Wisconsin's troubled jobs agency did not independently verify whether businesses receiving tax dollars created the jobs they promised, state auditors told a panel of lawmakers on Wednesday.
Addressing the Joint Legislative Audit Committee, officials with the nonpartisan Legislative Audit Bureau detailed a May audit of the Wisconsin Economic Development Corporation. The audit found cases in which WEDC didn't comply with state law or its own policies, made awards without the proper review and didn't require confirmation that jobs were created after businesses received awards.
The day after the audit was released, Gov. Scott Walker abandoned a proposal in the state budget that would have merged his flagship jobs agency with the Wisconsin Housing and Economic Development Authority.
While WEDC board member Sen. Julie Lassa, D-Stevens Point, questioned whether WEDC is "irretrievably broken," newly appointed board chairman Dan Ariens compared the agency to a start-up.
As with a startup, Ariens sad, there will be stumbles along the way.
Sen. Alberta Darling, R-River Hills, and Rep. John Nygren, R-Marinette, who co-chair the Joint Finance Committee, both argued that WEDC's troubles should be taken in context with those of its predecessor, the Department of Commerce.
Walker replaced the Department of Commerce with the quasi-public WEDC after taking office in 2011. It was one of his top priorities, touted as a way to spur job growth.
"We don't want to throw the baby out with the bathwater," Nygren said. "We can address the shortcomings that we have in WEDC without necessarily throwing out the positives that have taken place, and we need to identify that a lot of these shortcomings were in existence prior to the creation of WEDC."
Darling agreed with Ariens' "start-up" comparison, adding that the Department of Commerce was in "horrible condition" when WEDC was formed.
"We have to acknowledge we really inherited a bucket of misinformation," Darling said.
Lassa countered that even if untracked loans were issued under the former Department of Commerce, it was WEDC, not the commerce department, that failed to track them.
WEDC officials argued that the agency has continued to improve and has shown positive results.
Reed Hall, the agency's outgoing CEO, did not attend the hearing. He accompanied Walker and his cabinet to a small business summit in Eau Claire.
WEDC chief legal counsel and compliance officer Hannah Renfro said the agency takes seriously its legal obligations and is "constantly striving to do better." Renfro also said instances of awards not complying with state law shouldn't have happened and should have been discovered internally.
Both Renfro and deputy secretary and COO Tricia Braun said a questionable loan made to Building Committee Inc., would not have been granted under new policies that have been implemented since the award was made.
The unsecured $500,000 loan to the since-dissolved company was not repaid, even as the company was collapsing. The loan was given after BCI owner William Minahan donated the maximum $10,000 to Walker's campaign.
Lassa and fellow WEDC board member Rep. Peter Barca, D-Kenosha, announced plans to introduce legislation to dramatically overhaul the agency with "major structural changes" designed to increase openness and accountability.