Lawmakers ready for big week on budget, Foxconn

Republicans hope to settle their differences

MADISON - When measured purely in money, this could be the most momentous week of action ever at the Wisconsin Capitol.

After weeks of debate and delays, two big bills are expected to move forward in the next several days — the budget and a separate multibillion-dollar plan to bring a flat-screen plant to southeastern Wisconsin.

GOP lawmakers have said they hope to settle their differences over road funding and taxes, a challenging step that would clear

the way for a final budget committee vote on the state’s two-year, $76 billion tax and spending plan.

In this same four-day work week, the Joint Finance Committee is also supposed to vote on paying up to $2.85 billion in cash to Foxconn Technology Group of Taiwan to secure a factory employing as many as 13,000 workers. The plan would be the largest public subsidies ever offered to a private group in Wisconsin by a factor of more than 10.

“For the average voter, it should be a tremendous level of excitement,” budget committee chairman and Marinette Rep. John Nygren said of the Foxconn deal. “A few years ago, we wouldn’t have had the opportunity. I’m pretty confident of that.”

GOP lawmakers like Nygren see a confirmation of their small government philosophy in the Foxconn bill and the budget, which rejects a gas tax increase for road building and cuts several other taxes. Their approach could bring back to the United States an LCD screen industry that currently operates only in Asia, they say.

Democrats see challenges ahead, saying

the state will have a harder time paying for schools and health care in the future because of the expected votes this week. The decision to delay road repairs will mean higher costs over the long run and the 15-year payments to Foxconn will compete for tax dollars against other priorities like the University of Wisconsin System, they say.

“The reality is there simply isn’t going to be enough revenue going forward,” said Rep. Gordon Hintz (D-Oshkosh), who sits on the budget committee. “We’re not in a very good position to make the future investments we’re going to need.”

The state budget is now two months late, and the Joint Finance panel is scheduled to meet Tuesday as part of its effort to settle these outstanding questions:

■ How much to borrow for road construction over the next two years. The committee will also consider potential revenue sources such as a fee on hybrid and electric vehicles and the first-ever use of tolling in the state.

■ Whether to increase or decrease the delays on road projects proposed by Walker. His budget bill would slow down completion of the north leg of the Zoo Interchange project in Milwaukee, work on Highways 18 and 151 on Madison’s south side, and Highway 15 in the Fox Valley.

■ Whether to make Walker’s proposed tax cuts, including $203 million in broad income tax decreases; $22 million for a sales tax holiday; and hundreds of millions of dollars in property tax cuts. The GOP co-chairs of Joint Finance, Sen. Alberta Darling of River Hills and Nygren, said they’re still deciding whether to keep the sales tax holiday. Darling also predicted cuts to the personal property tax, which is levied by local governments and paid by businesses on items such as furniture and certain equipment.

■ Whether to prepare for slower than expected tax growth by increasing the balance in the state’s main account. It is currently projected to finish the budget in June 2019 with $87 million, which is not enough to fund the state’s large operations for two full days.

■ Whether to include a final grab bag of policy changes and pork-barrel spending known as the “999 motion.” GOP lawmakers unsuccessfully used the motion in 2015 in an attempt to undermine the state’s open records law. Hintz, the Democratic lawmaker, noted that a trade group for rent-to-own stores has been lobbying lawmakers in recent months and said he was watching out for moves to weaken regulations on that industry. Nygren didn’t rule that out.

Darling said she hoped to finish the panel’s work on the budget and Foxconn bills this week but that work on them could stretch as late as Sept. 12.

The lawmakers will decide on making the nearly $3 billion cash payments to Foxconn, which would be paid out over 15 years as the company first builds and then staffs an up to $10 billion proposed plant in Racine or Kenosha counties.

A study released last week by the EconoFact Network out of Tufts University found that the Foxconn bill is offering the company the “largest such direct wage subsidy ever paid by an American state.”

No study has looked at whether it’s reasonable to assume that Foxconn will be able to carry through on its commitment to build and profitably run a plant employing 13,000 workers making more than $700 million in total payroll. Foxconn has previously spoken of making major investments in Pennsylvania, India, Vietnam and Brazil, only to have the results fall short.

If Foxconn does create 13,000 jobs at its plant, several studies have found that the ripple effect would create an additional 12,000 to 26,000 jobs at suppliers and other businesses.

But even if the ripple effect is on the high end of that range, it could take until 2043 for state taxpayers to be repaid on a $2.85 billion investment, the Legislature’s nonpartisan budget office found last month.

The Walker administration hasn’t yet completed underwriting work to determine if Foxconn has the financial resources and stability to carry out the project.