Progressive Thinking

Independent analysis reveals 14,000 jobs deficit for existing corporate tax credits and loans is greater than the direct job creation claim for the Foxconn deal. A full 60% of WEDC-supported corporations have failed to meet job creation goals.

STATEWIDE - On a media call Monday, Citizen Action of Wisconsin, State Rep. Amanda Stuck, and State Rep. Jonathan Brostoff released a new analysis of Wisconsin Economic Development Corporation (WEDC) data showing that the troubled economic development agency has an extremely poor record of holding corporate recipients accountable for their jobs promises. The analysis, which comes from the agency’s own self-published data, provides additional evidence that WEDC is completely unqualified to manage the gigantic Foxconn deal, which would be by far the largest job creation tax credit program ever issued by an American state. Audio of the call can be found here.

The Citizen Action of Wisconsin analysis examines job creation tax credits issued by WEDC three years ago and longer to allow time for corporate recipients to execute the hiring plans they submitted to WEDC. The analysis finds a large gap between “Actual Job Creation” (the jobs companies actually reported creating) and “Planned Job Creation” (the jobs that were promised in return for tax credits).

Key Findings

• Of the 337 WEDC awardees with established job creation goals at least 3 years old, 60% (203 awardees) failed to meet their goals. (company list available on our website)

• Of the 203 awardees that have not met their job creation promises, the difference between their actual job creation as reported by WEDC and their goals are 14,744 jobs. This means the WEDC job creation gap is larger than the total number of direct jobs being proposed by Foxconn in the best case scenarios (13,000 jobs).

• The numbers would be even worse if WEDC kept net job creation numbers, because it is well documented that many WEDC recipients have outsourced other jobs while taking state tax credits.

• WEDC has a very poor record of taking back tax credits when corporate recipients fail to fulfill their job creation promises. WEDC has only sought to claw back $9.9 million from 24 companies, less than 12% of companies who have not met their job creation goals after 3 years. WEDC does not report how much of this money has been successfully recovered.

• The 203 companies that still have not hit their jobs goal in at least 3 years have already received $94.8 million in verified tax credits from WEDC, with another $158 million awarded but not yet dispersed.

“The Walker Administration's abysmal record of holding corporations accountable for their job creation promises makes the Foxconn deal a scandal waiting to happen,” said Robert Kraig, Executive Director of Citizen Action of Wisconsin. “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 the biggest economic scandal in Wisconsin history.”

As both data sets used in this analysis are self-reported by WEDC itself, they indicate the best-case scenario for job creation. The Legislative Audit Bureau found in May that all of WEDC’s job creation claims should be treated as suspect because the agency has failed to implement basic verification procedures. Given the continued refusal to implement basic accountability procedures, it is highly likely that WEDC’s performance record is much worse. The Legislative Audit Bureau concluded that WEDC does “not contractually require grant and loan recipients to submit information sufficiently detailed to allow it to determine the extent to which jobs were actually created or retained.” In addition, the Audit Bureau found that “WEDC did not collect sufficiently detailed information from tax credit recipients about their existing employees. Collecting such information will help WEDC determine in future years the extent to which recipients actually created or retained contractually required jobs. WEDC also did not comply with statutes because it did not annually verify jobs-related information submitted by recipients on the extent to which contractually required results were achieved.”

“Given WEDC’s record of scandal, the Foxconn deal does not make sense even if you believe in extreme corporate welfare,”said State Representative Jonathan Brostoff (D-Milwaukee).

“I have been told by WEDC when trying to help my constituents that the agency has no way of verifying with the Department of Revenue which companies have claimed job creation tax credits or how much they’ve recovered from those that don’t follow through on their commitments,” said State Representative Amanda Stuck (D-Appleton). “We have no guarantees that we will get the public’s money back from Foxconn if they do not follow through on their promises. I want to know that we have a system in place to protect our state.”

TABLE 1: Select companies receiving WEDC awards 3 years ago or more

The full analysis can be viewed here

Late night secret dealings. No notice to local elected officials. No local powers to say “no”. Sen. Kathleen Vinehout writes about a last-minute, late-night budget motion to take away local powers to oversee sand mines and quarries in Wisconsin.

MADISON - A last-minute budget amendment has folks in Western Wisconsin very worried.

