni Research notes that buybacks among companies in the S&P 500 are actually down over 20% from the peak that we saw at the start of 2016. That being said, the amount was still near $500 billion in Q2 2017, and it’s 4 times the amounts we saw in the early 2000s. Not coincidentally, this has happened as tax rates on capital gains and dividends have been reduced.



And unlike stock buybacks, dividends being handed out to shareholders keep going up, hitting another record high in Q3 2017. This means that the amount of dividends have more than doubled in total dollars during this 8-year bull market run.

Remember that stock buybacks and dividends come from retained earnings, and that's money that could have been used to pay workers more or improve benefits. But instead of those added profits trickling down to people with real jobs, those funds are getting funneled to the investor class who has the time and money to lobby in the board rooms and the halls of Congress. Add in the lack of unions in the 2010s to get a countering voice at that table, and what’s going to stop this upward funneling of wealth in the future?

Got any questions why wages are still relatively stagnant despite the record stock market and full employment? And the last 20 years should tell anyone with an IQ above bug level that once the average person decides that it's safe to go "all in," that's when the Wall Street casino gives you the bad card on the flop, and you get cleaned out.

More to learn about state's Vets Homes, even if Walker thinks he isn't accountable

You may remember that the state has had several issues at the State Veterans Home at King, including significant understaffing and increased overtime, several stories with details of nelgect of aged and disabled veterans at the home, and water that looked like this.



In response to those concerns, and the fact that the Walker Administration used excess money given by the US Centers for Medicare and Medicaid Services to plug budget holes instead of improving conditions at the homes, the Joint Finance Committee was spurred into action during this year’s state budget deliberations. The JFC voted 16-0 to require the Walker Administration and the Department of Veterans Affairs to send them more information on how they planned to manage and operate the Veterans Trust Fund and the state’s Veterans Homes.

As passed by the Legislature, Assembly Bill 64 would have required the Department of Veterans Affairs (DVA) to receive approval of the Joint Committee on Finance under a 14-day passive review process prior to making any transfers of moneys from unappropriated balances in the program revenue appropriations for the state veterans homes to the veterans trust fund….

As passed by the Legislature, Assembly Bill 64 would have required DVA to submit a report to the Joint Committee on Finance that contains the following: (a) a description and analysis of the Department's administrative costs supported by the veterans trust fund and by revenue generated from the state veterans homes; (b) proposals for changes to the Department's administrative structure or position levels and salaries to increase efficiency or administrative costs; and (c) two proposed long-term plans to maintain the solvency of the veterans trust fund, one of which that includes transfers from the appropriations of the state veterans homes and one of which that does not include such transfers….

As passed by the Legislature, Assembly Bill 64 would have required DVA to do the following to implement recommendations contained in the Legislative Audit Bureau's Report 17-8 relating to the Wisconsin Veterans Home at King: (a) promulgate administrative rules to establish a formula for calculating private pay rates for nursing home and assisted living care at the state veterans homes; (b) submit a report to the Joint Committee on Finance and the Joint Legislative Audit Committee by July 1, 2018, relating to the cash balance in the state veterans home PR appropriation account and providing a plan for the management and proposed use of the cash balance in the account; and (c) submit a report to the Joint Committee on Finance and the Joint Legislative Audit Committee by July 1, 2018, that includes a description of the Department's efforts to establish a process for identifying and assessing the capital-related project needs for all Wisconsin Veterans Homes and a description of the Department's efforts to use this information to complete a 10-year facilities plan for the state veterans homes….

But Governor Scott Walker arrogantly rejected all of these oversight and improvement provisions as part of his 99 vetoes of the 2017-19 budget, and enabling his administration to act on its own to (mis)manage King and the Veterans Trust Fund, including a green light to send $26.2 million away from the Homes to make sure taxpayers don’t pay a dime toward the Trust Fund. At the same time, the Trust Fund condition statement says there will be a $1.5 million cut in expenses paid out by the Trust Fund in Fiscal year 2018-19, even with the transfers.

But those issues haven’t gone away just because Walker’s Administration doesn’t want to talk about them. And tomorrow’s meeting of the Joint Audit Committee will check in to see if any progress has been made regarding the ongoing issues at King and within the Trust Fund. These comments from a preview article by the Capital Times’ Katelyn Ferral are not promising.

