Wisconsin

No, Gov. Walker Isn’t Hedging His Bets on Foxconn

Policy

As Democrats continue to look for flaws in a proposed deal with Taiwanese giant Foxconn, State Senate Minority Leader Jennifer Shilling hopes to add further fuel to the fire, criticizing a provision in Gov. Scott Walker’s proposed legislation that she claims would give back to local governments should the Foxconn deal ever fall through.

While Foxconn has had false starts on other plant announcements, The Walker administration says it has protected taxpayers in a deal to bring as many as 13,000 jobs to Wisconsin and making it site of the first American made LCD technology. Shilling claims a provision in the legislation, which is quoted as covering “up to 40 percent of the principal and interest of a local governmental unit’s obligations,” would act as a “bailout” should the deal with Foxconn fall through.

In a press release, Shilling immediately assumed that the provision proposed by Gov. Walker shows his own supposed feelings of insecurity in Wisconsin’s partnership with Foxconn. “If Foxconn was as committed to our state as Gov. Walker wants us to believe,” Shilling said, “this bailout wouldn’t be needed.” While she equates this provision as a warning of mistrust between Gov. Walker and the Foxconn deal, taking a closer look at the bill shows it having an entirely different purpose.

The section of the bill that Shilling referred to reads:

 Recognizing its moral obligation to do so, the legislature expresses its expectation and aspiration that, if ever called upon to do so, it shall make an appropriation to pay up to 40 percent of the principal and interest of a local governmental unit’s obligations, if all of the following apply: (a) The local governmental unit’s obligation is issued to finance costs related to development occurring in or for the benefit of an electronics and information technology manufacturing zone designated under s. 238.396 (1m). (b) The secretary approves the local governmental unit’s obligation before it is issued.(4) AGREEMENT. The secretary may contract with a local governmental unit to implement this section.

 

Shilling accused Walker of “sneaking in” the provision and “misleading Wisconsin families” on the risks of Foxconn coming to Wisconsin.

But Media Trackers spoke with sources who have expertise on such agreements and who reviewed the legislation. Those sources say that neither the bill nor Legislative Reference Bureau nor the memorandum of understanding in any way mention failure as it relates to the “Moral Obligation” section Shilling is referring to. And none of those documents note a bailout to local governments should the Foxconn project fail

Instead, these sources tell us that the money referred to in the “Moral Obligation Pledge,” is money that would be used upfront if local governments needed assistance for expenses incurred in preparation of a Foxconn facility.

Put another way, this was described to us as front end cash for local improvements needed to make the projects happen, and are not intended as safety nets should the projects fail. The sources also tell us that there are two forms of taxpayer protections in the agreement. First is the requirement that money only go out the door once Foxconn is investing and creating jobs, and second are  the claw back provisions previously mentioned by Gov Scott Walker. These provisions insure that any money given to Foxconn would be recovered by the state if the development doesn’t produce jobs as promised.

While Shilling remains skeptical of the implications of Foxconn on taxpayers, Assembly speaker Robin Vos assures otherwise. “We will ensure the public has adequate time to review the bill,  commented Voss, “address any concerns and have the jobs created as quickly as we can without harming the environment.” Interpreting the bill correctly, would be a great start.

 

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