Panel advances Foxconn bill
No Assembly Democrats vote for measure that gives company $3 billion in incentives
MADISON - Without any Democratic votes, Republicans on Monday advanced a $3 billion incentive package to encourage Foxconn Technology Group to build a display panel plant in southeastern Wisconsin that could employ thousands. The 8-5 vote in the Assembly Committee on Jobs and the Economy came as a new report concluded the ripple effect from the Taiwanese tech giant’s investment would produce 4,000 to 10,000 fewer jobs than previously estimated.
On the positive side, the report by consultant Baker Tilly Virchow Krause predicted a greater number of short-term jobs resulting from the construction of the Foxconn factory. The report was produced for Gov. Scott Walker’s administration and released under Wisconsin’s open records law.
Monday’s vote suggests Republicans who control the Assembly will struggle to get any Democratic votes when the incentive package goes to the floor of that house on Thursday. Walker and his fellow Republicans have emphasized the importance of securing bipartisan support for the incentive package.
“There is no way in the world you guys can tell me this is the greatest deal out there,” Rep. Jason Fields (D-Milwaukee) told Republicans on the committee. “It has way too many loopholes and uncertainties for us to sign off on $3 billion.”
Republicans were united behind the deal.
“This is an investment that
makes sense and we cannot look the other way and let this go by,” said Rep. Bob Kulp (R-Stratford).
If the bill clears the Assembly on Thursday as expected, it will then go to the Legislature’s budget committee and the Senate. GOP Senate leaders have not said whether changes will be needed to get it through their house.
Foxconn has said if the package passes it would build a $10 billion plant that would employ 3,000 initially and as many as 13,000 in the coming years.
Senate Minority Leader Jennifer Shilling (D-La Crosse) said the incentive package could lead to Wisconsin taxpayers paying nearly $1.5 million per Foxconn job. Under that scenario, Foxconn would receive $1.35 billion in subsidies for investing $9 billion in its factory and receive another $137 million if the company creates just 1,000 jobs.
“Rather than rushing through a $3 billion tax break for a foreign corporation, we need to make sure Wisconsin taxpayers aren’t being taken for a ride,” she said in a statement.
Until now, the estimates for how many jobs would be created by the Foxconn plant were provided mainly from an analysis by EY, a consulting firm formerly known as Ernst and Young. That analysis was paid for by Foxconn.
The Baker Tilly report was paid for by a state entity, the Wisconsin Economic Development Corp.
Like the EY analysis, the Baker Tilly estimates assumed that as promised Foxconn would create up to 13,000 jobs at the plant. But the new projections then came to a different conclusion.
EY previously calculated that another 22,200 jobs would be created outside the Foxconn plant at suppliers and other businesses such as restaurants, for a total of 35,200. Baker Tilly, on the other hand, figured that a Foxconn plant would create between 12,000 and 18,100 jobs outside the factory, for a total of between 25,000 and 31,100.
But the Baker Tilly analysis also estimated that in the short term the Foxconn project would create between 20,400 and 24,900 construction jobs and other ripple effect positions. That was more than predicted in the EY report, which had calculated 16,200 construction jobs and other indirect positions.
Party-line vote
Under the incentive package, the state would pay Foxconn up to $2.85 billion in cash over the next 15 years and waive an additional $150 million in sales taxes on construction materials. Over those 15 years, state taxpayers would pay $1 billion more to the company than the additional taxes that would be generated by the deal, according to a report from the nonpartisan Legislative Fiscal Bureau.
The Assembly committee largely left that package intact Monday, but on a party-line vote made some changes to it. it also rejected nearly two dozen amendments offered by Democrats that would have placed stricter requirements on Foxconn to earn state subsidies, such as by hiring Wisconsin workers.
Among those voting against the incentive package Monday was Rep. Tod Ohnstad (D-Kenosha), whose district is near the likely sites for Foxconn’s plants. He said he had concerns about the cost and environmental consequences of the legislation but left open the possibility he would vote for the measure when it gets to the Assembly.
The committee added a provision to the package that would have the state spend $20 million to train workers starting in 2019.
The package adopted Monday left in place provisions allowing Foxconn to build in wetlands and waterways without getting permits and exempting the project from filing a state environmental impact statement.
Under one set of changes, if wetlands are destroyed, a priority would be put on trying to create new wetlands in the same watershed — though it would still be possible for the new wetlands to be created outside that watershed.
“It’s a good start, certainly, but we need to move it a little farther yet,” said Tracy Hames, executive director of the Wisconsin Wetlands Association.
The amendment would also allow local governments to use tax incremental financing to pay for police and fire equipment, fire stations and general operation costs. Normally, tax incremental financing can be used only for infrastructure like streets or sewers.
Such financing allows local governments to reach agreements with developers to subsidize large projects. The local governments borrow money to get developments built and over the following decades use property taxes generated by the project to pay off the loan.
Lee Bergquist of the Journal Sentinel staff in Milwaukee contributed to this report.