Lawmakers on the joint audit committee are set to meet Tuesday to discuss the vetoes and follow-up on the King audits released earlier this year. Robert Cowles, R-Green Bay, a co-chairman of the committee, said he is unhappy with Walker’s WDVA vetoes, but said the committee will keep working on issues identified in the audit.

“We’re elected just like he is, and our fiscal body should have some oversight over these things,” he said. “I’m not giving up on those issues and I would expect that the committee will ask for additional oversight. It’s rare that an agency defies us and doesn’t do it. I believe there are several concerns remaining that are left over from the King audit.”

Some of them, he said, are staff turnover and the Department of Health Services' refusal to give the audit bureau access to its records, Cowles said.

Seems like there are a lot things that need further investigation and transparency, but it seems unlikely we can count on the Walker Administration to do the right thing on their own. Which is why a leading legislative Democrat is asking for a law that would require more information to be released to her fellow legislators and the public.

Rep. Katrina Shankland, D-Stevens Point, sits on the Joint Finance Committee and is proposing a series of four bills that would bring more accountability to WDVA. The “King Veterans Home Accountability Package” specifies that the financial needs of Wisconsin veterans homes receive first consideration for the use of veterans home revenue before it is transferred to other WDVA funds and programs, and creates a hotline for veterans home employees, residents and their families to report abuse and neglect at veterans homes.

You’d think Shankland’s bill would have some movement, given the unanimous, bipartisan vote on Joint Finance during the budget asking for more oversight. But Ferral’s article later quotes State Sen. Luther Olsen (R-Spineless) as saying we shouldn’t expect that to happen in this session.

“The thing about it is we can pass a bill, but he can veto a bill, so what’s the point of that?” he said. “If he was a Democrat, he’d do the same thing because governors don’t like to give up power.”

True Lute, it’s not like there’s an ability for the Legislature to override a governor veto or take other actions to CHECK Gov Dropout, so whatcha gonna do? (slams head on desk)

So let’s see what we find out in tomorrow’s Joint Audit hearing, and to see if we get an update to what upgrades we cannot do at King and other veterans’ homes because the Walker Administration keeps taking money away from them to plug their budget holes. And let’s not have these concerns get put on the back burner just because the Walker Administration refuses to tell us what’s going on.

This just in..

Aaron Rodgers is really good. Appreciate what you're witnessing, folks.

Sunday reading- GOP tax "reform" is a hypocritical joke

Great article from this weekend by Forbes contributor Stan Collender which is summed up in its title- "The Republican Party Is A Deficit Fraud."

The budget resolution passed last week by the GOP-controlled Senate Budget Committee provides for a $1.5 trillion increase in the deficit and debt [over 10 years]. That will very likely become more than $2 trillion when the final version of the fiscal 2018 budget is developed jointly with the Republican majority in the House.

The demands by the House Freedom Caucus and its counterparts in the Senate that emergency spending for past hurricane relief be offset with spending cuts so the deficit isn't increased haven't been repeated now that the hurricanes have happened while a Republican is in the White House. Even some of the GOP's most virulent critics of the past aid have worked hard to get the additional spending now while at the same time denying they are being two-faced about the deficit increases that will result.

There's also billions for the wall between the United States and Mexico and a still-unspecified $1 trillion infrastructure program.

Whatever spending cuts have been proposed are too small to offset much of the deficit increases being considered, and most won't be enacted by the Republican-controlled Congress anyway.

On top of everything else, Trump and congressional Republicans are relying on a level of economic growth to seemingly pay for their tax cuts and spending increases that few reputable economists think is really possible. The much-more probable lower growth rate means the federal deficit will be higher later than any Republican is now admitting publically.

And given that Trump is also asking for more money to the military, the only spending cuts that could be enacted to keep the deficit from spiraling back to Great Recession levels would come from Medicare, Medicaid, and Social Security. We've already seen how hated the proposed cuts to Medicaid were in the Obamacare debates, and you'd have to think cuts to programs like Medicare and Social Security, which cover everyone and not just the poor, would be even more of a no-no for most voters.

