Democrats warn that Walker plan to merge economic agencies will create unaccountable entity

Markets Associated Press

Republican Gov. Scott Walker's plan to merge Wisconsin's two major economic development agencies would create a new unaccountable entity, minority Democrats on the Legislature's budget committee said Wednesday.

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The governor's 2015-17 budget proposal calls for merging the Wisconsin Economic Development Corporation and the Wisconsin Housing and Economic Development Authority into the new Forward Wisconsin Development Authority.

The plan calls for doing away with the agencies' boards, both of which include legislators, and replacing it with a single 12-person board of business people whom Walker would appoint. It also would allow state auditors to review only the new agency's programs once every two years, a departure from current state law, which mandates auditors must check both WEDC's programs and finances biennially.

Leaders from the two agencies told the budget committee during a hearing that the merger would create a great opportunity to build an efficient, one-stop shop to help businesses and communities grow. But Democrats were quick to point out that WEDC has been plagued with problems.

Walker established the agency in 2011 as his flagship job-creation engine, but audits in 2012 and 2013 showed it lost track of $12 million in overdue loans and gave money to ineligible projects between July 2011 and June 2012. The agency also has seen considerable turnover in its upper ranks.

Democrats on the Republican-controlled committee said the new board structure coupled with the loss of the financial audit means no public transparency.

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"We're creating a new board here with no legislative accountability. None," said Sen. Jon Erpenbach, D-Middleton. "I don't understand the change."

Rep. Chris Taylor, D-Madison, was sharper, saying WEDC has been plagued by cronyism, scandal and turnover and that she's worried that will carry over into the new entity.

"It's kind of like trying to save a bad marriage by having a baby," she said. "It never works."

WEDC Secretary and CEO Reed Hall acknowledged the agency's past problems. He vowed to work to hold down turnover and said if state auditors found something in their reviews that led them to the agency's finances they wouldn't hesitate to investigate. He also noted the new agency would be subject to the state's open records law.

Republicans who control the committee praised Hall. Rep. Dale Kooyenga, R-Brookfield, said WEDC has gone through "growing pains" but has made remarkable improvements. He also noted the agency deals with companies that typically can't get help from banks or private lenders because their portfolios are too risky. Rep. John Nygren, R-Marinette, the committee's co-chairman, attributed the turnover to the agency hiring sought-after workers.

The committee will begin revising Walker's budget within the next few weeks. When the panel is done it will forward the spending plan to the full Assembly and Senate for approval. From there the budget will go back to Walker, who can use his partial veto power to largely restore the document to his liking.