WEDC cited in national report on how not to spend taxpayer dollars on economic development

2013-10-24T08:45:00Z WEDC cited in national report on how not to spend taxpayer dollars on economic developmentMIKE IVEY | The Capital Times | mivey@madison.com madison.com

A new national report is harshly critical of the Wisconsin Economic Development Corp., using WEDC as an example of the inherent risks with so-called “public-private partnerships” being used in a growing number of states.

WEDC was created by Gov. Scott Walker to replace the economic development duties of the former Department of Commerce, including offering loans, grants and tax credits to private business. But the agency has been fraught with problems, the report charges, including misuse of taxpayer funds, exaggerated jobs claims, conflicts of interest, excessive executive pay and lack of basic oversight.

"Privatizing a state development agency is an inherently corrupting move that states should avoid or repeal," says Greg LeRoy, executive director of Good Jobs First and lead author of the study in a statement. "Taxpayers are best served by experienced public-agency employees who are fully covered by ethics and conflicts laws, open records acts, and oversight by auditors and legislators."

Good Jobs First, a non-partisan Washington, D.C. research group that tracks government subsidies, on Wednesday released "Creating Scandals Instead of Jobs: The Failures of Privatized State Economic Development Agencies" as a follow-up to a 2011 report that warned of problems with the public-private partnerships or “PPPs.”

The report analyzes problems with PPPs in Arizona, Florida, Indiana, Michigan, North Carolina, Ohio, Rhode Island, Texas and Wisconsin in offering a roadmap for other states to avoid.

The section on Wisconsin doesn’t break much new ground but rather recounts the problems with WEDC which have been well publicized: spending millions of dollars from the U.S. Department of Housing and Urban Development without legal authority, the failure to track loans, the revolving door of top management, the hiring of a communications director with tax debts and the $185,000 salary of director Reed Hall, who now makes more than the governor.

Good Jobs First also highlights the June 2013 report from the advocacy group One Wisconsin Now showing that executives at companies receiving subsidies from WEDC had contributed $429,060 to Gov. Scott Walker. It claims that Walker in July then signed a reform bill because he was “apparently worried about the conflict appearances” within the agency.

State Sen. Mark Miller, D-Monona, joined Good Jobs First in criticizing WEDC, noting that in 2007, Wisconsin terminated the largely ineffective state-backed private economic development entity “Forward Wisconsin” in order to reduce political favoritism and misuse of public funds.

"Unfortunately we reverted to old-style cronyism in 2011 with the creation of the Wisconsin Economic Development Corporation, which has been plagued with predictable ethics improprieties and gross mismanagement,” he said in a statement.

WEDC officials took issue with the report, however, saying the agency has made significant progress after an admittedly rocky start.

“Frankly, the concerns raised in this report are old news,” says spokesman Mark Maley. “The organization’s leadership has acknowledged there have been problems in the past, but they have been addressed, a fact that Good Jobs First appears to be ignoring in its report of recycled headlines about WEDC.”

Maley said the report failed to mention the significant reforms in the July bill, including changes to awards, collections, financial management and ethics. He said the agency is more transparent than ever and invited critics to visit the website.

“It can’t be forgotten that WEDC replaced a state agency that wasn’t working when it came to quickly meeting the needs of Wisconsin’s business community,” he said, referencing to a legislative audit of the old Commerce Department that showed 152 different economic incentive programs that were so disjointed they couldn't be properly tracked.

Wisconsin wasn’t the only state singled out by Good Jobs First. Other findings:

  • Enterprise Florida faced controversies over a performance bonus paid to its CEO and subsidies awarded to companies represented on its board.
  • The CEO of the Arizona Commerce Authority was given a three-year compensation package worth $1 million, then a $60,000 privately-funded bonus when he stepped down after one year.
  • JobsOhio received a large transfer of state monies without the legislature being informed, intermingled public and private monies, refused to name its private donors and then won legal exemption from review of its finances.
  • The Indiana Economic Development Corporation has faced continuing criticism over its job creation claims, including a state audit showing more than 40 percent of the jobs promised had never materialized.
  • The Rhode Island Economic Development Corporation is still litigating the biggest economic development scandal in Rhode Island history: its $75 million loan to the now-bankrupt 38 Studios.

"Public dollars should be controlled by accountable and transparent public agencies, not handed off to private interests with looser standards and less oversight," said Donald Cohen, executive director of In the Public Interest in a statement released with the report.

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(18) Comments

  1. pete
    Report Abuse
    pete - October 25, 2013 8:59 am
    remember this ol' knee slapper from our fearless leader on the campaign trail:

    "We refused to let Detroit go bankrupt."