Plus, why are we even talking about cutting taxes for the rich and corporate and exploding the deficit anyway? It's not like these guys don't get far more than they deserve as it is, and it's pretty clear that as taxes have been cut for those groups, they've hoarded more of the profits for themselves.

U.S. corps making record profits, share of federal taxes has dropped from 32% in 1952 to 10% in 2013 & @SpeakerRyan says corps need tax cut. pic.twitter.com/KJqmmtHKhH

— Charlie Breit (@charlie_breit) October 7, 2017

So why would we continue more of this, and make our crippling inequality even worse? I'm not even a deficit scold, and think deficits are fine if/when the alternative is an austerity that drives the economy into recession and makes people worse off. But this GOP fiscal policy is insane feudalism that shows how full of crap these people were when they cried crocodile tears about Obama's stimulus package in 2009. And we needed stimulus in those days when we were losing hundreds of thousands of jobs a month. Nowadays, with unemployment below 4.5% and 8 straight years of GDP growth?

Former US Labor Secretary Robert Reich released a video this week showing what a crock that Trump/Ryan trickle-down is, and reminding us that states like Kansas (and Wisconsin) have tried this "cut our way to prosperity" plan in recent years, and have been left in the dust.

If there's any "tax reform", it should try to take away the incentives of profit-hoarding and wage-suppression that have led to the two-tier society that's holding this economy back for the vast majority of us. Some of that includes higher taxes on the rich, and it includes added security and options to older workers through methods such as expanding Social Security and encouraging unioninzation to raise wages.

If you're not talking about that, you're not talking about anything that will help this country's economy keep moving ahead after 8 years of growth, and actually be a boon to the average American.

GOP plan working- UW enrollment, programs fall while Koch/Bradley influence grows.

In addition to the right-wing-stacked UW Board of Regents approving a regressive “freedom from consequence” law for talentless hate mongerers today, the Regents also found out that not as many people are attending UW schools this year. The largest percentage drop in total enrollment among the 4-year campuses happened at UW-Stevens Point, which lost nearly 5% of its total enrollment (over 400 students), and has had total enrollment decline nearly 15% in the 4 years of Scott Walker's freeze on in-state tuition.



Combined with the lack of funding from the state level to cushion them, and UWSP is looking at program reductions and layoffs, and they aren't the only ones. As Karen Herzog of the Milwaukee Journal-Sentinel summarizes, lower enrollments mean more budget problems at several UW campuses outside of the Madison flagship.

UW-Stevens Point is now looking for ways to cut costs, and is developing plans to eliminate staff positions and programs to invest in areas more likely to increase enrollment, such as its geographic information science program, the Stevens Point Journal reported last month.

One cut already proposed: UW-Stevens Point will likely eliminate its Geography and Geology Department, although not necessarily those majors….

UW-Milwaukee gained 110 freshmen (3.5%) in this fall's preliminary headcount, but overall, was down 649 students (2.6%). UW-Madison continued its pattern of modest gains in overall (1.0%) and freshmen (2.8%) enrollments.

A 3.5% drop in enrollment at UWM would mean a loss of more than $6 million in tuition revenue. Nearly a third of revenues for UWM come from tuition and fees. State funding makes up roughly 15% of revenues at UW campuses.
Preliminary numbers show significant losses in freshman enrollments on several campuses this fall — 206 students (9.3%) at UW-Whitewater and 134 students (8.6%) at UW-Platteville.

It’s especially noteworthy that the drops are happening at the non-Madison campuses, because those campuses have smaller donor bases and fewer research dollars associated with them, and therefore they are more reliant on state aid and tuition than Madison is.

And let’s not forget that 2017-18 has $85 million less in tax dollars going to UW operations than it did 10 years ago BEFORE INFLATION, so these institutions are facing a double-whammy with declining enrollment.

Non-debt tax dollars going to UW System
2007-08 $925.7 million
2011-12 $880.0 million
2017-18 $840.4 million

So this situation means there isn't sufficient funding available for these schools to operate as they were, let alone pay a premium to attract talent. You’d never run a business this way, but that’s how WisGOP has run one of the few items in this state into the ground, instead of trying to expand the advantage in talent generation that this state used to have from the UW.

