MADISON, Wis. - The federal government has requested the state return a total of $15.2 million in grants that were awarded while Democratic candidate for governor Mary Burke was the secretary of the Department of Commerce.
Documents provided by the Department of Administration at the request of News 3 show three Community Development Block Grants issued by the Department of Commerce in 2006 were questioned by the Federal Department of Housing and Urban Development as part of a review done of awards in 2011.
The largest of those CDBG grants has been the subject of two attack ads run by Gov. Scott Walker in his campaign, discussing a parcel of land purchased in Kenosha County for $12.3 million. The federal government told the Walker administration that the project failed to meet a national objective and was issued in error, and have asked for the funds to be returned.
The two remaining grants detailed in the documents provided to News 3 show a $2.6 million grant issued to Juneau County and a $225,000 grant issued to the village of Kronenwetter have both been questioned.
The Juneau County grant was for a program to set up the Wisconsin Entrepreneurial Network and to set up a network of 25 outreach centers across the state.
Executive Director of the Juneau County Economic Development Corporation Terry Whipple said that the grant was run through Juneau County because of their experience with"inventor and entrepreneur clubs, but administered by WEN.
Whipple said WEN was designed to create a statewide network of partners to spur entrepreneurial efforts throughout the state. The federal government said in part that was the problem -- because CDBG grants are meant to provide local, rather than statewide impact.
Information provided by the WEN to the state in 2013 said the program created an estimated 3,753 jobs, and an administrator within the Walker administration advocated for the program on behalf of DOA. But the federal government said the program did not meet national objectives for benefiting low and moderate income individuals, and benefited the entire state rather than Juneau County specifically.
The grant to the village of Kronenwetter was for infrastructure necessary to serve the location of Woods Equipment Company. HUD determined that this project also did not meet national objectives to create low-to-moderate income jobs.
The feds also flagged a 2009 deal issued to the village of Plain by then Commerce Secretary Dick Leinenkugel to create a Green Technology Training and Enterprise Center for just more than $1 million. HUD determined the project did not meet the low-to-moderate income job standard.
While the state is on the hook for the money, state officials told the federal government earlier this year that they couldn't afford to pay back the funds for the projects, according to documents provided to News 3.
A letter written by Walker asked for a reduction in future grants over three years, which the department ultimately denied based on news at the time that showed a $900 million surplus and a potential detriment to the state of reducing funds available to assist low-to-moderate income residents. They agreed to a repayment plan where the state would take a reduction of future grants of $7.6 million, and pay $7.6 million back in the 2015-2017 budget.
A spokesman for Burke defended the Juneau County deal saying that it helped create at least 3,700 jobs according to Scott Walker's own administration.
"Mary makes no apologies for aggressively using scarce taxpayer resources responsibly to make investments that creates jobs," Burke spokesman Joe Zepecki said. "The fact is that each of these awards created jobs in Wisconsin, and when Mary was secretary of commerce there were 57,000 more jobs than we have today."
In a statement to Wispolitics.com, Walker campaign spokeswoman Alleigh Marre called Burke's decision bad and careless.
"These bad deals are just two more in a series of costly failures that marked Mary Burke's time as Jim Doyle's commerce secretary and show a pattern of millionaire Mary Burke playing it fast and loose with taxpayer money," Marre told Wispolitics.com. "Seven years later Wisconsin taxpayers are still on the hook for millions of dollars as a result of Burke's bad and careless decisions."
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