The Truth about the Wisconsin Economic Development Corporation

A person should be able to make simple distinctions, as between the sensible and foolish, or practical and impractical. Sometimes those distinctions should be clear, and as stark as the difference between the contents of a sample cup and a glass of Chardonnay.

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You’ll hear a lot locally over the next few days about a ‘partnership’ between Whitewater and Gov. Walker’s Wisconsin Economic Development Corporation (WEDC), the public-private hybrid replacement for the Wisconsin Dept. of Commerce.

You’ve probably read in these last few days that there’s more to the WEDC than grant funding. This agency has been a train wreck since its formation. It’s an inefficient, mistake-prone exercise in crony capitalism on a grand scale.

Here’s what publicity-mad insiders don’t want you to recall about the Wisconsin Economic Development Corporation:

The WEDC wanted hundreds of millions in people’s pension funds. See, WEDC request rejected | $200 million was sought from state pension fund.

This supposedly private venture relies on public money, from ordinary taxpayers, to pick and choose businesses it prefers. Greedy for more, the current head of the WEDC

….Reed Hall asked the State of Wisconsin Investment Board in November for the venture capital seed money. The board rejected the request late last year, saying that the use of pension funds to pay for economic development initiatives “does not meet our fiduciary duty.”

These aren’t private men investing their own money – they’re public men avariciously looking for every last dollar of public money they can control, even from the pensions of ordinary workers.

That’s their vision, their proactive approach, their supposedly new idea: to take from weaker people while ignoring people’s basic needs.

The WEDC has neglected millions in taxpayer funded loans. See, Neglected WEDC taxpayer-financed loans grow to $12.2 million.

Borrowers have fallen behind in making payments on taxpayer-funded loans worth $12.2 million in total that were neglected by officials at the state’s top jobs agency – $3 million more than was previously believed to be at risk.

As of Nov. 2, borrowers were late in making payments totaling $2.5 million, but the state could easily end up losing more than that, records show. One late borrower, Flambeau River Biofuels, is unlikely to repay $2 million of its outstanding loans from the state, though the amount currently past due is only a fraction of that total, according to state figures and past interviews with its owner.
The Wisconsin Economic Development Corp. Friday afternoon turned over the information on the 67 past-due loans and a stack of other documents in response to an open records request by the Milwaukee Journal Sentinel.

There’s Whitewater’s new ‘partner’: a negligent organization that doesn’t properly account for the people’s money.

The WEDC has tried to conceal its problems. See, WEDC won’t say whether past-due loans top $9 million.

…the state’s top jobs agency isn’t saying whether the total amount owed to taxpayers by scores of unnamed businesses could go higher than the $9 million figure that officials first estimated.

A spokesman for the Wisconsin Economic Development Corp. told the Journal Sentinel that the agency wouldn’t provide information on the total owed until it finishes an internal review that will take an unspecified amount of time. “WEDC is developing a corrective action plan. It is reviewing each loan and the status of each loan. We will provide additional information when we have completed the review,” WEDC spokesman Tom Thieding said.

Last week, the newspaper [MJS] reported that the agency had discovered it had failed to systematically track nearly $9 million in loans that are not current. As a result, WEDC’s chief financial officer resigned and GOP Gov. Scott Walker, a champion of the quasi-public agency created last year, brought in a new interim leader.

If one had a drunk, coma victim, or skid-row bum for a partner, he’d still be more responsible than this agency.

The WEDC has been the subject of federal complaints. See, Walker aide apologizes over handling of WEDC federal complaints.

Most people shy away from misconduct in public affairs, and one good reason would be when a state agency is under federal investigation:

Gov. Scott Walker’s top cabinet secretary apologized to the state’s flagship jobs board Thursday for not telling them about sharp criticism from the federal government about legal violations by the state and promised to keep them better informed in the future.

The apology by Department of Administration secretary Mike Huebsch came after a member of the Wisconsin Economic Development Board told Walker that he is frustrated about the lack of communication and will resign if it doesn’t improve. Huebsch, a nonvoting member of the WEDC board, had said he had first wanted to resolve the outstanding issues with HUD – initially raised more than a year ago.

“I should have brought this to the board earlier and it was my mistake not to do that. . . . I thought it was premature but it clearly wasn’t,” Huebsch told the board in a telephone conference Thursday. “I will certainly err on the side of providing greater information in the future.”

The WEDC has a mediocre jobs record. See, Second review gives low marks to state jobs agency.

Even a second review’s not the charm:

Another independent report has found that the tracking of millions of dollars of taxpayer-funded loans at the state’s flagship jobs agency hasn’t measured up, and Gov. Scott Walker could soon be interviewing finalists to turn the agency around.

The latest report by a subsidiary of the state bankers group showed that the Wisconsin Economic Development Corp. didn’t have the right bookkeeping policies, computer systems and collection procedures to track the loans that the agency made to businesses. Walker, who also serves as the chairman of the WEDC board, last year signed legislation creating the organization as a replacement for the former Department of Commerce.

In a four-hour meeting of the WEDC board Tuesday at the Marshfield Clinic in Eau Claire, Walker acknowledged and pledged to correct the failures in basic accounting practices at the quasi-public agency that in recent months have drawn attention away from its mission of creating jobs.

There we are. Just a quick survey of the Wisconsin Economic Development Corporation shows it to be one of the worst-performing organizations in the state.

A sensible man or woman would do well to stay as far away from the WEDC as possible. It’s only the foolish or the gluttonous who’d hold out their hands, asking from this agency for as much public money as they could carry away.

In any event, it’s worth watching and tracking what happens to these grants, as it is for all the money the Wisconsin Economic Development Corporation has taken from the public.

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