Outgoing Wisconsin Economic Development Corporation (WEDC) secretary and CEO Mark Hogan made his final appearance before the state legislative audit committee Tuesday, once again defending WEDC’s performance in the face of another audit reporting recurring shortcomings at the state economic development agency.
The session doubled, in the words of state Sen. Alberta Darling (R-River Hills) as an “exit interview” for Hogan, who has run the agency since September 2015.
Gov. Tony Evers will replace Hogan after Sept. 1. As part of a package of measures passed at the end of then-Gov. Scott Walker’s term limiting the newly-elected governor’s powers, the Republican-controlled legislature blocked the governor from appointing a replacement sooner.
The Legislative Audit Bureau’s latest report, released May 10, found that WEDC had complied with most recommendations in its previous audit. But that report also said that the economic development agency, which has been scandal-plagued since the quasi-private agency was created by Walker, is still not sufficiently monitoring companies. And that the corporation had provided tax breaks and other incentives. WEDC audits are conducted every two years.
Past audits have found that the corporation didn’t adequately document the return it got for doling out tax credits and providing other benefits to draw employers to Wisconsin. The 2019 audit continued that pattern, although less dramatically. Its findings included:
- Companies getting tax credits and loans in the fiscal year ending in June 2018 only created about 35% of the jobs they were required to. One company got $462,000 in job-creation tax credits lost 17 jobs.
- WEDC didn’t require loan recipients to repay $4 million when it could have.
- WEDC awarded businesses tax credits for some new jobs that were created out of state or held by non-residents.
- WEDC conducted only one of its required annual verification audits in the two years from January 2017 through December 2018.
- The agency removed online records for awards it had made that were concluded a year or more before the date of the audit report. As a result, “WEDC cannot know how many jobs were actually created or retained as a result of its economic development awards that ended,” the report stated.
In what was generally a low-key and cordial two-hour session, Hogan largely defended his agency’s actions, saying WEDC had followed the statutes as it understood them and its own procedures.
The only real tension took place late in the meeting, when Sen. Tim Carpenter (D-Milwaukee) asked Hogan about funds for FiServe Corp. shortly before the company paid for naming rights at the new Milwaukee Bucks stadium. At that point Hogan said Carpenter “as usual, [has] about 70% of the facts” — prompting Carpenter to heatedly interrupt. Committee chair Sen. Robert Cowles (R-Green Bay) cut in, telling both men to “take a deep breath.” Carpenter: “He made a comment about something and I want to have the right to defend that comment.”
Hogan apologized, then said that while the WEDC board had voted for funds for FiServe, the formal application had never come from the company and would still have to go through underwriting.
“WEDC has never been accountable,” Carpenter said in closing comments, moments later.
Except for that moment, the tenor or the meeting was a steep departure from past controversies surrounding WEDC. For example, the Center for Media and Democracy worked with whistleblower Molly Regan to determine that WEDC had only created 5,840 jobs when it was boasting 60,000 in the official records.
Regan, who won the “Whistleblower of the Year” award from the Wisconsin Freedom of Information Council, also worked with the Wisconsin State Journal on an award winning series on how top state officials in Governor Walker’s office and at the Department of Administration pushed for a failed $500,000 loan to a struggling construction company, spurring new safeguards on how agency dollars are spent.
Regan told the State Journal: “I hope my coming forward results in real, meaningful changes in the way economic development programs in the state are administered because people in Wisconsin, especially those who are struggling financially, who have a legitimate need for government assistance, or who are unemployed, deserve better.”