Sep 5, 201712:58 PMInside Wisconsin
with Tom Still
In today’s competitive world, government incentives are usually in the picture
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As the Wisconsin Legislature nears another round of voting on the $3-billion incentive package to bring Foxconn Technology Group to the state, supporters of the deal find themselves sandwiched between two philosophical camps.
On the left are those who think government should spend predominantly on education, health care, and helping the poor, and not invest in attracting or retaining profit-seeking companies. That outlook fails to recognize those profit-seeking companies spark an economy that generates taxes for government programs at all levels.
On the right are economic purists who think corporations should fend for themselves in an Adam Smith world that no longer exists. To them, government subsidies are antithetical to raw capitalism. That approach ignores today’s competitive world, in which nations, states, and neighboring communities constantly seek an edge.
That economic competition isn’t new. Consider the city of Madison, where Mayor Paul Soglin has taken a dim view of the Foxconn package — even though Foxconn has taken a strong interest in the city’s health care research and tech-based companies, large and small.
One of Madison’s longest-running economic development programs is tax incremental financing, which lets a community loan money to development projects with the expectation the loan will be repaid through the higher property taxes the developer or company will pay on the improved property.
Targeted at blighted areas when the Legislature passed a TIF law in the mid-1970s, it was later amended to pay for projects that create large numbers of jobs.
Since Madison created its first TIF district in 1977, it has invested $148 million and leveraged $1.6 billion in property value. That’s a double-digit return spread over about 47 projects over 40 years, with no insolvencies and only three that were withdrawn or shut down before the city invested heavily.
The latest TIF proposal on the city’s radar screen involves Exact Sciences, a company that was on its last legs when Kevin Conroy and Manesh Arora moved it from Boston to Madison a decade or so ago. Today it has 750 employees and is looking to hire about 200 more in the short term, evidence of the growing market acceptance of its Cologuard test for colorectal cancer.
Exact Sciences is preparing to move into the former Spectrum Brands headquarters on Madison’s Southwest Side, mainly to manage overflow in its current facilities. That site could eventually become home to Exact Science’s second processing laboratory — a project that would cost $57.3 million and create another 225 well-paid jobs.
However, the laboratory project depends in large part on whether the city of Madison approves a TIF district that meets a $2.5 million need within the company’s financing plan.