News of the Day

Wisconsin Assembly Set to Approve $3 billion for Foxconn

The Wisconsin Assembly planned to approve a $3 billion tax break Thursday for Taiwan-based Foxconn Technology Group to build a massive display panel factory in the state, a project President Donald Trump touted as a transformational win for the U.S. economy.

If built, the plant would be the first outside of Asia for liquid crystal display panels used in television, computers, medicine and other fields.

Republican Gov. Scott Walker, who led negotiations on the deal won by Wisconsin over competition from several other nearby states, has called it a once-a-generation opportunity.

The deal signed by Walker and Foxconn officials calls for the electronics giant to invest $10 billion in the state and hire up to 13,000 people at the massive plant that would be spread over a 20 million-square-foot campus. Construction would begin in 2020.

It will take at least 25 years for Wisconsin taxpayers to break even under the deal, according to an analysis by the nonpartisan Legislative Fiscal Bureau.

Democrats complain the bill is moving too quickly through the Republican-controlled Legislature. Walker and Trump announced that Foxconn was coming to Wisconsin on July 26, and the $3 billion incentive package was introduced on July 28. The Assembly is voting on it less than three weeks later.

The measure must also clear the Senate, but Republicans there have indicated they may want to make changes. If that happens, the Assembly would have to vote on it again.

The agreement with Foxconn calls for the state to approve the incentive package and secure the roughly 1.56 square miles of land for the deal by the end of September.

Wisconsin’s Real Estate Market Continues to Grow

The Wisconsin Department of Revenue (DOR) has released its annual Equalized Value Report. The report shows that Wisconsin’s total statewide equalized property value as of January 1, 2017, was $526 billion, a 4 percent increase over the prior year. Equalized Values are based on data from January 1, 2016 to January 1, 2017.

Wisconsin residential property was valued at $369 billion as of January 1, 2017, an increase of 4.3 percent, or $15.1 billion. The 4.3 percent increase marks the fourth consecutive year of positive gains in residential home values.

The DOR report also shows construction activity continues an upward trend. Wisconsin added $8.1 billion in new construction during 2016, including $3.6 billion in residential property, $3.8 billion in commercial property, and $389 million in manufacturing property. In total, new construction value increased by 13.6 percent from the prior year.

The DOR report indicates that commercial property values were $102 billion, an increase of 5.1 percent or $5 billion. Manufacturing property was valued at $14 billion, an increase of 2.4 percent or $338 million from the prior year. Agricultural land was valued at $2 billion, an increase of 1.3 percent from a year earlier (agricultural land value changes do not represent changes in market value; agricultural land values are based on the income that could be generated from its rental for agricultural use). Undeveloped land saw a slight increase in total value of 0.2 percent, or $4 million, with a total value of $1.9 billion. The Agricultural Forest and Forest property classes had overall changes of +1.9 percent and -1.2 percent, respectively. To round out real estate value changes, the value of Farm sites and Farm buildings (Other) increased by 0.5 percent. Lastly, the value of personal property increased by 2.4%, to $12.9 billion.

Equalized Values are calculated annually and used to ensure statewide fairness and equity in property tax distribution. The Equalized Value represents an estimate of a taxation district’s total taxable value, and provides for the fair apportionment of school district and county levies to each municipality. Changes in Equalized Value do not necessarily translate into a change in property taxes.

Assembly Lawmakers Advance Foxconn Incentive Package

An Assembly committee Monday gave the green light to a package of incentives designed to convince Taiwanese electronics manufacturing giant Foxconn to build its first U.S. plant in Wisconsin.

The Republican-controlled Assembly Committee on Jobs and the Economy voted 8-5 along party lines to advance Gov. Scott Walker’s bill that provides Foxconn with nearly $3 billion in tax credits, exempts the company from a number of environmental regulations and spends $20 million in state funds on job training to ensure the state’s workforce is prepared to fill the 13,000 jobs the company has promised to create.

The full Assembly is scheduled to vote on the package Thursday.

Republicans said amendments to Walker’s bill that the committee adopted Monday have added some of the protections Democrats want. They included asking state officials negotiating the final contract with Foxconn to add a goal of hiring Wisconsin-based workers and making sure enough workers in the state are available to be hired and at a livable wage.

