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Foxconn-style subsidy for Kimberly-Clark up for hearing before legislative panel

November 14, 2018

The path forward remains murky for a bill to give a Foxconn-style subsidy to paper giant Kimberly-Clark to retain as many as 500 jobs in the Fox Cities, an issue set for a hearing before state lawmakers Wednesday.

The proposal would give the company state tax credits for 17 percent of certain payroll costs and 15 percent of capital investment in exchange for retaining jobs at a facility in Fox Crossing that makes adult incontinence products. The 17 percent figure matches what was given to Taiwanese electronics giant Foxconn to build a $10 billion manufacturing and research campus near Racine.

The bill is set for a hearing in the Legislature’s budget-writing Joint Finance Committee Wednesday morning.

The state Assembly passed the bill earlier this year with support from Gov. Scott Walker. But it has been stalled for months in the state Senate amid concerns from some Republican senators that it would set an impossible precedent in Wisconsin for lavish economic-development subsidies.

“There will be other businesses … that will come to the state, come to their legislators, and say, ‘What about us?’” said Mike Mikalsen, a spokesman for Sen. Steve Nass, R-Whitewater, who opposes the package. “It is not a sustainable set of numbers in that scenario.”

The Kimberly-Clark package could cost taxpayers between $100 million and $117 million over 15 years, according to the Wisconsin Economic Development Corp. The state could seek repayment of the credits if employment at the facility falls below a level established in a contract between Kimberly-Clark and the state.

Proponents of the package say it would prevent the loss of jobs from one of the Fox Valley’s iconic companies and secure its future in the region for years to come.

“We look forward to sharing with the committee the impact the passage of this legislation will have on our employees and their families, the 230 Wisconsin suppliers who do business with Kimberly-Clark every year, and the communities we serve,” said Chris Wyse, vice president of communications for Kimberly-Clark.

Two other Republican senators, Sens. David Craig, R-Town of Vernon, and Chris Kapenga, R-Delafield, are publicly opposing the package as currently written.

With Republicans now holding an 18-15 edge in the Senate, at least two Democratic senators would need to support the bill during a lame-duck session.

Senate Majority Leader Scott Fitzgerald, R-Juneau, said last week he plans to reach across the aisle to Senate Minority Leader Jennifer Shilling, D-La Crosse, to gauge support.

“If the votes are there, then the Senate will convene the last week of November” to take up the bill, Fitzgerald said.

But Kate Constalie, a spokeswoman for Shilling, said Tuesday that Senate Republican leaders have not approached Shilling to seek Democratic support for the package.

Jay Wadd, a spokesman for Sen. Dave Hansen, D-Green Bay, said Hansen has not taken a firm position on the package but “he has said publicly that he’s not a fan of it.”

It’s unclear how Democratic Gov.-elect Tony Evers might approach the Kimberly-Clark deal. Evers has publicly expressed skepticism about the subsidy but hasn’t said he flatly opposes it.

An Evers campaign spokesperson did not immediately respond Wednesday to an inquiry about it.

The tax credits in the bill are refundable, meaning they would be paid to the company for any amount exceeding its state tax liability.

Kimberly-Clark has paid almost no state income taxes in recent years due to the state’s manufacturing and agriculture credit, which largely shields such businesses from tax liability, according to liberal advocacy group One Wisconsin Now, which obtained the company’s tax payment records from the Department of Revenue.

The Assembly bill’s passage came in response to the Kimberly-Clark announcement in January that it planned to shutter factories in Neenah and Fox Crossing as part of a global restructuring. The move had been expected to cause the loss of 600 jobs in the Fox Cities.

The company later said it still expects to close the Neenah plant, which employs about 110 people. But it said a renegotiated labor deal with its workers, combined with the state subsidy package, could save the plant in Fox Crossing.

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