Locals have spent seven years negotiating with large sand mines to reach agreements that allow neighbors and mines to co-exist. In some cases, locals decided certain sensitive and tourist areas needed protection from mines.

All the careful negotiations appear poised to go out the window in a strangely evolving budget deal that seems to affect quarries – or, as we often know them, gravel pits.

First, in full disclosure, my farm is located next door to a quarry. My neighbor crushes rock for construction projects. The details I provide here will personally affect my family.

Late Tuesday night last week, the public and minority members of the budget writing committee got their first look at a transportation deal. The deal was to break the impasse that’s stymied budget passage for four months. Buried in the amendment was language that stopped all local oversight of quarries using sand, rock and gravel for road projects.

The next morning, I received several calls from local government officials who wanted to know if the budget writing committee had taken away local powers to oversee sand mines and quarries. Locals worried details were never made public until after supper, when most folks were getting their little ones off to bed, and voted on the same night, when most had gone to bed.

At first, no one seemed to know the origin of the idea to remove any oversight of quarries by locals. Why take away local powers related to gravel pits? There are hundreds of gravel pits across Wisconsin. Some are idle, some are large, some are very small. But they are everywhere.

The budget amendment was comprehensive and dealt with many of the issues written in previous attempts to take away local oversight of sand mines. The proposal would stop locals from requiring a quarry to get a zoning permit, including a site that has not previously been developed as a mining pit. Locals could not set limits on explosives or other types of blasting, on noise, the number of trucks leaving a mining pit, and the hours of mining operation. The proposed law forbids locals from setting air or water standards, or putting any type of restrictions related to monitoring air quality or water quality or quantity.

I’ve heard from local elected leaders and citizens all across western Wisconsin who do not like lawmakers taking away any local powers. And they certainly did not like this.

But when this proposal became public I also heard from interest groups that the plan DID NOT GO FAR ENOUGH in taking away local control.

In what must be the strangest “up” is “down” memo I’ve ever seen, Wisconsin Manufacturers and Commerce (WMC) and others asked lawmakers to get rid of the quarry provisions because they did not go far enough.

Remember, this amendment is taking away local powers, not rewriting state laws adding more local powers.

WMC wrote, “…there is no getting around the fact that the Republican-controlled Legislature will have granted expanded environmental regulatory powers to municipalities… This Legislature has done so much to turn our state around. Now is not the time to begin turning that progress back by deciding which Wisconsin industries can be subject to significant regulatory overreach by local governments.”

A local county official had a very different description of what the late-night budget motion did.

“It comes within a 16th of an inch of including sand mines to say nothing of how it takes away our local control. They will be blasting and crushing rock all night, all summer long. Why don’t they trust local officials? Who is going to take the complaints we get? Somebody went to a lot of trouble to write this amendment if all they wanted to limit were quarries.”

Somebody indeed. A few hours later, I learned sand mines were included in the amendment, as late as Sunday evening of Labor Day weekend.

Late night secret dealings. No notice to local elected officials. No local powers to say “no”. An “up” is “down” memo. The public left out in the cold.

The vote is “no”!

Wisconsin was one of the first states to enact a Living Wage law in 1913, at first only for women and minors over age 17. Opponents fought the law in the courts and the legislature, and the Governor and Legislative majority repealed the very definition of “living wage” by the 1980s. The federal minimum wage law replaced it, but has not kept up with the cost of living since 1968.

MADISON - “For an adult with a family who has to pay for food, clothing, and a place to live, and be able to pay for a car, the minimum wage is clearly not high enough,” wrote Bethany of Eleva-Strum High School.

Wisconsin was one of the first states to enact a Living Wage. The law gave authority for determining a living wage to an Industrial Commission made up of a balance of employers, employees and the public. The year was 1913.

Two years earlier, people attending a national conference of the National Consumers’ League in Milwaukee called for a minimum wage. Advocates made a minimum wage the top issue.

Following the conference, Wisconsinites called on leaders to create a state minimum wage.

The next year, UW Professor John Connors wrote the first minimum wage bill. Progressive lawmakers introduced two bills. But neither bill was signed into law.

Massachusetts has the distinct honor for passing the first minimum wage law in 1912.

In 1913, Wisconsin joined seven other states, including Minnesota and Oregon, to pass state minimum wage laws. But not until 1919 did workers see the result in better wages.

