Economy

Analysis: Scott Walker’s Foxconn Deal Would Create a Fiscal Hole Until 2042

JM Ashby
Written by JM Ashby

Scott Walker's promise of record-setting corporate welfare comes with a very high price, but this is even worse than I dared quip.

According to analysis conducted by the Wisconsin Legislative Fiscal Bureau (similar to the federal government's Congressional Budget Office), the state would not recoup the cost of incentives until the year 2042!

And that sounds bad, but it's much worse than that.

The projections in the report depend on Foxconn following through on several commitments, including an average annual salary of about $54,000, said Rob Reinhardt, a bureau program supervisor.

"Any cash-flow analysis that covers a period of nearly 30 years must be considered highly speculative," the report said.

The bureau based its analysis on Foxconn reaching its threshold of 13,000 employees, Reinhardt said. If the actual employment number was 3,000, the break-even point would be so far in the future that it is "silly to talk about," he said.

When I quipped that this was analogues to taking out a 30-year-loan to build a football stadium for a team that will relocate in 10 years, that was apparently more appropriate than I imagined.

Whether or not the Foxconn plant will create the 3,000 jobs the company has promised or the more lofty number of 13,000 jobs the company envisions, that may be beside the point.

I am not from the future, but I am fairly certainly no one will be looking at LCD screens in the year 2042 and possibly not even in the year 2030. Some of the people reading this probably already have phones that use more advanced screens, and this is 2017.

Either way, the point is the projection that the state will not recoup the cost until 2042 is based on an ideal scenario that sees the plant creating 13,000 jobs and thousands of other jobs in the surrounding area.

And there's another catch:

The report said if 10 percent of projected new jobs from the project were filled by Illinois residents, a concern of several lawmakers, the state would not break even until about 2044.

You'd have to be insane to not reconsider offering the company $3 billion in largely tax-free incentives knowing that the state may literally never recoup the cost.

  • Aynwrong

    Scott Walker is the mild mannered Chris Christie.

  • muselet

    The Party of Fiscal Responsibility, ladies and gentlemen.

    –alopecia

    • 1933john

      For themselves.

  • Dread_Pirate_Mathius

    Republicans: Appearance over substance. Yet again.

  • Badgerite

    Oh sh*t. Kansas comes to mind. This was the guy who turned down federal funds for a high speed rail between Madison and Milwaukee because the state would ‘be on the line for future maintenance costs’ and who turned down Medicaid expansion that was 90% paid by federal grants because ‘the black guy did it’. Both of those would have been a boon to this state’s economy. But this debt that could break future budgets that would be owed to a foreign company that may or may not provide the jobs and incomes specified and for who knows how long sounds like a cost efficient plan to him?
    Maybe the legislature will say no but I doubt it. Kansas, hold our beer.