By State Representative, Leon D. Young
State Republicans are literally dancing in the aisles over their perceived coup in convincing Foxconn to build its high-tech manufacturing plant in Wisconsin. Walker and his Republican cronies are now proudly boasting that they have made Wisconsin a “top 10 state” for business. On its face, this effusive language sounds most appealing in a state that languishes near, or at the bottom, in terms of new job creation. Now that the intricacies of deal have become public, it begs the question: Does the Foxconn deal make sense for Wisconsin taxpayers?
It is now being estimated that it would take state taxpayers an estimated 25 years to recoup up to $2.85 billion in proposed cash payments to bring Foxconn to southeastern Wisconsin. Per the Legislative Fiscal Bureau, the Legislature’s nonpartisan budget office, state taxpayers wouldn’t recoup their investment until 2043, if all goes per the plan. (And, if Foxconn stuck with 3,000 workers – its initial project employment instead of its eventual peak employment level of 13,000 – the “breakeven point would be well past” 2045).
Moreover, the fiscal bureau found that over the next 15 years, state taxpayers would pay out $1 billion more to Foxconn than the additional taxes that would be generated by the deal. Additional public incentives would include environmental exemptions, lower utility rates and a still undisclosed tax subsidy from local governments of which the state is guaranteeing up to 40% in case the deal fails.
It’s imperative to note that this nonpartisan fiscal analysis of the Foxconn venture assumes several assumptions:
• The fiscal bureau relied on Foxconn funded projections that company suppliers and local businesses such as restaurants would also create 22,000 good jobs outside the plant, for a total of up to 35,000;
• The analysis also assumed that the jobs being generated by the deal in Racine and Kenosha counties would all be filled by Wisconsin workers. If 10% of the new jobs are filled by Illinois residents driving across the border, then it could take another two years to pay back state taxpayers’ investment.
The Foxconn deal is purported to be the best thing since sliced bread. In fact, one Republican state lawmaker has even gone as far as to contend that the Foxconn deal poses “no risk” to state taxpayers. Not only is this assertion blatantly false — it’s asinine and completely delusional.