Monday, October 1, 2012

WisGOP hiding from accountability - WEDC FAIL

The first is the ongoing saga of WEDC. Scott Wittkopf at Badger Democracy continues to do great work in exposing how the Walker Administration has tried to go around accountability rules from the U.S. Department of Housing and Urban Development (HUD), and the latest installment in his WEDC series is damning.

Not only is WEDC not allowed to handle millions of dollars in grants from HUD (as mentioned here and in numerous other places last week), but Wittkopf goes on to note that
As of today, the federal government considers WEDC a “third-party contractor” with the state. Whether DOA will meet the federal oversight guidelines remains to be seen. Meanwhile, the block grant program remains in limbo, and Scott Walker’s signature “agency” is nothing more than a conduit to public funds for private corporations. WEDC as a non-state entity has less accountability, and DOA has yet to demonstrate the ability to monitor its own programs adequately.
Another brutal part of the HUD report that Wittkopf notes relates to the giving away of tax credits of up to $20,000 a job (when the state's planned limits were $10,000) and letting the businesses walk away from loans. Instead of a designed set of rules and procedures to follow, WEDC just shrugged its shoulders and gave the businesses what they wanted
in spite of written state policy that “loans are only forgivable under extraordinary circumstances.” Since 1/1/11, eleven of twenty loans under this plan were forgiven. As part of interview comment, WEDC staff told HUD officials:

Certain jobs were considered more valuable to the state, so limits were exceeded, projects received forgivable loans.
And here you thought Baggers hated government picking winners and losers.

Wittkopf calls for an investigation into WEDC's auditing and accountability measures, as well as asking about $43 million in revolving loan funds that could have been used instead of using the CDBG funds from HUD (which come from D.C. and are intended as grants to low-income communities, not business giveaways).

Fortunately, State Sen. Kathleen Vinehout is right on this one. Sen. Vinehout calls out the lack of oversight of WEDC in this blog in Uppity Wisconsin. Vinehout also mentions the refusal to follow established rules on giving out tax credits and forgiving loans, and says that the Walker Administration has miserably failed with WEDC. If anything, the Walker folks have made the situation even less responsible than it used to be under the Department of Commerce.
A serious lack of oversight exists. This administration inherited a system in which almost 90% of the state’s 139 economic development programs did not report both the expected and the actual number of jobs created.

The Governor promised a nimble response to businesses seeking state assistance. Legislators and the public expected WEDC to improve oversight and compliance with federal and state law.

One concern raised by both the audit and HUD was whether companies that received job creation money actually created jobs. An example raised by HUD was a printing company given half a million dollars to create jobs and nine weeks later laid-off 20 employees. The company eventually declared bankruptcy and the state never recovered the money.
Vinehout and the State Senate Dems are going to give WEDC the accountability that Walker and WisGOP failed to do when it was set up last year. There's going to be a special hearing on the Joint Committee on Audit regarding WEDC's failures on October 17, so despite what our short-attention span media likes to do, the issue of sketchiness and inconsistency at WEDC won't go away anytime soon.

But deception and funneling money to well-connected interests is just the way WisGOP and the D.C. GOP play. Keep it in mind as the election nears, and realize that GOPs don't really want to cut government spending - they just want to send it to their buddies.

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