Opponents challenged an Oregon law, similar to Wisconsin’s, in court. A tie vote in the United States Supreme Court eventually cleared the way for action.

The first Wisconsin minimum wage was only for women and minors over age 17. Men were not included in state minimum wage laws until 1975 law when lawmakers first used the term “employees”.

The first wage was set at twenty-two cents an hour. Advocates challenged this wage, asking the commission to make the pay “more commensurate with a proper living standard”. A few years later the minimum wage was increased to a quarter an hour.

Again, action of the courts interfered with people’s ability to make a living wage. In 1923, the US Supreme Court declared all minimum wage laws unconstitutional. The action was a set-back for all living wage advocates. Wisconsin reacted by passing an “oppressive” wage law protecting women and minors from very low wages.

By 1937, the Supreme Court reversed its decision clearing the way for Wisconsin’s original law to again take effect. The next year President Roosevelt signed a law setting the first federal minimum wage at twenty-five cents an hour.

Wisconsin kept its own living wage. Even so, inequalities continued for women, and worse for rural women. For example, in 1956, the federal minimum was a dollar an hour. The state wage for women and minors was seventy cents in an urban area and fifty cents for women and minors who worked in a small town or rural area.

The Industrial Commission regularly reconsidered a living wage. The Commission authorized studies of the cost of living and made many adjustments. The last “living wage” study was done in 1967. The study recommended Wisconsin use the federal Consumer Price Index (CPI). The state then set a policy to revise minimum wages every other year using the CPI. As near as I can tell by reading state historical documents, this approach continued through the 1970s.

But by the 1980s, the minimum wage was no longer a living wage. And in the last budget, the Governor and Legislative majority repealed the very definition of “living wage” and the law allowing an employee to file a complaint if he or she felt unfairly compensated.

If the minimum wage kept up with inflation since 1968 workers would now be paid $11.17 an hour. According to a recent report of the Economic Policy Institute (EPI), in 2016, $7.25, the current minimum wage, buys ten percent less than when it was last raised in 2009 and one-quarter less its value in 1968.

According to EPI, raising the minimum wage to $15 in 2024 would undo the erosion that began in the 1980s. Several members of Congress have introduced a bill to raise the minimum wage in eight steps to $15 by 2024.

Yes, Bethany, the minimum wage is clearly not enough. For a hundred years, Wisconsinites traveled a long journey to keep a minimum living wage. Now is it’s our turn to take up the struggle and advocate for our neighbors and friends.

Budget announced by Senator Fitzgerald earlier this summer caps total spending on the Historic Tax Credit at $20 million and limits the funding a project can receive at $5 million.

MADISON - Drive through a quaint renovated small village or town in Wisconsin and you are likely seeing a downtown renovated with Historic Tax Credits. In my opinion the Historic Tax Credit is the most successful rural and small town economic development program administered by Governor Walker’s Wisconsin Economic Development Corporation (WEDC). As the Legislature considers venturing into the great unknown on high tech manufacturing with checks from our taxpayers for 15 years, that same Republican majority is planning to cap the Historic Tax Credit program.

This cap is defended as needed as an austerity measure. But clearly these budget cuts are not needed elsewhere. The Republican compromise budget announced by Senator Fitzgerald earlier this summer caps total spending on the Historic Tax Credit at $20 million and limits the funding a project can receive at $5 million. These limits will have a significant impact on the program’s success.

In 2014, 60 percent of the Historic Tax Credit projects renovated buildings that had been vacant for more than 20 years. The return on investment for taxpayer investments in the Historic Tax Credit has been proven to be 8 to 1. Capping the program will jeopardize projects that will revitalize our communities and provide a known payback to taxpayers. I have heard from local leaders from all over the state and the 27th Senate District asking to leave the program alone, so I know other Legislators have received contact as well.

I cannot figure out why Governor Walker has continually tried to kill this program and why Republican Legislators would consider allowing it to happen. 2016 brought 38 projects into the Historic Tax Credit. Projects all over Wisconsin including Plymouth, Superior, Fon du Lac, Evansville, Platteville, Darlington, Waupaca, Wausau, Prairie du Chien, La Crosse, Manitowoc, Watertown, De Pere, Oshkosh, Neenah and Kenosha. I know of projects in the works in the 27th District as well.

