Friday, July 28, 2017

Wisconsin in focus: Foxconn subsidies could mean heavy borrowing for local municipalities

By Watchdog News - July 28, 2017 at 07:37AM

Milwaukee Journal-Sentinel: Foxconn subsidies could mean heavy borrowing for local municipalities

The written agreement to bring a Taiwanese electronics giant to Wisconsin calls for changes to the main subsidy program used by local governments – a key item for taxpayers to watch.

In a ceremony Thursday, Gov. Scott Walker signed a written commitment that the state would provide up to $3 billion in tax credits and other incentives if Foxconn Technology Group builds out and operates a $10 billion flat-screen plant employing up to 13,000 workers in Wisconsin.

But local governments will almost certainly have to put up huge undisclosed subsidies of their own through a financing program known as tax incremental financing. Changes to that program will have to be made to ensure that local governments can finance the sewer lines, streets and other infrastructure to be built in what are now undeveloped fields, according to the memo of understanding with the state.

ABC News: Rust Belt Wisconsin looks to fill high-skill jobs at Foxconn

A Rust Belt state that built a manufacturing legacy through assembly-line jobs will have to quickly transition to a more highly skilled workforce now that Foxconn has selected Wisconsin as the site of its coveted U.S. electronics plant.

“This will not be your grandfather’s factory,” said Tom Still, president of the Wisconsin Technology Council. “This will be a high-tech facility that will attract workers of various skill levels to produce products that will really define where the economy is going to go for years to come.”

Foxconn is best known for making iPhones and other Apple products in China. It entered into a memorandum of understanding Thursday to build its first U.S. manufacturing plant in Wisconsin — a decision cheered for its potential to transform the state’s economy. But many questions remain, including the type of jobs the Taiwan-based electronics giant will offer and whether it will follow through on its plans.

The deal calls for finalizing terms of the agreement — which will require a special legislative session to approve a $3 billion incentive package — no later than Sept. 30. Gov. Scott Walker and Foxconn CEO Terry Gou signed the memorandum inside Milwaukee’s art museum, a white, winged-shaped structure by Santiago Calatrava that sits on Lake Michigan. The project to bring Foxconn to Wisconsin was called “Flying Eagle,” they said.

Washington Post: Foxconn deal to build massive factory in Wisconsin could cost the state $230,700 per worker

Foxconn, the technology giant that supplies gadgets to Apple, Google and Amazon, has shown willingness to make a huge investment in Wisconsin — in exchange for a similarly hefty commitment from the state.

The Taiwanese company has agreed to build a factory that will stretch 20 million square feet, the size of 11 football fields, and Gov. Scott Walker has offered a set of financial rewards to seal the deal.

On the table is up to $3 billion in state tax breaks. The state legislature could approve the economic incentive package as early as August.

These payouts, Wisconsin officials said, come with lofty expectations. As long as Foxconn keeps hiring  U.S. workers at the new flat-screen manufacturing facility, Wisconsin would cut the company $200 million to $250 million a year for up to 15 years.

That works out to a rough cost to the state of about $230,700 per worker, assuming the factory goes on to generate 13,000 jobs.