Economy

Legislative Fiscal Bureau (Aug 2017): “August 2017 Special Session Assembly Bill 1: Foxconn/Fiserv Legislation”

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Here’s the entire Legislative Fiscal Bureau document on Foxconn (since links to original site do not work in my previous post “Wisconsin FoxConned by Walker et al.”:

Table 4 (which underpins these graphs) below:

Source: LFB (2017).

This table provides the basis for these graphs:

Figure 1: State payments (blue) and increased tax revenue (red) under August 2017 Special Session Assembly Bill 1, in millions of dollars, by fiscal year (2018 indicates FY 2018-19). Source: Legislative Fiscal Bureau, Table 4.


Figure 2: Net benefits calculated as increased tax revenue minus state payments under August 2017 Special Session Assembly Bill 1 (dark blue), and cumulative (purple), in millions of dollars, by fiscal year (2018 indicates FY 2018-19). Source: Legislative Fiscal Bureau, Table 4.

The original contract was substantially revised (!), so here are the obligations under the 2021 contract.

Source: Legislative Audit Bureau (2023).

So Wisconsin taxpayers are on the hook for paying Foxconn to pay employees that are doing minimal work. While this has some multiplier effects (in other words, Scott Walker and the Wisconsin GOP are de facto the greatest exemplars of Keynes’ aphorism “let them dig holes”), it’s doubtful they have the full upstream multiplier effects on suppliers etc. that were envisaged by e.g., Williams (2017).

Note that the above does not take into expenditures by localities. From Mitchell (2019):

In addition to the state subsidies, localities agreed to a $764 million site development subsidy (which subsequently expanded to $911 million), funded via tax increment financing. The state has agreed to underwrite 40 percent of these loans if the local government is unable to pay them off (but we do not include this potential cost in the state subsidies listed in table 1). Beyond these financial incentives, the state also exempted the company from certain wetland regulations, permitting it to circumvent the standard environmental impact reports and to discharge material into nonfederal wetlands without a permit. It also authorized over $332 million in electric and gas utility infrastructure improvements to service the plant, the costs of which will be borne by other utility customers. Finally, the Village of Mount Pleasant declared 2,800 acres as “blighted,” despite the area’s comparatively low crime rate, and has spent $160 million to acquire property through eminent domain in order to transfer it to Foxconn.

Hence, while the State of Wisconsin was somewhat insured against costs, the localities were shafted incurred substantial uncompensated costs.

So, when looking back, it is hard to see how much some policymakers (Wisconsin GOP, Scott Walker, Ron Johnson)  were so badly bamboozled. (I’m sure almost everybody by now understands how Donald Trump was so badly bamboozled). See more here, here.

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