The Wisconsin Economic Development Corporation (WEDC) is supposed to make sure Foxconn keeps its end of the deal to create jobs in its proposed manufacturing plant in southeastern Wisconsin in exchange for tax breaks and other incentives.
But WEDC has a terrible track record of holding corporations accountable to their job creation promises, critics of the deal and representatives of liberal advocacy group Citizen Action of Wisconsin said in a media call Monday. That makes the Foxconn deal “a scandal waiting to happen," they said.
“It’s already scandalous how badly WEDC’s existing tax credit programs have been managed,” said Robert Kraig, executive director of Citizen Action Wisconsin.
WEDC called Citizen Action Wisconsin's statement "misleading and incomplete."
Taiwan LCD manufacturer Foxconn has pledged to build a factory in Wisconsin, a $10 billion investment that could create up to 13,000 jobs, initially hiring 3,000 employees.
Because the deal includes up to $2.85 billion in incentives for Foxconn, some lawmakers voiced concern about committing money without a solid job creation guarantee.
“What I think most voters are concerned about is, are we going to get what we are paying for?” Sen. Kathleen Vinehout, D-Alma, said on the “UpFront with Mike Gousha” talk show in February.
Criticism increased after a legislative analysis said the state wouldn't financially break even on the deal until 2043.
Mark Hogan, CEO of WEDC, has repeatedly said that state incentive payments are contingent on Foxconn fulfilling its promises.
“I would like to again stress this is a pay-as-you-grow investment. These refundable tax credits will not go out the door until and unless the company meets the performance metrics that will be included in its contract with WEDC,” he said.
But Citizen Action of Wisconsin doesn’t think WEDC is up for the job, and published an analysis examining WEDC’s past success with accountability for job creation tax credits.
Out of 337 companies that had received tax credits from WEDC at least three years ago, 60 percent had not met their job creation goals, it found.
The analysis does not list deadlines for job creation, which varies by contract and is not provided on WEDC’s website, Kraig said.
This amounts a gap between planned and actual job creation of 14,744 jobs, which Citizen Action pointed out is larger than entirety of the 13,000 possible Foxconn jobs.
Mark Maley, public affairs and communications director for WEDC, said that many of the companies listed in the report still have years remaining in their contract to meet their goals.
“Once again, Citizen Action of Wisconsin has released another misleading and incomplete 'report' in an attempt to try to stop 13,000 family-supporting jobs from coming to our state,” he said.
Asked whether companies that failed to meet their goals still received the whole tax credit amount, Kraig said it varies case by case and the data is sometimes unclear. The analysis shows that WEDC attempted to claw back tax credits from less than 12 percent of the companies that failed to meet their goals.
It lists W.W. Grainger, Inc., an industrial supply company, as an example. The company was awarded $500,000 tax credits in 2011 to create 130 jobs. It has received $50,000 in verified credits, but is listed as creating zero jobs, the analysis said.
Maley said that all of WEDC’s job-based tax credits are also “pay as you go,” and companies do not receive full tax credits without meeting the job creation goal.
Kraig said that the analysis is a “best case scenario,” as it is based on WEDC’s own data. In May, the state’s Legislative Audit Bureau said WEDC “cannot be certain about the numbers of jobs created or retained as a result of its awards,” and needs to improve the accuracy of its numbers.
It doesn’t make sense to give WEDC responsibility over the Foxconn deal when it already has a such a poor track record with much smaller deals, said Rep. Jonathan Brostoff, D-Milwaukee.
“Quite frankly, putting WEDC in charge of this deal is like putting Bernie Madoff in charge of your personal investments,” Brostoff said.
State Rep. Amanda Stuck, D-Appleton, said her experience with WEDC in her district showed her WEDC “has no way to verify these jobs,” but rather takes companies at their word.
“I wanted to know what they were going to do to make sure they would have a system in place to really verify these jobs,” Stuck said, but she said she found such a system doesn’t exist.
Tuesday, the state Senate will vote on the $2.85 billion incentive package in tax breaks for Foxconn.
“Any senator or representative that is thinking of voting for the Foxconn deal this week should think long and hard about whether they want to be held accountable for potentially one of the biggest economic scandals in Wisconsin history,” Kraig said.
This story has been updated to include comments from WEDC.