Money For Nothing

Mike Ivey wrote an excellent piece this week about how Wisconsin is handing out hundreds of millions of dollars in business subsidies every year without bothering to check if they pay off. A 2005 Democracy Campaign review of over 5,100 state Commerce Department grants and subsidized loans found the same problem.

We found no evidence of site visits or audits by the state to determine if the state assistance was being used as promised or that the recipients had created or retained the number of jobs promised in their agreements. In four cases, recipients did not even file the required self-evaluations to show the progress of their projects. Five projects Commerce signed off on violated the department's own program guidelines requiring the assistance to be targeted to economically distressed areas, or where unemployment and poverty rates were higher than the statewide average.

To make matters even worse, the public is kept in the dark about the state's dealings with private business. Ivey cites a 2007 evaluation of state disclosure of business subsidies, procurement contracts and lobbying activities by the national watchdog group Good Jobs First. The group gave Wisconsin an "F" for disclosure of economic development subsidies and a "C+" for disclosure of state procurement contracts that businesses receive.

There was another dimension to our 2005 report that was not touched on in either Ivey's article or the Good Jobs First evaluation. We found that those who made campaign contributions received eight times more state assistance in the form of grants, subsidized loans and tax breaks than non-contributors. This finding mirrored what a University of Michigan researcher found in a January 2003 review of major state construction and road building contracts. The value of contracts awarded during the 1990s to contractors who contributed to then-Governor Tommy Thompson's campaign averaged $20 million while the average value of contracts awarded to non-contributors was $870,000.