Steven Walters
The State of Politics

Foxconn Biggest Deal in State History

Review of past deals shows its 35 times more than biggest prior state payout.

By - Aug 21st, 2017 11:25 am
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Foxconn chairman Terry Gou and Governor Scott Walker signing a memorandum of understanding. Photo by Jeramey Jannene.

Foxconn chairman Terry Gou and Governor Scott Walker signing a memorandum of understanding. Photo by Jeramey Jannene.

Until last week, the most economic development cash that state government gave to a private business or pro sports team went to the Milwaukee Bucks, which two years ago got $80 million to help build the team’s new downtown Milwaukee arena.

A state Assembly vote last week made the Bucks deal seem like pocket change.

Suddenly, Wisconsin is two steps – one state Senate vote and Gov. Scott Walker’s signature – away from promising Foxconn $2.85 billion in tax breaks if it invests $10 billion in a high-tech campus that could have as many as 13,000 workers at a still-unknown southeast Wisconsin site.

One way to benchmark the $2.85-billion potential tax break, which would be paid over the next 15 years, is this: This year, state government will collect a total of $16 billion in income, sales and all other general-fund taxes.

Foxconn’s plans to build the first North American factory for high-tech liquid crystal displays will prompt development of a “WisConn Valley ecosystem” – a Midwest version of Silicon Valley, Walker told the state chamber of commerce last week.

In a newsletter, Walker summarized the case for the deal this way: “Foxconn, the world’s fourth largest tech company by revenue, chose Wisconsin over every other state in the nation for their $10 billion, 20 million square foot facility because we have the education system and skilled workers needed to meet Foxconn’s workforce needs.”

But Rep. Dana Wachs, of Eau Claire, the first declared Democrat for Walker’s job in 2018 to vote on the deal, explained his “no” this way: “I’ve become appalled at what a bad deal it is for Wisconsin — from the staggering price tag borne by taxpayers, much of it cold hard cash just given to the company, to lack of protections for workers, our water and air…

“[T]he best-case scenario leaves taxpayers on the hook until 2043… A young Wisconsinite about to start kindergarten this month will be nearly 30, or older, before this deal could have a chance to pay dividends for our state.”

With that background, what happened six other times that state officials helped pro sports teams or private businesses develop, expand or stay in business?:

*Milwaukee Bucks arena: In 2015, state government provided $80 million for a new downtown Milwaukee arena for the Milwaukee Bucks, then estimated to cost $500 million. State government agreed to pay $55 million in principal, and $25 million in interest, on bonds for the arena. (An additional $320 million in principal and interest payments will be paid through metro Milwaukee taxes.)

*Gogebic mine: Early in 2015, after years of debate, Republicans in the Legislature reworked mining regulations to ease the permitting process for a proposed $1.5 billion Gogebic Taconite mine in Ashland and iron counties. Walker signed the new regulatory process into law in March 2013. Exactly two years later, Gogebic Taconite killed its mine plan.

*Mercury Marine: In 2009, Democratic Gov. Jim Doyle and legislators approved $65 million in state tax credits to avoid the potential move of Mercury Marine in Fond du Lac to Oklahoma.

A Fox 11/WLUK-TV news story this year said the help, which also included a loan from county government and wage concessions by workers, helped Mercury Marine repeatedly expand and now employ more than 3,000 workers – about twice the number in 2009.

*Janesville GM plant: The 2001-03 state budget gave Janesville $8 million in federal funds to improve highway access around GM assembly plant and borrowed $2 million for the project. The Janesville plant closed in December 2008 and is still empty.

*Lambeau Field: In 2000, state government provided $9.1 million to help pay for the $295-million remodeling of Lambeau Field in Green Bay. Also created was a stadium district that, with voters’ approval, levied a 0.5 percent sales tax in Brown County. That sales tax, which raised $300 million, ended in 2015. It closed its books with a surplus, which local governments split.

*Miller Park for Brewers: In 1995, state government approved $72 million for infrastructure funding from the state Department of Transportation and other sources for the Miller Park stadium, then estimated to be a $250-million project. The Legislature also created the Miller Park District Authority, which levies a 0.5 percent sales tax in a five-county area. That tax, scheduled to end by 2020, has generated over $500 million in revenue.

After that history lesson, Wisconsin taxpayers, how do you vote on the Foxconn deal?

Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. Contact him at stevenscwalters@gmail.com

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2 thoughts on “The State of Politics: Foxconn Biggest Deal in State History”

  1. daniel golden says:

    The next biggest corporate welfare giveaway was Pennsylvania, which gave 1.65 billion to an American Corporation. Why is it overlooked that all of the profits of this venture will flow overseas to a Chinese company?

  2. Vincent Hanna says:

    I thought Washington’s giveaway to Boeing was bigger?

    Today’s paper runs a story gushing over the potential of the deal. It mentions that the study revealing this alleged potential was conducted by UW-Madison’s Noah Williams. It doesn’t make a single mention of the fact that Williams has long been an ally of Walker and his administration, publicly supporting Walker many times over the years. That is irresponsible journalism. What liberal media.

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