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Wisconsin lawmakers reinstate economic development loans

The Legislature's Joint Finance Committee holds a public hearing on the 2017-19 state budget April 7, 2017, at Berlin High School. (WLUK/Alexa Santos)

MADISON (AP) -- Gov. Scott Walker's jobs agency would be able to issue business loans again under provisions in the state budget the Legislature's finance committee approved Tuesday in a sign that Republicans' faith Walker's troubled flagship economic engine is growing again.

The 2015-17 state budget prohibited the Wisconsin Economic Development Corporation from originating new loans totaling more than $10 million in fiscal year 2015-16 and $5 million in 2016-17. The budget also prohibited WEDC from issuing any new loans other than loans to develop technology after this June 30.

WEDC has faced frequent scrutiny over its operations since Gov. Scott Walker and Republican lawmakers created the agency in July 2011 to replace the Department of Commerce. The agency hasn't recovered loans made to troubled companies, gave out $126 million without a formal review and has experienced high turnover in top positions. Republicans included the loan prohibitions in the budget in response to the problems. They have allowed WEDC to continue issue tax credits and grants, however.

Walker included a plan his 2017-19 budget that would fully restore WEDC's ability to issue loans as long as the loans are funded by repayments of other loans and not new tax dollars.

The Legislature's Joint Finance Committee, which is revising Walker's budget before forwarding the spending plan on to the full Assembly and Senate, decided Tuesday to follow Walker's plan and allow WEDC to issue loans again. The committee removed the provision that the loans would have to be funded through repayments of other loans, however.

Sen. Alberta Darling, the committee's co-chairwoman, said she believes WEDC has improved its operations in the last two years and is in a much better position now. She added that many people and business around Wisconsin depend on WEDC's loan program.

All 12 Republicans on the committee voted for the plan. The four Democrats on the panel voted against it.

The Democrats offered a number of motions putting restrictions on WEDC tax credits, loans and grants, including proposals that would require anyone who receives an award would have to create at least one job in Wisconsin, impose penalties on recipients that eliminate jobs or relocate jobs outside of Wisconsin and block anyone who has defaulted on a loan payment from receiving any further WEDC awards.

"This is about creating transparency and accountability," said Sen. Lena Taylor, a Milwaukee Democrat. "This is government assistance."

Republicans killed all the motions. Darling said they duplicate WEDC policies; Rep. Dale Kooyenga said it's impossible to count how many jobs companies WEDC help might create indirectly or retain.

The committee also took action Tuesday on pieces of the state Justice Department budget.

The panel scrapped Walker's plan to provide $500,000 in grants for police to create units specializing in crowd control and approved providing police with $2 million over the next two years to cover beat officers' overtime.

The committee also voted to assume oversight of DOJ's discretionary fund, which is built through gifts, grants and settlement winnings. According to the Legislative Fiscal Bureau, the fund is projected to end the fiscal year with $8.4 million.

Finally, the committee voted to cut the $1 million Walker planned to give the DOJ for drug investigations to $500,000 and require the agency to spend $500,000 of its settlement funds in for drug investigation support.

DOJ spokesman Johnny Koremenos said the moves were disappointing and took the agency by surprise.

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