Republican lawmakers are receptive to overhauling the state’s embattled job creation agency after years of problems, including being caught flat-footed by last week’s announced closure of Madison’s Oscar Mayer plant.
Assembly Speaker Robin Vos, R-Rochester, said Tuesday he plans to discuss with Democrats their concerns about the Wisconsin Economic Development Corp. and is interested in addressing “sincere, legitimate problems,” but he isn’t proposing his own plan yet.
He said WEDC not proactively contacting Kraft Heinz as other states did in the months after a merger was first reported could be one of the issues discussed with Democrats. It’s unlikely such contact could have saved Oscar Mayer, but similar situations could arise in the future.
“Legitimate issues have been brought up,” Vos said in an interview. “We have taken steps to fix many of those, but I’m not saying it’s perfect and I’m not saying that there are not things that we could additionally do.”
Sen. Rick Gudex, R-Fond du Lac, is also working on legislation to address economic development issues that were discussed during a series of hearings around the state. Gudex spokesman Tim Lakin said he expects bills will be introduced by the end of the year, with hearings in January and floor action in February or March.
“At this point we are not ready to discuss specifics,” Lakin said. “These are still very fluid discussions.”
Senate Majority Leader Scott Fitzgerald, R-Juneau, noted in a statement that a WEDC review by the Center for Regional Economic Competitiveness is due out in December.
“The Legislature should first review the suggestions laid out in the audit before we discuss moving forward with changes to the agency,” Fitzgerald said.
In September, Democrats proposed splitting the agency into separate public and private entities, saying the change is necessary because the model is ineffective and the WEDC brand is tarnished.
Under the proposal from Assembly Minority Leader Peter Barca, D-Kenosha, and Sen. Julie Lassa, D-Stevens Point, a cabinet-level department similar to the former Commerce Department would oversee all of the state’s economic development efforts. The other would be a public-private board that would lead trade missions, recruit businesses, market the state and help develop industry clusters.
Barca said some of the main problems he wants to address include the state continuing to rank poorly compared with neighboring states in job creation, the agency using private lawyers to recoup unpaid loans rather than the attorney general and the state’s federal economic development programs being run through the Department of Administration, contrary to the original goal of having all programs run through one state agency focused on job creation.
Barca also cited high turnover among top executives as a problem that needs to be addressed. Last week three vice presidents announced plans to depart, including the agency’s fifth chief financial officer in four years.
The WEDC board discussed the Oscar Mayer closing at its meeting Tuesday afternoon. New CEO Mark Hogan said the agency has been meeting with state and local officials about Oscar Mayer and plans to meet with Kraft Heinz officials next week.
“We’re at all hands on deck to move forward and make sure we make the best of the situation,” Hogan said.
In response to questions about why the agency didn’t reach out to Kraft Heinz, Hogan acknowledged “it’s what we say we do, and we should make sure we’re refocused on it and learn from everything that happens.”
Chief Operating Officer Tricia Braun explained that local economic development agencies and municipalities are typically the “boots on the ground” that alert WEDC about distressed businesses. But she also said the agency this week reached out to an Italian company with operations in Missouri that bought a Green Bay company.
Gov. Scott Walker and the Republican-controlled Legislature set up WEDC hastily in 2011 as the flagship agency for helping achieve Walker’s goal of creating 250,000 jobs in his first term, a target the state missed by half. The agency was embroiled in a series of management flaps and critical audits early on.
In May, another scathing audit showed that problems persisted under the agency’s second CEO. And the State Journal reported on a still unpaid $500,000 loan to a struggling Milwaukee construction company made at the urging of Walker’s top cabinet secretary. The company’s owner, a top Walker donor, submitted false information on the loan application, but the agency hadn’t conducted a formal staff review.
In the wake of the report, the agency determined it had made 28 awards to companies totaling $126 million between 2011 and 2013 without a written staff review. The agency has implemented more than 100 policies since 2013 to prevent a repeat.
Earlier this year, the Legislature removed Walker as WEDC board chairman at his request, cut agency funding and sunset its loan program in 2017. Republicans proposed removing legislators from the board, though the proposal hasn’t advanced.
Both Republicans and Democrats have called separately for creating specific criminal penalties for defrauding WEDC, though Republicans have yet to introduce a proposal. The Democratic proposal authored by Sen. Dave Hansen, D-Green Bay, and Rep. Chris Taylor, D-Madison, which is being introduced this week would also create a hotline for reporting WEDC waste, fraud and abuse.
[Editor's note: This story was changed to reflect that Rep. Chris Taylor is a Democrat from Madison, not a Republican.]