Just what impact would the
Foxconn project have on local
government?
In tonight's Closer Look, we
dive into that with Todd Berry
from the Wisconsin Taxpayer's
Alliance, who has been asking
that question in recent days.
Todd, thank you very much for
being here.
>> We have a blog post on the
website on this subject.
>> I read it.
We invite you to talk about the
important stuff.
But I wanted to ask you about
the overall reaction to this
$3 billion incentive package and
specifically the part of it that
would cost more in a budgets
cycle in 2022?
>> First of all you have the
long memo that talks about this,
and when you get into it you
find out that it's all
based on assumptions that the
Fiscal Bureau accepted
from other outside parties, and
it really is questionable,
and that's not meant to be a
criticism of the Fiscal Bureau.
As far as the impact,
we get $1.5 billion,
$2 billion dollars a year--
in a biennium of new revenue.
$600 million is manageable,
but how do they manage it?
I would look back to 2014-15
when the state threw a lot of
money at technical college
property taxes,
and it was actually more money
than the Foxconn thing.
What happened?
They basically just screwed down
the entire state budget and all
the new money went there or to
Medicaid, and that's probably
what would happen.
>> Wherever Foxconn
locates it would be inside a
local Tax Incremental Finance
district.
What does that afford
the company?
>> The idea behind TIF, and it
was originally meant for
disturbed, blighted urban
areas-- and this would probably
be on farmland-- but what it
does is it says the municipality
can issue debt in order to cover
the costs of improvements like
roads and sewer and so forth,
and because of the scale of the
thing, we are talking about
roads, and we may be talking
about four-rain highways for
miles, and just the parking
lots, whatever.
It's huge.
>> The Fiscal Bureau, though,
says these public service costs,
like that of which you speak,
would not be recouped
from Foxconn because of this TIF
district but instead shifted to
other property
outside the TIF district.
>> There's a couple things going
on there.
Foxconn is going to pay property
taxes, and because the
increment, the amount of
increased property taxes will be
because of all the borrowing and
development, and Foxconn will
share in those costs and because
it will be such a large part of
the tax base of the community,
they are going to pay something.
They are not going to be exempt
from property taxes.
>> How complicated is
it for local governments to
implement a TIF district?
What concerns are they
considering the fast track
nature?
>> I think it's a great
question, and it's part of what
was on our website.
There's a certain due diligence
and process to all of this.
Local governments hire a
consultant, they have to design
the district, and there are
hearings and meetings and local
government boards have to do the
approval and so forth.
If the state is assuming they
can get it through the
Legislature in the next 30 or 60
days, no one has given much
thought how fast can local
governments do this, and besides
the normal TIF process, if this
is done in a rural town that has
limited TIF authority, you
probably will have part of the
town next to a village or city,
and so then you have all the
annexation issues, and there's
nothing like local annexation
issues to stir up the troops.
>> Does this whole
thing, bottom line, help or hurt
local governments?
>> Well, long run, if the TIF
works the way it is and Foxconn
works the way it's supposed to,
you end up with a lot more
property value to tax whatever
the TIF has done, and that
windfall will fall to not only
municipality but the schools and
the counties.
Perfect example is Epic, in the
Madison area, where TIF ended
and suddenly there's a lot of
new value to tax by the local
governments.
>> 30 years out, though,
in this one, right?
>> That's another great
question, and rhetorically the
way to answer that is suppose we
had decided to build a
manufacturing plant to make
landline phones years ago,
technology changes.
>> 30 years is a long time.
Todd Berry, thanks very much.
>> You're very welcome.