The Wisconsin Economic Development Corp. is changing its procedures to ensure Foxconn can only collect tax credits on workers living in the state, following the recommendation of a recent Legislative Audit Bureau report.
At a board meeting yesterday in Madison, WEDC CEO Mark Hogan said the agency initially considered some workers outside the state as qualifying for tax credits, because their wages would be taxed by the state.
“LAB came in, they said they did not agree with that,” Hogan said. “We looked at it, we researched it, and we’ve agreed. We agree with the LAB’s recommendation, and we’re following LAB’s recommendation.”
The LAB report last month found Foxconn could collect tax credits on workers who don’t work in the state, under a written policy with WEDC. The audit recommended a change in written procedures to ensure those program credits are only awarded for the Foxconn employees who live within the state’s boundaries, though Hogan in his mid-December response didn’t commit to changing the policy.
Hogan said yesterday the LAB’s recommendation provided “a unique opportunity” for revision, as no tax credits have yet been verified for Foxconn.
Foxconn recently announced it would not reach the minimum job creation threshold to collect tax credits for 2018.
“So we will not even be verifying tax credits until this time next year at the earliest, which will be based on 2019 activity,” Hogan added.
Brian Nowicki, chief financial officer for WEDC, says an additional change mentioned in the LAB audit has been made, though he says it was “not an issue.”
Following the LAB report, procedural language at WEDC was changed so that any tax credits earned for job creation can be carried over year to year. Nowicki says there was originally a “misinterpretation” around language pertaining to job creation credits.
“Credits that are not claimed in a year for jobs can be carried over; they are not lost under any scenario,” Nowicki said.
Also, when job creation credits are carried over, they can’t be accessed until the maximum job creation target has been exceeded. Credits related to capital expenditures cannot be carried over, he said.
In its audit, LAB recommended that WEDC report to the Joint Legislative Audit Committee by Jan. 31. Hogan briefly went over a drafted response letter at the meeting, which he said would be finalized in the next day or two.
“Basically what it says is we’ve accepted the LAB recommendations and we’ve implemented those,” Hogan said.
The 18-member board voted to approve the response, though some members were not present. Sen. Tim Carpenter, D-Milwaukee, was the only no vote.
The board also voted to postpone confirmation votes on officer elections and the CEO until the next WEDC board meeting, which has yet to be scheduled. That means the officers elected at WEDC’s annual meeting in July, as well as Hogan, will remain in their positions until an official vote is held.