Walters: 10 questions about Foxconn making lawmakers squirm

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Steven Walters
Sunday, August 13, 2017

It’s crunch time for Wisconsin legislators on Gov. Scott Walker’s deal that would give the high-tech giant Foxconn $3 billion in tax breaks, if it builds a $10-billion manufacturing facility in southeast Wisconsin that could employ up to 13,000 in a few years.

With an Assembly vote on the package—the biggest ever economic development deal between state government and a business—tentatively scheduled for Thursday, here are 10 questions that have every legislator squirming.

No. 1: Will my vote help or hurt me in the November 2018 election?

If Foxconn breaks ground on the facility by election day, a picture of the construction site, and a total of how many employees the company has by then, might make a good TV ad justifying a vote for the deal. But voting “yes” means trusting a deal negotiated by the Walker and Trump administration with a huge Taiwan business.

If you vote no, and Foxconn breaks ground and starts hiring, imagine the TV ads that will run before the November 2018 election: “Foxconn wanted to help return Wisconsin to manufacturing greatness. [Your name here] said, ‘No’.”

No. 2: If I vote yes, what financial legacy am I leaving my kids and grandchildren?

A state Department of Administration forecast—using the most optimistic estimates—predicted that the “break even” year for the deal won’t be until 2042-43. That’s when all tax breaks given Foxconn will finally be outweighed by the increased tax revenues resulting from the company’s investments.

Senate Majority Leader Scott Fitzgerald said the 2042-43 projection was “striking,” and one reason the Foxconn package didn’t have enough Senate votes to pass last week.

No. 3: Why does Foxconn get its tax breaks over a 15-year, up-front period, if it lives up to its build-and-hire promises?

“They can do whatever they want after that 15-year period,” said Democratic Rep. Chris Taylor, a member of the Legislature’s Joint Finance Committee.

No. 4: What message does $3 billion in tax breaks to Foxconn, and $12.5 million in tax breaks to keep Fiserv’s headquarters in Wisconsin, send to other Wisconsin tax-paying corporations?

Foxconn’s tax breaks, although paid out over 15 years, total more than three times the $940 million in corporate income taxes other businesses are expected to pay this year.

No. 5: Although a new Foxconn plant in Wisconsin would make liquid crystal displays, how long will they be the dominant part of high-tech communications, giving the short lifespans of electronic products?

A 28-page summary of the Foxconn deal by the nonpartisan Legislative Fiscal Bureau raised that issue this way: “Technological advances and changes in Foxconn’s market share, operating procedures, or product mix could significantly affect employment and wages at the proposed facility over time.”

After all, weren’t state officials once promised that GM vehicles would “always” be built at the Janesville assembly plant? It closed two days before Christmas 2008.

No. 6: Will the Assembly Jobs and the Economy Committee recommend changes before Thursday’s vote that make the deal more acceptable, or recommend changes that Walker and Foxconn warn threaten to kill the deal?

No. 7: Could—and should—Wisconsin’s Investment Board buy into Foxconn, giving public employees relying on those investments for their pensions an equity stake in the company?

“If I’m going to give you money, then I want some ownership,” said Democratic Rep. Jason Fields, who said the deal as written offered Wisconsin only “wishes and prayers.”

No 8: Besides exempting a new Foxconn plant from an environmental impact study, what other concessions—for filling in wetlands and diverting Lake Michigan water, for example—are part of the deal?

No. 9: Why does the deal’s fine print say state government “may”—and not “must”—clawback or try to recover past tax breaks, if Foxconn cashes those refundable tax-break checks and then leaves Wisconsin?

No. 10: Can any financial estimates and numbers projected as far into the future as 2033 and 2043 be trusted, especially when they come from Walker loyalists at the state Department of Administration?

“Any cash-flow analysis that covers a period of nearly 30 years must be considered highly speculative,” the Legislative Fiscal Bureau analysis warns.

It will be a tough vote. “My Facebook comments say ‘no’,” one Kenosha County lawmaker said. “But the people I meet on the street want it.”

Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. Contact him at stevenscwalters@gmail.com.

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