burning money

Officials probe $66M discrepancy for Walker's agency

Wisconsin’s economic development agency is checking on nearly $66 million in discrepancies in tax credits awarded and actual jobs created.

The Wisconsin State Journal reports that officials with the Wisconsin Economic Development Corp. are still working to understand the scope and magnitude of the problem. Last year, the an investigative report by the Milwaukee Journal Sentinel revealed that the troubled agency exceeded its authority and improperly awarded more than $21 million in taxpayer funding to businesses and Gov. Walker campaign contributors.

Agency officials said at a meeting last week they have identified inaccuracies in how the agency counts the number of jobs a company creates that qualify for tax breaks. The board discussed few details before going into closed session.

The Legislature ended the state’s jobs tax credit and economic development tax credit programs in December. The agency has been under close scrutiny after a series of critical audits and reports about failed loans and unmet job promises.

Failed jobs pledge

In his 2010 campaign for governor, Scott Walker pledged to create 250,000 jobs. At the center of his pledge was the creation of WEDC, a public-private agency that replaced the state Commerce Department.

The primary purpose of WEDC was to grant loans supporting companies’ efforts to grow and hire more workers in the state. But a 2013 audit found that money was being handed out without any such agreements. Since that audit, large loans have been made to companies that outsourced jobs to places such as Tijuana, Mexico. We’d love to hear Walker explain the thinking behind that plan.

Millions of dollars in loans were made without any terms attached. Technically, they weren’t even loans — they were handouts, because they were granted without stipulations or payback terms. Many were not recorded, so they can’t be tracked and will never be repaid. Those were among the findings of a 2013 audit of the agency.

Since 2013, more than $4 million in loans were written off by WEDC because they were only 90 days behind in their payments.

Critics, including Republicans, said WEDC treated taxpayer money like play money.

Loan recipients were not contractually required to submit information showing that jobs were created and/or retained. WEDC failed to comply with state laws or to collect information about the numbers of jobs created and retained as a result of its handouts.

In his 2015–17 budget, Walker proposed fixing the mess he created by combining WEDC with the Wisconsin Housing and Economic Development Authority — in other words, bringing it back under government control. But after the last audit, he sent an SOS to the Legislature, asking lawmakers to step in and handle it.

Critics say that it’s emblematic of the Walker administration’s arrogance, incompetence and disregard for the rules. They say it illustrates not just ignorance of the most fundamental workings of government but also a complete lack of interest in them.

It reveals a character that cannot accept responsibility and whose only leadership strategy is to spin his failures into someone else’s problem, according to naysayers.

WEDC has been criticized by numerous state audits and media reports — here, here, here – for failing to properly award, document and track millions of dollars in state aid to businesses. Republicans responded by eliminating state audit agencies.

Johnson Controls

Last year, the Wisconsin Democracy Alliance published a report showing a case that demonstrated the reasons for WEDC’s failure.

WEDC awarded Johnson Controls nearly $2.47 million in tax credits in March 2014 for two projects, including $1 million for its Milwaukee Business Center in suburban Glendale, where it laid off all of its employees beginning in January, according to the report. The company said the jobs lost in Wisconsin would be sent to Johnson Controls’ accounting and finance operations in China, Mexico and Slovakia.

Meanwhile, company employees contributed about $5,700 to Walker in 2014 when the tax credits were awarded and the governor was at the agency’s helm. Top Johnson Controls employee contributions to Walker in 2014 were $1,000 from Andrea Ferestad, of Mukwonago, senior program manager; $600 from Donald Pfeiffer, of New Berlin, an engineer; and $550 from Paul Thompto, of Brookfield, a control engineer.

Since Walker was first elected governor in 2010, through June 2015, Johnson Controls employees have contributed about $28,200 to the governor.


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