Legislative Update – July 27

WEAC Legislative Update

An Assembly bill (AB-452) referred to the education committee would terminate Wisconsin’s voucher program, including special needs vouchers, and repeal the achievement gap reduction program. Instead, the bill calls for expanding the Student Achievement Guarantee in Education program (SAGE).

Foxconn and the budget

The Foxconn deal was unveiled Wednesday by the U.S. president and Wisconsin governor. Wisconsin Democrats urged caution, demanding that the corporation adhere to promises it makes about the number and quality of jobs and workplace safety. Here are the brass tacks about the tax credits totaling up to $3 billion over 15 years, provided by the WI Economic Development Corp.

  • The Foxconn investment is the state’s largest economic development project.
  • The factory floor area will be 20 million square feet.
  • The average salary will be $53,875 plus benefits.
  • The project requires an estimated $10 billion of capital investment to construct the facility.
  • Of the $10 billion, $5.7 billion will be sourced from Wisconsin businesses.
  • The project is estimated to include 13,000 jobs directly at Foxconn and 22,000 indirect and induced jobs.
  • The project is estimated to generate $181 million in state and local tax revenues annually, including $60 million in local property taxes.
  • Foxconn plans to be operational in 2020.
  • There will be a memorandum of understanding that will outline terms of the incentives based on expected job creation and capital investment.
  • The contract will contain clawbacks that will require the company to pay back tax credits if the jobs and investment are not kept in Wisconsin.
  • The Tax Incremental Financing District tools available to the municipality where this is located will be expanded to ensure the capital available for local infrastructure.

A special session will be called to pass an incentive package.  The WEDC document says:

  • Tax incentives will be tied to actual performance.
  • Foxconn will be eligible to earn incentives based on its actual job creation and capital investment.
  • Foxconn will be eligible for a sales tax holiday for the purchase of construction materials.
  • Incentives are projected to cost between $200 million and $250 million a year.
  • Once fully staffed, Foxconn’s payroll will be estimated at $700 million a year.
  • The maximum amount of credits Foxconn will be eligible to earn is $3 billion over 15 years:
    • Up to $1.5 billion in state income tax credits for job creation.
    • Up to $1.35 billion in state income tax credits for capital investment.
    • Up to $150 million for the sales and use tax exemption (sales tax holiday).

UPDATE – JULY 28:

Governor Walker Friday called for a special session and introduced a bill to implement the Foxconn Memo of Understanding. Executive Order #250 is the name of the session and it is scheduled to start next Tuesday morning, August 1. His order includes the Foxconn proposal. Insiders say this will move fast, and be introduced in the Joint Finance Committee and a done deal by late August. Read the memo of understanding.

Coming up:

  • Thursday, August 3 – Assembly Education Committee Hearings – 11 a.m.
    • Guns and Schools. AB 427 (companion bill SB 340) would create a comprehensive firearm education curriculum to be offered as an elective to high school pupils. The bill would require the state superintendent to jointly develop the curriculum with the Department of Natural Resources, a law enforcement agency, or an organization that specializes in firearms safety or that certifies firearms instructors.
    • Summer SchoolAB 398 (companion bill SB 301), expands the types of online classes offered as summer classes or interim session classes to high school pupils and to pupils in grades 7 and 8 that qualify for state aid.