Something’s Rotten in Madison

This One Failed Wisconsin Government Agency Can Help You Buy a Governor

I’m going to tell you a story about a mismanaged agency within Wisconsin’s government.

Still awake?

You should be. The details of the Wisconsin Economic Development Corporation start with Scott Walker’s failure to deliver on his jobs promise, and end with loans and tax credits going out to his political donors. And here’s why that matters.

The Beginning

Scott Walker campaigned in 2010 on the notion that he’d create 250,000 private sector jobs by the end of his first term in 2015.

To meet that goal, he created the WEDC, which he claimed would play an integral role in keeping that promise.

“Our number one priority is to create an environment that allows the private sector to get 250,000 people back to work by 2015. The WEDC will play an integral role in achieving this goal.” — Walker

The WEDC would give out loans to hundreds of companies in the hopes of spurring growth, but that growth never came, and the agency quickly devolved into a mismanaged mess.

The Wheels Fall Off

Things went south quickly. The WEDC missed its goals in 2012, and missed its goals for helping businesses in over half of its economic development programs in FY13. In fact, one agency in Wisconsin found that WEDC was so poorly run that it was impossible to determine how many jobs it created.

This raised a number of flags for auditing agencies and the public at large. First, there was the mismanagement. WEDC staff used taxpayer funds to pay for iPads, alcohol, and football season tickets.

On top of all of this, the WEDC lost track of $69 million in funds loaned out to companies. Eventually, it was revealed that Walker’s WEDC gave financial assistance to ineligible projects, companies with known financial issues, and even companies who made it clear from the start they were planning to lay off Wisconsin workers.

At least six companies that received substantial awards from the WEDC laid off Wisconsin workers and sent their jobs overseas.

As of the beginning of his second term, Scott Walker fell 120,869 jobs — 48% — short of his promise.

But under this layer of mismanagement lies something deeper and darker: the question of how those loans were distributed and to whom.

Donors Cash In

When Walker created the WEDC he appointed himself chairman and gave himself the authority to appoint much of the agency’s leadership team. And its board of directors? It shared a lot of names with his campaign donor rolls.

This set up a clear feedback loop between his campaign and the agency he created and chaired. But Walker’s donors got more than just seats on the Board. Right before Election Day, the owner of one struggling Wisconsin company maxed-out his donations to Walker’s campaign. Walker’s staff sprung into action. Not long after, members of his administration, including his former campaign manager and the current head of his super PAC, lobbied for the company to receive a loan. The company, which had been previously sued by the state for tax delinquency, received a loan for $500,000.

That’s not the only example of Walker’s donors cashing in. Just a little over two weeks after WEDC’s board gave a company a $6 million tax credit, Walker’s campaign received four donations from the company’s owners, totaling $20,000.

But the WEDC doesn’t just deal in tax credits and loans. They also provide marketing for properties that are ready to be developed. And — you guessed it — the only privately-owned properties promoted by WEDC’s program are owned by Walker donors, who have given the governor over $41,000 in campaign contributions.

TL;DR

Walker tried to sell his WEDC as the model of his government working. Instead, it’s been a model of failure and corruption.

For Walker’s donors, the deal was clear. Donate to Scott Walker or groups that help his campaigns. Receive taxpayer funding to help your business — even if you lay off Wisconsin workers or outsource their jobs.

And despite over $1.1 billion in awards, to date WEDC has only created 13,350 jobs — 5% of Walker’s overall first-term goal.

Scott Walker talks a lot about how he’d like to bring a little bit of Wisconsin to Washington.

With the Wisconsin Economic Development Corporation, you can get a sense of exactly what he’s looking to bring with him.

Lauren Dillon is the Research Director at the Democratic National Committee.