Meanwhile, Madison continues to attract students and maintain its strong reputation, but with righties’ attempts to screw up Bucky, I have to wonder how much longer that will continue. Strong public research institutions like UW-Madison are a threat, because they might reveal truths which would prove inconvenient to the right-wing’s agenda. So to counteract that, there is an active Bradley-Koch effort to slant research, and it's being manifested in an attempt to buy off Madison’s Economics Department.

Bruce Murphy at Urban Milwaukee has a great article on that this week, which describes the goal of the $340,000 that the Koch and Bradley “charities” put in to start the Center for Research on the Wisconsin Economy (CROWE).

But economics is a quite different matter, than, say, political science, where liberals surely dominate. One study found that those who take economics courses are actually more likely to be conservative. An analysis of economics professors by fivethirtyeight.com found that 60 percent were liberal and 40 percent conservative in their ideology. Another study found econ professors were about twice as likely to vote for Democratic candidates, but I suspect the ratio would have been different as recently as 15 years ago, before the Republican Party began to reject science and other university research. The broader point is there are certainly many economists with a conservative viewpoint whose work could be funded, something the Bradley Foundation has done for decades.

But even conservative professors can’t be counted on to deliver precisely the results demanded by someone like James (Art) Pope, which is where CROWE comes in. It will be run by Professor Noah Williams, who lobbied to get a job from Gov. Scott Walker and worked as an advisor to Walker’s presidential campaign, and then did a laughable “study” finding the manufacturing tax credit created all kinds of jobs even though such employment has been flat in this state and has trailed neighboring states in growth.

Yes, that Noah Williams, whose work has been rightfully derided as cherry-picked trash by myself in this blog, as well as other people who know a lot more than I do. And that fuckhead is now denigrating the reputation of my alma mater as well as the professors that do legitimate work in Madison, which is exactly what the Kochs and Bradleys want.



Murphy rightfully casts a skeptical eye at UW-Madison officials who claim that the donations won’t have anything to do with what is the focus and information that comes out of the Economics Department.

UW-Madison spokeswoman Meredith McGlone assured the Cap Times that donors to CROWE will not set its research agenda or direct the research conducted there. No indeed. “Decisions about the way resources are allocated rest with the executive committee of the Department of Economics,” she said.

If that turns out to be true, you can bet the Bradley Foundation and Koch Brothers will terminate their funding. They want the kind of research cigarette companies bought for years to “prove” tobacco doesn’t cause cancer. But Williams has already proven he is a Walker toady. And UW officials, after years of seeing their funding targeted by Walker and Republican legislators, no doubt felt they had no choice but to hold their noses and approve this smelly deal. I doubt it’s the last such proposal the Bradley Foundation will offer UW-Madison. The Wisconsin Idea may gradually be replaced by the “golden rule”: he who has the gold rules.

And that's what's one of the most infuriating parts about these right-wing oligarchs trying to mess up the UW System. They know in their heart that their ideas can't stand up to legitimate scrutiny, but instead of dealing with the world as it exists and trying to improve things for society, they're the snowflakes who want to hide from criticism, silence those who call pout their BS, and use the confusion and silence to create their own reality.

You wonder why this state continues to lag behind with this mentality dominating the corporate-directed Board of Regents and the oligarchs' puppets at the Capitol? And I don't want to hear Scott Walker or any Koched-up GOP legislators tweeting out their "GO BADGERS!" BS ahead of tonight's game, because if you really cared about the UW, you'd stop trying to starve and privatize our public universities into mediocrities.

If Congress doesn't restart CHIP, Wisconsinites will pay very soon

First off, let’s go to the webpage of the US Department of Health and Human Services to get an explanation of how CHIP started, and how we got to this point.

The Children's Health Insurance Program (CHIP) was originally created under the Balanced Budget Act of 1997. In 2009, CHIP was reauthorized under the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), which provided an additional $44 billion in funding through FY 2013 and created several new initiatives to improve and increase enrollment in the program. The Affordable Care Act extended funding for CHIP through FY 2015, and the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) extended funding for the program through FY 2017. The Budget proposes an additional two-year extension of CHIP, through FY 2019. Since September 1999, every state, the District of Columbia, and all five territories have approved CHIP plans.

