Foxconn contract secrecy

Wisconsin Economic Development Corp. CEO Mark Hogan speaks with reporters about progress on the Foxconn contract after the WEDC board received an update in closed session last month.

I’m confused by all the wrangling over whether the Wisconsin Economic Development Corp. board should get to see the Foxconn contract before it’s finalized.

Because shouldn’t a $3 billion state agreement with a foreign company be released to the public, and the public’s democratically elected representatives be allowed to vote on it?

WEDC says that releasing incentives deals before they’re signed is not part of the agency’s standard operating procedure — which is true, but also irrelevant, as there’s little that’s standard about the Foxconn deal. At least on Friday agency leaders relented somewhat and declared the contract would be shared with board members.

If there’s such a thing as a good way to dole out tax breaks, public grants and low-interest loans, and other corporate welfare, it’s probably the way municipalities do it.

Developers or companies approach cities about dipping into taxpayers’ pockets to help them build or expand facilities. Rules for what kinds of help are available are set by state law, city ordinance and city policy. The city and developer negotiate a deal in private, which is legal and which they contend is necessary to maintaining their competitive advantages.

But once the developer and city staff decide on an agreement, it’s released publicly before the city’s elected officials vote on whether to approve it.

In a way, incentives agreements approved by WEDC have gotten a public airing because the tax credit, grant, loan and other programs the agreements involve have been approved through legislation.

The Foxconn agreement to open up a $10 billion factory and create thousands of jobs in Racine County, though, required legislation to create new programs — and only one incarnation of one of those programs — specifically for Foxconn. Under the legislation, Foxconn could collect up to $2.85 billion in tax credits by building in what is now the state’s only Electronics and Information Technology Manufacturing Zone.

I tried to find out if this is the first time the state has created a lucrative new incentives program for a single company since WEDC’s creation in 2011, but WEDC spokesman Mark Maley did not respond to requests for comment.

Yes, the Foxconn legislation — signed by Gov. Scott Walker on Sept. 18 — got a public hearing and votes. State law also gives traditional state agencies — as opposed to quasi-public ones like WEDC — authority to sign contracts with third parties without having to run them past the Legislature first.

But the Foxconn legislation left WEDC and Foxconn to hammer out the contract details in private — and Foxconn isn’t exactly your everyday state deal.

The Foxconn incentive package is 167 times larger than the largest WEDC tax credit award in fiscal year 2015-16, according to a May audit of the WEDC by the state’s nonpartisan Legislative Audit Bureau. It’s 750 times larger than the largest WEDC loan made that year. It’s 16 times larger than the total of all loans, grants, tax credits and bonds issued or authorized by the agency in FY15-16.

In August, PolitiFact said that as far as it could determine, the Foxconn deal was the most generous collection of public subsidies ever awarded to a foreign company. Second was a $1.65 billion deal Pennsylvania crafted for Dutch Royal Shell in 2012.

UW-Madison professor emeritus of public affairs and political science Dennis Dresang contrasted WEDC’s approach to that of the UW System Board of Regents and the state’s Building Commission.

The Board of Regents is appointed mostly by the governor, although the elected state superintendent of public instruction gets a seat. The Building Commission, which approves state construction projects and building leases, is made up mostly of lawmakers and the governor. The WEDC board is made up of state legislators, private citizens with expertise in business or industry, and nonvoting state agency heads.

The Building Commission can see project costs and leases before voting on them, while the Board of Regents will be provided, upon request, with the contracts it’s asked to vote on.

“It is standard that negotiations are confidential, but it is not standard that contracts are approved behind closed doors,” Dresang said of state contracts.

Since they took what’s turned out to be near-continuous control of the governor’s office and the Legislature six years ago, Republicans haven’t always provided the best example of open government.

Legislative leaders sought to gut the state’s open records law and drew state and congressional district lines in secret. The governor has limited access to so-called “transitory” records and his campaign and travel schedules.

The GOP’s Foxconn deal is unique. But the lack of transparency surrounding it is not.

Contact Chris Rickert at 608-252-6198 or crickert@madison.com, as well as on Facebook and Twitter (@ChrisRickertWSJ). His column appears Tuesday, Thursday, Saturday and Sunday.

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Chris Rickert is the metro columnist for the Wisconsin State Journal, where he's got his laser-like perspective trained (mostly) on all things Madison.