Letter from Rep. Danou: WEDC must be held responsible

• Rep. Danou

Rep. Danou

Talk about it

Recently, the newly created Wisconsin Economic Development Corporation and its leadership (WEDC) have been in the headlines. WEDC was created by Governor Walker to replace the Wisconsin Department of Commerce in an effort “to elevate the Wisconsin economy to be the best in the world by providing a positive business climate, world-class support services, and economic development tools to accelerate business start-up, attraction, and growth.”

This sounded like an innovative idea in January 2011 when Wisconsin’s economy was performing well below the national average. The WEDC leadership structure is like other state governmental agencies in which the Governor has the authority to appoint a Secretary (unlike other agencies the WEDC Secretary is known as the CEO and Secretary) to oversee the agency. WEDC also has a board of directors that is made up of business leaders and elected officials from both parties to oversee day-to-day operations.

Under this structure WEDC is responsible for the coordination of all of Wisconsin’s economic development programs and it oversees the millions of dollars in grants, loans and tax credits given to companies for job creation. On the surface this seems like an open and transparent operation that fairly and responsibly works on behalf of taxpayers to help our state’s economy. However, the federal government has expressed concerns going back more than a year and a half and recent developments indicate that WEDC needs to operate within its jurisdiction and with greater accountability.

On August 25, 2011, the U.S. Department of Housing and Urban Development (HUD) advised the Wisconsin Department of Administration (DOA) that the administrative role of WEDC would be limited because the State was unable to provide an Attorney General’s opinion certifying WEDC as an “instrumentality of the state.” Again, on September 20, 2011, HUD reiterated the position that it did not recognize WEDC as an instrumentality of the State and that WEDC was not authorized to administer the Community Development Block Grant (CDBG) program as a subrecipient of the State. Despite federal concerns, WEDC continued to award State dollars to private businesses through job creation grants.

On April 12, 2012 HUD advised the DOA that WEDC must immediately cease awards that were announced by Governor Walker on February 21, 2012. WEDC was also informed that the agency was to cease administration of all CDBG funds until an appropriate written opinion from the Wisconsin Attorney General or an appropriate written agreement between the DOA and WEDC is received and approved by HUD. This correspondence and inquiry from the federal government was not brought attention to the board of directors and only recently became public.

It is my belief that an agency that is responsible for awarding State dollars to private businesses should be 100% sure of its authority and jurisdiction. Additionally, I believe the agency must be transparent and must inform the board of any and all issues that arise regarding day-to-day business operations. Instead, the WEDC ignored the inquiry, continued to operate as it had been and withheld the federal inquiry from board members.

This is not a responsible way to manage any organization. Not informing board members of any potential problems is inexcusable in the private, non-profit and governmental sectors. How can we expect any organization to operate efficiently and responsibly when crucial information is withheld from the board? I believe that the government has the responsibility to set the example and should never operate according to its own rules when taxpayer dollars are at stake.

I hope the state officials at WEDC will execute greater oversight and provide better communication with the board of directors. Information should never be withheld from the board and we need to be assured that taxpayer money is administered effectively and responsibly as we work to move our economy forward.

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