Wisconsin Assembly approves up to $3 billion offer to lure Foxconn

MADISON - The state stood at the edge of an unprecedented jobs deal Thursday as the Assembly approved up to $3 billion in incentives to lure a Taiwanese company and flat screen plant to southeastern Wisconsin.      

All but two Republicans supported the bill in the 59-30 vote and the majority included three Democrats – Reps. Cory Mason of Racine and Peter Barca and Tod Ohnstad of Kenosha.

GOP Reps. Adam Jarchow of Balsam Lake and Todd Novak of Dodgeville joined the bulk of Democrats in opposing the measure, which goes to the Legislature's budget committee and the Senate.

In exchange for yearly state subsidies of $15,000 or more per worker and exemptions from environmental rules, Foxconn Technology Group has pledged to build an up to $10 billion plant that could provide up to 13,000 jobs. The deal would be the largest in state history, amounting to 46 times as much as the previous record offered to a manufacturer in Wisconsin. 

Trying to ramp up their rhetoric to match the size of the deal, lawmakers compared it to the Louisiana Purchase, a lemon, the signing of football stars Reggie White, Aaron Rogers and Melvin Gordon, and the movie "Field of Dreams." 

Assembly Speaker Robin Vos (R-Rochester), whose district might end up with the plant, said the rewards of the deal outweighed the risks. 

"Once in a while I think it is worth it for us to take that kind of big leap to do something that will get Wisconsin on the front page of every single paper in the country," Vos said. 

Mason and Ohnstad, the southeastern Wisconsin Democrats, said the legislation did not have the protections for taxpayers that it should have included. But both men called the bill a rare chance to renew their cities' legacy of manufacturing in the 21st century. 

"It is harder and harder for Americans to make it if America doesn't make anything the way they used to," said Mason, who is running for mayor of Racine.   

Under Assembly Special Session Bill 1, the state would pay Foxconn up to $2.85 billion in cash over the next 15 years as the company makes investments in its plant and equipment and in paying its workers. The state would also waive an additional $150 million in sales taxes on construction materials. 

Democrats said the cash payments to the company could end up affecting other long-term priorities such as schools and health care. Rep. Gordon Hintz (D-Oshkosh) questioned the lengthy terms in the deal, noting how quickly electronics products such as Blackberry smartphones can rise and fall in popularity.

"Is it wise to make taxpayers make a 15-year investment with a 25-year payback?" Hintz said. 

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But Vos noted that the company had to spend money in Wisconsin and would not get any cash payments "until a shovel is in the ground or a paycheck has been cashed." 

Rep. Dale Kooyenga, a Republican accountant from Brookfield, said he wasn’t comfortable with the entire bill, noting he generally opposes the kind of tax incentives being paid to Foxconn because they complicate the state’s tax laws.

But the Foxconn deal represents a chance for Wisconsin to get the kind of liquid crystal display plant currently found only in Asia, he said. 

“We are talking about bringing an entire industry to America,” Kooyenga said. “This is a game changer.”

On Thursday, an older version of a previously released state report surfaced and raised new questions about how many jobs the plant might create. 

The report by consulting firm Baker Tilly Virchow Krause was paid for by the Wisconsin Economic Development Corp., which had previously denied an open records request by the Milwaukee Journal Sentinel for the document by saying it was a draft.

The document reports the plant would create a maximum of 8,260 jobs rather than 13,000.

The study also projects that a larger share of the jobs building and running the plant would go to out-of-state workers. Baker Tilly changed those assumptions and findings in a newer version of the report that was released to the Journal Sentinel on Monday. 

WEDC spokesman Mark Maley said the nearly 5,000 additional workers in the new report were due to Foxconn increasing its hiring plans. Maley would not say whether that was due to changes in the company's plans for the factory or because the state had offered more incentives. 

"The size and scope of the project and the number of employees evolved during the discussions with the company," Maley said. 

Rep. Chris Taylor (D-Madison), who provided the report, said it left her concerned that the Foxconn deal might not lead to as many jobs as projected for Wisconsin residents. She said no outside study had examined whether it was reasonable to think Foxconn would hire 13,000 workers. 

"This deal is entirely based on an economic impact statement that Foxconn paid for," Taylor said. 

The deal has no minimum number of jobs required and Republicans voted down a Democratic amendment that would have required that. 

The plant is expected to start at 3,000 workers making $53,900 a year on average and ramp up over time. 

Over 15 years, state taxpayers would pay $1 billion more to the company than the additional taxes that would be generated by the deal, according to a report from the nonpartisan Legislative Fiscal Bureau. If the plant hit full employment and generated another 22,000 local jobs, then taxpayers would recoup their investment in 2043, the fiscal bureau found.

A report released Thursday by the Wisconsin Council on Children and Families found that if fewer jobs are created, it could take longer for taxpayers to recoup their investment. If the plant creates half the number of jobs expected, then the state would collect the tax money back in 2050, the group calculated.

GOP Gov. John Kasich of Ohio told media in his state Wednesday that Ohio is still seeking an investment from Foxconn there. But Kasich panned the offer from Wisconsin that beat out other states like his. 

“I’ll tell you one thing: It’s not going to take us 40 years to make back the investment we make,” he said. “We don’t buy deals.”