The Wisconsin Senate is poised to approve nearly $3 billion to Foxconn Technology Group.
(Karen Bleier, Getty Images photo)
MADISON, Wis. (AP) The Wisconsin Senate was poised to approve nearly $3 billion in cash payments for Taiwan-based Foxconn Technology Group, an unprecedented incentive package for the electronics company to locate a flat-screen factory in the state.
The proposed subsidy would be the largest ever from a U.S. state to a foreign company and 10 times bigger than anything Wisconsin has extended to a private business. It would take at least 25 years for Wisconsin to see a return on its investment, the nonpartisan Legislative Fiscal Bureau estimated.
Foxconn would receive $2.85 billion in cash payments over 15 years if it invests $10 billion in the state and employs 13,000 people. It could also qualify for $150 million in sales tax exemptions for construction equipment.
The Assembly, which like the Senate is firmly in GOP control, takes a final vote. The bill then goes to Gov. Scott Walker, who led negotiations on the deal and has a deadline to sign a bill by the end of the month.
Critics, including Democrats who don't have the votes to stop it, argued that state taxpayers are giving up too much. They also questioned whether the state economic development agency, which has had trouble tracking much smaller projects, will be able to properly verify that the required investments are made and jobs created.
Senate Democrats were pushing changes to the bill they said would prioritize Wisconsin workers and businesses, protect taxpayers from overpayments to Foxconn and increase environmental oversight. None were expected to be adopted.
“Taxpayers know it's going to cost them $3 billion but they have no idea what they're buying,” said Sen. Jon Erpenbach, a Democrat from Middleton, during debate. “There are no guarantees in this legislation and we don't even know what we're buying.'
Republican Sen. Alberta Darling, co-chair of the Legislature's budget committee, urged Democrats to get on board with a project she said was both a good deal for taxpayers and would be transformational for the state by making it a leader in the advanced manufacturing world.
“Passing this up would be a huge mistake,' she said.
Walker and other supporters say Foxconn is giving the state a once-in-a-lifetime opportunity to get a foothold in the world electronics market. Foxconn is the largest contract maker of electronics, best known for making iPhones, but with a long list of customers including Sony Corp., Dell Inc. and BlackBerry Ltd.
The Wisconsin plant would be the first outside of Asia to construct liquid crystal display panels for televisions, computers and other uses. Foxconn wants to open the factory by 2020 and initially employ 3,000 people.
Environmental groups and others concerned with waiving certain state regulations to speed construction of the plant have been threatening to file lawsuits. Foxconn would be allowed to build in wetland and waterways and construct its 20-million sq. ft. campus without first doing an environmental impact statement.
Republicans planned to tweak the bill to give the Wisconsin Supreme Court the option to take appeals related to the Foxconn project directly from the circuit court. As advanced by the committee, all Foxconn-related appeals would go directly to the Supreme Court, skipping the state appeals court. Legal experts had questioned the constitutionality of requiring all appeals to go directly to the Supreme Court, which is controlled 5-2 by conservative justices.
Foxconn was eyeing locations in Racine and Kenosha counties in southeastern Wisconsin, in between Milwaukee and Chicago. The mayor of Kenosha sent a letter to Walker saying the bill didn't do enough to make it possible for the city to support the project, leaving Racine County as the likely home to the factory, although no exact location has been announced.