Rearranging the Deck Chairs Won’t Save Gov. Walker’s Wisconsin Economic Development Corporation

MADISON, Wis. — The centerpiece of Gov. Scott Walker’s economic agenda, the Wisconsin Economic Development Corporation (WEDC), has been a prime example of his administration’s cronyism, corruption and incompetence throughout its four plus years of existence. Now it is looking for yet another new head after the current CEO announced this week he will be resigning next month. According to One Wisconsin Now Executive Director Scot Ross, WEDC needs more than Walker and the WEDC Board Chair, who also heads the board of the big business lobby the Wisconsin Manufacturers and Commerce, tapping a new crony to oversee the operation.

“Rearranging the deck chairs by appointing a new CEO isn’t going to right this scandal ridden, sinking ship,” said Ross. “Research we’ve done at One Wisconsin Institute exposed WEDC’s disturbing pattern of doling out a disproportionate share of funds to contributors to Gov. Walker’s campaign. Media outlets have reported numerous instances of shady dealings and the nonpartisan Legislative Audit Bureau has issued multiple scathing audits.”

Earlier this week, WEDC CEO Reed Hall announced he would be leaving the agency, effective September 25. In a press statement, Walker said he would work with the WEDC board chair to find a replacement. Current WEDC board chair Dan Ariens also serves as chair of the board of the Wisconsin Manufacturers and Commerce, an organization that spends large sums lobbying state government on behalf of big business interests and has doled out millions to support the electoral fortunes of Walker.

Key findings of the One Wisconsin Institute’s research report, “WEDC: Four Years of Failure,” include:

• Gov. Walker received more than $2.1 million in campaign contributions from individuals with ties to WEDC award recipients, who in turn received more than 60 percent of the state’s economic development awards;
• WEDC economic development dollars are not resulting in promised job creation;
• The majority of awards made by WEDC have not included any job creation or retention goals;
• The agency has awarded funds to outsourcers and promotes outsourcers as “success” stories on its website.

Media reports have detailed how top Walker aides met with and succeeded in getting WEDC to issue a risky $500,000 loan to a business owned by one of 32 donors who gave $10,000, the maximum allowed by law, to Walker’s 2010 campaign for Governor. The business went under and the loan was never repaid. Subsequent investigations have shown basic safeguards for issuing loans were ignored and supporting documents were riddled with false or incomplete information. Another media expose uncovered a secret $1.5 million donation to a Walker aligned group from Wisconsin’s richest man before his business snagged $1.8 million in tax credits courtesy of the Walker administration’s WEDC.

Concerns about this very kind of corruption and cronyism were raised at the time Gov. Walker and the GOP controlled legislature rammed through legislation to reduce accountability and privatize the operations of the former state Commerce Department. A series of scathing reports from the nonpartisan Legislative Audit Bureau detailed downright incompetence, ranging from failing to observe basic business and accounting standards to using tax dollars to buy sports tickets, liquor and gift cards. Recent media reports have also unveiled turmoil amongst current and former employees of the agency.

Ross concluded, “Gov. Walker’s WEDC was flawed from the start, and no one should be fooled into thinking that appointing a new crony as CEO is going to fix old problems. Everything this guy does now is focused on advancing his political ambitions and you can bet he’s more interested in installing a crony who’ll cover his tracks than admitting his WEDC has failed miserably.”