In the last three budgets the Historic Tax Credit destruction has been defeated, but it appears we are at the cusp of a “victory” for Governor Walker limiting the Historic Tax Credit for communities all over Wisconsin in planning phases for redevelopment. I truly hope that the final budget will save the Historic Tax Credit again and deter those that wish to punish communities that are working to redevelop their downtowns.

***

Please contact members of the Legislature and ask them to support the Historic Tax Credit as current law in the state budget. The Legislative Hotline is (800) 362-9472 or you can email from the Legislative website: http://legis.wisconsin.gov/

At a recent public hearing, ideological groups push a de-licensing plan for state professionals in an all-to-common process of speed and secrecy. Notice was posted late Friday for a meeting the following Thursday to discuss public safety as well as erosion of wages and workers’ rights.

MADISON - “This bill does not allow for public debate...is the public even aware? You’re not allowing the public to have adequate input into this issue,” testified Stephanie Bloomingdale.

Ms. Bloomingdale is the Secretary-Treasurer of the Wisconsin State AFL-CIO. She represented many workers who, along with the rest of us, just found out about bills that set up a process to get rid of occupational licensing.

In Wisconsin, many professions are licensed, such as plumbers, electricians, doctors, lawyers, architects, and teachers. Those folks affected by the bill had little time to become aware of efforts to change their professional credentials. The rest of us, who may hire plumbers or use deaf interpreters, had little way of knowing what was happening.

In what has been an all-to-common process of speed and secrecy, a public hearing notice was posted late Friday for a joint Assembly and Senate committee hearing the following Thursday. Scheduling a joint hearing means there is only this one opportunity for public input.

The bills, Senate Bills 288 and 296, set up an “occupational license review council” and a “self-certification registry”. In short, SB 288 creates a politically appointed council that would review all professional licensure requirements and recommend repeal of certain licenses.

Senate Bill 296 would create a registry for people to use the term “state certified”. This registry would allow individuals to work in a field even if they were unlicensed. The bill singled out certain professions for potential self-certification including dieticians, landscape architects, private detectives and sign language interpreters.

Two very different types of people came to testify during the all-day joint hearing.

On one side were conservative “think-tanks” who came from out-of-state to testify. Groups with names like the “Mercatus Center” and the “Institute for Justice.” According to Wikipedia, the Mercatus Center was founded with a $30 million-dollar Koch Industries donation and the founding CEO was a former Koch Industries lobbyist. Both the former lobbyist and Charles Koch serve as board members, according to the Center’s website. The “Institute for Justice” employs 39 attorneys and was co-founded in 1991 with seed money from Mr. Koch.

Two Milwaukee-based groups also joined in the push for the de-licensing process. According to press reports, the “Wisconsin Institute for Law and Liberty” and the “Wisconsin Policy Research Institute” are entities funded, in part, by the Bradley Foundation. The Koch-funded group “Americans for Prosperity” submitted written testimony and registered in favor of the bill.

On the other side were folks from all over Wisconsin who took the day off work to come to Madison and tell lawmakers about their profession. In every case, these people opposed the two bills before our committees.

Dozens of professionals explained what they did and how the public would not be well served by taking away the professional licensing process. Not only did licensing assure that a person was properly educated and skilled in their profession, but also the state’s involvement in overseeing professions protects consumers. When a licensed professional is guilty of a misdeed the state removes that professional’s license.

I asked the co-sponsors of SB 288 and 296 what type of protections consumers would have under the new regime if their bills became law. The answer was some version of “you can’t legislate everything so no one gets hurt”.

I’ve never seen a hearing that more clearly illustrated the power conservative “think tanks” have gained in the Capitol. A review of my notes shows only one ordinary Wisconsinite who testified in favor of the bills compared to the dozens who spoke in opposition.

The process laid out by the bills eerily reflected a process outlined in an August 2017 report by the Mercatis Center. This process included a commitment by elected officials that they would accept the Council’s recommendation “in their entirety or not at all.” Parts of one bill contained wording identical to 2013 model legislation set out by the American Legislative Exchange Council (ALEC). Where are the people in this process?

I wondered, where are the people in this process and why do these groups want to remake Wisconsin in their own image.

“What, do you suppose, is the real purpose of these bills?” I asked.

“We’ve seen a pattern to drive down wages and workers’ rights,” Ms. Bloomingdale replied.