The amendments also call for providing $20 million to the Department of Workforce Development after 2019 for job training, requiring the state’s jobs agency to provide tax credits only for jobs that have a salary of at least $30,000 per year and allowing tax incremental financing funds to be used for fire, police and other government services.

The lawmakers also want state officials negotiating a final contract with Foxconn to emphasize that workers living in Wisconsin should be given preference for hiring. But Assembly Speaker Robin Vos, R-Rochester, has acknowledged that requiring that preference could be illegal.

If Foxconn fills a wetland during its construction process, Assembly lawmakers also want to require the creation of two wetlands in its place in the same watershed, if possible.

A spokesman for Walker did not say whether Walker supported the changes.“Governor Walker is working closely with the Legislature to advance this bill and he looks forward to signing it into law in the coming weeks,” spokesman Tom Evenson said.

Deteriorating State of Wisconsin Bridges Adds to Transportation Budget Woes

As lawmakers continue to struggle over how to fund the state’s transportation budget, drivers are contending with bridges that have deteriorated to their worst condition since 2003, according to Federal Highway Administration data.

While the number of structurally deficient bridges has held relatively steady over the past decade, the average structural fitness of the state’s bridges has been declining since 2008. The National Bridge Inventory rates the structural fitness of a bridge from 0 to 9, with 0 indicating the bridge is closed and 9 indicating its status is superior to desirable criteria. Since 1992, about a quarter of Wisconsin bridges were rated an 8 or 9, the best two designations on the evaluation scale, peaking at around 27 percent from 2006 to 2008. By 2016, that number had fallen to 19 percent, the lowest in the span of the data.

The percentage of bridges that are “basically intolerable” meanwhile increased slightly from 2.5 percent in 2008 to 3 percent in 2015 and 2016. That slight increase on the low end only accounts for about 100 of the state’s 14,230 bridges. But combined with a general slide in ratings, the average bridge rating has decreased from a high of 6.5 in 2008 to 6.3 in 2016, the lowest since 2003.

For the most part, Wisconsin’s bridges are converging in the middle range, creating the potential to significantly swell the number of bridges in poor condition in coming years, requiring more of them to close or impose weight limits.

The main concern with the deteriorating condition of bridges isn’t safety — it’s commerce. Bridges are inspected regularly, and those in very poor condition are posted with weight limits or closed as needed. Those closures and weight limits can have a significant impact on agriculture, timber and other commerce that involves transporting heavy loads.

The number of bridges posted with weight limits has already more than doubled since the mid-2000s, hitting a high of 875, or 6 percent of bridges, in 2015 and 2016. County Highway Administration Executive Director Dan Fedderly said that’s both due to declining bridge conditions and recent increases in the amount of weight trucks are allowed to carry. Some bridges end up posted simply because they weren’t designed to carry that much weight.

A Snapshot of Wisconsin Regulation in 2017

It would take an ordinary person more than three years to read the entire US Code of Federal Regulations (CFR), which currently contains more than 112 million words. The sheer size of the CFR poses a problem not just for the individuals and businesses that want to stay in compliance with the law, but also for anyone interested in understanding the consequences of this massive system of rules.

States also have sizable regulatory codes, which add an additional layer to the enormous body of federal regulation. A prime example is the online version of the 2017 Wisconsin Administrative Code (WAC).

A tool known as State RegData—a platform for analyzing and quantifying state regulatory text—was developed by researchers at the Mercatus Center at George Mason University. State RegData captures information in minutes that would take an ordinary person hours, weeks, or even years to obtain.

For example, the tool allows researchers to identify the industries that state regulation targets most by connecting text relevant to those industries with restrictive word counts. Known as regulatory restrictions, the words and phrases shall, must, may not, prohibited, and required can signify legal constraints and obligations. The three industries with the highest estimates of industry-relevant restrictions in the 2017 WAC are utilities, food manufacturing, and chemical manufacturing.

State RegData also reveals that the WAC contains 159,253 regulatory restrictions and roughly 12.0 million words. It would take an individual about 667 hours—or almost 17 weeks—to read the entire WAC. That’s assuming the reader spends 40 hours per week reading and reads at a rate of 300 words per minute.

