WEDC may get lending power back

Finance panel backs move, says flaws have been fixed

MADISON - The state’s jobs agency could lend taxpayer money to businesses again after problems led to the loss of its lending program two years ago, under a proposal approved by a key committee Tuesday.

Republicans on the Legislature’s budget committee voted to approve the proposal contained within Gov. Scott Walker’s budget bill. Walker proposed — and the panel approved — both the return of business loans at the Wisconsin Economic Development Corp. and an $11.8 million increase in funding for the agency over the next two-year budget compared to the current one.

Sen. Alberta Darling (R-River Hills), co-chairwoman of the Joint Finance Committee, said that WEDC had overcome past problems with its financial controls and could now safely manage the loans.

“I think they’ve demonstrated they’re in a much more solid financial situation,” Darling said.

Also Tuesday, Darling said in the coming weeks the committee would be rejecting Walker’s plan to save at least $60 million by restructuring health insurance for some 250,000 government employees and their families.

“I just think there’s not convincing evidence we need to do that right now,” Darling told reporters.

Walker and a top appointee said Tuesday that they were disappointed by that, with Walker telling reporters in Appleton that “almost every state in America has some form of self-insurance.”

“It’s $60 million in savings for sure over the next two years,” said Walker’s administration secretary, Scott Neitzel. “So we are in disbelief that the committee would not take that low-hanging fruit.”

Rep. John Nygren (R-Marinette), cochairman of the budget committee, said lawmakers would seek to find other ways for the state to save money, perhaps by changing the benefits provided to public workers.

The committee is in the early stages of its work on the budget and will spend weeks more on it before sending it to the Assembly and Senate for approval. It will then go to Walker, who can remake the spending plan with his broad veto powers. Also Tuesday, the committee:

Created a grant program that could cover up to $200,000 in security costs for the Harry & Rose Samson Family Jewish Community Center or other institutions that have faced threats.

Put more oversight on spending by Attorney General Brad Schimel, requiring him to submit reports on how he plans to spend legal settlements the state receives. The Republican attorney general has faced criticism for using state money to buy commemorative coins stamped with the letters “K.A.E.D.” for Schimel’s slogan for the department, “Kicking Ass Every Day.”

Earmarked $100,000 to the Marathon County Economic Development Corp. for minority-owned businesses there.

Provided $1.4 million over the next two years to support high-tech shops known as fabrication labs within schools.

Shifted the state’s efforts to create a communication system for emergency responders from the Department of Justice to the Department of Military Affairs and provided $928,000 for that over two years. The panel also approved $7.1 million to build a modern statewide 911 system that can receive not just phone calls but also text messages, photos and videos.

WEDC critical audit

WEDC has stayed out of the headlines in recent months but received pointed criticism in past years. That included a harsh audit that came one week before Walker proposed dropping the loan program in May 2015.

Democrats said WEDC still needs more oversight on what it does with public money.

“We all should stand for accountability,” Sen. Jon Erpenbach (D-Middleton) said.

As part of the change, the agency would no longer be able to issue forgivable loans that could be written off without full repayment.

The 2015 audit of WEDC found that some companies receiving state help were not required to submit records to verify job creation, contracts with companies didn’t always include provisions required by law and WEDC didn’t verify information submitted by companies on jobs created.

In July 2015, the Milwaukee Journal Sentinel reported on a soured $1 million loan that WEDC gave to an entrepreneur months after a federal judge wrote that other deals involving the businessman had “all the earmarks of fraud.”

WEDC officials have pointed to scores of policy changes that the agency has made since 2012 to strengthen its financial safeguards for taxpayers.