Scott Walker announces up to $28 million in incentives for Kimberly-Clark facility

December 14, 2018 GMT

The state’s economic development agency has reached a $28 million tax credit deal with Kimberly-Clark to retain its Fox Crossing facility and 388 jobs, Gov. Scott Walker announced Thursday, just weeks before he leaves office.

Gov.-elect Tony Evers criticized the incentive package and referenced it as a reason Walker should veto recently approved lame-duck legislation, which makes several changes to the Wisconsin Economic Development Corp., including stripping the agency’s ability to make such deals without legislative approval.

Walker pushed for an incentive package for the consumer products manufacturer even after Republican lawmakers chose to shelve a bill during the lame-duck session that could have provided as much as $100 million in tax incentives over a 15-year period. The bill had received bipartisan criticism for setting a bad precedent.

Walker lamented the delays in that bill and championed the deal, which won’t require legislative approval, as a victory for workers and their families across the state.

“This deal isn’t just about your plant, it’s about making sure that all the other Kimberly-Clark jobs in the state stay here,” Walker told a group of workers gathered at the Cold Spring facility in Fox Crossing.

Kimberly-Clark was founded in Neenah in 1872, but the company moved its world headquarters to Irving, Texas, in 1985. The company in January announced plans to close two facilities near Neenah as part of a global restructuring plan, prompting Wisconsin lawmakers to craft the tax incentive legislation.

Under the agreement announced Thursday, Kimberly-Clark will need to retain all 388 employees through 2023 and make at least $200 million in capital investments at the Cold Spring facility. A second facility employing more than 100 workers, Neenah Nonwovens, is still slated for closure.

The incentive package delivers refundable tax credits for job creation and retention through so-called “enterprise zones,” according to WEDC spokesman Mark Maley.

Specifically, the agreement provides refundable tax credits of $5.5 million for job retention, or roughly 7 percent of payroll; $20 million for capital investments, such as equipment and building materials; and $2.5 million for supply chain purchases from Wisconsin companies at a 1 percent rate.

The arrangement also requires the company to retain a statewide workforce of 2,400 employees.

Evers, who was in Washington on Thursday along with other newly elected governors meeting with President Donald Trump, criticized the deal, announced by Walker, Sen. Roger Roth, R-Appleton, and a Kimberly-Clark official.

“Unfortunately, Republicans played politics with this issue for months, leaving Kimberly-Clark workers and their families in the dark and uncertain about their futures,” Evers said in a statement.

Evers said a “long-term, industrywide solution” is needed for the paper industry.

During his campaign, Evers vowed to shutter WEDC and channel the funding to regional economic development centers. He also criticized the wisdom of Walker’s signature tax-incentive package to lure Taiwanese manufacturer Foxconn to build a massive facility in southeastern Wisconsin. The Kimberly-Clark deal that lawmakers rejected would have been similar to the Foxconn deal.

The WEDC board met Wednesday in closed session to approve the terms of the incentive package, and WEDC CEO Mark Hogan and the company approved the contract shortly thereafter.

The potential Kimberly-Clark incentive package comes as Walker is set to potentially sign into law a provision in the lame-duck legislation that would require the state’s budget writing committee to review enterprise zones and remove limits on the number of such zones WEDC could approve. The current limit is 30.

If Walker doesn’t veto that measure, it means Evers would not be able to approve a deal such as the one Walker reached without the approval of the Republican-controlled Joint Finance Committee.

Provisions in the lame-duck bills would also add more legislative appointments to the agency’s board and take away authority from the governor to appoint the agency’s CEO by giving it to the agency’s board for the next nine months.

Evers in his statement called on Walker to veto the bills, arguing their provisions would make it more difficult for him to have a say in economic development deals.

“The governor of our state shouldn’t be hamstrung when it comes to economic development,” Evers said.

Senate Minority Leader Jennifer Shilling, D-La Crosse, criticized the approach to Thursday’s deal, arguing lawmakers were cut out of the process.

“They’ve [WEDC] been plagued with scandal and misuse of money and misappropriations,” Shilling said. “I’m concerned about the lack of oversight and transparency and legislative responsibility we have to approve these packages.”

The incentives proposed in the original bill would have provided Kimberly-Clark with a 17 percent tax credit for jobs paying $30,000 to $100,000 after the company in January announced it would close the two Fox Valley facilities.

The bill would have given the company refundable tax credits of as much as $7.8 million per year for up to 15 years — more than $100 million total — when the company was still considering keeping the two Fox Valley plants open.

Walker told reporters Tuesday he planned to wait on signing the GOP’s lame-duck bills into law until an incentive package was reached on the Kimberly-Clark plant.

“The reason we’re not acting on any of this (GOP bills) is because my priority is on Kimberly-Clark,” Walker said. “I’m going to find a way to do everything in my power to find a way to save jobs at Kimberly-Clark.”

Walker has requested the bills and now has until Dec. 20 to veto them or they become law.