Governor Walker Signs Legislation Limiting New State Regulations

State agencies will have to take added steps and meet higher standards to approve new rules, under legislation signed by Gov. Scott Walker Wednesday.

The measure allows a co-chairman of the Legislature’s rules committee to request that agencies hold public hearings before submitting scope statements on new regulations. In addition, under the bill, the state Department of Administration would also need to review an agency’s scope statement for proposed rules.

Since 2011, Walker and GOP lawmakers have given the governor more power over new environmental and other regulations, including a requirement that the governor sign off on a scope statement before new rules are written. The vetting by the administration department will now come before Walker’s review.

The proposal also requires the full Legislature to sign off any administrative rule that would make the public pay more than $10 million to comply with it.

In addition, the legislation allows the Joint Committee for Review of Administrative Rules to object indefinitely to proposed rules and not just temporarily. A committee co-chairman can also contract with an outside group to analyze the compliance cost to the public of a new rule.

State Would Recoup Foxconn investment in 25 years, Estimate Shows

A new analysis released Tuesday by the nonpartisan Legislative Fiscal Bureau shows taxpayers would pay to Foxconn Technology Group about $1 billion more than the state received in tax revenues during the first 15 years of the project, and that the state would start to recoup those payments starting in 2043 — or a quarter of a century after the project starts.

A Foxconn-commissioned analysis shows that once the plant is up and running, for every 10 jobs created there, 17 jobs would be created elsewhere in the state and that the facility’s operations would support more than 35,000 jobs statewide — a figure that includes the 13,000 planned to be at the campus itself.

Fiscal bureau director Bob Lang, who authored the analysis, noted the review focuses only on the impacts of the Foxconn project on the state’s finances, and does not account for other benefits to the state’s economy and residents. Foxconn would spend $6.70 for each public dollar, for example.

But Lang also warned that any cash-flow analysis that covers a nearly 30-year time frame must be considered “highly speculative, especially for a manufacturing facility and equipment that may have a limited useful life.”

Under fiscal estimates from state agencies released Tuesday, the state’s payments to fulfill the incentive package would reach their peak by fiscal 2023, when the state would annually be sending $119.5 million in income tax credits and $192.9 million in capital expenditure credits to the Apple iPhone manufacturer that wants to build LCD panels in Wisconsin.

The estimate from the Department of Revenue also shows annual payroll for the proposed campus would reach $703.4 million annually.

Fiscal estimates from state agencies released on Tuesday also show provisions exempting Foxconn from sales taxes on construction materials and equipment would result in $139 million the company would not need to pay. Local governments would have gotten about $10.7 million in revenue if the exemptions were not in place and Foxconn created the same campus at the same size investment, the estimates show.

Governor Walker Announces Broadband Expansion Grant Recipients

Governor Scott Walker joined the Public Service Commission (PSC) in announcing $1,500,000 in Broadband Expansion Grants, awarded to 13 projects in underserved areas throughout the state. Matching funds for these projects amounted to $2,310,475.60 for a total of $3,810,475.60 in broadband infrastructure investment.

The Broadband Expansion Grants provide reimbursement for equipment and construction expenses incurred by efforts to extend or improve broadband telecommunications services in underserved regions of Wisconsin.

“As broadband continues to become an increasingly integral part of our lives, I know that Wisconsin businesses and families will be well-served by these continued investments,” said Governor Walker. “Internet access is a critical component of education, telemedicine, e-commerce, agribusiness, and tourism, just to name a few. No corner of our state can be left behind.”

Governor Walker created the Broadband Expansion Grant Program in the 2013-15 biennial budget and increased funding for the grants in the 2015-17 biennial budget from $500,000 to $1.5 million annually. The Governor’s proposed 2017-19 biennial budget provides $11 million more for the program over the next several years. Recipients include:

24-7 Telcom ($153,500) – This project proposes to build a fiber-to-the-home service past 120 homes and businesses located southwest of the City of Menomonie in Dunn County.

Amherst Telephone Company ($170,000) – This project proposes to build a fiber to the home service in rural Portage County, northeast of Stevens Point. The 18 mile fiber route will build past 207 residential and business locations in the Towns of Hull and Dewey.

