Gov. Scott Walker on Monday approved up to $3 billion in subsidies for a Racine County flat-screen plant, binding the state's economic hopes and his own political future to the investment proposed by an Asian electronics giant.
The signing of the legislation at Gateway Technical College clears the way for the Walker administration and Foxconn Technology Group of Taiwan to ink a final contract in the coming days, announce the chosen site for the plant soon and break ground there by spring.
"We’re thrilled that these are going to be the first of its kind made in America," Walker told a crowd at Gateway on Monday. "And not only will these LCD displays be made in America, they’ll be made proudly right here in the state of Wisconsin."
It's still unknown how much Racine County taxpayers will have to spend to provide the infrastructure and services needed for the plant.
But the state deal would pay up to $2.85 billion in cash to the company over 15 years to offset 17% of its qualifying payroll costs as well as 15% of the capital costs of constructing an up to $10 billion factory that could employ as many as 13,000 people.
In addition, the state would waive approximately $150 million in sales taxes on construction materials for the facility.
If Foxconn follows through with its commitments, then the state payments would be the largest incentive package for a foreign company in U.S. history.
Walker on Monday used his powerful partial veto pen on the measure to eliminate legislative oversight of $250 million in borrowing to advance work on the long-delayed I-94 north-south project, which will help to serve the factory. Walker also scaled back provisions in the measure to allow towns involved in the deal to convert to villages to avoid being annexed by larger communities.
The measure passed both houses of the Legislature last week along largely party lines, with all but several Republicans voting for the bill and all but a handful of Democrats from the Racine and Kenosha area voting against it.
Democrats such as Senate Minority Leader Jennifer Shilling of La Crosse have questioned the deal's price tag, saying that there's too great a cost to the subsidies and exemptions from environmental rules that will be going to Foxconn.
"Now’s not the time to hand over $3 billion in cash payments to a foreign corporation,” Shilling said in a statement. “Governor Walker and legislative Republicans are putting home-grown businesses at a competitive disadvantage while committing taxpayers to decades of economic costs and liabilities."
The payroll credits would only be paid as jobs are created and workers are paid. The capital credits would be paid as the company spends money on building and equipping the plant. If the display market or the company's plans changed and the plant was abandoned, the state generally could not recover any of the credits that had already been paid, under the legislation signed Monday.
Walker raised the possibility Monday that the state’s final contract with Foxconn might tighten those requirements but didn’t promise that.
Mark Hogan, head of the Wisconsin Economic Development Corp., said the state jobs agency is vetting the deal and company now and hopes to present the package to WEDC’s board at a regularly scheduled meeting on Sept. 28.
Just back from a trade mission to Asia, Walker said that he had been asked about it in all his meetings there, including with Japanese Prime Minister Shinzo Abe.
“To a person, everyone brought up Foxconn. Everyone said, ‘Congratulations, wow, that’s big,’ ” Walker said. “Even the people from Samsung said that to me, which is amazing — that’s a competitor! But they understood it … This is one of those things that is transformational
At the signing ceremony, Milwaukee Bucks President Peter Feigin said he has been meeting with Foxconn representatives on a nearly weekly basis about a potential sponsorship by Foxconn of the professional basketball team. The partnership hasn’t been defined but could include scoreboards and other electronics equipment in the team’s new arena.
"We're both beyond eager," Feigin said of the two sides.
Feigin is also pitching conceptual plans for an office building that could include Foxconn on the Park East strip in downtown Milwaukee.
Officials with Foxconn have said they envision a massive campus that would occupy up to 20 million square feet and could spur the creation of up to 22,000 additional jobs at suppliers and other area businesses.
But even when accounting for the positive economic ripple effect from the project, it would take the state 25 years to recoup its investment in Foxconn, according to the nonpartisan Legislative Fiscal Bureau.
Scot Ross, head of the liberal group One Wisconsin Now, said Monday that the state's payments to the company will compete in future years with other priorities such as state roads, universities and K-12 schools.
The legislation would exempt the Foxconn project from some state rules to protect wetlands and waterways — provisions that environmental groups have threatened to challenge in court. Foxconn would not need to write a state environmental impact statement or procure state permits to build in bodies of water but would have to comply with federal environmental laws.
The bill would expedite appeals of litigation over the project, creating a path that would likely get any case to the state Supreme Court more quickly.
Any trial court rulings in that litigation would be automatically suspended until a higher court weighed in, raising constitutional concerns from Democrats and at least one conservative attorney.