By Ryan Ekvall | Wisconsin Reporter

MADISON –  “You hired me to put Wisconsin back to work,” Gov. Scott Walker  said in his first State of the State address.

In one of his first moves to do what he was hired to do, he replaced the former state Department of Commerce with the Wisconsin Economic Development Corporation, a public-private partnership overseen by Walker’s handpicked board.

WEDC boasts that it has one focus: job creation. Taxpayers may ask, at what cost?

Critics say the board spends fast and loose, handing out multi-million-dollar spiffs to powerful corporations with only limited taxpayer oversight.

“There’s just not enough detail and meat to really make sure that taxpayer money is going to be protected, used efficiently and effectively, and that the jobs that Gov. Walker and the Legislature want to create are going to be created,” Sen. Julie Lassa, D-Stevens Point, said at the time of WEDC was first proposed.

In one high-profile example, WEDC is deploying part of its $77 million per year budget to close a deal that could earn Kohl’s Department Store up to $62.5 million over 12 years in tax breaks. In exchange, the national retailer would have to keep its headquarters in Menomonee Falls, and meet capital investment and job creation benchmarks.

Tracking those jobs WEDC helped to create seems to be a full-time  job in itself, and some serious questions have dogged the young agency.

From the beginning, lawmakers were concerned that the quasi-public WEDC lacks accountability. Like other development corporations, the agency does its wheeling and dealing with taxpayer money behind closed doors.

Last month, news broke that WEDC had guaranteed $11.7 million in Enterprise Zone tax incentives to Skyward, a Stevens Point-based information systems company that works with Wisconsin’s public schools. The bidding process for the state contract had not even closed when the deal was completed.

Lassa, the Stevens Point Democrat, continued her criticism of WEDC Monday, calling for a hearing of the corporation’s plan for use of tax credits.

“The absence of actual planning details in the WEDC passive review request suggests, at minimum, a lack of sufficient respect for the responsibility of the Committee to protect the interests of taxpayers by ensuring the efficient and effective use of tax dollars,” the senator said in a statement.

Lassa, who sits on the Board of Directors of WEDC, did not return calls for comment.

It’s not just WEDC that has problems tracking the so-called benefits of state economic development programs.

In California, Gov. Jerry Brown has tried to dismantle the state’s enterprise zone programs, where several studies — including one from the state legislature’s Legislative Analyst’s Office — found the programs expensive and ineffective. A California Budget Project analysis found over 70 percent of enterprise zone funds went to companies with assets of $1 billion or more.

“It’s government trying to micromanage the economy,” said Chris Edwards, an economist at the Cato Institute, a Washington, D.C. Libertarian think tank. “Both Republicans and Democrats do it; they can’t seem to help themselves with offering businesses incentives.”

“To me what they’re doing is distorting the economy. If you give credits to one type of jobs industry, you’re steering the economy to where the government wants it to go. It’s unfair to the businesses that don’t get the breaks that have to pay the high regular rate to fund the breaks to other company,” he said.

Loans provided to companies at lower interest rates than what banks or private investors are willing to lend also shifts risk to taxpayers. If a bank offers a company a loan at 5 percent, and the government offers it at 3 percent – the risk in that 2 percent spread is now the taxpayers’.

Edwards said public-private partnerships open the door to corruption.

“I don’t think there’s any way they take politics out of these things,” Edwards said. “Even if they do at arm’s length from the Legislature, you can’t take the politics out of it.”

In WEDC’s case, it appears politics were never meant to be taken out of it. Walker chairs the corporation and all board members who aren’t legislators donated to his campaign.

Even WEDC appears less than enthusiastic about tax incentives for companies like Kohl’s. But Thieding said there is a game to be played – a game taxpayers pay for.

“On the bigger scale of tax credits — should state government be doing it? It’d be a great world if states weren’t doing it,” Thieding said. “You have to stay in the game, otherwise you could be losing businesses to other states. It would be a different world if all states weren’t doing tax incentives to retain or recruit a company from other states.”

“Those are the tools the Legislature provided to us,” he said. ”The Legislature felt it necessary to provide those tools to support business development in the state.

Kirsten Adshead contributed to this report.