How CHIP Works
CHIP is a partnership between the federal government and states and territories to help provide low income children with the health insurance coverage they need. The program improves access to health care and the quality of life for millions of vulnerable children less than 19 years of age. In general, CHIP reaches children whose families have incomes too high to qualify for Medicaid, but too low to afford private health insurance.

So it’s a very good way for children of working class parents to get covered, especially if that parent doesn’t get health insurance through his/her job. States also like it because it allows more children to be covered without having to spend much (if anything) to do so, because of generous matching levels by Uncle Sam.

States with an approved CHIP plan are eligible to receive an enhanced federal matching rate, which will range from 65 to 85 percent. Beginning in FY 2016, and effective through FY 2019, each state’s enhanced federal matching rate increased by up to 23 percentage points to cover between 88 and 100 percent of total costs for child health care services and program administration, drawn from a capped allotment.

In Wisconsin, this means the Federal government was projected to pick up over 94% of costs under CHIP (as noted in page 3 of the DHS summary by the Legislative Fiscal Bureau), meaning state taxpayers have to pay less than 6% of costs instead of the 41% they would have to pay under the traditional Medicaid program.

Side note, it is ironic that the Walker Administration talks a big game about not taking the 100% funded Medicaid expansion for adults that was part of Obamacare, but they are glad to take Obamacare’s expansion of CHIP funding. It's good that they do, but it’s also very funny/cynical.

The state receives a block grant each year of CHIP funds allowing for the higher matching amount, which makes it likely that at least some of those funds may be left over today (it at least takes a while for the funds to be drawn off of the plans due to delays in claims and such). The Kaiser Family Foundation says those left-over funds will likely run out soon in the near future in many states, which means that those places will have to figure out where the extra money to continue coverage is going to come from.

Because states have assumed continued federal funding in their state budgets, the majority of states will face a funding shortfall if Congress does not extend federal funding. Addressing these shortfalls will likely require special legislative sessions and/or Governor action because state budgets have already been passed. States will face challenges replacing federal dollars since many were already facing budget shortfalls heading into FY 2018.1 States will also face costs associated with implementing program changes in response to loss of federal funding, including system changes and outreach and training costs. For example, Colorado estimates that eligibility system changes to implement program changes will cost $300,000. The Centers for Medicare and Medicaid Services (CMS) indicated that states must factor such costs associated with close out of the program into calculations of use of remaining federal funds.2 If Congress extends funding but does not include the 23 percentage point increase in the federal matching rate that was provided in the ACA, most states will still face shortfalls, since many assumed continued funding with the enhanced match rate.

Of the 42 states (including DC) that provided an estimate of when they will run out of their FY 2017 CHIP allotment, 10 anticipate exhausting funding by the end of 2017 (Figure 1). A total of 32 states project they will exhaust federal funds as of the end of March 2018. These recent state estimates show more states running out of funds earlier compared to previous projections from the Medicaid and CHIP Payment and Access Commission (MACPAC), which found that four states will run out of funding by December 2017.3 In most cases, differences with the MACPAC estimates are small (one or two months); in some cases they result in differences in the projected quarter that federal funds will be exhausted.

Wisconsin is listed as having their enhanced funding run out in March, but the state’s Department of Health Services said last Friday in their quarterly report that they would be good for slightly longer than that.

This projection assumes that Congress will reauthorize the Children’s Health Insurance Program (CHIP)….Wisconsin uses its CHIP allocation to fund costs for Badger Care Plus children who meet the CHIP eligibility criteria, spending approximately $115 million FED in CHIP funds per year. If Congress does not act to reauthorize the program, the state would have sufficient carryover funds from its FFY 17 allocation to cover costs through April 2018. The impact to the Medicaid budget of no reauthorization for the remainder of the biennium would be $134 million GPR.

$134 million in taxpayer funding would barely fit under the $210 million cushion that the just-signed state budget, and would increase the near-$1 billion structural deficit in the General DFund for the next budget. Needless to say, I would think the WisGOPs in charge of the Legislature would like CHIP to continue for fiscal reasons, as it makes a bad budget notably worse.

