Wisconsin could offer paper company Kimberly-Clark tax incentives similar to the ones given to electronics manufacturer Foxconn under a bill approved Thursday evening by the state Assembly.
The legislation is an effort to keep the company from shuttering two plants in the Fox Valley, which would result in the loss of about 600 jobs. Kimberly-Clark did not ask for the incentives, but has said it will consider the offer as it moves forward with its restructuring plan.
Under the bill, the Wisconsin Economic Development Corporation could give Kimberly-Clark refundable tax credits equal to 17 percent of the company's payroll at its Neenah and Fox Crossing facilities. Kimberly-Clark would also be exempt from paying sales taxes on any building materials used for construction or development at those facilities, and would receive a 15 percent capital investment credit.
The legislation includes similar clawback provisions to the ones Foxconn is subjected to under its contract with the state. Any agreement reached between the state and Kimberly-Clark would be in effect for up to 15 years.
According to an estimate from WEDC, the company could receive between $7 million and $8 million per year under the bill.
"We’re not talking about possible jobs," said Assembly Majority Leader Jim Steineke, R-Kaukauna, highlighting differences between Kimberly-Clark and the Foxconn deal. "These are 600 real people. This is two communities in northeast Wisconsin."
Gov. Scott Walker first offered to give the company a tax break similar to the one authorized under the state's $3 billion deal with Foxconn when the Fox Valley closures were announced earlier this month.
Democrats in northeastern Wisconsin have offered their own plan to preserve paper jobs in the Fox Valley, where Kimberly-Clark is the region's third-largest employer. The company makes products including Kleenex tissue, Huggies diapers and Depend undergarments.
Sen. Dave Hansen, D-Green Bay; Assembly Minority Leader Gordon Hintz, D-Oshkosh; and Rep. Amanda Stuck, D-Appleton, were joined by Outagamie County Executive Tom Nelson in requesting $60 million to fund two revolving loan programs that would improve the mills' energy and water efficiency and help them transition to making brown paper products.
Stuck said Thursday the Democratic proposal offers long-term solutions that would benefit the entire paper industry rather than handing out cash to one company.
"It’s simply the laziest form of legislation you could put out there," Stuck said of the Republican bill. "This really just shows they really haven’t done their homework, they really haven’t thought about long-term solutions to this problem."
Bill author Rep. Mike Rohrkaste, R-Neenah, said the Democrats' proposal would amount to government telling a business what to do, rather than giving them an incentive "but not tell(ing) them how to run their company."
Stuck argued there is "nothing to prove that these tax credits would actually do anything to keep these jobs here."
Democrats accused Republicans of "playing politics" to save their seats in an election year.
"(Walker) is so desperate to win the election that he will give money to any corporation in order to secure the election," said Rep. Gary Hebl, D-Sun Prairie.
Steineke said Democrats were the ones playing political games, pointing to a fundraising email sent by the Assembly Democratic Campaign Committee earlier this month referencing Kimberly-Clark's planned closures.
"What happens when the next company threatens to leave? Will Walker continue to toss money down the drain instead of investing in creating meaningful job growth in our state, for the people of Wisconsin?" the email read. "This is why we need you. Chip in $20.18 right now so that we can better spread our message (and support the #BlueWave2018) throughout the state."
The planned Kimberly-Clark closures come after Fox Valley mills have already shed close to 900 jobs in the last year — more than 600 at Appleton Coated in Combined Locks, about 200 at Appvion in Appleton and 52 at Grand Chute’s U.S. Paper Converters, which shut its doors in December. Appleton Coated has since restarted one of its machines, bringing back 150 jobs, according to the Wisconsin Paper Council.
Walker suggested earlier this month that he might offer similar tax breaks to other paper companies if the opportunity to prevent job losses is "significant." The bill approved on Thursday only covers Kimberly-Clark.
A coalition of conservative organizations — the Wisconsin Institute for Law & Liberty, FreedomWorks, the MacIver Institute and the Badger Institute — opposed the deal. While well-intentioned, they said, it is "simply bad economics and sets a troubling, if not unsustainable, precedent for economic development."
Walker acknowledged earlier this month that other companies in Wisconsin could see the Foxconn and Kimberly-Clark deals and ask for similar assistance, but said Foxconn and the paper industry are "Cadillac things" in the state.
"When something has such a large impact, we’re willing to put a significant offer on the table to not only keep them here, but in hopes if it were to keep them here, it would help them stay here and grow here," Walker said.
The bill passed the Assembly on a 56-37 vote, with Rep. Jason Fields, D-Milwaukee, breaking from Democrats to support it. Republican Reps. Scott Allen of Waukesha, Cody Horlacher of Mukwonago, Adam Jarchow of Balsam Lake and Todd Novak of Dodgeville joined Democrats in voting against it.
This story has been updated to note that Appleton Coated has restarted a machine and brought some of its workers back.