WEDC in the Hot Seat

In response to the Legislative Audit Bureau’s recent audit of the Wisconsin Economic Development Corporation (WEDC), the public-private job-creation agency has faced increased scrutiny and its budget is in jeopardy.

Budget Consequences

On May 9, the Joint Finance Committee voted to make funding for WEDC conditional upon new compliance and reporting requirements in response to LAB’s audit.

Under the proposal adopted by JFC, which is still subject to approval by the full legislature, WEDC is only guaranteed funding for next year. Additional funding will only be awarded if the agency can show it is complying with the audit.

The proposal would require WEDC to make a written request and appear before the committee before starting a new nonprofit foundation to raise private money for economic development efforts.

In addition, all WEDC employees would be required to file a yearly financial statement with the state. This is a change from current law, which only requires the WEDC CEO, currently Reed Hall, to make this filing.

JFC also approved language that would require WEDC to follow the state purchasing rules.

A point to highlight – Sen. Wirch introduced a motion requiring the transfer of $1,000,000 in segregated environmental funding and the authority to administer the brownfield site assessment grant program from WEDC to DNR. That motion passed 16-0.

Other motions introduced by Democratic members of the committee failed. The Democratic motion would have removed all additional WEDC funding and would have given the WEDC board more authority. Specifically, the authority to elect the chair of the WEDC board instead of it automatically being the governor, and the sole authority to hire the WEDC CEO. The motion would also have given the WEDC board authority over WEDC rules and polices. While these motions did not pass, they give you a sense of what minority members of the legislature will be looking for, and may introduce as individual bills.

Video of the JFC hearing from WisconsinEye.

Click here to read a summary of JFC’s other actions on May 9.

Joint Audit Committee Hearing

Earlier in the day on May 9, the Joint Legislative Audit Committee held a public hearing on the audit.

The committee was less than pleased with the audit, but encouraged WEDC to continue to work on improving its operations. No members of the committee argued that going back to a Dept. of Commerce model would solve the current problems, instead discussion centered around putting teeth into the current model – a theme that carried over to the JFC meeting later that day.

Video of the Joint Audit Committee hearing from WisconsinEye.

WEDC Board Meeting

The day before all of this legislative action, May 8, WEDC held a special board meeting to discuss the audit. The board went through a list of items from the audit and WEDC’s response. WEDC CEO Reed Hall assured the board the audit was being taken seriously and concerns were being addressed.

Gov. Walker, the board’s chairman, directed Hall to ask the LAB to meet with and provide guidance to the agency’s board and key staff members. In addition, the board resolved to form three new committees to oversee policies, credit decisions and contracts.

Video of the WEDC board meeting from WisconsinEye.

If you have questions about any of these items please contact Hamilton Consulting’s Rebecca Hogan.