Proposed Changes Will Hurt the Elderly, Blind and Disabled, while Corporate Fraud Goes Unpunished
The Wisconsin Senate moved a step closer last week to passing a bill that has been described as combatting fraud or abuse in the FoodShare program, but which will do little, if anything, in that regard. In contrast to the progress of that legislation, as each day passes it looks less likely that the Senate will approve a bipartisan bill (AB 669) that could accomplish a great deal to halt benefit fraud by businesses.
AB 669, which was approved by a voice vote in the Assembly, would make it a felony to fraudulently obtain an economic development benefit from the Wisconsin Economic Development Corporation (WEDC). It would also allow WEDC to bring a civil action to recover damages for fraudulently obtained benefits. Although the lead Assembly author of the bill is a Republican (Rep. Kerkman), and it enjoyed broad support in the Assembly, AB 669 hasn’t even been given a public hearing in the Senate. Read more
Only Six States Had a Larger Decline from 2002 to 2013
State and local governments have been neglecting to make investments in infrastructure according to a new analysis issued this week. The new study found that state and local spending on infrastructure, such as transportation, public buildings, and water systems, fell to a 30-year low in 2014, when measured relative to gross domestic product (see Figure 1). The drop-off since 2000 has been especially pronounced in Wisconsin. Read more
A New Review of Economic Patterns Shows Why Wisconsin’s Job Creation Strategies Haven’t been as Effective as Hoped
Cutting taxes and luring companies from other states won’t do much to boost job creation in Wisconsin, according to the findings of a new research report released this week that examines which businesses create jobs and where they create them.
Wisconsin state lawmakers, including Governor Walker, have emphasized the importance of creating new jobs in Wisconsin, and have argued that tax cuts are the path to achieving that goal. With that in mind, they have enacted nearly $5 billion in tax cuts over six years, including a tax cut that nearly wipes out any income tax liability for manufacturers, and a tax cut for multi-state corporations that makes it easier for them to shift income from one state to another.
According to the theory, lower taxes will spur business to create more jobs. But despite deep tax cuts in Wisconsin, the pace of job growth in the state continues to lag the national average. Read more
Good Jobs First (GJF) announced today that Wisconsin taxpayers can now access nine years of economic development subsidy data in the organization’s searchable Subsidy Tracker database. The enhanced and expanded database developed by GJF now includes information about nearly 2,200 state and local subsidies for businesses in Wisconsin, totaling more than $1.8 billion.
The updated database adds nearly 30,000 new entries across the U.S. from 160 state and local programs, and 138 federal ones. Access to the database is free and unrestricted at: goodjobsfirst.org/subsidy-tracker. Read more
A national survey of small business leaders reveals that they overwhelmingly believe that state economic development incentives favor big businesses, and they say small businesses interests in economic development are not well represented in their state capitols.
The survey of 41 leaders of small business organizations representing 24,000 member businesses in 25 states found they think that states are overspending on large individual deals and that state incentive programs are not effectively meeting the needs of small businesses seeking to grow. Almost three-fourths (72%) do not believe their state’s current incentive policies are effective in promoting economic growth.
There’s been a lot of talk in Wisconsin over the last couple of weeks about the need to ensure that tax breaks and loans awarded by Wisconsin’s economic development agency are limited to businesses that are creating jobs and fulfill their job growth commitments. Yet almost no attention has been paid to the fact that the state’s largest tax credit for corporations is ballooning in cost and is distributed to businesses operating in Wisconsin regardless of whether they are expanding or slashing their workforce in our state. Read more
Conservatives Critique “Tax Cronyism,” and Progressives Critique the ALEC Report
I was pleasantly surprised to learn recently that the American Legislative Exchange Council (ALEC) has issued a report calling on policymakers to end the wasteful subsidies given to corporations by state and local governments. Their report titled The Unseen Costs of Tax Cronyism: Favoritism and Foregone Growth criticizes special tax breaks for certain companies, which it points out tend to increase the tax burden on other companies and put them at a competitive disadvantage.
Corporations are very good at extorting costly subsidies from state and local officials, but some of those corporations and a growing number of policymakers are realizing that these incentives aren’t an effective way to promote economic growth. As WCCF intern Jelicia Diggs wrote in a recent WI Budget Project blog post, a number of businesses in the Kansas City area have prevailed on Missouri legislators to call a ceasefire to the use of incentives for pirating corporations across the border with Kansas. Read more
Public-private jobs creation agencies, like the Wisconsin Economic Development Corporation, are inherently susceptible to problems with accountability, conflict of interest, and public disclosure. That’s the message of a new report by Good Jobs First, which shines a spotlight on WEDC as an example of a partly privatized jobs creation agency beset by accountability issues.
The report includes a five-page summary of the problems that have affected WEDC since it was created in 2011, which include:
- Spending federal money without legal authority to do so;
- Failure to track past-due loans awarded to businesses;
- Erroneous or unrecorded financial deals; and
- Inadequate verification of whether companies getting subsidies met performance requirements.
These types of problems aren’t unique to the WEDC. The report details similar issues that have arisen in several other states that have converted their economic development arms to public-private partnerships, including Arizona, Indiana, and Florida.
WEDC officials scoffed at the new report. Read more