What City Officials and the Press Haven’t Told You About the HyPro Layoffs

Updated, 9.9.15, 2 PM, and bumped forward from original 9.8.15 post date. I’m always eager for more discussion about WEDC –

To reconcile the figures of $1,300,000 and $262,000: There are differences in the dollar amounts of tax credits depending on whether one considers the maximum authorized or the amount HyPro has so far taken.

In 2013, HyPro had a maximum tax-credit authorization of over a million dollars ($1,300,00). The company used around $262,000 of that maximum. (The Legislative Fiscal Bureau report below lists legal maximums in Economic Development Tax Credit — Maximum Total Tax Credit Limit.)

That maximum, by the way, assumed 80 jobs created for $1.3 million in tax credits, or $16,250 per job.

In the clip below, WKOW reports that HyPro so far took over $262,000 in credits, and created just two jobs.

The tax credits used were actually 8x less efficient than WEDC estimated.

The WEDC’s own records indicate that HyPro created jobs at the price of over $131,000 per job.  

There should have been no tax credits for this employer; everything received should be paid back.

WKOW 27: Madison, WI Breaking News, Weather and Sports

Original post, 9.8.15:

Local newspapers have reported that HyPro is laying off over sixty workers at its Whitewater building. Those workers will be out of jobs by early November.  

What city officials and local newspapers haven’t mentioned is that only two years ago, HyPro received $1,300,000 in tax credit [authorization] from the Wisconsin Economic Development Corporation.  

One-million, three-hundred thousand in tax credits.

See, from the Legislative Fiscal Bureau,  Economic Development Tax Credit — Maximum Total Tax Credit Limit (General Fund Taxes — Income and Franchise Taxes), page 16.

Commenting on these layoffs, Whitewater City Manager Clapper is quoted in the Daily Union observing that that “[w]e’re sad to see them go, but we recognize this happens in the life cycle of a business.” See, HyPro Inc. closing Whitewater plant @ http://www.dailyunion.com/news/article_d83ec8d2-5291-11e5-a5a7-1fb4265234ef.html.  

If that should be so, and these developments occur in the life cycle of a business, then why would Wisconsin offer $1,300,000 in tax credits to that business?  Either that money was futile from the beginning or it’s not true that layoffs like this simply happen in the “life cycle of a business.”  

Proponents of the WEDC cite its funding selectively: big talk when the grants, loans, or credits are issued, but then silence when those grants, loans, or credits prove ineffectual.  

(Rep. Jorgensen is quoted in the same story alluding to the failure of tax credits as an incentive, although his printed remarks don’t say directly that HyPro received tax credits, or in what amount. He’s right to be critical of the WEDC; it’s almost a measure of reasonableness.)

City Manager Clapper has been a supporter of the WEDC, likening its work to a natural science like chemistry.  

WEDC funding is nothing like a natural science; it’s akin to alchemy, not chemistry.

HyPro’s workers deserved better than the WEDC.