By Cassandra Lans
An audit from the nonpartisan Legislative Audit Bureau found that last year the Wisconsin Economic Development Corp. (WEDC) didn’t verify or require performance information or financial statements from companies receiving financial incentives and awarded nearly $1 million in tax credits to companies for actions taken before they had signed their contracts with the state.
Senator Chris Larson (D–Milwaukee) released the following statement this week in response to the Legislative Audit Bureau’s findings.
“This audit confirms what legislative Democrats and concerned citizens have been saying from the beginning. By refusing to adopt commonsense accountability and transparency amendments proposed by Democrats, Republicans doomed the hastily-created WEDC to fail.”
He also stated, “The revelations made in the report are nothing short of shocking. According to the audit, WEDC provided awards to ineligible recipients, for ineligible projects, and for ineligible amounts. WEDC didn’t even track half what its staff was buying with agency credit cards. Losing track of taxpayer dollars during difficult economic times is unacceptable. We cannot allow WEDC to continue this fraud waste and abuse at a time when neighborhood schools aren’t able to spend a single new dollar in the classrooms and 90,000 Wisconsinites are being cut from BadgerCare.”
One Wisconsin Now executive director Scot Ross said, “Gov. Walker’s WEDC has failed to perform at even a basic level of competency — doling out improper grants and awards to ineligible recipients, failing to track how they are spending our money, ignoring state statutes and 44th in the nation and last in the Midwest in job creation.”
He also directed comments to others, “To Speaker Vos, Rep. Marklein and the other members of the so-called ‘CPA Caucus’ I ask, after this scathing audit, what more do you need to put Gov. Walker’s WEDC under the microscope? Failing to apply the same scrutiny to this demonstrably mismanaged agency as they have to education funding confirms Republicans are doing what they intended to do all along, create an excuse for another raid on public education to pay for more tax breaks for the wealthy and expanding the unaccountable private school voucher program.”
Larsen also added, “Until accountability and transparency measures are enacted, no new taxpayer dollars should be wasted at the WEDC.”
The audit found:
• From July 2011 to December 2012 WEDC in some cases did not verify financial information of receiving awards. WEDC lacked invoices or other contractually required documents showing authorized costs for 7 of 29 grant and loan awards reviewed. Of 14 grant and loan contracts of at least $100,000, 12 recipients had not submitted the required financial statements.
• Expected results were not established for 10 of WEDC’s 30 programs in the 2012 fiscal year. Recipients of 59 awards reviewed submitted 45% of 40 contractually required reports.
• Companies receiving awards submitted only about 45% of the reports required by their contracts on their progress toward meeting their contract goals. Because a November 2012 report from WEDC contained inaccurate and unclear information, it wasn’t possible for auditors to assess the effectiveness of WEDC’s jobs programs.
• Four businesses received $906,000 in tax credits for job creation and worker training that occurred before their contracts with the state were finalized.
• WEDC did not have sufficient purchasing card policies. The purposed of more than half of the 141 purchasing card transactions reviewed was not specified.
And as Wisconsinites digest the sour news of this audit, another bitter pill is revealed. The U.S. Chamber of Commerce released its annual Enterprising States report that shows Wisconsin ranked dead last in short-term job growth and 44th in the nation in overall economic performance.
The study measured overall economic performance, analyzing five policy areas including exports and trade, innovation, talent, infrastructure and business climate, as well as the role of state policies and programs in fostering small business growth.
Wisconsin’s dead last ranking in short-term job growth isn’t the only bad news in the report — the Chamber’s findings show Wisconsin ranked 45th in the nation in long-term job growth and 47th in the nation in new business start-ups.
Last month, the most accurate federal jobs numbers available showed Wisconsin ranked 44th in the nation in job growth, down from 11th in the nation when Walker took office.
These news items broke this week as Governor Walker travelled across the country on what has been reported as a fundraising effort for a presidential bid.
“As Scott Walker traipses all over the country campaigning for president, Wisconsin continues to be on the receiving end of bad economic news because of his failure to invest in education, infrastructure and jobs training programs,” Democratic Party of Wisconsin chair Mike Tate said Wednesday. “Maybe now that even his supporters at the U.S. Chamber of Commerce are highlighting the way his failed policies are harming Wisconsin’s economic performance, Scott Walker will pay more attention to Wisconsin jobs than to his next one.”
The Joint Legislative Audit Committee has scheduled a public hearing on the audit findings on Thursday, May 9. Citizen Action of Wisconsin calls on the audit committee to fulfill its duty to take prompt legislative action to restore accountability at WEDC.
State Representative Jon Richards is expected to introduce reforms which will assure accountability and transparency for all of Wisconsin’s jobs creation programs.
“Hard Working Wisconsinites have a right to expect that government expenditures for job creation are used to expand opportunity for all residents,” said Jennifer Epps-Addison, Economic Justice director for Citizen Action of Wisconsin. “The WEDC audit clearly demonstrates that the quasi-public agency has failed to protect taxpayers when doling out millions of public dollars to private businesses. To ensure that scarce public resources are utilized to their highest and most useful purpose, we must attach strong accountability and transparency legislation to all public expenditures.”
