Not even close to being a "liveable" wage, more like "laughable! C'mon Wisconsin!
Milwaukee Journal Sentinel
Wisconsin taxpayers would need until 2043 to recoup nearly $3 billion in Foxconn payments
Jason Stein and Patrick Marley, Milwaukee Published 12:22 p.m. CT Aug. 8, 2017 | Updated 2:11 p.m. CT Aug. 8, 2017
MADISON - State taxpayers would need an estimated 25 years to recoup up to $2.85 billion in proposed cash payments to bring a Taiwanese firm's flat screen plant to southeastern Wisconsin, a new analysis finds.
The analysis by the Legislature's nonpartisan budget office found that if the Foxconn Technology Group plant operated at full expected employment levels — and attracted large numbers of jobs to Wisconsin through supplier companies — then state taxpayers could recoup their investment by 2043.
In Foxconn's industry — the competitive world of consumer electronics — the market could see multiple upheavals over that period.
The report released Tuesday by the Legislative Fiscal Bureau relied on projected jobs and investment numbers generated by Gov. Scott Walker's administration and a consulting firm paid by Foxconn. Walker and legislative leaders had no immediate comment.
The fiscal bureau found that over the next 15 years, state taxpayers would pay out $1 billion more to Foxconn than the additional taxes that would be generated by the deal.
The long payoff on the project is due to both the size of the cash payments to the Asian electronics giant and to the fact that in Wisconsin companies pay no corporate or income taxes on profits from manufacturing. That eliminates a major source of repayment for taxpayers that would be available if the award had been made to a different type of company, such as a financial services provider.
The review by the fiscal bureau takes into account the increased taxes generated by the company, its suppliers and other businesses that would establish themselves here. To do that, the budget office relied on a Foxconn-funded analysis that projected the deal would create a large number of additional good-paying jobs — 22,000 in all — at suppliers and other local businesses, such as restaurants.
The memo does not account for additional investments to which Foxconn might later commit, such as a second facility the company is considering siting in Dane County.
The memo notes it is difficult to project what will happen with Foxconn, particularly over a long period. Projections developed by the Walker administration “must be considered speculative,” the Legislative Fiscal Bureau noted in its report.
“Any cash-flow analysis that covers a period of nearly 30 years must be considered highly speculative, especially for a manufacturing facility and equipment that may have a limited useful life,” the report noted.
So far, Republican lawmakers who control the Legislature have not viewed the proposal as having a potential downside. For instance, when the deal first emerged, Sen. Duey Stroebel (R-Saukville) told the Milwaukee Journal Sentinel he believed it posed “no risk” to taxpayers.
The report makes clear that even under optimistic scenarios the deal will involve risk and the better part of a generation to pay off.
And if Foxconn stuck with 3,000 workers — its initial project employment instead of its eventual peak employment level of 13,000, the “break-even point would be well past” 2045, the report found.
In the short term, state government’s bottom line could benefit from the Foxconn development. That’s because building the plant over four years would create more than 10,000 construction jobs and spark other economic activity that would temporarily boost state tax collections.
That could increase tax revenues by $83 million over the next two years, according to the fiscal bureau. However, it concluded that possibility was not firm enough that the figures could be officially tallied in projections of future state revenue.
To receive state payments under the deal, Foxconn would first need to make investments in the plant and hire workers.
If by 2021 the company had hired 13,000 workers, then by the next year Foxconn could be receiving up to $119.6 million in annual cash payments, according to a memo from the state Department of Revenue that was also released Tuesday. Those payments could last more than a decade.
In addition, the company could receive up to $192.9 million in state payments for investments in its plant in each of seven years running from 2020 to 2026. So by the 2022 fiscal year the state could be making an annual payment of $313 million to Foxconn, according to both the revenue department and the fiscal bureau.
The jobs at the plant would have starting salaries of $41,600 a year and the average pay would be $53,900 plus benefits, with total payroll reaching up to $800 million a year, state officials have said. The jobs would have to pay at least $30,000 a year to qualify for state subsidy payments.
The company could qualify for up to $2.85 billion in cash payments from taxpayers — up to $1.5 billion to help offset the cost of Foxconn's payroll and another up to $1.35 billion to help defray the cost of its plant and building. The company could also receive another $150 million in sales tax exemptions on construction materials.
Scot Ross, executive of the liberal group One Wisconsin Now, questioned whether the state could experience cash flow challenges at the beginning of the Foxconn deal when the company is investing in the plant and rapidly collecting subsidy payments from the state for those investments. They could amount to more than $600 million over a two-year state budget, complicating efforts to pass the next state spending plan, he said.
"Look how much trouble they are having with this budget in a relatively healthy economy," Ross said.
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