Two Wisconsin state agencies have failed to follow federal law and their own policies in issuing economic development grants, the U.S. government said...The juicy is over the squiggle...
Some details from Wednesday's Wisconsin State Journal:
In a strongly worded Aug. 12 letter to Department of Administration Secretary Mike Huebsch, federal officials said two state agencies failed to follow federal law and their own policies in issuing economic development grants.
Among the findings:
-- The state gave out aid worth $20,000 per job created to Kapco, a company with a plant in Polk County —twice as much as its own policies allow.
-- Officials failed to check the financial soundness of two companies receiving $1.4 million in federal grants.
-- Eleven out of 20 loans using Community Development Block Grant funds awarded since Jan. 1, 2011, are "forgivable," despite the fact that the state's own policy calls for allowing businesses to get no-payback loans only in "extraordinary circumstances."
-- Questions remain about an $8.6 million chunk of CDBG funds withdrawn under unusual circumstances late last year.
The criticisms target both the Department of Administration, which oversees the CDBG economic development program, and the public-private Wisconsin Economic Development Corporation created by Gov. Scott Walker that runs it.
HUD said some of the problems resulted from the "hasty" transfer of duties from the former Department of Commerce to the new economic development entity without a formal written agreement. The monitoring apparently was triggered by an announcement in February by Walker that four communities had received $9.6 million in CDBG funding.
A spokesman for the Wisconsin Economic Development Corporation said Governor Scott Walker would announce an interim replacement for Jadin Thursday afternoon – along with the formation of a search panel to find a new permanent leader.
In a statement, Jadin said he was proud of what’s been done to, “rebuild Wisconsin’s approach to economic development.”
Jadin’s resignation came two months after Walker made his former deputy chief of staff the agency’s Number 2 official, amid a controversy over tax breaks offered to a firm if it won a state contract. The offer was later rescinded, and the bids for the contract were tossed out.
HUD review of the WEDC ”Administrative Agreement” executed by DOA exposes a negligence in the statutory authorization of WEDC to act as a state agency. It also underscores growing concern over lack of accountability and oversight of WEDC.
DOA has been aware for this issue for over one year.
It is apparent that WEDC is a hastily contrived, singular vision agency put together with no consideration for statewide public impact. While it may serve the corporate development elite in the state, it is keeping the general public (which fund its existence) in the dark as to its activities and investments.
The HUD letter raises serious concern as to whether WEDC should continue to be funded by Wisconsin taxpayers.
A HUD director detailed the concerns of mishandled public funds in an Aug. 16 letter and GOP Gov. Scott Walker's administration secretary, Mike Huebsch, responded to them in a Sept. 12 letter. The economic development corporation's board met eight days later, on Sept. 20, but the issue was not broached, according to Sen. Julie Lassa (D-Stevens Point), who sits on the board.
"It's inexcusable that this letter was not shared with the WEDC Board at its meeting last week even though the administration received it in August," Lassa said in a statement. "The legislators on the WEDC Board are supposed to be providing oversight of taxpayer dollars, but we can't play that role if important information like this is withheld from us. I expect WEDC and DOA to provide a full explanation of these charges, what they're doing to remedy the situation, and why the board of directors was not informed of HUD's allegations."