On a related budgetary note, what the state is getting for regular Medicaid reimbursement from DC is slated to go up in a year, as Jon Peacock from the Wisconsin Budget Project explains, although the reason isn’t necessarily a good one.

Per capita income has grown relatively slowly in Wisconsin over the last few years, and according to the most recent data, it was 5.0% below the national average in 2016. Because that gap has been growing, Wisconsin’s FMAP for 2019 will climb to 59.37%, which is an increase of 0.6 percentage points compared to the rate in federal fiscal year 2018 (which began on Oct. 1 of this year).

That might sound like a relatively small increase in the federal share, but because it is applied to a large amount of spending, that change will save Wisconsin taxpayers roughly $68 million during the last nine months of the 2017-19 budget period. And because the Legislative Fiscal Bureau (LFB) had assumed a smaller increase in the FMAP when it made its 2017-19 Medicaid spending estimates several months ago, the new estimate will yield a state savings of almost $40 million compared to the prior LFB projection. That’s very fortunate because it will largely offset higher cost estimates announced by DHS a couple days ago for certain Medicaid services.

The current FMAP formula, which has been in place for decades, is a very sensible way of allocating more federal support to states that need it more. However, it could be repealed soon if Congress approves the Medicaid block grants or per capita caps that have been part of the recent House and Senate bills to radically change Medicaid and the Affordable Care Act. Under those proposals, Medicaid spending will no longer be based on changes in costs and in state’s financial capacity, and instead will simply be proportional to past spending in each state.

Thankfully, the proposed changes haven’t been approved yet and they wouldn’t take effect for a few years. That’s fortuitous for Wisconsin, since it looks like our income growth is continuing to lag the national rate, and in fiscal year 2019 we will get a significant boost in federal funding from the current formula.

It also means that a bit more of CHIP-type services could be covered by the Feds, but it would still be well below the 94% that is covered today.

But there’s a more practical concern with CHIP and the related Medicaid funding discussions, and it goes beyond the awful possibility of cutting some children off of their health care. October and November are also the key signup times for health insurance for most people, and now one of the options in use is in danger of going away. If CHIP’s fate is not decided within a couple of weeks, parents may have to put their kids onto their own (likely crappier) insurance for next year, or be pushed onto the Obamacare exchanges.

That may end up working out for some people, but it will likely prove too expensive for a lot of working-class families, leading to the horrible choice of being uninsured or cutting some other type of household spending. Or worst of all, the parents don’t realize that there will be a difference, and by the time they get notified that coverage is ending, it’s too late to do anything. In addition to the sickening aspect of this situation even existing in an allegedly civilized country, I can’t see how the end of enhanced funding for CHIP would help our state’s economy at all.



So maybe the Wisconsin-based Speaker might want to spend less time trying to suck up to the Kochs and other donors by getting rid of Obamacare and blowing up the budget by cutting taxes on the rich, and care more about the near-term needs of Americans to continue stability in children ‘s lives by reauthorizing CHIP. These selfish clowns have already fallen down on the job by failing to meet the September 30 deadline, but they can minimize the damage by getting their asses back to work and actually fulfilling their duty to uphold the common welfare.

Local writeoffs adding hundreds of millions to the Fox-con price

As predicted, there is much more cost to the Fox-con than the billions the state will be paying out in incentives to the corporation. We got an idea how much more when the Village of Mount Pleasant and Racine County announced on Wednesday that they will shell out AN ADDITIONAL $764 million toward the project.

Both the county and Mount Pleasant will borrow money, by issuing bonds, to pay for their upfront costs. All told, the long-term debt financing by the county and village will total just under $285 million.

Other costs would be covered by the property taxes Foxconn pays as it builds out its complex. An investment by the company of $1.4 billion — significantly less than the $10 billion the firm has said it plans — would generate more than $31 million a year in new taxes and represent enough to pay for public improvement and development costs, officials said during a background briefing.

That makes no sense. If it’s a TIF district, then Foxconn isn’t paying taxes while the facility gets built and opens up. They only pay once the facility is worth enough to pay off the TIF district and go on the tax rolls. And the Fox-con package signed into law allows up to 30 years for that property to be untaxed if it’s not worth enough.

