State initially offered Foxconn $1.1 billion in subsidies

Wisconsin more than doubled its incentive package for Foxconn after initially offering the Taiwanese manufacturer $1.1 billion to bring jobs to the state, according to records obtained by WisPolitics.com and confirmed by the guv’s office.

Along with pushing the state’s share of the incentive package to $2.85 billion, Wisconsin went from offering Foxconn 10 cents for every $1 in salary it paid workers at the proposed plant to 17 cents for every $1, records from Gov. Scott Walker’s office show.

The original deal had called for $6 billion in capital investment and approximately 8,000 jobs. That grew as “Foxconn continued to engage with the state” to the pledged $10 billion in capital investment and 13,000 jobs, although no new RFP was issued by the company, the guv’s office said.

On July 12, more than a month after the state submitted its proposal to Foxconn, Walker and Foxconn Chairman Terry Gou signed an acknowledgment of the deal via a handwritten note on letterhead from Walker’s office. The document only listed the date, the pair’s signatures, and two columns showing Foxconn’s and the state’s investments. For Foxconn, “USD 10 Billion” and “Job creation: 13,000.” For Wisconsin: “USD 3 billion.” The deal was announced at the White House on July 26.

Walker spokesman Jack Jablonski cautioned comparing the two deals, saying it’s “apples to oranges.”

“It was an initial offer in a negotiation to a plan that ultimately evolved quite differently,” he said.

The original offer was outlined in a June 2 letter from WEDC chief Mark Hogan to Ernst & Young, a firm hired by Foxconn, although some key words had been redacted. Still, Jablonski confirmed the original state incentive offer was $1.1 billion.

That letter, which was a response to an RFP, did not include an attached proposal Hogan submitted along with it. Those materials, according to the guv’s office “are still undergoing review and redaction.”

Hogan then sent a follow-up letter on June 26, again referencing state and local incentives. “In doing so, the state-based incentives for (redacted) 818 would have been calculated at approximately (redacted) and $1.1 billion, (redacted), for the purpose of my June 2nd letter.”

The June 26 letter also referenced “approximately $100 to $150 million” attributed to local incentives.

Hogan also offered Foxconn 10 cents on the dollar for every $1 in qualifying payroll checks to workers, up from the typical state standard of 7 cents per dollar.

That offer, which was hinted at in Hogan’s June 26 letter, was first made in his June 2 correspondence.

Still, that offer ultimately increased to 17 cents in credits when the final deal was announced.

“Although current Wisconsin statutes allow for refundable tax credits of up to 7% for eligible wages and 10% for capital expenditures, the proposal outlined in my June 2nd letter considered an increase in the advance against eligible wages to 10%,” he wrote on June 26.

The letter also stressed the state’s commitment to the potential deal, with Hogan citing the weekly meeting of an “ad hoc group” of Walker’s cabinet secretaries.

The group, led by DOA Secretary Scott Neitzel, included executives from DNR, DOT, DWD and DOR, according to the letter. They met “to identify and address any issues that may arise from the proposed projects.”

And the letter referenced the company’s identification of “Cost, Speed and People” as the “primary factors that will drive the Company’s decision as to where to locate its new facilities.”

“Governor Walker, WEDC, and our local and regional partners have clearly responded to the Company’s desire to move quickly through the process,” Hogan wrote. “We also remain confident the Wisconsin model for addressing workforce requirements will be successfully implemented for the Company. Cost then becomes the critical factor in the Company’s decision-making process as it attempts to level the playing field with its competitors.”

Hogan also urged Ernst & Young to share its economic impact analysis with the state “as soon as possible,” because it’s “critical for the state to substantiate the incentive proposals outlined in my June 2nd letter (and certainly any possible increases to those amounts).”

“It would be extremely helpful for this analysis to provide specifics on the positive impact the Company’s presence will have on attracting additional supply chain companies to the state,” he wrote. “Discussions around the supply chain’s potential capital investment and employment levels would provide invaluable information that would support the elevated incentive levels.”

The Assembly has already approved its version of the Foxconn incentive package. The Senate held a public hearing on the bill in the Joint Finance Committee Aug. 22.

JFC Co-chair Sen. Alberta Darling, R-River Hills, told WisPolitics.com today the committee is still eyeing next week for a vote, saying the committee is trying to accommodate members’ availability since some had made plans with their families “a long time ago” for next week thinking the budget would already be wrapped up.

See the June 2 letter:
http://www.wispolitics.com/wp-content/uploads/2017/08/20170602-LOS-Project-Flying-Eagle_Redacted-FINAL.pdf

See the June 26 letter:
http://www.wispolitics.com/wp-content/uploads/2017/08/20170626-LOS-Project-Flying-Eagle-Update_Redacted-FINAL.pdf

See the July 12 signed agreement:
http://www.wispolitics.com/wp-content/uploads/2017/08/20170712-Signed-Acknowledgement.pdf

— Dems immediately knocked the hand-written agreement between Walker and Gou.

“The largest state taxpayer handout to a foreign corporation in U.S. history was handwritten on an 8.5 x 11 inch piece of paper? Not good,” Senate Minority Leader Jennifer Shilling tweeted.

Meanwhile, Rep. Gordon Hintz, D-Oshkosh, tweeted a picture of a handwritten statement that read, “Are you kidding me?” that he signed and dated.

See Hintz’s response:
http://www.wispolitics.com/wp-content/uploads/2017/08/170831Hintz.jpg

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