CHICAGO – Wisconsin’s budget writing committee is aiming to wrap up work on an overdue state budget and a $3 billion incentive package for a proposed Foxconn Technology Group plant in the coming weeks that would allow for votes on both in mid-September.
Joint Finance Committee co-chair Sen. Alberta Darling, R-River Hills, said after a public hearing held by the committee on the Foxconn project that she’s hoping for a Senate vote on the incentives package the week of Sept. 14. The state Assembly approved the package last week in a 59-30 vote. Gov. Scott Walker and company officials want the deal approved before the end of September.
“There’s a lot of downside to saying no. There’s a lot of upside to saying yes,” Darling said of the proposed $10 billion investment by the Taiwanese electronics manufacturer.
The Wisconsin state legislature is currently in special session to consider a bill that would grant Foxconn approximately $3 billion in tax incentives over a 15-year period and a $252 million state debt issuance for required infrastructure improvements to the Interstate-94 corridor. The package also allows the state to back some local borrowing.
Company officials and Walker announced the project at a White House ceremony last month. It calls for an estimated $10 billion capital investment to build and equip the facility by 2020 that will produce liquid crystal display, or LCD, products.
Walker said it’s expected to result in 16,000 construction-related jobs and 13,000 permanent jobs, $348 million in state and local tax revenues during construction, and then $181 million in state and local tax revenues generated annually.
But the investment commitment comes with a hefty price tag that critics say is not worth it. They were buoyed by a recent report from the non-partisan Legislature Fiscal Bureau that warned the state won’t break even from the tax breaks until 2043. That date is pushed out further depending on the number of employees that come from Illinois.
At the Joint Finance hearing Tuesday, administration officials defended the incentives as well worth it.
“This is a pay-as-you-grow investment - these refundable tax credits will not go out the door until, and unless, the company meets the performance metrics that will be included in its contract with WEDC,” said Wisconsin Economic and Development Corporation secretary and chief executive officer Mark Hogan.
A report published this week by the Center for Research On the Wisconsin Economy at the University of Wisconsin said the project has the potential to create an economic ripple effect that could generate a nearly $4 return for every $1 in state subsidies.
“Foxconn has the potential to generate broad gains that go far beyond the direct job estimates and tax revenue costs which have dominated the recent discussion,” the report read. “But they are by no means certain – they require that high tech investment by Foxconn in Wisconsin would induce other firms to invest in the area, cause high productivity workers to relocate there, and lead current workers to improve their skills.
“In evaluating the Foxconn package, the uncertain but potentially large gains in jobs, wages, output, and incomes must be weighed against the certain fiscal cost,” the report concluded.
Joint Finance meets Thursday on the budget. Walker said Tuesday an agreement had been reached that resolved sticking points, which have been led by how to make up a transportation funding shortfall. The legislature’s Republican leaders and Darling and her Joint Finance co- chair Rep. John Nygren, R-Marinette, said the parties were close but nothing was final yet.
Darling said the committee is aiming to finalize a budget agreement for the fiscal biennium that began July 1 in early September, setting the stage for Assembly and Senate votes in mid-September.