Republican lawmakers have been patting themselves on the back in recent days for their foresight in tying the historical amount of state subsidies Foxconn stands to receive to its actual hiring and investments in Mount Pleasant.
And they do deserve some praise. Any good-government advocate would say a fundamental principle of using these incentives is that you shouldn’t give away something for nothing.
But in noting that Wisconsin has yet to pay out a cent to a company that appears to be revising its plans for its Mount Pleasant site by the day, these lawmakers are overlooking something big: the hundreds of millions either already spent or under contract for Foxconn-related infrastructure work.
State officials have said well over a half-billion dollars of road improvements could be needed to accommodate the people who will eventually be going to and from the factory (and, yes, after suggesting at one point they’d only be building a research and development hub, Foxconn officials have now returned to planning a factory.) The biggest of those projects, widening Interstate 94 in Racine County and nearby counties, is far enough along that there’s no turning back now.
It’s fair to say this work would be taking place eventually whether Foxconn was coming or not. But the project was advanced last year for the sole purpose of supporting the new factory. Meanwhile, other long-planned jobs, such as expanding an east-west running section of I-94 between the Zoo and Marquette interchanges, have been delayed indefinitely.
Beyond roads, there is the water and sewer work that’s being undertaken for the Foxconn project. Racine County has estimated it will need to spend $120 million to expand its water system to the point where it can meet Foxconn’s supposed need for 7 million gallons of water a day. By late November, the Racine Water and Wastewater Utilities already had more than $40 million of this work under contract.
It’s much harder to argue any of this would be taking place were it not for Foxconn. Making matters worse, much of the money for this local work was eventually to come from property taxes generated by the new factory. True, local officials contend Foxconn is under a contractual obligation to build something with a valuation of at least $1.4 billion – which would generate enough money to cover the public spending. And there are “claw back” provisions meant to protect taxpayers should Foxconn fall short of its promises. But enforcing any of this will not be easy, especially when we’re dealing with a company with almost no presence in the United States.
Then there’s all the money and time that’s been spent acquiring land for the project and re-writing environmental rules and other regulations so Foxconn can build its factory exactly as it wants.
So, yes, lawmakers can say Foxconn has yet to receive any subsidies directly from the state. But if they argue the company hasn’t benefited from taxpayers, they’re guilty of overlooking some glaring facts.
Perhaps recognizing this, state and local officials were quick to say this week that Foxconn had assured them that their plans had not fundamentally changed. Whatever the company eventually builds, it will still be bringing 13,000 jobs; it will still be building a massive campus of some sort; and it will still be investing enough money to make Wisconsin the envy of public officials in any other Rust Belt state.
Yet, after so much else has changed, who can really believe these promises?
We at The Daily Reporter have generally been backers of the Foxconn project. Much of our support was grounded in the belief that state officials had taken the necessary steps to protect taxpayers and make sure Foxconn lived up to its commitments.
If Foxconn officials do end up deviating from their original plans in a substantial way, lawmakers shouldn’t be able to just wash their hands of the whole thing and say: Oh well, at least they didn’t get any subsidies. Too much has already been spent for that.