In addition, the amount of the INVESTMENT in the Foxconn facility (in machines and such) is a whole lot different than the value of the PROPERTY. The throw in the fact that the recently-signed state budget removes the value of “machinery, tools, and patterns, not including such items considered manufacturing property under current law” from a business’s assessment, and it’s likely much of what goes into the Foxconn plant won’t be counted at all.

The Journal-Sentinel’s Rick Romell also discussed other local costs that will go into the Foxconn campus.

The local money would go toward multiple purposes, including $168 million for land acquisition, $160 million for water and wastewater infrastructure, $175 million for financing expenses and $116 million to cover additional public safety costs as the village adds police officers and likely builds a new fire station.

Also included: a $100 million “development incentive” for Foxconn in the form of a forgivable loan. Officials said that was necessary to put the deal together and pointed to the far larger investment Foxconn will be making.

Forgivable loans related to job creation? That’s better known as the “Bill Minahan Maserati Special”, which WEDC has excelled in. Its where you give money to a corporation/donor, and the agency decides when and if they ever want to perform any oversight to get back those tax dollars.


The rubes actually think they'll be better off? SUCKERS!

There’s also $50 million in land purchases that Racine County will borrow for the first Foxconn plant (if there ever is one), but the Journal-Sentinel article claims that there will be $74 million in special assessments put onto Foxconn for the extra services they will require. What’s not mentioned in the article is when that assessment will be levied, and over how many years.

And of course, this is merely the Racine County and local government side of the story. Foxconn hasn’t signed anything with anybody as of this time, and could always back out or threaten to do so to get more favorable terms to their side. Meanwhile, the local taxpayers are likely going to be paying more in property taxes and debt costs to pay for Foxconn-related improvements in the short-term.

Well, if there are local taxpayers around to pay for things. Another side effect of the Fox-con is land speculation at taxpayers’ expense, as Channel 6 in Milwaukee reported that local officials are offering some farms up to $50,000 an acre for their land, However, other single-family homeowners have heard nothing, and being forced off the land is a looming possibility (insert video?).

There's three separate land situations and there's three separate purchasing strategies for all those," said Dave DeGroot, Mount Pleasant village president.

When it comes to securing that land, officials said everything is on the table.

"Anything is a possibility because this is such an astronomical scale," DeGroot replied when asked is eminent domain was a possibility.

Look, I get it. Sometimes eminent domain and reuse is the “price of progress.” But let’s check back in a few months and see what happens to local families in that area, and if the speculative prices become an excuse to send their property assessments (and taxes) through the roof.

Quick side note- it's interesting to read about the Village of Mount Pleasant doing these negotiations at a time when they are looking for a new Village Administrator and new Finance Director, according to the League of Wisconsin Municipalities. Seems like an odd and coincidental time to be going through a change in leadership, isn't it?

But as you can see, the Fox-con is going well beyond the $3 billion that Wisconsinites may pay in tax incentives. The total price tag of tax handouts, loans and gifts is going well beyond that when you figure in the local government costs. And if the Foxconn plant fails and/or closes up before that massive TIF district is paid back, don’t forget about this section in the Fox-con package passed by the WisGOPs (taken from the newly updated Fiscal Bureau rundown of the signed bill).

The Act specifies that, recognizing its moral obligation to do so, the Legislature expresses its expectation and aspiration that, if ever called upon to do so, it would make an appropriation to pay no more than 40% of the principal and interest of a local governmental unit's municipal obligations, if all of the following apply: (a) the local governmental unit's municipal obligation is issued to finance costs related to development occurring in or for the benefit of an EITM zone; and (b) the DOA Secretary designates the moral obligation pledge for the local governmental unit's municipal obligation before the municipal obligation is issued, based on a plan that the local governmental unit submitted to DOA. The Act also permits the DOA Secretary to contract with a local governmental unit to implement the moral obligation pledge.

Of course, any additional bailout of local governments wouldn’t be paid until several years in the future, after Scott Walker and the local yokels who signed these agreements with Foxconn are long gone. Which is the intelligence of WisGOP's and Racine County's design- take all the credit and photo ops for short-term “new jobs” at Foxconn (if there are any), and then dash out the door when the check comes that pays the ridiculous price for those jobs.

And the ones that are left in the state will end up being the ones who have to pay that bill.