WEDC & WHEDA Merger Called Off

In the previous edition of Political Tidbits we detailed the just released bill draft that would merge the Wisconsin Economic Development Corporation (WEDC) and Wisconsin Housing and Economic Development Authority (WHEDA) into one agency, the Forward Wisconsin Development Authority (FWDA).

Last Friday, Governor Walker issued a press release requesting legislators to remove the WEDC and WHEDA merger from the budget and asked the bill authors of the separate legislation to not take any further steps to advance the bill. The governor cited issues raised at recent joint WEDC and WHEDA board meeting as the reason to call off the agency merger. The governor’s announcement to eliminate the agency mergers also included the proposed the merger of the Department of Financial Institutions and the Department of Safety Professional Services.

LAB’s Audit of WEDC

The governor’s announcement to call-off the WEDC/WHEDA merger came several hours after the Legislative Audit Bureau (LAB) released the biennial audit of WEDC.

LAB’s comprehensive audit examined WEDC’s program administration compliances, including the grant, loan and tax credit programs. In addition, LAB analyzed WEDC’s contractual agreements, program accountability and financial management.

LAB identified areas of improvement for WEDC, specifically relating to the reporting of job creation data, as well as statutory and policy compliance. The audit also included information that demonstrates performance advancements at WEDC since its inception in 2011. For example, the audit states that loan delinquency rates have declined from the end of 2013 to the end of 2014, from 2.75% to .2%.

LAB’s report included several recommendations to address the issues identified. LAB recommends requiring the WEDC governing board to include total numbers of jobs created and retained that were a result of WEDC loan and tax credit programs, since July 1, 2011. This jobs number requirement may require award recipients to submit payroll information. LAB suggests the legislature require tax credit recipients to increase net employment in Wisconsin in order to be awarded tax credits.

Legislators, various stakeholders and WEDC have responded publicly to LAB’s audit. In addition to issuing a formal response to LAB, the CEO of WEDC, Reed Hall, published an op-ed citing many of his organization’s successes, while highlighting the importance of WEDC to remain flexible to the needs of businesses to foster economic growth.

With the WEDC/WHEDA merger off the table and the results of the audit carefully being examined by legislators, it is not known if legislators will address outcomes in the audit in the budget. WEDC is up in JFC next Thursday, May 21.