Foxconn must meet job creation goals to get subsidies. Tony Evers says maybe those goals are too high.
Molly BeckMADISON - Foxconn's $3 billion deal with Wisconsin taxpayers allows the Taiwanese tech giant to receive tax credits each year if the company creates hundreds of jobs annually — a goal Gov. Tony Evers says might be "too expansive."
Evers and Foxconn officials are in talks to rewrite a contract that lays out what size investments Foxconn must make in Wisconsin in order to receive taxpayer-funded subsidies — a deal that currently requires Foxconn to hit targets in job creation before any state tax credits can be paid.
"Maybe those goals are too expansive," Evers said Sunday in an appearance on WKOW's "Capital City Sunday." "Whether it's 1,300 jobs or 13,000 jobs, any governor of the state, including me, wants them to be successful and create as many jobs as possible."
In 2018, the company was required to create 260 jobs in order to receive any tax credits — a goal they fell short of meeting by 82 jobs. The number of jobs the company must create to continue to receive credits grows each year by hundreds.
Evers said because Foxconn has "changed their footprint" in Wisconsin, "we need to take a look at how we can all benefit from that."
Evers' comments Sunday provide the first clue as to what potential changes might be made to the state's contract with Foxconn.
The company in recent months has said it will build a smaller manufacturing facility in Racine County than first planned when former Gov. Scott Walker brokered a deal in 2017 with the company in exchange for 13,000 jobs and a $10 billion facility.
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Evers said last week he no longer believed the company's plans would result in that many jobs in the state and wanted to change the contract to reflect fewer expected positions.
It's unclear if officials with the Evers administration and the Wisconsin Economic Development Corp. are also considering reducing the percentage of wages and capital investment state taxpayers cover if the project's scope is scaled back.
The pay-for-performance provisions provide protection for state taxpayers if Foxconn fails to create jobs and investment, but the payments the company stands to earn if it follows through on its pledges are generous compared with incentive packages other companies have received from the state.
A spokeswoman for Evers declined to comment Monday.
Where state incentive deals with companies typically have taxpayers covering 7% of salaries, Foxconn would get 17%. Foxconn would also get 15% of its capital investment paid back instead of the usual 10%.
"The fact of the matter is they have made a business decision and we're working with them and discussions are happening to consider changing the deal," Evers said.
On Monday, Evers said it is "premature" to elaborate on what changes he may be considering.
Of the $3 billion in state incentives Foxconn is eligible to receive, Foxconn currently must create 13,000 full-time jobs averaging an annual salary of $53,875 to receive $1.5 billion in credits.
Foxconn is eligible to receive $150 million in waivers of sales tax on purchases Foxconn makes within Wisconsin and could get another $1.35 billion in credits by investing $9 billion in its Mount Pleasant complex.
The tax credits are "refundable," meaning that if Foxconn doesn't owe taxes, it still will receive the money. Because Wisconsin waives almost all taxes on manufacturing profits in the state, it is likely Foxconn's credits would be in the form of cash payments.
Assembly Speaker Robin Vos, R-Rochester, in a separate appearance on Sunday's "Capital City Sunday," said Foxconn is becoming a part of Wisconsin's "ecosystem," and believes Foxconn will still create 13,000 jobs in the state because the company continues to stand by that figure.
Vos, who represents the Assembly district where Foxconn is building its first U.S. manufacturing campus, said last week he believed Evers was undermining the state's deal with Foxconn after Evers said he wanted to renegotiate the contract.
"It is beyond my level of understanding to think that a governor of Wisconsin is basically rooting for the failure of the largest economic development in our state’s history," Vos said during an interview Thursday on WISN.
But Evers said his administration's officials are working with Foxconn officials on the potential changes.
"We are working directly with Foxconn on this — this isn't an Evers imposition on Foxconn. This is Foxconn and WEDC and Evers administration looking at what's best for that company and for the state of Wisconsin," Evers said.
Rep. Adam Neylon, R-Pewaukee, said Monday he doesn't support lowering the job creation benchmark for Foxconn and doesn't believe the current deal with the company could be improved for taxpayers.
"We’ve landed at a good place and if they don’t create the 13,000 jobs, they won’t get all the incentives and I think it’s designed that way for a reason," Neylon said. " And I can’t foresee the Legislature wanting to go back and renegotiate this agreement that I think is a good agreement for the state of Wisconsin. It protects the taxpayer.”
Patrick Marley and Rick Romell of the Milwaukee Journal Sentinel contributed to this report.
Contact Molly Beck in the Capitol bureau at (608) 258-2263 or at molly.beck@jrn.com. Follow her on Twitter at @MollyBeck.