Scott Walker: Rural officials asked for return of WEDC loans

Feb. 15--Economic development officials in rural Wisconsin spurred Gov. Scott Walker's proposal to revive a troubled state loan program that was phased out two years ago after some loans were never repaid and the state lost millions, the governor said Tuesday.

"We heard from a lot of local economic development folks who, particularly in smaller areas, said we are needing assistance and this is a way of doing that without adding (state funding)," Walker told reporters in Madison.

The Wisconsin State Journal first reported that Walker is seeking to reinstate the Wisconsin Economic Development Corp.'s loan program two years after calling for it to be phased out this year amid several questionable deals and a scathing audit.

Walker scrapped the program in 2015 as the State Journal was preparing to publish an investigation showing that the governor's top secretary pressed WEDC to offer a failing construction company a $500,000 taxpayer loan that has not been repaid. The agency couldn't provide documentation of a proper financial review of the company, and a subsequent review prompted by the newspaper's investigation found documentation missing for more than two dozen other awards totaling more than $124 million.

The new loans, according to Walker's 2017-19 budget, would come with a few new stipulations -- they can be funded only with repayments of existing loans, they can't be forgivable and they must adhere to commonly accepted commercial lending practices.

"We think it makes sense," Walker said.

During the 2015-17 state budget cycle, Republicans and Walker limited new loans to $10 million in 2015-16 and $5 million in 2016-17 with no new loans after June 30 of this year. One specific type of loan for technology startups was separately capped at $3 million a year and allowed to continue.

The agency had 189 outstanding loans totaling $73.3 million as of last June 30, according to the Legislative Fiscal Bureau. The agency received about $9.2 million in loan repayments last year, forgave $6.7 million and wrote off $2.45 million worth of loans that could not be recouped.

In his new budget proposal, Walker wants to increase a tax credit eligibility threshold for new business investment from $8 million to $12 million. Walker's budget also gives the Department of Revenue the ability to claw back tax credits from companies in violation of a contract that is more than 4 years old.

Walker: Insurance plan won't cost jobs

Walker also dismissed the idea that switching to a state self-insurance system could result in insurance companies having to cut a significant number jobs.

"I don't believe that," Walker said. "We still have to have people be covered. The fact is people are still going to get their health care coverage from providers across the state. We're just going to do it in a way that's more cost-effective to the taxpayer."

Senate Majority Leader Scott Fitzgerald, R-Juneau, said last week that switching to a self-insurance model could disrupt the health insurance industry, leading to job losses.

Fitzgerald also predicted lawmakers may not go forward with Walker's plan to boost K-12 spending by $649 million, which Walker has tied to $60 million worth of savings from moving to self-insurance.

But Walker said Tuesday that no matter what, lawmakers will have to come up with that share of the school funding.

"The Legislature can make alternatives, but they're going to have to come up with the money," he said.

Act 10 advice

Walker on Tuesday said he told Iowa lawmakers considering a bill diminishing collective-bargaining power for public workers there to look at the "facts, not the hype" over a similar measure championed by the governor that passed in Wisconsin six years ago.

"I just told them ultimately they are going to face some of the things we faced in terms of attention and potentially protests but I told them to look at where we are in the last six years," he said.

Walker tweeted Monday that he spoke with Republican lawmakers in Iowa, encouraging them to push forward with the legislation.

The governor said Tuesday he told the lawmakers schools "are the same or better" and taxes are down "dramatically" six years after the passage of the law.

Syrian refugees

Walker on Tuesday also said he expects vetting of refugees seeking to travel to the United States will be altered after recent federal court rulings halting enforcement of President Donald Trump's executive order stopping travel to the U.S. by people living in seven Muslim-majority countries.

The governor, who once said in a letter to then-U.S. Secretary of State John Kerry that state officials would not aid any federal attempt to resettle Syrian refugees in Wisconsin, said Tuesday that he doesn't have a problem with "safe" refugees settling here.

"As long as they're safe, I've got no problem with refugees," Walker said. "I just want to make sure the people already here are safe."

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