Members of a Wisconsin Assembly committee voted on party lines on Monday to approve a $3 billion tax incentive package for electronics manufacturer Foxconn, sending the legislation to the Assembly floor for another vote on Thursday.
The legislation offers the Taiwanese company environmental exemptions and tax breaks tied to capital investment, employment and construction materials, in exchange for building a $10 billion LCD manufacturing facility in southeastern Wisconsin.
The Republican-led Assembly Committee on Jobs and the Economy rejected 22 Democratic amendments, ultimately approving a large amendment drafted by Republicans. Democrats on the committee acknowledged some of their concerns were addressed in the GOP amendment, but said the changes weren't significant enough to earn their votes.
Rep. Tod Ohnstad, D-Kenosha, who represents the area where the facility is expected to be built, said he hopes more of his misgivings can be assuaged before the full Assembly vote on Thursday.
"Far too many questions have been raised about whether this project is good for taxpayers, a good deal for Wisconsin workers and contractors and safe for our environment for me to vote yes today," Ohnstad said. "I ask that we take a deep breath, slow this down a bit."
The amended version of the legislation 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.
Democrats introduced their own amendment which would require, rather than encourage, Foxconn to give preference to hiring Wisconsin employees. Committee chairman Rep. Adam Neylon, R-Pewaukee, said it would be unconstitutional to make that a requirement. A Legislative Council attorney said such a requirement would be viewed by courts as "being very suspect."
The bill would still exempt the project from preparing an environmental impact statement required by the state for some other projects, and would exempt the project from state wetlands regulations. Under the amended version, if wetlands are destroyed, mitigation efforts would be encouraged to take place within the same watershed.
The committee heard testimony on the legislation earlier this month.
Foxconn announced its intent last month to build the facility in Wisconsin, a project state officials have said would be "transformational" for Wisconsin 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.
Wisconsin would break even on the deal 25 years after it is approved, according to analysis released last week 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.
Other amendments introduced by Democrats on Monday included provisions that would require Foxconn to maintain a minimum employment of 3,000 people after Jan. 1, 2021, require the company to follow collective bargaining laws, create a regional transit authority and eliminate the environmental exemptions contained in the bill.
Rep. Joel Kleefisch, R-Oconomowoc, asked Democrats if they would support the bill if any of their amendments passed. It would take more than one, said Rep. Christine Sinicki, D-Milwaukee.
Rep. David Crowley, D-Milwaukee, joined Ohnstad in calling for a slowdown in the approval process. And Rep. Jason Fields, D-Milwaukee, argued supporters of the deal are making decisions based on hypotheticals.
"If anybody in this room believes this 13,000 (jobs) number is possible, where are you at? That's not going to happen," Fields said.
Several Republicans on the committee said they had initial concerns with the deal, but after studying the proposal they felt it would benefit the entire state.
Rep. Bob Kulp, R-Stratford, said the proposal is "an investment that makes sense." Rep. Shannon Zimmerman, R-River Falls, said the deal is "not perfect," but he supports it.
"It takes a little bit of good faith. It takes a little bit of risk — quite a bit of risk. But I’m telling you nothing comes without risk," Kleefisch said.