Here & Now

Looking Back to Walker's Last Budget

Scott Walker:

To kick start our plan to create a quarter of a million jobs, I will call a special session of the state legislature starting today.

Zac Schultz:

During his inaugural address in 2011, Governor Scott Walker followed through on one of his most repeated campaign pledges.

Scott Walker:

Here is the official call that I will present to our new leaders of the state assembly and state senate. We will present a bold set of reforms, aimed at helping businesses create jobs.

Zac Schultz:

The Republicans in control of both houses, brothers Jeff and Scott Fitzgerald, went to work. 13 of the 14 special session bills eventually became law, with nine being passed in the first two months. The stated goal of every special session bill was creating jobs, but they can be roughly divided into two categories, bills that created tax credits and bills that focused on regulatory reform. Four bills focused on taxes. Act 1 allowed people with health savings accounts to deduct contributions from their state taxes. According to the Department of Revenue, in 2011 79,000 people saved about $20 million. Act 4 increased the amount of money for economic development credits by $25 million, but it doesn’t take effect until 2015. Act 5 was the job creation deduction, which gave businesses a tax credit for adding new employees. The Department of Revenue says businesses hired 14,000 new employees and claimed credits worth $2.25 million. But it was Act 3 that got the most attention. With the Relocated Business Tax Credit, Governor Walker talked about luring companies away from other states.

Scott Walker:

Now, while recruiting employers from Illinois is almost as exciting as beating the Bears

Zac Schultz:

In his State of the State Address this year, Governor Walker compared recruiting Illinois companies with the Green Bay Packers beating the Chicago Bears in football. The Packers have beaten the Bears six times since Scott Walker became governor, and a total of ten companies claimed the relocation tax credit in 2011, for a fiscal effect of less than $50,000.

Kerri Frank:

What are you working on on the Samsung now? Are you updating that app that we talked about?

Man:

Yes.

Kerri Frank:

Okay.

Zac Schultz:

But that credit will increase when Comply 365 is able to take the credit on this year’s taxes.

Kerri Frank:

We moved to Wisconsin because we had out grown our facility in south Beloit.

Zac Schultz:

Kerri Frank and her husband started the company in the basement of their home.

Kerri Frank:

So what we do is we help industries or enterprises embrace mobile.

Zac Schultz:

They recently moved across the Illinois border to Beloit and expect to see exponential growth in the next few years.

Kerri Frank:

We kind of predicted that we could add about 35 jobs in the next five years when we moved here. If we keep up at the pace that we’re keeping right now, we’ll blow that out of the water in five years.

Zac Schultz:

Kerri says they knew about the tax credits before making the move, but it was only a small part of their decision.

Kerri Frank:

I didn’t move here for the tax credits alone. It was– it was everything.

Zac Schultz:

And while that kind of story will get you an invite to the State of the State Address

Scott Walker:

Kerri, thank you for being here tonight, and thank you for being a partner in job growth.

Zac Schultz:

Even Governor Walker admits, Kerri’s story is not happening enough to call the special session tax credits a major success.

Scott Walker:

Some of the specific provisions, I think, still need to be expanded on and more highly promoted. If you look at the efforts to bring in companies from other states that haven’t had a corporate interest here, I think a lot of them don’t fully know or recognize the benefits of that tax incentive.

Peter Barca:

Bottom line, it really hasn’t worked. There’s only ten companies that actually have claimed the credit.

Zac Schultz:

The tax credits had bipartisan support, but minority leader, Peter Barca, says Republicans ignored additional proposals put forward by the Democrats.

Peter Barca:

It was just a very modest agenda that just didn’t accomplish what we had hoped.

Robin Vos:

Maybe people had an idea that things would happen quickly and we think some things are, but you’re right. It’s a long-term, sustained effort.

Zac Schultz:

Assembly speaker, Robin Vos, says part of the special session is changing the culture of economic development in Wisconsin. That can be found in Act 7, which eliminated the Department of Commerce and created the Wisconsin Economic Development Corporation, or WEDC. WEDC is a quasi-public agency, with people from the business world and politicians sitting on the board directing how public tax dollars are used to spur economic development. Unfortunately, WEDC's biggest headlines came when they announced they lost track of $8 million in past-due loans, and when they improperly offered tax credits to a company bidding on a state contract. Just two years old, they’re already on their second executive director.

Robin Vos:

And they created some problems that I think were of their own making, so I’m not going to totally say they didn’t have issues with it, but at the same time I think they’re doing a great job changing the culture of how we do economic development.

Peter Barca:

We have to retool WEDC, which has not worked very well. And make sure that we have the kind of agenda and aggressiveness that’s needed to really have success.

Zac Schultz:

Other bills in the special session can be called regulatory reform, but they range from things like Act 6, which allowed a wetland near Lambeau Field to be filled in in order to build a store, to Act 9 which requires a two-thirds majority of the legislature to raise taxes. But it also included Act 2, which was Tort reform. The bill primarily impacts nursing homes and long-term care facilities by putting limits on the amount of money a jury can award to a victim. It also made it more difficult for injury reports and other inspections to be introduced at trial. The rationale is this would save nursing homes money, allowing them to better address staffing levels and training.

Matthew Boller:

It is nothing other than an excuse to hide facts, hide individuals, and hide problems which could be tantamount to a pattern.

Zac Schultz:

Matthew Boller is a lawyer who exclusively handles the cases of nursing home abuse.

Matthew Boller:

I don't think that in any way an industry is detoured anymore from a lawsuit.

Zac Schultz:

The Wisconsin Healthcare Association represents nursing homes and assisted care facilities. They rejected multiple requests for an on-camera interview, but did send a statement that reads, in part, Despite assertions by opponents, the provisions in the bill did not limit access to a patient’s medical record or facility compliance information. Nor did it limit causes of action or preclude accountability.

Robin Vos:

But when we saw, lawsuits as an example, where there’s an unforeseen cost that you have to protect yourself from, we saw a lot of people who were wasting resources on defending themselves from frivolous lawsuits as opposed to putting it into creating new jobs.

Zac Schultz:

Boller says the whole point of punitive damages is to send a warning to the industry that poor training and poor supervision can cost you a lot in court.

Matthew Boller:

To the extent that there was any concern, or any risk, in trying a case that they knew they were going to lose; that is, they, the industry, I don’t think that exists anymore. The reason is they can manage how much they lose, period. Before, they never knew, because it was up to a jury.

Robin Vos:

But I’m certainly glad that the trial lawyers aren’t getting rich off somebody else’s suffering.

Zac Schultz:

Barca says the Tort reform bill is one of many special session bills that had no impact on job creation.

Peter Barca:

Unless we’re trying to attract more nursing homes to Wisconsin, I don’t understand how that would help any business whatsoever, other than perhaps a nursing home, and I’m not sure we want to help nursing homes that have practices that, you know, have a history that they’re trying to shield the public from their, you know, their practices.

Zac Schultz:

After two years, there is no consensus on whether the special session was a success. But perhaps the best indicator will be to check in two years from now, to see if Governor Walker reached his goal of helping the state create 250,000 new jobs.