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GOP legislation would ease rules for complying with tax breaks (UPDATE)

Associated Press

MADISON, Wis. (AP) — Companies seeking tax credits from Wisconsin’s troubled job-creation agency would be subject to reduced scrutiny under a provision Republicans included in a package of lame-duck legislation designed to weaken newly elected Democrats.

The proposal awaiting GOP Gov. Scott Walker’s signature would loosen the reins on an agency he established, which has been marred by allegations of failing to recover loans from some companies and handing out $126 million without a formal review.

A separate provision in the lame-duck legislation would meanwhile prevent Gov.-elect Tony Evers, who ousted Walker in last month’s election, from overseeing the Wisconsin Economic Development Corporation for nine months. It’s one of several components in the legislation that would reduce the powers of Evers and the incoming attorney general, also a Democrat.

Current law requires the WEDC to annually verify payroll and employment data from tax-credit recipients to make sure they’re creating enough jobs to live up to the obligations they came under when they accepted the money. State auditors found last year that the agency wasn’t complying with that requirement and was accepting information recipients had submitted without doing any independent verification.

The lame-duck legislation would erase those annual verification requirements. The agency instead would be required to have a third party verify a sampling of the information. Recipients also would have to send a signed statement to WEDC attesting to the accuracy of the information they had submitted.

WEDC chief executive officer, Mark Hogan, told reporters on Monday that the agency can’t possibly verify information about the tens of thousands of employees that work for the 300 or so credit recipients. The agency has been verifying data samples for years and the lame-duck bill simply codifies that practice into law, he said.

“You’re never going to be able to independently verify over 200,000 employees,” Hogan said. “It’s a process that cannot work. The only solution was to change the statutes to codify what we’re doing.”

Hogan said changing the law has been his “top priority” for three years. He tried to get lawmakers to pass the changes before the Legislature adjourned its two-year session this past spring, but legislators told him then it was too late.

WEDC is a quasi-governmental agency established by Walker in 2011. It hands out grants, loans and tax credits to businesses and other organizations. An audit in May 2017 found the agency hadn’t required recipients of such aid to supply enough detailed information to show how many jobs had been created or retained as a result of the agency’s awards.

WEDC officials played a central role in persuading Foxconn Technology Group to build a huge flat-screen plant in Mount Pleasant. The agency administers an unprecedented $3 billion worth of state incentives that Walker and Republican lawmakers offered to the manufacturer. Walker has promised that if Foxconn doesn’t create jobs, it won’t receive state tax credits.

“Under Republican control, the WEDC has been plagued by scandals, mismanagement and under-performance,” Senate Minority Leader Jennifer Shilling said in a statement. “The last thing that agency needs is less accountability measures.”

The WEDC provisions are tucked into wide-ranging legislation that, if signed by Walker, would also restrict early in-person voting to the two weeks before an election, prevent Evers from withdrawing from a multi-state lawsuit challenging the federal Affordable Care Act and eliminate the state Justice Department’s solicitor general office.

Walker has signaled his general support for the legislation. His spokesman, Tom Evenson, said on Monday that the governor was still reviewing the proposals.

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