5 Points On Scott Walker’s Big New Wisconsin Mess And Its Impact On 2016

Wisconsin Gov. Scott Walker speaks during the Iowa Republican Party's Lincoln Dinner, Saturday, May 16, 2015, in Des Moines, Iowa. (AP Photo/Charlie Neibergall)
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As he gears up his putative 2016 presidential campaign, Wisconsin Gov. Scott Walker (R) has found himself increasingly mired in a mess back in Wisconsin.

It’s not the kind of scandal that sends tabloids into a lather, but it has Democrats pouncing and good government types scolding, and even some state Republicans have piled on Walker.

The mess involves an entity called the Wisconsin Economic Development Corp. (WEDC), a state agency Walker himself established when first elected to fulfill his promise of creating a wave of new jobs. The problems at WEDC have multiplied since. Recently, Walker was forced to give up on a proposal meant to shore up some of the problems at the agency in the face of calls for a federal investigation from Democrats, criticism from a few Republicans, and an audit by the state’s nonpartisan Legislative Audit Bureau.

Here’s your quick and dirty guide to sorting through the Walker mess:

Why is Scott Walker In So Much Trouble?

When Walker took office in 2011 he very quickly transformed the state’s Commerce Department into the WEDC as part of his plan to create 250,000 new, private sector jobs. But Walker hasn’t been able to meet that goal.

Instead, the WEDC has been the subject of reports of mismanagement and corruption. Two recent reports, one from the Wisconsin Legislative Audit Bureau, one from the Wisconsin State Journal, cast a harsh light on the agency. The audit report said the WEDC failed to follow the law in awarding taxpayer funded incentives. The State Journal report found that aides to Walker pushed a $500,000 loan to businessman William Minahan who donated $10,000 to Walker on election day in 2010.

The WEDC’s problems have caught the attention of national news outlets. A Bloomberg Politics headline on Monday read “Scott Walker Keeps Wisconsin Jobs Agency at Arm’s Length.”

Walker hasn’t taken all this lying down. He tried to merge the WEDC with the Wisconsin Housing and Economic Development Authority in the 2015 biennial budget but after a “damning audit” gave up on the idea. Earlier this month, Walker changed the agency’s role from giving out about $20 million in loans annually to offering tax incentives and making sure that businesses are taking full advantage of that WEDC help.

What Is The WEDC?

The WEDC is the state agency Walker hoped to use as a major vehicle for job creation and economic growth. Originally, its primary purpose was to give out loans to private Wisconsin companies.

On Thursday, with Walker’s blessing, Republican lawmakers in the state legislature voted to remove the governor as chairman of the WEDC. A spokesperson for Walker said he proposed getting rid of all elected officials from the board and replace them with people with backgrounds in the business world and economic development. Democrats quipped Wisconsin Republicans were effectively firing Walker from the agency.

Where’s The Heat Coming From?

Walker, predictably, has found himself in the crosshairs of local and national Democrats who see the WEDC as rife with problems.

“It’s been mismanagement and incompetence at every level,” said Wisconsin Assembly Democratic Leader Peter Barca told Bloomberg Politics. “We have been so misled about what is going on at WEDC.”

The Democratic-leaning opposition research outfit American Bridge 21st Century has also attacked Walker on the WEDC’s issues. Meanwhile, Wisconsin Democrats have called for a federal investigation into the agency.

It hasn’t been just Democrats though. Collin Roth, the managing editor of conservative Charlie Sykes’ Right Wisconsin website, called the WEDC an example of “crony capitalism.”

An audit report of a questionable loan from the WEDC going to donor William Minahan resulted in state Rep. John Nygren (R) saying, in the words of the liberal-leaning Capital Times, there was “cause for concern.”

Why Now?

The obvious incentive for Democrats to gin up attention on the WEDC is that it casts negative attention on Walker just as he’s gearing up to announce he’s running for president.

And the most recent Legislative Audit Bureau report flagging the questionable loan to a Walker donor wasn’t the first. A 2013 report from the bureau also reported WEDC mismanagement in how it divvied out loans and tax credits.

The renewed attention on the agency comes as the state legislature is set to pass a two-year budget, probably in June. Walker, about a week ago, decided to cut a proposal in his budget that would have exempted the WEDC from an open-records law.

There’s pressure to do more though. Major state papers like the Milwaukee Journal-Sentinel have called for even more changes to the WEDC while also arguing that the concept behind the agency “is sound.”

Walker’s Jobs Record Isn’t Completely Toast

Walker’s jobs record isn’t completely ruined. As Bloomberg Politics notes, the unemployment rate in the state has fallen from 7.7 percent when Walker first took office as governor in 2011 to 4.4 percent in April. The national average is about 5.4 percent.

Still, as Reuters noted, Walker’s jobs record leaves room for improvement. Private sector job growth in Wisconsin grew under Walker by 6.8 percent while the national average has been 8.4 percent.

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