Dems question if WEDC can handle Foxconn incentive package

Democratic lawmakers are using a May audit to cast doubt on whether the state’s job agency is up to overseeing the $3 billion Foxconn incentive package.

Still, others on the Legislative Audit Committee commend the Wisconsin Economic Development Corporation for the improvements noted by the audit, while defending the corporation’s work on the Taiwanese plant’s contract with the state.

The Joint Legislative Audit Committee yesterday reviewed an audit of 133 awards from the agency. It found while WEDC has improved since the last audit two years ago, the corporation continues to have issues in tracking the number of jobs created or retained by economic development job programs.

Citing a pattern of concerns surrounding “accountability, transparency and accuracy,” Sen. Kathleen Vinehout asked WEDC Secretary and CEO Mark Hogan how the corporation could be trusted to handle Foxconn.

The Alma Dem, a candidate for governor, also questioned how she could be confident the Foxconn deal is “in the public’s interest” given the findings of past audits that WEDC doesn’t follow state statutes when identifying whether its awards have led to the agreed-upon amount of jobs created or retained.

That’s because, according to the most recent audit, WEDC representatives during the underwriting process failed to consistently collect existing employee numbers from applicants and verify the information recipients submitted detailing whether they had been creating jobs.

But Hogan pointed to an additional layer of verification over the Foxconn deal included in the program guidelines WEDC signed off on this month.

Those guidelines say WEDC “will require an annual independent third-party verification of project deliverables” and may add on additional reporting requirements to ensure Foxconn keeps its promises to the state.

Hogan also said his agency was making “significant progress,” adding he’s already in discussions to establish a clearer process and procedure to ensure employment information from companies that receive awards is “accurate and complete.”

One way to verify it, he said, is by following an LAB recommendation to use Department of Workforce Development unemployment insurance data and compare it with jobs-related information submitted by tax credit recipients, although both Hogan and the audit said it wasn’t a perfect solution.

But Rep. Terese Berceau questioned how WEDC is able to offer loan forgiveness to businesses on the basis of jobs created if WEDC doesn’t independently verify it.

Hogan responded the company provides WEDC information and the corporation ensures it complies with the terms of the contract originally signed. He said while WEDC has “not been able to verify the jobs, we do verify the capital expenditures” made, which sometimes also warrants loan forgiveness.

Others, though, praised WEDC’s progress under Hogan.

That included Sen. Alberta Darling, R-River Hills, who cautioned her fellow lawmakers to “be accurate about how we view this economic development agency.”

“When the name WEDC comes up, we often get smoke in the room or pants on fire,” Darling said, referring to the mention of the state jobs agency in the Joint Finance Committee, where she’s a co-chair.

While she said it’s “important for us all to demand transparency or accountability from WEDC,” lawmakers shouldn’t “exaggerate” when it comes to portraying WEDC from a “negative viewpoint.”

See the audit:

–By Briana Reilly