    Gotch, I need a ruling, is kneeslapper racist?
  2. pete
    Report Abuse
    pete - October 25, 2013 7:56 am
    apple meet orange
  3. tomtom
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    tomtom - October 24, 2013 9:31 pm
    why isn't the FBI investigating Scotty and Company?

    and how much did the Marshfield Clinic give to Walker's campaign to justify Reed Hall's salary at WEDC?
  4. everclear
    Report Abuse
    everclear - October 24, 2013 8:50 pm
    Well Pete, Bush sent 20 BILLION to Iraq in shrink wrapped packages with ,$100 bills. Then Iraq bankers and military personal started showing up in Abu Dhabi with duffle bags full of American $100 dollar bills and buying condos, not just one but two or more. Given the average citizen of Abu Dhabi is worth 17 million , I guess we can say Bush raised the living standard for a lot of Iraq's Now Pete while you fully support this how much did solyndra {which Bush started the program} cost us????? And what do you say to giving 20 Billion away to anyone that could carry it away. Newsweek did a story on this, I am sure you can google it.
  5. pete
    Report Abuse
    pete - October 24, 2013 7:57 pm
    @wis-taxtaker - I thought the headline read "how not to spend taxpayer dollars on economic development"? was I wrong? I believe there were lots of taxpayer dollars spent on the solyndra experiment....what am i missing? (other than you being a fraud?)

    feel free to jump in nav, tax - taker needs the help
  6. Stuck In The Middle With You
    Report Abuse
    Stuck In The Middle With You - October 24, 2013 5:55 pm
    Hey Joe, there is a difference between glitches and gross mismanagement. But on the flipside we can celebrate that we are in the top six of something nationally.
  7. joe
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    joe - October 24, 2013 5:23 pm
    Just as Obama screwed up on the obamacare roll out, WEDC screwed up in the roll out of their newly organized entity. The Commerce department was very inadequate and the WEDC was an attempt to improve it. We will see how it performs now that the "glitches" are out of it. Hopefully, the obamacare website can one day have the "glitches" out of it as well.
  8. Nav
    Report Abuse
    Nav - October 24, 2013 2:41 pm
    Because that is ALL they can do. it is very hard for them to defend what is in the articles so they try to deflect. When facts are not on your side, what else can you do?
  9. Mad-son
    Report Abuse
    Mad-son - October 24, 2013 1:14 pm
    It's interesting how the WDEC claims it replaced Commerce, which did not look good in an audit, with full-on cronies, which looked even worse in an audit, and say they are now making progress.

    The word "reform" coming out of a GOP'ers mouth does not mean what you think it means. It's a smokescreen for superfical laws/policies/regulations that make one think things are legit and an improvement, but allow even deeper corruption, because the devil is in the details and in the lack enforcement that most don't pay attention too. They learned this from doing the same thing successfully on the federal level as a response, after they are exposed.

    State Senator Miller seems to be the only one telling the truth on this. Denial is a river in Egypt. Sunshine is the best disinfectant.
  10. Wis_taxpayer
    Report Abuse
    Wis_taxpayer - October 24, 2013 12:34 pm
    pete, I wonder why you Republicans always attack the messenger and never address the issue itself?

    Deflect, Distract, Disinform.... But you need to vote for us!

    Just as RWG below makes the point.... what in this article is not true?
  11. pete
    Report Abuse
    pete - October 24, 2013 11:06 am
    I wonder what this organization thinks of all the good jobs at Solyndra?
  12. Rich White Guy
    Report Abuse
    Rich White Guy - October 24, 2013 10:56 am
    @ mbadger
    was anything on there not true??? Are they making the whole thing up??? Are you telling me none of this has happened???
  13. Wis_BlogRider
    Report Abuse
    Wis_BlogRider - October 24, 2013 10:25 am
    Appears Walker is now recognized nationally for his criminality. And he thinks he can run for president in 2016?
  14. mbadger
    Report Abuse
    mbadger - October 24, 2013 10:22 am
    take a look at Good Jobs First website. Then tell me they are non partisan.
  15. idunoe
    Report Abuse
    idunoe - October 24, 2013 10:20 am
    Remind me again, who is the head of this Public Private agency? Scott something or other, isn't it?
  16. Harvey
    Report Abuse
    Harvey - October 24, 2013 10:12 am
    Let's see how Governor "Awful Sauce" spins this. I don't know how many more embarrassing revelations people from Wisconsin can take. Rated near the bottom in economic growth. Rated near the bottom in job creation. Rated near the bottom in entrepreneurial climate. And now this. I actually had a guy from Alabama that I have known since the late 70's call and thank me for taking the heat off their state. Makes one ashamed to drive out of state with a Dairyland license plate on their car.
  17. Gianni
    Report Abuse
    Gianni - October 24, 2013 10:08 am
    I'm shocked. Shocked! There's something unseemly going on in Gov Walker's administration?
  18. Wis_taxpayer
    Report Abuse
    Wis_taxpayer - October 24, 2013 10:02 am
    "Public dollars should be controlled by accountable and transparent public agencies"

    Refresh my memory... didn't Walker also run on "transparency"?

    http://www.lakelandtimes.com/main.asp?SectionID=9&SubSectionID=9&ArticleID=11869

    http://www.jsonline.com/blogs/purple-wisconsin/180370981.html

    http://thepoliticalenvironment.blogspot.com/2012/01/walker-claims-transparency-but-his.html

    A new WPR / St. Norberts poll says that by a 49% to 46% margin, most Wisconsinites think that Scott Walker "does not deserve to be re-elected.

    http://wpr.org/sites/default/files/13FallRelease.pdf
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