Aug 09

Legislative Update – August 9

A kindergartener today will be about 37 years old by the time the state would possibly break even on tax breaks and government incentives for Foxconn, the foreign corporation proposing to set up shop in southeastern Wisconsin. Critics are asking whether some of those incentives could instead be used to strengthen community infrastructure across the state, including public schools. The latest on the Foxconn deal and state budget deliberations is below. To see education-related bills circulating, visit www.weac.org/budget.

Assembly may vote on Foxconn deal next week

The Assembly may vote on the Foxconn bill as early as August 17, leaders have announced.

Fiscal bureau says state won’t break even – possibly – until 2047

Democrats are demanding Republicans slow down deliberations on the Foxconn bill after a new Legislative Fiscal Bureau analysis found the state’s break-even point, at best, would be fiscal year 2042-43. That’s if the Taiwanese electronics manufacturer creates 13,000 jobs at a planned $10 billion facility. But it would be “well past” 2044-45 before the state reaped more tax revenue than the $3 billion it’s slated to dole out to the company if only 3,000 jobs were created.  

Questions arise on oversight of potential Foxconn deal

Red flags are being raised over the $3 billion government spending proposal for the Taiwanese corporation, as it would be overseen by a state agency with mixed results on tracking such awards and clawing back money from companies that default. The Wisconsin Economic Development Corporation (WEDC) would be tasked with awarding up to $1.5 billion in state income tax credits for job creation and another $1.35 billion for capital investment. That means WEDC will have to accurately track Foxconn’s job creation efforts, on which the agency has a spotty record. A state audit in May found WEDC was not certain about the numbers of jobs created or retained as a result of its awards. Along with troubles tracking job creation numbers, the agency has been inconsistent with efforts to “claw back” money awarded to companies that later eliminated jobs or outsourced them to other countries.

Details of the deal

The Foxconn bill would create two refundable tax credits, paid from a sum sufficient GPR appropriation. In addition, Foxconn would be able to claim 7.5% manufacturing and agriculture credit (MAC) on income from Wisconsin operations, and “it appears likely that most of the proposed tax benefits would be refunded to Foxconn and not used to offset its state tax liability,” analysis shows. The estimated payments of the credits would begin with $2.35 million in 2018-19, and would not end until 2034. (This assumes Foxconn’s zone employment will increase from 1,040 positions in the latter part of 2017 to 13,000 by 2021 and stay at that level with an annual average salary of $53,875).

The bill also includes incentives to keep a southeastern Wisconsin firm called Fiserv in the state. These taxpayer-funded incentives would total $2 million annually from 2019-20- through 2023-24 for a total of $10 million, plus Fiserv would receive an additional $500,000 annually in capital investment credits.

Education Bills Introduced in Senate:

  • SB-382 School Employee Tuberculosis Screening (Olsen, Luther) Screening school district employees for tuberculosis. Referred to Senate Education Committee
  • SB-383 School Aid Payments (Olsen, Luther) The payment of state aid to school districts and payments to operators of independent charter schools and private schools participating in a choice program or the Special Needs Scholarship Program. Referred to Senate Education Committee