Democrats Should Propose an Alternative to WEDC

by Robert Kraig, executive director, Citizen Action of Wisconsin

Democrats in the Legislature should go beyond critiquing the proposed merger of the Wisconsin Economic Development Corporation (WEDC) with the Wisconsin Economic Development Authority (WEDA) and provide an alternative approach for job creation.

Here’s why.

WEDC is not just badly mismanaged, it is a flawed model. The notion that our scarce job creation resources should be doled out to business with less accountability is one of the worst ideas generated by the Walker Administration, which is really saying something. We at Citizen Action of Wisconsin have been saying that the whole model is flawed since it was first proposed in early 2011, and the short history of the troubled agency bears us out.

I won’t recount WEDC’s entire resume of scandal. Mary Bottari from the Center for Media and Democracy provided a good short history late last year for The Progressive. More financial mismanagement was revealed this year. There has also been shocking evidence of bias and possible corruption uncovered. Our friends at One Wisconsin Now found that 60% of WEDC development assistance went to firms that have contributed either to Governor Walker or the Republican Governor’s Association. Earlier research done by my colleague Kevin Kane at Citizen Action of Wisconsin found that WEDC’s own records show it created 86% more jobs in Republican Assembly Districts than Democratic districts, and nearly 3 times more jobs in Walker political base in the three Milwaukee suburban counties than in Milwaukee County.

This is not just about mismanagement. The structure of WEDC itself, which by design has less accountability and transparency than a traditional public agency, raises questions about undue influence, further undermining public’s trust in their own government. In an environment where massive corporate election expenditures have been legalized, the public deserves ironclad guarantees that the process of handing out public economic development dollars is above politics.

For example it was revealed in late March by investigative journalist Michael Isikoff that John Menard Jr, the richest man in Wisconsin, gave $1.5 million dollars to a right wing group that fully coordinated with Walker’s re-election campaign, and was also awarded $1.8 million in special tax credits by WEDC. The Walker response was to fall back on the alleged objectivity and fairness of the process at WEDC, something very much in doubt not only because of mismanagement at WEDC but because its structure is by design less accountable and transparent.

Given all of this, one would think that the Democrats would be pushing for the elimination of WEDC. So far, they have not. As the Jesse Opoien in the Cap Times has reported in her excellent on-going coverage of WEDC, Democrats have made a strong case that the proposed merger, and the creation of the Forward Wisconsin Development Authority, will further reduce transparency and accountability.

The problem is that if Democrats only oppose the merger, without offering an alternative, they are in effect supporting WEDC as it currently stands.  

I think one of the reasons leading Democrats have held the fire was their inclusion on the WEDC board that Governor Walker chairs. Including two Democratic legislators on WEDC, Senator Julie Lassa and Assembly Minority Leader Peter Barca, has tended to deflect opposition. As conscientious legislators, both have worked to improve WEDC from the inside. For their constructive approach, they have often been misused by the communication hacks that do media relations for WEDC. Whenever there is a new scandal, WEDC tells journalists the activity had bipartisan approval.

One of the major critiques of the merger coming from Legislative Democrats is that the new entity will not have legislators on its board. But did that prevent any of the scandals at WEDC? Its time for Democrats to take the gloves off as the WEDC merger approaches a vote on the Joint Finance Committee, and provide an alternative vision for economic development and job creation.

I would suggest Democrats support a new publicly accountable agency with strong accountability and transparency, and strong civil service rules to make sure it is run by highly qualified public servants. At its heart the agency’s mission needs to convey that the purpose of economic development is not to aid particular businesses but to create economic opportunity for working families. No business should have any expectation of public support, unless it can objectively show a broader public benefit.

The new agency should also reform other WEDC abuses. It should stop providing funds to companies engaged in outsourcing of jobs. It should also cease WEDC’s failed strategy of wasting money on poaching jobs from neighboring states, rather than investing in new economic opportunity.

The new department should focus its resources on creating the maximum number of family supporting jobs, not poverty jobs, and should place a special emphasis on areas with the greatest shortage of good jobs. Given recent research that shows the WIsconsin middle class has contracted more than any state in the country, it is critical that Wisconsin create an effective public agency that can make real progress on opening opportunity to more Wisconsin families.

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