Legislators ‘running out of patience’ with commerce agency

Governor spokesman defends agency, says he's 'confident' in its direction

The nonpartisan Legislative Audit Bureau has found numerous problems with how the semi-private agency that handles economic development for the state is operating.

The Audit Bureau report released Wednesday is leading lawmakers to call for changes in the nearly two-year-old Wisconsin Economic Development Corp., which replaced the Department of Commerce.

The 100-page document has a laundry list of problems and suggested changes at the WEDC.  Among the LAB’s findings: it said that agency didn’t have sufficient policies to administer its programs, including some required by law; that funding was being given to ineligible companies and projects above specified limits; and that WEDC employees were making credit card purchases they didn’t explain, including Badger Football tickets and iTunes gift cards.

WEDC CEO Reed Hall, who joined the agency in November after his predecessor resigned, said because of prior audits showing problems, the agency is already making changes.

“Generally we agree with the Legislative Audit Bureau report as a picture of a previous time in our history,” Hall said.

He said some employees have been asked to pay back amounts that weren’t allowed on company credit cards and that the Badger tickets were bought as tools to woo businesses to come to the state. 

Hall also said the agency uses “discretion” in choosing what companies to fund, and doesn’t think the agency was ignoring state law.

“I think [the LAB] suggestion that we are violating the statute is subject to interpretation,” Hall said.  “We don’t agree with that. There may have been some things that were not as formally adopted as the Legislative Audit Bureau thought we should, but reasonable people can interpret statutes differently.”

Lawmakers were outraged at that suggestion.

“This isn’t up to them to decide whether they want to follow the statutes,” said Rep. Peter Barca, D-Kenosha. “The statutes are not a set of helpful hints.”

The Legislative Audit Committee co-chair, Republican Sen. Rob Cowles, R-Green Bay, said after two years WEDC needs to prove it is on the right track.

“They’ve had a fair amount of time and I’m running out of patience and excuses and I know other legislators are also,” Cowles said. “They may have fixed all these things in recent months, but until we actually see the proof of that, we won’t know.”

“I’m saying I would give them one more year,” Barca said. “I would have an audit done next year, and if these serious problems are not cleared up then I think it’s time to abandon this experiment.”

The report outlines a number of recommendations for the agency and its board, including to create policies for running tax credit programs, monitor their expenditures and establish an”accurate annual budget,” and develop expected results for each economic development program.

Lawmakers have already scheduled a hearing on this May 9, and a spokesman for the governor said in a statement that the agency has taken proactive measures to address its issues and he is “confident in the direction of WEDC.”