Here’s how the Foxconn deal would work
Your questions about environment, jobs, taxes answered
MADISON - Wisconsin has never done a jobs deal like the one with Foxconn Technology Group that would bring a flat screen display plant to southeastern Wisconsin.
So should Assembly lawmakers approve or reject the $3 billion jobs deal in their Thursday vote? See what’s in it and decide.
Q: What are the state and its taxpayers offering for the plant?
A: Foxconn would receive up to $2.85 billion in cash payments from state taxpayers over 15 years and additional sales tax exemptions on construction materials for the plant valued at $150 million. The state would also waive some environmental rules.
Q: What is the public getting in return?
A: Foxconn has committed to building an up to $10 billion plant over six years to make liquid crystal displays and create up to 13,000 jobs.
Q: How much would these jobs pay?
A: Foxconn has told the state that in addition to benefits, plant salaries would start at $41,600 a year and average $53,900. However, any job paying $30,000 or more would qualify for the state incentives.
Q: Is the state just giving up future tax dollars that it won’t get anyway if Foxconn doesn’t come here?
A: Mostly not. The projected $150 million in sales tax exemptions would work that way. But the other tax incentives will be paid as cash if Foxconn doesn’t owe taxes. The company very likely won’t owe any — Wisconsin law already exempts manufacturers from almost all corporate and income taxes.
Q: Does the company have to create jobs to get the money?
A: Yes and no. Under the Foxconn bill, the company could get up to $1.35 billion in cash for making the full investment in the plant and equipment — even if the market changes and the company is
forced to abandon the plant. The other up to $1.5 billion in state money would be awarded only after workers are hired and paid by the company. The company has said the plant would employ 3,000 workers at the beginning but the state’s agreement in principle with Foxconn has no minimum jobs requirement.
Q: Could this deal change?
A: Yes, Gov. Scott Walker’s administration is negotiating a final contract with Foxconn that might include new provisions like a minimum jobs requirement for all of the cash payments. Stay tuned.
Q: How long would it take state taxpayers to recover the $2.85 billion?
A: The Legislature’s nonpartisan budget office found it would take until 2043, or 25 years, if the company does reach its predicted employment levels. So far, no outside study has looked at whether it is reasonable to expect a Foxconn plant to employ 13,000 workers.
Q: Will local taxpayers see other costs?
A: Yes, local governments will have to borrow an undisclosed amount to help build infrastructure at an undeveloped site in either Kenosha or Racine counties. The state government is committing to paying up to 40% of qualifying local borrowing if the deal goes bad — a commitment similar to past deals involving Lambeau
Field and Miller Park.
Q: What are the deal’s other benefits?
A: The state could see up to $8.65 billion in private investment by Foxconn and $700 million in annual payroll at the plant.
A study paid for by Foxconn projected that the ripple effect of a 13,000worker plant would generate an additional 22,200 local jobs. A study paid for by the state found the plant would lead to between 12,000 and 18,100 extra jobs.
In addition, this deal could lead to other Foxconn investments in Wisconsin, including a potential second factory in Dane County. But that’s not guaranteed.
Q: How does this agreement compare to other jobs deals?
A: The offer to Foxconn is roughly 46 times larger
than the previous record deal by Wisconsin to a manufacturer. In 2010, the state offered $65 million to Mercury Marine of Fond du Lac in exchange for creating roughly 1,000 jobs and retaining roughly 1,900 more.
In 2015, state and local governments provided $250 million to help build a new arena for the Milwaukee Bucks and keep the team here. Nationally, the State of Washington provided $8.7 billion in tax breaks for Boeing so that the airplane manufacturer would keep and create jobs there.
The Foxconn deal would cost roughly $15,000 per job per year if the company hits the high end of investment and employment targets. If the company made the full investment in the plant but was able to run it with robots
and only 2,000 employees, then taxpayers would end up paying $54,200 a year for each job, or just slightly more than the workers’ average salary.
Nationally, the average yearly per job incentive cost is $2,457, according to the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.
Q: What environmental regulations would be waived?
A: The state Department of Natural Resources would not require Foxconn to seek approval for construction activity on some types of wetlands, which can retain storm water, filter pollution and provide habitat for wildlife.
The U.S. Army Corps of Engineers would still have to evaluate the wetlands
impact and issue a permit, but the state exemption could allow the destruction of wetlands that are only regulated by the state and are not connected to a navigable stream, lake or river.
The legislation would also allow Foxconn to perform construction in waterways without a permit and would waive the requirement for a state environmental impact statement and public hearing. This might be required by the Army Corps, although the focus of the Corps’ work could be different than the state’s.
The company would still be required to obtain permits for air emissions, releases of wastewater and hazardous waste.