Wisconsin moved one step closer to luring Foxconn to the state on Thursday, as Assembly lawmakers approved a $3 billion incentive package for the Taiwanese electronics company.
The legislation offers the company environmental exemptions and tax breaks tied to capital investment, employment and construction materials, in exchange for building a $10 billion LCD panel manufacturing facility in southeastern Wisconsin.
The bill was approved with a bipartisan 59-30 vote. Senate leaders have said they will send the bill to the Joint Finance Committee, where it will likely be amended.
Assembly Speaker Robin Vos, R-Rochester, said lawmakers who supported the bill will look back on it in decades and say, "I was part of something that transformed our state in a way I didn’t even understand at the time."
The bill earned reluctant support from three Democrats who represent the area, whose concerns were overshadowed by the possibility of bringing jobs to an area that once thrived on manufacturing. Two Republicans voted against it.
"Say what you will about who the governor is, say what you will about who this company is, say what you will about investing our money into a Chinese company coming to Wisconsin — but you know what is worse? Watching those factories shutter and move to China and Mexico," said Rep. Cory Mason, D-Racine, who is running for mayor of the city. "Racine does manufacturing extremely well. This is our chance to have our part of the state be a manufacturing hub again in the 21st century, with 21st century technology."
Rep. Samantha Kerkman, R-Salem, grew emotional as she recalled the economic ups and downs the area has seen over the years.
Assembly Minority Leader Peter Barca, D-Kenosha, voted for the bill based on support in his community, but said after the vote the deal needs improvement.
Supporters of the deal — primarily Republicans — say it is a rare opportunity that will benefit the entire state for years to come. Opponents — mostly Democrats — generally say they welcome the creation of jobs, but that the arrangement raises too many concerns. Some who voted against the bill said they initially wanted to support it, while others were against it from the start.
Mason argued the politics of the debate "fade away" when he sees the opportunities it presents.
"It returns our community back to the dignity of work, of letting people know they can do something with their own two hands and provide for their family with good, middle-class jobs," Mason said.
But Rep. Jonathan Brostoff, D-Milwaukee, said the state should not "bend over" and beg Foxconn to come to Wisconsin with a "$3 billion bribe." And Rep. Dana Wachs, D-Eau Claire — who is running for governor in 2018 — said he is "appalled" by a "massive handout of Wisconsin tax dollars to a foreign company."
Many Democrats urged their colleagues in the majority to slow down the process, arguing they haven't had enough time to have all their questions answered and concerns addressed. The bill was introduced on August 1. Several Democrats argued no action should be taken on the Foxconn bill until the state budget — now nearly seven weeks late — is completed.
"This so-called deal is being rushed through to keep us uninformed," said Rep. Sondy Pope, D-Mt. Horeb.
Foxconn announced its intent last month to build the facility in Wisconsin, a project state officials have said would be "transformational" for the state and for the American manufacturing industry. CEO Terry Gou and Wisconsin Gov. Scott Walker signed a memorandum of understanding last month outlining the terms of the deal, which must be approved by the Legislature by Sept. 30 to move forward.
Under the proposal, Foxconn would be eligible for up to $1.5 billion in credits for $9.5 billion of payroll expenditures over a 16-year period, and $1.35 billion in credits for $10.7 billion of capital expenditures over a five-year period. The company would also be eligible for a sales and use tax exemption on building materials, supplies and equipment used for construction of the facility, amounting to about $139 million.
The bill includes a provision that would encourage Foxconn to hire Wisconsin residents to fill the 3,000 to 13,000 jobs it has pledged to create. It would also set aside $20 million under the state Department of Workforce Development for a worker training and employment program.
The project would be exempted from state wetlands regulations and from preparing an environmental impact statement required by the state for some other projects. If wetlands are destroyed, mitigation efforts would be encouraged to take place within the same watershed.
Rep. Dale Kooyenga, R-Brookfield, said he is uncomfortable with "some elements" of the deal, but the opportunity to bring "an entire industry to the western hemisphere" is too great to pass up. The facility would be the first to manufacture LCD panels outside of Asia.
Kerkman is bullish on the return on investment. She said she expects Foxconn will invest more than $10 billion in the state and create more than 13,000 jobs. But Rep. Gordon Hintz, D-Oshkosh, is skeptical the company will fulfill the promises it has made.
"How much Kool-Aid do you have to drink to believe that is going to happen?" Hintz asked.
Hintz also questioned why lawmakers are working so quickly to approve legislation that will "take more than a quarter-century to pay back."
Wisconsin would break even on the deal 25 years after it is approved, according to analysis by the the state's nonpartisan Legislative Fiscal Bureau.
For the next 15 years, starting in 2017, the state would pay a total of $1.04 billion more than it takes in by having Foxconn in the state. Starting in fiscal year 2033-34, the state would take in about $115 million per year in increased tax collections, leading to a break-even point in 2042-43, the report said.
No date has been set for a Joint Finance Committee hearing on the bill. Senate leaders originally said they wanted to wait on Foxconn until a budget is passed, but have since relaxed that stance.