Governor Inks Deal with Foxconn, Calls Special Session on Incentive Package

Governor Scott Walker signed a memorandum of understanding (MOU) last Thursday (July 27) with Foxconn founder and chairman, Terry Gou, that could bring a potential $10 billion investment by the world’s largest electronics manufacturing services provider to Wisconsin.  Foxconn, also known as Hon Hai Precision Industry Co., Ltd. , is famous for assembling iPhones, flat panel screens, and other high tech devices.  It plans to build a plant in Southeast Wisconsin that would initially employ 3,000 workers and could eventually employ up to 13,000 workers.

Gov. Walker followed up by issuing an Executive Order last Friday (July 28), calling a Special Session of the Legislature to consider legislation that would bring Foxconn to Wisconsin. Governor Walker’s executive order requires the Legislature to commence the Special Session at 11 a.m. tomorrow (Tuesday, August 1).

The draft bill the governor put forward to be considered in the special session proposes a $2.85 billion state income tax credit package as well as a sales tax exemption for building materials, supplies, and equipment used to construct the Foxconn-related facilities. The bill further rolls backs several environmental protections in and around the area where the Foxconn plant will be built.

The bill also includes $250 million in bonding for completion of the north-south corridor project to upgrade I-94 upgrade south of Milwaukee.  That roadway would take on added significance with the Foxconn plant nearby.  The project has long been a priority of Assembly Speaker Robin Vos (R-Rochester).  Under the bill, however, the state Department of Transportation could not spend the proceeds of these bonds unless the state receives an award of federal monies for the project.

How to fund highway projects, including the I-94 project, has been a point of contention in budget negotiations and a major factor in GOP Senate and Assembly leaders deadlocking over attempts to pass the 2017-19 state budget, now nearly a month overdue.  Wisconsin’s transportation debt has nearly doubled over the past six years, which is of particular concern to Speaker Vos and Assembly lawmakers.

The bill would also several exceptions to Tax Increment Financing (TIF) law for tax increment districts (TIDs) created in an area that includes an electronics and information technology manufacturing zone, as created by the special legislation, and would extend the life of such TIDs from the 20 years (specified under current law) to 30 years.  It would also authorize a city or village in which an electronics and information technology zone is located to contract for the acquisition of water and sewer systems, and wastewater treatment facilities, using the design-build system without following the ordinary competitive bidding process.

Hearings on the special session legislation could start this week with GOP legislative leaders hoping for passage by mid-August.  It is hoped that with the Foxconn incentive package being discussed out in the open, this may enable lawmakers to finalize the state budget.

Foxconn plans to build a new high-tech manufacturing and technology campus to build Liquid Crystal Displays (LCD), and is said to be evaluating multiple sites in southeast Wisconsin to build the plant, which it expects to be operational by 2020.