Kimberly-Clark to receive $28 million in taxpayer funds under new deal from Scott Walker

Taxpayers will give a Fox Valley company up to $28 million over five years to keep a plant open under a deal Gov. Scott Walker announced Thursday using powers the Legislature recently voted to strip from his successor. 

Kimberly-Clark Corp., which makes Depend adult undergarments and Kotex pads at the plant, can qualify for the full set of subsidies by investing in the plant, buying from Wisconsin suppliers and keeping about 2,400 employees in the state. 

“This is a pretty good Christmas going forward because we didn’t just save your jobs for the short term. This is about a long-term commitment to this company, to this community and to this state," the outgoing Republican governor told workers at the plant.

“I want this to be my legacy, that we protected these kind of jobs, not as a handout but because we knew if we invest in people like you, you won’t let us down."

The last-minute deal came after GOP leaders spent nearly a year unsuccessfully seeking enough votes in the state Senate to pass a package for Kimberly-Clark valued at $70 million over 15 years. Some Republican lawmakers called that proposal a bad deal for taxpayers and the free market, and Democrats wanted legislation that addresses the entire paper and forest products industry rather than just one company within it. 

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Walker was able to strike the latest deal with Kimberly-Clark without seeking approval from the Legislature because it is smaller than the last proposal.

Walker is considering signing legislation passed last week that weakens the governor's office and would give lawmakers more of a say in incentive packages like the one he is now offering Kimberly-Clark. Under that lame-duck legislation, the governor could not on his own cut a deal like the new one with Kimberly-Clark and would need permission from lawmakers to do it.

Walker has signaled he is open to signing the lame-duck legislation but has said — without offering specifics — that he would veto parts of it.

Evers calls for veto of lame-duck measures

Incoming Democratic Gov. Tony Evers said the latest deal shows why Walker should veto the lame-duck legislation that would trim Evers' ability to reach economic development agreements. He said Republicans had "played politics" with the Kimberly-Clark subsidies for months. 

"I've said all along that we need a long-term, industry-wide solution to the challenges facing the paper industry — the governor of our state shouldn't be hamstrung when it comes to economic development, and that's why I continue to call on Governor Walker to veto the lame-duck legislation," Evers said in a statement.

Kimberly-Clark officials have said they planned to close facilities in Neenah and Fox Crossing as part of a global restructuring and would change course only if they received state subsidies. As of earlier this year, the company employed 110 people at the Neenah facility and about 500 at the Fox Crossing facility, which is known as the Cold Spring plant.

Under the new plan, the Neenah nonwovens facility would close, as would a plant in Conway, Ark.

The Cold Spring plant would remain open and Kimberly-Clark would retain about 2,400 employees around the state, including 388 at the Cold Spring plant.

By keeping those employment levels, the company would receive $5.5 million of the $28 million. Kimberly-Clark would qualify for $20 million in state assistance if it invests $200 million in the plant and $2.5 million if it buys supplies from Wisconsin companies.

Like most manufacturers in Wisconsin, Kimberly-Clark has virtually no income tax liability and would get the subsidies in the form of cash payments. 

Kimberly-Clark was founded in Neenah in 1872 and has grown into an international business that makes Kleenex tissues and Huggies diapers. The Cold Spring facility makes Kotex, Depend and Poise adult undergarments.

"This is great news for the workers. Especially this close to Christmas," said Outagamie County Executive Tom Nelson. "But there are still questions that need to be answered. And I am not the only one asking them. What does this mean for the long term? What does this mean for the rest of the industry? What do we do when the next company threatens to shutter a plant?"

Rick Esenberg, president of the conservative Wisconsin Institute for Law & Liberty, in a statement said using state subsidies "'as a way to give money to influence routine plant closings and expansions raise serious questions."

"Markets are better at allocating resources than government and equal treatment under the law is an important principle," his statement said. "Government should focus on providing a good economic environment for everyone and not on picking winners and losers.”

Foxconn comparisons

The original deal would have provided per-job incentives similar to those that Taiwanese tech giant Foxconn Technology Group is receiving under a 2017 deal in which the company will spend up to $10 billion to build its first U.S.-based factory in Wisconsin and bring 13,000 jobs to the state. Foxconn could receive up to $4 billion in state and local incentives.

Walker and Republican leaders have said they were willing to provide unprecedented subsidies to Foxconn because the deal with the high-tech company would be "transformational" for the state's economy. The state's paper industry, while critical to the state, has shed thousands of jobs in recent years. 

The state agreed to cover 17 percent of qualifying Foxconn salaries instead of the usual 7 percent. Walker spent much of the year trying to give Kimberly-Clark a similar deal for its Wisconsin operations.

RELATED:GOP lawmakers hold hearing on $70 million deal for Kimberly-Clark but are short of votes

RELATED:High stakes: Huge consequences for Fox Cities if Kimberly-Clark closes two plants

As that deal fell apart in the Senate in recent months, Walker quietly began working on a separate, smaller, more traditional deal through the Wisconsin Economic Development Corp. that did not need legislative approval. 

WEDC's board approved the deal in a Wednesday meeting that was closed to the public and Walker announced it Thursday.

Democratic Sen. Dave Hansen of Green Bay praised the new deal as a victory for taxpayers and union workers but argued it also showed Wisconsin could have landed Foxconn for less money. 

“It begs the question of what type of savings taxpayers could have seen on the Foxconn deal had the initial agreement been done by a politician with better negotiating skills,” Hansen said in a statement.

Walker will leave office on Jan. 7 when Evers takes over.

The deal comes as Walker is pushing back against public outcry from Democrats and some Republicans over the lame-duck legislation that would remove powers from the offices of governor and attorney general.

Walker has rejected assertions that signing that legislation would tarnish his legacy and has been arguing on Twitter and in constituent newsletters that he will be proud of his record even if he signs the legislation, which he characterized as providing more transparency and accountability.

But Walker also has previously vetoed measures similar to some provisions of the lame-duck legislation, such as ones requiring state agencies to file reports with the Legislature. 

Maureen Wallenfang of the Appleton Post-Crescent contributed to this report.