Lawmakers approve host of changes to Walker's job creation agency, including removing him as chairman

MADISON (AP) — The Legislature's finance committee has approved a host of changes to Gov. Scott Walker's floundering job creation agency, including removing the governor as chairman, dramatically reducing its reserves and eliminating a proposed $55 million in grants to fund regional loans.

The governor has called on legislators to reform the Wisconsin Economic Development Corporation's operations after years of problems at the agency. Issues have ranged from failing to track past-due loans to businesses to failing to demand proof beneficiaries have created any jobs.

The committee voted 12-4 to insert the changes into the state budget on Thursday. All four Democrats on the committee voted against it, saying the changes don't go far enough to rein in what they consider a rogue agency.

Republican lawmakers on the Legislature's finance committee sought Thursday to restructure Gov. Scott Walker's struggling job creation agency, proposing to remove the governor as chairman, dramatically reduce the agency's reserves and eliminate a program that would fund regional loans.

The move immediately drew praise from the committee's minority Democrats, who declared that the GOP wants to "fire" the governor from the Wisconsin Economic Development Corporation. They demanded Republicans get even tougher on the agency.

"WEDC was part of the governor's promise to create jobs. That promise has clearly been broken," said Rep. Chris Taylor, D-Madison.

Republicans countered that Walker proposed removing all elected officials from the board in the state budget he introduced in February. They said he wants to depoliticize the agency and called on Democrats to dial back the rhetoric.

"We share your major concerns about WEDC. There's no question about that," said Sen. Alberta Darling, R-River Hills, the panel's co-chairwoman. "If we are just so negative about everything WEDC does, who's going to want to deal with us as a state?"

The committee was expected to vote on the motion Thursday evening or early Friday morning.

The governor created WEDC in 2011 to serve as the state's flagship economic engine. But the agency has been plagued with problems, including failing to track past-due loans, leadership turnover and blistering audits revealing mismanagement.

Walker included language in his budget that would have merged WEDC and the Wisconsin Housing and Economic Development Authority into the Forward Wisconsin Development Authority, sealed off more of the new entity's records, and allow only people from the private sector to serve on the new agency's board.

But criticism of WEDC has intensified over the last few weeks. An audit this month revealed the agency hasn't followed state contract law and hasn't demanded proof from grant and loan recipients that they've created jobs. This past week a newspaper reported that the agency awarded an unsecured $500,000 loan to a company controlled by a Walker campaign donor in 2011. The loan wasn't used to create any jobs and still hasn't been repaid.

Looking to blunt Democrats' attacks as he prepares for a potential 2016 presidential bid, Walker has asked legislators to scrap the merger, end direct WEDC loans to businesses and use $55 million he set aside in the budget to fund loans to regional organizations for worker training instead.

Finance committee Republicans introduced a sweeping motion Thursday afternoon that would insert language in the budget wiping out the merger and removing the governor as board chairman. The board would be allowed to elect a member of the public as its leader.

WEDC would be required to reduce its reserves to one-sixth of its estimated annual administrative expenditures each year. The reserves would be reduced by $12 million in the upcoming fiscal year to reflect that change. The finance committee would control about $11.3 million of that money.

The agency would be required to distribute the remaining $750,000 in grants to the Midwest Energy Research Consortium; Northcentral Technical College; Prosperity Southwest Wisconsin, an economic development agency in that area; and the Marathon County Economic Development Corporation.

The plan also would eliminate the additional open records exemptions as well as the regional loans.

The proposal makes no mention of WEDC loan program. Rep. John Nygren, R-Marinette, the committee's co-chairman, told reporters during a news conference that Republicans support "winding" the program down. He offered no specifics.

Walker spokeswoman Laurel Patrick said in an email to The Associated Press that the plan "is in line with prior actions," pointing out the governor had proposed removing all elected officials from the Forward Wisconsin Development Authority.

"These provisions," she said, "are not major departures from what the Governor has proposed and discussed publicly."