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Scott Walker's big Foxconn factory deal is going to cost taxpayers a fortune

The final legislation demands only a $9 billion investment from Foxconn, while the bill for accommodating the factory keeps rising.

by Alex Lubben
Dec 27 2017, 5:45pm

The new Foxconn factory in Wisconsin is expected to bring about 13,000 jobs to the state, but it might not be worth it after all the escalating costs the taxpayers will have to pick up.

Foxconn, the Chinese company best known for manufacturing Apple products, was originally slated to receive $3 billion in state subsidies for putting a flat-screen plant there, plus $764 million from the Village of Mount Pleasant and Racine County, in exchange for a $10 billion investment. But the final legislation demands only a $9 billion investment, while the bill for local taxpayers keeps rising. New infrastructure is needed to accomodate the factory, and the windfall from the loosening of environmental regulations to allow the factory to run could cost Wisconsinites extra in secondary costs.

Republican Gov. Scott Walker signed the tax-break bill for Foxconn in September, breaking a record for tax credits to a foreign company. Pennsylvania gave Royal Dutch Shell, a company based in the Netherlands, $1.65 billion in tax credits back in 2012.

Here’s all the state is doing to lure and accommodate Foxconn:

  • A $30 million four-lane highway to accommodate the new traffic that the factory would bring to the area

  • An additional $134 million, siphoned off from other highway projects, to widen already existing roads near the new factory, according to a memo from the state’s Legislative Fiscal Bureau

  • Wisconsin’s expanding another highway from four to eight lanes, a project with a price tag of $252 million (the state’s applying for a federal grant to help pay for most of this project)

  • A $140 million electric project, that would essentially be funded by the residents of southern Wisconsin. The costs, spread out over 5 million Wisconsinites, would only increase customers’ bills marginally, the utility claims.

  • And Walker wants to spend $6.8 million on an out-of-state ad campaign to help attract workers for the Foxconn plant

All told, Wisconsin Alderman Bob Bauman added up the full cost to taxpayers, in a speech before a Common Council committee, and landed at $4.5 billion, according to Urban Milwaukee (the publication estimated the costs itself at closer to $4.1 billion). That cost, all while Foxconn’s own investment drops and the company lobs new demands at the state, like asking to be considered a foreign trade zone, which would reduce its customs fees on some of the goods it imports for production.

And these investments are very likely not the last time the state will be footing the bill for infrastructure improvements designed to cater to the plant. The tax break bill for the plant committed the state to paying 40% of local governments’ expenses for building even more infrastructure, like sewers and roads, “if ever called upon to do so,” according to the Associated Press.

Furthermore, the bill makes unusual concessions, which the Wisconsin Legislative Council called unconstitutional, around how the state will handle environmental challenges brought against Foxconn down the road, should any arise. Among the weird provisions of the bill is a clause that immediately suspends any lower-court ruling on environmental infractions until a higher court weighs in, according to the Milwaukee Journal Sentinel. This could drive up the costs for taxpayers of defending the state in court.