Foxconn qualifies for $28.8 million in state tax credits based on jobs, capital investment – Madison.com
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Dignitaries — including Mount Pleasant Village President Dave DeGroot, far right, and Brand Cheng, CEO and board member of Foxconn Industrial Internet, third from right — in front of Foxconn’s 100-foot-tall High-Performance Computing Data Center Globe during a ribbon-cutting ceremony on May 17 in Mount Pleasant.
Foxconn Technology Group has qualified for $28.8 million in state tax credits, marking the first time the Taiwan-based company has secured state aid since breaking ground on its southeastern Wisconsin facility in 2018.
The Wisconsin Economic Development Corp. on Wednesday verified that Foxconn created 579 eligible jobs and made a capital investment of $266 million at the Racine County facility last year, which qualifies the company for $2.2 million in job credits and $26.6 million in capital investment credits, according to documents provided to the Wisconsin State Journal. The state Department of Revenue will ultimately release those funds to the company.
“WEDC has determined that Foxconn created sufficient jobs and invested sufficient capital expenditures to qualify for tax credits under its amended contract,” WEDC Secretary Missy Hughes said in a statement.
Foxconn failed to qualify for state funds under the first two years of its previous contract with the state. Ultimately, Wisconsin and the company in April reached a new agreement for the project after state officials told Foxconn it would not be eligible for any state credits under the previous contract. Foxconn was eligible for just over $29 million in performance-based tax credits for 2020 under the new contract.
Wisconsin Gov. Tony Evers has reached a scaled-down deal with Foxconn — one that will cut tax breaks by billions.
Foxconn reported on June 30 that, by the end of 2020, the company had created 970 total jobs at the Mount Pleasant facility. WEDC verified that 579 of those jobs were eligible, well above the minimum requirement of 481 jobs, though falling slightly short of the target goal of 601 jobs.
A statement from Foxconn on Wednesday indicates that the company has continued to add jobs at the facility and has invested nearly $1 billion in the state.
“This center of gravity has attracted the attention of other manufacturers, businesses and investors who share our vision for a Park that can sustain continued business and community development,” the company said. “Foxconn thanks staff at WEDC for their work on the 2020 tax credit evaluation process and looks forward to continued reporting periods beginning next year.”
Under the new six-year contract, Foxconn could receive up to $80 million in state tax dollars as long as the company creates at least 1,454 jobs and makes a capital investment of at least $672 million by 2026. Foxconn’s $266 million in spending represents nearly 40% of the investment needed in the entire contract.
Foxconn’s original contract, signed by former Gov. Scott Walker in 2017, promised the company $3 billion in state subsidies if it made a $10 billion investment and hired 13,000 employees over a 15-year period. Other state and local incentives, including $150 million in sales tax breaks that the company still could receive, brought the total to about $4 billion.
Last year, Foxconn reported creating more than 800 jobs in 2019, above the 520 minimum needed for state subsidies under the previous contract. However, WEDC reported that only 281 of those jobs had been verified. The company fell 82 jobs short of the minimum required to claim state tax credits in 2018.
Ultimately, Foxconn and the state agreed to an amended contract in April that drastically reduced both the company’s jobs and capital investment requirement, as well as the state’s subsidy commitment to the project. The contract was renegotiated after the state told Foxconn it would not receive any state dollars under the previous agreement, as the project being constructed didn’t match what was agreed on.
Assembly Minority Leader Gordon Hintz, D-Oshkosh, who has been a vocal critic of the state’s deal with Foxconn since it was signed, said the new agreement entered into earlier this year was certainly “Foxconn’s best moment,” but said he remains concerned that, despite being several years in the making, the company still hasn’t said specifically what is happening at the manufacturing facility.
“If there are 500 people working there, what are they doing? What do they make? What’s going on? What’s the future?” said Hintz, a WEDC board member. “If there’s 10 people working there, what are they doing? It’s just crazy to me and I keep sort of asking, but even the people who should know don’t know.”
Under the company’s new agreement with the state, which is similar to other performance-based incentive packages provided to companies, Foxconn could earn tax incentives without specific requirements on what the company produces as long as it meets hiring and capital investment targets. The contract also memorializes the potential for future investment and added tax incentives from the state.
