A $3 billion incentive package for Taiwanese electronics company Foxconn cleared another hurdle in the Wisconsin Legislature on Tuesday, with a 20-13 vote by the Senate to approve the deal.
The bill earned the support of 19 Republicans and one Democrat, Bob Wirch, of Somers. Sen. Robert Cowles, R-Allouez, joined the Democrats who voted against it. The bill will return to the Assembly once more on Thursday before it is sent to Gov. Scott Walker for final approval. The Assembly approved an earlier version of the bill last month, which was then amended by the Legislature's Joint Finance Committee.
The Republican majority rejected about a dozen Democratic amendments, but added a few of their own. Senate Majority Leader Scott Fitzgerald, R-Juneau, said he thinks the bill has been improved "significantly."
Wirch, a former factory worker who voted for every Democratic amendment that was introduced, said the bill "could have been a much better deal, but it was the only deal on the table." He lamented the loss of manufacturing jobs from southeastern Wisconsin.
"We need manufacturing jobs," he said. "They are the best jobs."
Supporters of the legislation — 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.
Sen. Kathleen Vinehout D-Alma, likened the deal to "buying a pig in a poke" — that is, purchasing something without knowing its value.
"Why would we sign off on a $3 billion agreement when we don’t know what we’re going to get?" asked Sen. Janis Ringhand, D-Evansville.
But proponents of the project argued it will create jobs in cutting-edge technology that will attract and retain young people.
Not only that, argued Sen. Van Wanggaard, R-Racine, it will bring manufacturing jobs to an area of the state that was once a manufacturing powerhouse.
"This is yes not just for southeastern Wisconsin, this is yes for every citizen that lives in the state of Wisconsin, and this is a huge, huge, huge project for our country," Wanggaard said. "This is a win for America."
The deal offers Foxconn 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.
Under a GOP amendment approved on Tuesday, the Wisconsin Economic Development Corporation would be required to set job creation thresholds for Foxconn for each year, which the company would be required to meet in order to claim $1.35 billion in capital expenditure tax credits.
That's a more stringent requirement than one added by Republicans on the Joint Finance Committee, which would have required WEDC "attempt to ensure" the company "has sought, and is seeking, to satisfy certain hiring goals in this state" to qualify for those tax credits.
While Vinehout said the amendment was "an improvement," Democrats questioned the effectiveness of the change. Democrats introduced amendments that would have required the company hire 1,000 employees before claiming the capital credit and that would have set the first threshold at 5,000 jobs within seven years.
"We can create all the thresholds we want to create," said Sen. Jon Erpenbach, D-Middleton. "But if they're not enforced and they still get the capital expenditure, what's the point?"
Fitzgerald argued the Legislature can only be so specific in its statutory requirements for the deal, which sets parameters for the governor's administration to negotiate a contract with the company.
Cowles said in a statement he understands more specific details will come during contract negotiations, but the uncertainties prevented him from supporting the bill.
"While I support our state promoting economic development, the incentives that Foxconn was presented were too steep, both financially and statutorily. The bill as presented on the floor left uncertainties that I felt were too crucial for me to pledge support for this legislation," Cowles said.
A second Republican amendment approved on Tuesday would scale back some significant changes to the legal process introduced and passed by the Joint Finance Committee last week. Among the changes approved by the budget-writing committee was a provision that would have allowed legal decisions related to the enterprise zone to be appealed directly to the state Supreme Court.
Under Fitzgerald's amendment, the appeals process would still be expedited. Appeals would first be processed by the appellate courts, then sent to the state Supreme Court. The Supreme Court could either hear the case or send it back to an appeals court. If a circuit court judge's decision is appealed, the judge's ruling would automatically be put on hold.
Among the Democratic amendments rejected were measures to promote hiring Wisconsin workers, make all tax credits nonrefundable, prohibit WEDC from amending its contract with Foxconn and require the company to report on environmental impacts.
"You want all these mandates in it," said Sen. Alberta Darling, R-River Hills. "We have put in the transparencies and accountabilities that need to be in there."
Darling said she has been contacted by real estate companies asking who they can contact to partner with Foxconn. People will move to Wisconsin for the jobs the project will create, boosting the state's economy, she said.
Foxconn announced its intent in July 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. Wetland mitigation would be required to be done on a 2:1 ratio.
Wisconsin would break even on the deal 25 years after it is approved, according to analysis by the Legislative Fiscal Bureau.