Wednesday, May 8, 2013

WEDC budget bunko

Lot of events to look at for tomorrow's Joint Finance meeting, with the main headline being the discussion of the WEDC budget, despite the protestations of Democrats who want the hearing delayed till after tomorrow's Audit Committee meeting comes up with discussions and recommendations of actions to fix WEDC's many problems. And I'd say there's a point to be made about that, because having a number of hearings at once is a typical way to sweep things under the rug (which there is no doubt WisGOP wants to do with the dog known as WEDC).

So let's dive into what Governor Walker had planned for WEDC, and see how this thing is funded.

First off, WEDC gets a sizable amount of cash from both general taxpayers and businesses. The plan is to use $73.6 million of GPR (General Purpose Revenue) for the next two years, an average of $36.8 million, which is $4 million a year more than the $32.8 million a year they're getting right now. And the reason is because the Walker Administration wants to pump up WEDC's PR abilities.
Governor: Provide $3,750,000 GPR in 2013-14 and $7,150,000 GPR in 2014-15 primarily for increased marketing activities....

WEDC marketing activities include starting the "In Wisconsin" branding campaign, paid media and Internet advertising, website development, videos, and related materials that promote the benefits of starting, expanding, or locating a business in Wisconsin. The WEDC marketing budget is $2 million in 2012-13.
So they're going to throw an extra $11 million in the next 2 years onto WEDC's marketing, because apparently THAT'S what this state needs to break out of its "44th in the nation" job status. Of course, it might be a bit hard to do some of these outreach activities when one of its top spokesmen just had to quit after it was discovered he owed tens of thousands of dollars in back taxes and got nearly $8,000 in improper unemployment benefits. I got a better idea, guys. Maybe instead of throwing $11 million more into marketing, try hiring better people. It won't change the "corrupt unaccountability" part of the WEDC fail, but at least you won't have law-breaking fuckups working there.

The other way WEDC gets funding is through what used to be the state's Recycling Fund (because these guys aren't so keen on that hippie recycling things these days) and the LFB describes this fee on businesses. It's slated to collect around $27 million a year for each of the next two years, and funds many WEDC tax credits and loan programs.
The primary source of SEG funding is the economic development surcharge, which was formerly the recycling surcharge that was deposited in the recycling fund. Under provisions of Act 32, the recycling fund was renamed the economic development fund, and the recycling surcharge was renamed the economic development surcharge, and deposited in the fund...As noted, $23.2 million annually is appropriated. In addition, the Department of Revenue (DOR) is appropriated $210,800 SEG annually, and is provided 1.0 SEG position to administer the surcharge.

The economic development surcharge is imposed on farm and nonfarm businesses that have more than $4 million in "gross receipts from all activities" The surcharge equals 3% of gross tax liability for corporations (including insurance companies and limited liability companies [LLCs] taxed as corporations), or 0.2% of net business income for sole proprietorships, partnerships, LLCs taxed as partnerships, and tax-option (S) corporations...In general "gross receipts from all activities" means gross receipts, gross sales, gross dividends, gross interest income, gross rents, gross royalties, the gross sales price from the disposition of capital assets and business assets, gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin income/ franchise tax purposes.
So at least some of the WEDC money handed out to corporations is money they originally paid to the state in the form of this Economic Development Surcharge (yes, that is some serious gallows humor).

So Walker's budget plans to spend another $6 million of this Economic Development Fund revenue over the next two years, with most of it targeted on start-up businesses and "training, mentoring, and financial assistance to entrepreneurs" in certain fields. Not a bad idea on its face, God knows Wisconsin does horribly on developing new businesses and ideas (which famously led a WEDC official to say "We suck, we're bad" after Wisconsin was listed as 47th in the U.S. for entrepreneurship), so it's not a bad idea to encourage new businesses over the established oligarchs who have been failing to get the job done in the Age of Fitzwalkerstan.

Of course, the fact that the program's good doesn't mean that the money will be handed out fairly or tracked well. This type of failure is why WEDC's "Federal money" line goes from $20 million this year to $0 in Walker's 2013-15 budget. As LFB explains
Delete $20,000,000 FED annually to reflect establishing administrative responsibility for the federal small cities community development block grant (CDBG) with the Department of Administration (DOA).

Prior to 2011 Wisconsin Act 32 [the state budget] , the Department of Commerce was the state's designated recipient of federal funding for the small cities Community Development Block Grant (CDBG) program. Under Act 32, Commerce was eliminated, and expenditure authority for CDBG funds was provided to the Corporation. However, the federal Department of Housing and Urban Development (HUD) designated the Department of Administration (DOA) as the state's designated recipient of CDBG funds with authority to administer the program. This provision zeroes-out the WEDC continuing expenditure authority estimate for federal funds to reflect establishment of program authority for the CDBG program with DOA.
If this sounds familiar, it should, because WEDC's sketchiness with CDBG money was the subject of a huge expose by Scott Wittkopf last year. The CDBG funds had to be pulled from WEDC after the U.S. Department of Housing and Urban Development had to remind Walker's DOA that WEDC was never officially allowed to be the group that could handle this federal money, and therefore
WEDC had no legal authority to award or administer CDBG funds.

As of April 12, 2012 WEDC must immediately cease the award and administration of all CDBG funds.
Remember that? How the Walker boys just allowed WEDC (with little to no oversight from anyone, remember) hand out CDBG funds as it damn well pleased? Oh, but I'm sure Reed Hall and the folks at WEDC will tell us it's all different now, and that they can be trusted with $73 million in general tax revenue for the next 2 years, and another $55 million from what used to be the Recycling Fund, and that there are now procedures in place that'll allow for funds to be tracked and criteria developed to fairly distribute funds.

Why don't I believe this? Oh, that's right, because there's nearly a 2 year track record of WEDC corruption and failure, and the LAB's humiliation of WEDC gave little indication that any of this had been cleaned up over the several months they spent studying WEDC's method of doing business. I got a better idea for the $73 million in GPR that's slated for WEDC- send it to K-12 schools to give them some needed help, or to local communities that are dealing with shared revenue freezes.

Given that school and local communities have fought through cuts from the state while WEDC has wasted tens of millions of dollars and made the state look like a corrupt Banana Republic, it's the least that can be done to level the field in the Age of Fitzwalkerstan. And unlike WEDC, helping local communities and schools might actually improve service, make it easier for something to be created in Wisconsin other than corporate welfare and (gasp!), help the chances for job creation.


  1. It's obvious that Walker's increase for marketing and advertising is really just another way for the taxpayers of Wisconsin to help launch his presidential campaign. Otherwise he'd be asking for that money yesterday.

    1. DING! DING! DING! It'll be "It's Working", part 2. And just like the other one, it'll be a lie