The state’s flagship job-creation agency handed out nearly $90 million more in economic development awards last year than the previous year, yet those awards are expected to create or retain almost 6,000 fewer jobs and result in $400 million less in capital investment.
Most of the additional award funding resulted from a historic rehabilitation tax credit that Gov. Scott Walker and the Legislature expanded in 2013. The agency gave out $2.9 million in 2013-14, but that jumped to $78.1 million last year.
Even without the historic credits, total economic development awards increased $13.5 million, while promised job creation and capital investment dropped. A WEDC spokesman said job numbers dropped because of declining interest in a tax credit program.
The figures come from an annual report released Friday by the Wisconsin Economic Development Corp.
Democratic lawmakers on the WEDC board said the data raise questions and reiterated their call for replacing the troubled agency with a new public entity.
“I am deeply concerned that taxpayers are not getting the needed bang for their buck at WEDC,” Assembly Minority Leader Peter Barca said in a statement.
Sen. Julie Lassa, D-Stevens Point, said she will be seeking an explanation for the numbers at Thursday’s WEDC board meeting, which is scheduled to review the report.
“We know Wisconsin continues to lag behind the national average in new job creation, and I think we have to acknowledge that our state job creation programs haven’t had the kind of impact we need,” Lassa said in an email.
Republican lawmakers on the WEDC board did not respond to a request for comment. Sen. Rick Gudex, Fond du Lac, chairman of the Senate Economic Development and Commerce Committee, is hosting the first of a series of meetings on economic development Thursday in Oak Creek after the WEDC board meeting. The discussions are open to the public, but participation is limited to invited business and economic development leaders.
In the 2014-15 fiscal year ending June 30, WEDC made 351 awards totaling $245.7 million in grants, loans, bonds and tax credits. Those funds are supposed to result in 7,496 new jobs and the retention of 19,326 existing jobs.
In the previous year, WEDC made 316 awards totaling $156.8 million, contingent on the companies creating 10,621 jobs and retaining 22,068 existing jobs.
WEDC spokesman Steven Michels said the jobs figure declined largely because of waning interest in the Economic Development Tax Credit, which the latest state budget phases out after this year. The number of awards dropped from 64 to 52, the amount awarded declined by $7 million, and the related jobs dropped by nearly 3,900.
Michels said a separate Manufacturing and Agriculture Tax Credit has resulted in fewer companies needing or qualifying for the Economic Development Tax Credit.
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The annual report also shows that anticipated capital investment from last year’s awards would total $1.2 billion, down from $1.6 billion anticipated from the 2013-14 awards. Michels said the agency has made five awards tied to $100 million or more in capital investment and three of them — Amazon, Meijer and Agropur — occurred in 2013-14, accounting for the higher amount that year.
The job numbers reflect the amount prescribed in the award contracts, which typically extend out over several years, rather than those created or retained in a given year.
In both years the agency exceeded its total jobs target (20,825 in 2013-14 and 23,390 in 2014-15). In 2012-13, the agency’s goal was to create 50,000 jobs, but it created or retained only 37,313.
Most of the increase in award dollars came in the form of tax credits, with the expanded historic rehabilitation tax credits accounting for most of the increase. The agency placed a temporary moratorium on those credits two years ago when initial demand greatly exceeded initial projections.
Walker lifted part of the moratorium last year and tried to place a $10 million cap on the credit in the 2015-17 budget, but the Legislature disagreed. Walker also tried creating clawback provisions for the credit tied to job-creation goals that don’t currently exist, but the Legislature rejected those as well.
The agency has faced criticism for making awards to companies, only to have them outsource Wisconsin jobs. At a recent legislative hearing, WEDC board chairman Dan Ariens pushed back against requiring the agency to make awards based on a net increase in jobs.
“Think about how business will continue to evolve,” Ariens said. “You’re going to see automated factories, you’re going to see the Internet of things grow, which is going to challenge the number of jobs, but it’s going to raise the quality of the workforce that you need in a plant to operate robotics or electronic instruments.”
Sen. Kathleen Vinehout, D-Alma, responded that that’s not what her constituents want — “they want job creation.”
“You may want to do that,” Vinehout said. “But the state doesn’t want to invest in it.”
The WEDC board meets Thursday at 10:30 a.m. at the Milwaukee Area Technical College Oak Creek campus. The board is reviewing the annual report, and also considering changes to its bylaws that would eliminate the board’s five standing committees and give the board chairman authority to create new committees.
The board won’t be discussing any policy changes that Barca and Lassa proposed at the board’s July meeting to address problems raised in a recent audit and in several news reports. The proposed policies would ensure the agency update background checks on companies every six months before making an award, and address companies that outsource jobs after receiving public subsidies.
The first of a five-stop Senate tour on economic development issues will also be held Thursday at the MATC Oak Creek campus at 2 p.m. Other hearings will be held in Rhinelander on Oct. 5, Appleton on Oct. 8, Menomonie on Oct. 12 and Platteville on Oct. 26.