Crony Capitalism Anyone?

In 2013, the Wisconsin Legislative Audit Bureau uncovered widespread mismanagement of the (state) money provided as loans and credits to businesses.  That same report indicated that WEDC staff had used the agency's credit cards to buy alcohol and football tickets.  In response to these findings, the WEDC board approved a new policy that required a written review on all program awards. Since then, by their own admission, WEDC has approved more than 760 awards, all of which were reviewed by staff (Chicago Tribune, June 19, 2015). 

A detailed and informative description of WEDC structure, rules and process can be found in Informational Paper 93 Wisconsin Legislative Fiscal Bureau, January, 2013. 

  • For each economic development program developed and implemented by the WEDC Board, there are a number of requirements that must be satisfied.  It is astonishing how many of the provisions of the Act are being ignored or circumvented.
  • According to the rules, WEDC Staff review is conducted by the underwriting unit and management. Factors considered by the underwriter include examination of existing poverty and hardship the program would impact, the amount of investment, the number and wages of full time jobs that would be created, the financial soundness of the business. 

On June 23, 2015, Wisconsin Radio Network reported the following: 

The troubled Wisconsin Economic Development Corporation is still having problems complying with a number of state laws and regulations, according to the findings of a report released Friday morning by the state’s nonpartisan Legislative Audit Bureau.  The audit is based on a review of more than 100 awards made by WEDC during the 2013-14 fiscal year. It found the public/private agency failed to include provisions in grants and loans that contractually require recipients to submit information proving they created and retained jobs. The LAB also discovered that “WEDC did not establish all statutorily required policies for its tax credit programs, did not consistently evaluate whether businesses met all eligibility requirements in its tax credit policies, and allocated tax credits in ways that did not consistently comply with statutes and its policies.”

State Sen. Rob Cowles (R-Green Bay), who co-chairs the legislature’s Audit Committee, said in a statement that “It is unacceptable that certain issues raised in the previous audit report have not been addressed. Maintaining administrative oversight and verifying of our job creation efforts should be a vital aspect to assuring WEDC’s grant, loan and tax credit programs are fruitful and are creating jobs.”

In 2013 WEDC leadership at least gave lip-service to the earlier report and purportedly made policy changes to address the problems.  However, it does appear that it was never intended those changes actually be adhered to.  This time, instead of even pretending to care, their solution is quite different, but certainly not unexpected. 

From the Capital Times, June 8, 2015, story titled "Wisconsin Republicans propose abolishing the Legislative Audit Bureau":

State Reps. David Craig, R-Big Bend, and Adam Jarchow, R-Balsam Lake, are looking for co-sponsors for their proposal to abolish the audit bureau and replace it with independent inspectors general who would be placed in state agencies. "Most if not all legislators believe the Legislative Audit Bureau (LAB) does a tremendous job of executing audits of state agency books," reads an email the two representatives sent to fellow lawmakers. "Unfortunately, the statutory process under which the LAB operates focuses more on retrospective examination rather than proactive fiscal action and bad practice deterrence. In many instances, by the time an audit has occurred the political will (or new legislative composition) necessary to change a state program has diminished." 
The same article quotes Democrats objecting to this specious reasoning:
"Why would legislators want to do away with the Legislative Audit Bureau?" said state Sen. Kathleen Vinehout, the Democratic caucus vice chair. "Could it be they don't want to know what's happening?"
Assembly Minority Leader Peter Barca, D-Kenosha, called the proposal one of the worst ideas in a legislative session fraught with bad ideas. “Changing the nonpartisan, award-winning Legislative Audit Bureau into partisan appointees continues the Republican efforts to reduce oversight of state government," he said. "The move would allow for more partisan and special-interest influence and further erode Wisconsin’s tradition of clean, open and transparent government."

Generally speaking an audit, by definition, is retrospective.  Are our distinguished Republican Legislators perhaps unaware of the meaning, confused, ignorant, or simply up to their usual nefarious activities?  Or maybe all of them? 

Since WEDC was never meant to be anything other than a structure to support rampant crony capitalism, it is my opinion that they are fully aware of what is going on:  they just don’t want us to know what is happening!

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  • Grassroots North Shore posted about A WEDC Primer on Grassroots North Shore's Facebook page 2015-06-30 15:00:08 -0500
    WILY WALKER’S WEDC: A WEDC Primer. Understand crony capitalism, Wisconsin style.
  • Grassroots North Shore posted about A WEDC Primer on Grassroots North Shore's Facebook page 2015-06-30 14:45:09 -0500
    WILY WALKER’S WEDC: A WEDC Primer. Understand crony capitalism, Wisconsin style.