The Legislative Audit Bureau is recommending WEDC establish a written policy for when it should revoke tax credits after recipients don’t meet the terms of their contract.
LAB on Friday released its latest report on the Wisconsin Economic Development Corp., which includes 14 recommendations for improvements as well as an overview of the agency’s program activities for fiscal year 2023-2024.
Following earlier reports from the bureau, WEDC had revised its process for verifying tax credits to require a notice of default and pending revocation to be sent to recipients that fail to create or retain enough jobs in time to fulfill their contract with the agency, authors noted.
“However, we found that WEDC’s policies did not specify a time by which WEDC should revoke tax credits for recipients that do not meet contractual obligations,” they wrote, noting the agency said it set a goal in fiscal year 2021-2022 to close awards within 90 days of their end date.
LAB reviewed 46 tax credit awards with job requirements the agency closed in the last six months of fiscal year 2023-2024 and the first six months of fiscal year 2024-2025, the report shows. WEDC revoked tax credits from 14 recipients of these awards after they failed to meet their contract terms, the review found.
While the agency revoked tax credits from 11 of those recipients before the end date outlined in the contracts for the awards, WEDC also waited an average of 1.6 years to revoke tax credits for three of the 14 recipients, LAB found.
These revocations included: $389,200 in tax credits 287 days after the award had ended; $375,000 in tax credits 299 days after the award had ended; and $68,500 in tax credits more than three years after the award had ended.
Along with its recommendation on creating a specific timeline for revoking tax credits when awardees don’t meet their contract terms, LAB also says WEDC should “then consistently comply with its written policies” by revoking credits within that time frame.
“Doing so will help to ensure that WEDC recovers taxpayer funds in a timely manner and tax credit recipients do not pay unnecessary amounts of interest on revoked tax credits,” authors wrote.
The 80-page report contains more recommendations around improving the accuracy of WEDC’s annual reporting, developing quantifyable “impact goals” for programs without job creation and retention goals and others.
See the agency’s release and a list of recommendations.
