• WisBusiness

Evers’ budget to push for more accountability, transparency in WEDC
2/25/2019

Gov. Tony Evers’ new budget will include a proposal to prevent businesses from getting loans, grants or tax credits from the state jobs board if they move jobs outside of Wisconsin, the governor’s office tells WisPolitics.com.


The guv’s plan also aims to up transparency and accountability at the Wisconsin Economic Development Corp. by compelling the board to post all final contracts and amendments to its website within 30 days and notify the Legislature’s budget committee when changes are made to a contract.


And it would reverse a couple of WEDC-related components of the lame-duck laws the Legislature and then-Gov. Scott Walker signed off on in December, according to an overview his office shared with WisPolitics.com.


Evers in a statement said he’s hopeful Dem and GOP lawmakers will support his proposals, which he said are geared toward “protecting the people of Wisconsin and using their tax dollars responsibly.”


“I’ve said all along that we have to do more to increase accountability and transparency at the WEDC to ensure we know where our tax dollars are going,” he said Friday.


Evers’ proposals surrounding the agency come on the heels of the Legislature’s recent lame-duck session that stripped the guv’s ability to appoint a WEDC head until September and temporarily changed the makeup of the board so it would be controlled by GOP legislative leaders’ appointees.


While the budget plan doesn’t outline any changes to that language, it does include proposed tweaks to the supervision of Foxconn’s economic development liaison and the creation of enterprise zones.


The proposal also follows a report from the nonpartisan Legislative Audit Bureau in December that found Foxconn could collect tax credits for employees who don’t work in Wisconsin, under a written policy with WEDC. CEO Mark Hogan said in January the agency is changing its procedures to ensure the company would only be eligible for taxes on employees working in the state.


But Evers’ budget will look to ensure that no loan, grant or tax credit from WEDC is used to relocate jobs outside the state or reduce employment in Wisconsin. The plan would also require recipients to notify WEDC when jobs are relocated or reduced.


It would also nix a current deduction for moving expenses for businesses that move out-of-state or out-of-country, a change that would up tax revenue by an estimated $500,000 per year. A bipartisan group of lawmakers, led by GOP Rep. Adam Neylon and Sen. Dan Feyen, introduced similar legislation earlier this month.


To promote transparency and accountability, Evers’ plan would require WEDC to include language in its tax credit contracts with recipients worth more than $5 million total. The terms would call on recipients to give full updates of their plans for employment and investment in case there are material changes to the contract’s terms going forward.


Evers is also looking to require WEDC to notify the Joint Finance Committee when changes are made to a contract or a contracted plan with a tax credit recipient. The agency would also have to change its program evaluation methods by only reporting job creation and retention numbers for positions that meet the program’s salary and benefit requirements.


Hogan told WisPolitics.com the latter recommendation stems from a past Legislative Audit Bureau report, which the WEDC Board considered at the time.


“And what our view is, and this is something that was reviewed by our Board, was that we ought to be including the total impact of the economic development and not just the portion of it that was tied directly to the credits being issued,” he said.


Evers’ budget would also have WEDC transmit repaid tax credits to the Department of Administration within a week for deposit in the state’s general fund, as well as enhance data sharing between WEDC and the Department of Revenue in an effort to improve verification capabilities.


Hogan noted the LAB’s May 2017 report on the agency recommended the one-week deadline for depositing repaid tax credits to DOA, and WEDC implemented it that same year.


As for enhanced data sharing, Hogan said WEDC and DOR had been looking to set up an agreement on it for more than two years, but said state statute doesn’t allow Revenue to share information with the public-private WEDC, because it isn’t a state agency.


Hogan added he’s “glad” Evers is working to change that in his budget.


Other parts of the guv’s plan would:


*Return the economic development liaison back to the Department of Administration, rather than housing that person at WEDC, which was required under the December extraordinary session laws.


That individual serves as the state’s primary point of contact for the electronic and information technology manufacturing zone tax credit program created under the Foxconn deal.


The post is currently vacant following Walker appointee Matt Moroney’s departure from DOA late last year. Hogan said he and DOA Secretary Joel Brennan are working together to find a replacement, because, Hogan noted, it’s “important that that person have access to the other agencies relevant to the Foxconn project.”


*Change language governing the creation of enterprise zones addressed in the lame-duck laws. Previously, WEDC could only designate up to 30 enterprise zones under its tax credit program without any review from the Legislature. The lame-duck laws eliminated the cap, but gave JFC the power for passive review of any new enterprise zones.


Evers’ plan would create an enterprise zone limit of 35 and allow any zones with revoked or expired certifications to be re-utilized by WEDC. It would also nix JFC’s passive review authority over the enterprise zones.


*Direct WEDC to dole out at least $1 million per year to regional economic development organizations across the state.


*Tweak the Business Development Tax Credit Program to incentivize recipients to make capital investments related to renewable energy generation or energy-efficient projects. The language would provide an incentive of 5 percent.


*And modify the historic rehabilitation tax credit program. The change would specify the new $3.5 million cap, which went into effect July 1 under a bill Walker signed into law last session, is applied on a per-project versus a per-parcel basis.


The change is one WEDC has been pushing for in the cases where there’s a larger project comprised of multiple parcels looking to take advantage of the program. Asked about whether the tweak would limit or expand the credit, Hogan disputed either characterization, saying the language instead represents “a clarification of what the intent was.”

 


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