State officials said earlier this year the project in Mount Pleasant had already cost the state more than $200 million in state and local road improvements, sales and use tax exemptions, grants to local governments and for worker training and employment.
Wisconsin Public Radio reported on Tuesday that Claude Lois, who was hired by the village of Mount Pleasant as project director overseeing the Foxconn project, has been paid $28,000 a month — for a total of about $362,000 for 2021.
Documents obtained by WPR found that Lois, a contracting consultant with Kapur and Associates who also works in Mount Pleasant Village Hall, has consistently billed the village for 40 hours per week, but records did not account for what work he has done. All told, Kapur and Associates has billed the village for about $1.23 million.
A report from the nonpartisan Legislative Audit Bureau released earlier this month recommended that WEDC modify its written procedures to adhere to the April 2021 contract.
The latest audit with only one recommendation shows continued improvement from the Audit Bureau’s previous reports to WEDC. Audit Bureau recommendations have dropped over the years from 30 in 2013 and 24 in 2015, to 19 in 2017 and 10 in 2019.
Choosing my five favorite stories of 2020 seems almost paradoxical.
This year has felt like one exhausting slog of pandemic stories, state Legislature updates and, oh yeah, a presidential election thrown in for good measure. Thanks to a split government, there’s been no shortage of politically-charged stories here in Wisconsin and the partisan divide has, maybe unsurprisingly, felt as wide as ever throughout the COVID-19 pandemic.
I don’t know if “favorite” is the best way to describe them, but here are a few stories from 2020 that stood out to me:
Back in March, Gov. Tony Evers issued the state’s first public health emergency in response to the then-emerging pandemic. At the time, Wisconsin had reported eight total cases of COVID-19.
As the pandemic progressed, positive cases and deaths climbed and state lawmakers battled over the appropriate response. In May, the Wisconsin Supreme Court struck down Evers’ stay-at-home order, a decision that still resonates today with the state’s coronavirus-related measures.
One story I was particularly excited about before I officially started working for the State Journal was the 2020 Democratic National Convention in Milwaukee. However, like most things this year, the pandemic drastically altered that plan.
In non-pandemic news, the state in October formally denied billions of dollars in state tax credits to Foxconn Technology Group — a story we managed to get before any other outlet in the state through records requests and sourcing.
Lastly, in November I worked on a story about how GOP-drawn legislative maps once again disproportionately benefited Republicans in state elections. Wisconsin is headed toward another legal battle next year when the next batch of 10-year maps are drawn.
Feel free to read my top stories below, or check out my other state government articles from this year, (by my count, there have been more than 300 so far).
Also, thanks to all the subscribers out there. This year has been challenging on so many people, so your support is so much appreciated.
Gov. Tony Evers declared a public health emergency in response to the growing number of COVID-19 coronavirus cases in Wisconsin, hours before …
In a 4-3 decision, the Wisconsin Supreme Court on Wednesday struck down the state’s stay-at-home order, handing Democratic Gov. Tony Evers a d…
With the nation continuing to deal with the COVID-19 pandemic, the DNC Committee announced first that delegates and then that most convention …
Wisconsin is denying Foxconn Technology Group billions of dollars in state tax credits until officials with the company come to the table to d…
Continuing a decade-long trend in Wisconsin due in part to GOP-drawn legislative maps, Democratic candidates on Tuesday secured fewer legislat…
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Evers also announced that current Department of Financial Institutions secretary Kathy Koltin Blumenfeld will take over the role of DOA secretary following Brennan’s departure.
But in the short-term, the state could be on the hook for an estimated $37.4 million over the next two years.
The new contract, which still must go through the Wisconsin Economic Development Corp. board for final approval, would provide Foxconn with reduced tax incentives in exchange for a more flexible agreement.
The new contract would provide Foxconn with $80 million in performance-based incentives as long as the company hires 1,454 employees and makes a capital investment of at least $672 million by 2026.
Dignitaries — including Mount Pleasant Village President Dave DeGroot, far right, and Brand Cheng, CEO and board member of Foxconn Industrial Internet, third from right — in front of Foxconn’s 100-foot-tall High-Performance Computing Data Center Globe during a ribbon-cutting ceremony on May 17 in Mount Pleasant.
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