WEDC head stands by rescinded tax credit offer

By SCOTT BAUER
?Associated Press

MADISON, Wis. (AP) – The head of a semi-private state development agency that offered, and then rescinded, tax credits to a Wisconsin company contingent upon it winning a multi-million dollar state contract said Friday he believes the proposal was legal.

Wisconsin Economic Development Corp. leader Paul Jadin told The Associated Press his legal team advised him that the offer to Skyward Inc. was allowed because the year-old agency isn’t bound by procurement laws that forbid bid-rigging.

“It was indicated that we could make a contingency offer,” Jadin said in his first public remarks on the controversy since it came to a head earlier this month. “We’re satisfied that we could make the offer.”

Others in state government didn’t see it that way, and Democrats on Friday issued their most forceful criticisms of the deal to date, calling it sleazy and illegal.

“The laws and regulations of the state of Wisconsin are put in place to ensure honest government, free from corruption,” Democratic Party spokesman Graeme Zielinski said. “At the very least, the Scott Walker administration has not followed these laws.”

And Democratic state Rep. Brett Hulsey, who tried to stop WEDC from being created last year citing problems with similar semi-private agencies in other states, said what happened here is “sleazy, unaccountable stuff.”

When Gov. Scott Walker found out about the offer the day after he won his recall election on June 5, he said it raised a red flag and he alerted his legal staff. Walker’s office then contacted the state Department of Administration, which was in charge of putting out the call for bids on the $15 million project to run a new statewide information system for schools.

The day before bids were due, on June 18, DOA halted the process and said the offer Jadin had made to the Stevens Point-based company violated the spirit of a competitive bid. Giving preferential treatment to any company bidding for a state contract is illegal.

Walker said Thursday that the agency will not make such offers to companies again and will ask those they are negotiating with to sign a document saying they are not bidding, or planning to bid, on state projects.

Jadin said he will be talking with Walker about pursuing legislation next year that would allow WEDC to make such contingency offers. He said his agency is still getting a “better handle on what areas we are clearly a state entity and what areas we are clearly private. That’s evolving a bit yet.”

Jadin also said there was a breakdown in communication with the governor. He had been updating Walker weekly on pending projects, but those meetings ended in March as a “victim of the recall process,” Jadin said.

Jadin sent the March 22 letter to Skyward after getting clearance from his legal counsel, but not in consultation with Walker. The governor was copied in on the letter, but it was not sent to him. Jadin said that had been the practice for WEDC and its predecessor the Department of Commerce for years.

Walker said Thursday that would stop and any letter from WEDC that says he was sent a copy will actually be delivered to him.

“It was unfortunate that the governor and I weren’t able to communicate as effectively as we had been,” Jadin said.

Walker pushed for abolishing the Department of Commerce and moving to WEDC, which is run by a board headed by Walker that includes state lawmakers and private business leaders, as one of his first priorities when taking office last year.

He said creating the new public-private hybrid with an $83 million budget would allow WEDC to respond more quickly to the needs of businesses and bolster economic development in the state.

But Hulsey and other critics pointed to problems in Texas, Michigan and Indiana with similar quasi-private agencies that made questionable stock deals, tax credits and inflated job creation numbers.

“This was a train wreck when it was created,” Hulsey said of WEDC. “We need to change the law to make it clear we have accountability for taxpayer money.”

Bids in the statewide information system project were originally due June 19 but the deadline has been moved back to July 10.

Skyward, which has threatened to leave the state if it doesn’t get the contract, is being allowed to submit a bid and a third party will oversee the evaluation process to ensure transparency and fairness.

Skyward sells management software to track grades, attendance and other information for schools and already serves 220 of Wisconsin’s 424 districts as well as about 1,400 other schools across the U.S. and in five other countries.

The tax breaks offered were to help the company with a planned $20 million expansion of its headquarters and the hiring of more than 600 workers. Jadin said state officials have been working closely with the company for more than a year over concerns that it may leave the state.

Creating the statewide information system is a priority for the state Department of Public Instruction, in part because it would make it much faster and easier for it to compile data and submit required information to the federal government and others.

The system is expected to save local districts millions of dollars as they no longer would have to run their own systems to track everything from student grades to their health records. School districts will be charged a per-pupil fee to use the statewide system, which is required to be fully implemented within five years.