CenturyTel of the Midwest – Kendall, LLC d/b/a CenturyLink ($167,300) – This project proposes to build a 9-mile fiber route in the central and northeast portion of the City of Baraboo. The route will pass 478 locations (13 businesses and 465 residences) in the underserved portion of the project area.

ChoiceTel LLC ($72,846.40) – This project proposes to complete the construction of a fiber to the home service in the Town of Land O’Lakes in Vilas County, authorized in 3 grants in FY 2016, 2017 and 2018. When construction finishes in 2019, ChoiceTel will have buried over 60 miles of fiber optic cable along the main roads and side roads in the township, and will have connected over 1,000 customers to fiber to the home service.

Florence County ($66,712) – This project proposes to deploy a fixed wireless service from 3 towers in Florence County.

MH Telecom, LLC d/b/a MHTC ($126,162) – This project proposes to build a fiber backbone and fixed wireless service in rural areas of Iowa County.

Oneida County Economic Development Corporation ($45,000) – This project proposes to build two additional towers in rural portions of Oneida County.

Somerset Telephone Company ($90,000) – This project proposes to build a fiber to the home service to 129 locations in St. Croix County.

SonicNet Inc. ($6,746.47) – This project proposes to install a fixed wireless service on a county-owned tower in the Town of Conover in Vilas County. The project will also build microwave links to other SonicNet tower locations.

Black Earth Telephone Company d/b/a TDS Telecom ($285,917.20) – This project proposes to build a DSL service to 307 locations in the Town of Vermont south of the Village of Black Earth in Dane County. Town of Dunn ($106,395.18) – This project proposes to build a Charter Communications cable facility to 103 homes in the vicinity of Hawkinson Road in the Town of Dunn in Dane County.

Vernon Communications Cooperative ($176,587) – This project proposes to build a combination of fiber to the home and fixed wireless services to 530 locations in Vernon County.

Waupaca Online ($32,815.75) – This project proposes to build a fixed wireless service to the home service to 324 locations in northern Waupaca County.

 

Wisconsin Credit Rating Boosted to ‘Aa1’ by Moody’s

Wisconsin won a one-notch credit ratings upgrade to ‘Aa1’ from Moody’s Investors Service on Friday despite the state’s fiscal 2018-19 biennial budget being overdue.

The action affects about $8 billion of outstanding general obligation bonds, according to the credit ratings agency.

“The upgrade to ‘Aa1’ reflects the proven fiscal benefits of the state’s approach to granting and funding pension obligations when many other states are experiencing stress from rising costs and heavy liabilities; an economy that delivers steady but moderate growth; conservatively managed budgets, and adequate liquidity,” Moody’s said in a statement.

While Wisconsin began its new fiscal biennium on July 1, its Republican-controlled legislature has yet to pass a spending plan as lawmakers debate how to fund transportation projects and consider a $3 billion package of incentives for a new LCD screen plant by Taiwan’s Foxconn.

“We don’t consider occasional late budgets as having a credit impact,” said David Jacobson, a Moody’s spokesman.

Wisconsin’s Republican Governor Scott Walker hailed the upgrade, the first for the state from Moody’s since 1973, as an affirmation of its “fiscal stability driven by bold reforms and accountable stewardship of the taxpayer’s dollar.”

Wisconsin’s credit ratings with S&P Global Ratings and Fitch Ratings are a notch lower at ‘AA’.

Economy Adds 209K Jobs in July

The U.S. economy added a solid 209,000 jobs in July, more than expected as the labor market shows few signs of slowing down. The labor market has churned out nearly 1.3 million jobs in the first seven months of the year.

The unemployment rate fell to 4.3 percent from 4.4, the Commerce Department reported on Friday.

In the past three months, the labor market has averaged growth of 195,000 jobs a month. Reports for May and June were revised upward by 2,000 jobs.

Hourly earnings ticked up slightly, 0.3 percent last month and have risen  2.5 percent over the year.

Retail remained weak last month, only adding 900 jobs in July.  Construction added 6,000 jobs and manufacturers hired 16,000 last month.