Gov. Scott Walker proposed merging the Wisconsin Economic Development Corporation (WEDC) and the Wisconsin Housing and Economic Development Authority (WHEDA) in his 2015 biennial budget.
In his executive budget summary, Walker said:
“…This merger will create a more responsive, coordinated and accountable economic development structure for our businesses and job creators.”
The entire bullet point from the link above is worth reading. It is the very first item in Walker’s budget summary. I’d presume that means the merger was important to the governor.
In 2013, the WEDC took some very bad press as the result of a Legislative Audit Bureau report that showed the agency to be mismanaged.
“We found that WEDC awarded some grants, loans, and tax credits to ineligible recipients, for ineligible projects, and for amounts that exceeded specified limits. In addition, WEDC did not consistently perform statutorily required program oversight duties, such as monitoring the contractually specified performance of award recipients, and could report more clearly on the number of jobs created and retained as a result of its programs.”
“Being a good steward of taxpayers’ money while helping people create jobs is my top priority. With that in mind, I will be discussing a series of dramatic moves with the board of the Wisconsin Economic Development Corp.”
That’s why the revelation in the new WEDC audit is such bad news.
“In completing the current audit, we found that WEDC did not require grant and loan recipients to submit information showing that contractually required jobs were actually created or retained. We also found that WEDC allocated tax credits in ways that did not consistently comply with statutes and its policies. We found no documentation that WEDC complied with statutes by verifying information submitted by tax credit recipients on the extent to which contractually required jobs were actually created or retained.”
Walker quickly dropped his merger plan after that second report and is exploring further reforms to the WEDC’s loan program. The lackluster performance of an agency he chairs could be a problem as he steps onto the national stage. It should be.
Economic development is the euphemism politicians employ to reward political donors. Here are a couple examples of this practice at work in Wisconsin.
The first donation to Scott Walker from employees of Ashley Furniture Industries, Inc. appeared in 2010. Twenty contributions totaling $31,800 were made by Ashley employees, including more than $30,000 from the Wanek family.
Two Ashley Furniture listings appear in the WEDC internal report — one for $675,000, the other for $60,000. Both are from 2013 and are listed as “Economic Development Tax Credits” on the WEDC’s website.
The Wisconsin State Journal ran an article lambasting Walker for the timing of the later contributions in conjunction with WEDC awards.
The Menards empire, too, has played this game with Walker. Menards shows two WEDC entries: $300,000 in 2014 and $1.5 million in 2015 (again, both “Economic Development Tax Credits”). From 2010 to recently, the database shows 35 contributions from those listing Menards, Inc., as their employer for a total of nearly $18,000, including one $10,000 contribution from John R. Menard in June 2014.
Earlier this year, Yahoo! News reported that Menard gave more than $1.5 million to the Club for Growth to support Walker’s efforts.
Not surprisingly, Democratic group One Wisconsin Now put out a critical report on these findings. The top point reads:
Walker Receives More Than $2 Million Campaign Benefit from WEDC Recipients, Who in Turn Receive Nearly 60 Percent of State’s Economic Development Dollars
That’s from May 2014 – long before the Yahoo! News article and the latest controversy.
Criticizing Walker and the WEDC’s shenanigans isn’t new for me. Though I’m a staunch fiscal conservative and have delighted in the sway to the right that I’ve watched in Wisconsin these last few years, Scott Walker won’t call me a fan.
I don’t know how else to say it: Pay to play is alive and well in Wisconsin.