Mining Bill will be voted on in Committee February 6

This afternoon Wisconsin State Senator Tom Tiffany and Rep. Mary Williams announced an Executive Session in both Senate and Assembly Committees taking up SB/AB1 (The Mining Bill).

The Assembly Committee will take up The Mining Bill in Executive Session:

Wednesday, February 6, 2013
10:00 AM
417 North (GAR Hall)

The Senate Committee will take up the Mining Bill the same day:

Wednesday, February 6, 2013
10:00 AM
201 Southeast

The Executive Session will occur three days prior to the hearing scheduled in Ashland by Senator Bob Jauch and Rep Janet Bewley, who serve constituents that would be directly impacted by a Taconite mine in the Penokee Range. That hearing is scheduled for Saturday, February 9 at the AmericInn in Ashland.

No “official” hearing is scheduled in the region, and based on the scheduled Committee hearings and likely vote to message to the full legislative bodies, the current mining bill appears to be fast tracked in spite of significant technical and legal issues with the bill as written.

A representative in Mary Williams’ office confirmed to Badger Democracy this afternoon that the bill would be voted on to refer out of committee on February 6.

John Doe Power Point implicates Walker; Source Discloses Continuing Pattern of Corruption

The seventy-eight slide Rindfleisch power point presentation given by Assistant District Attorney Bruce Landgraf is now available for public viewing (follow link). There can be no more speculation as to whether Scott Walker had firsthand knowledge regarding campaign activity occurring in his Milwaukee County Executive office. There was, and he did. Walker’s private campaign email address appears on numerous slides, and the campaign/county staff were one in the same. Significant questions remain.

Does the Milwaukee County DA have the goods on Walker? Or is this part of a coordinated chess match to “flush out” Walker for the Feds? Will the indictment come from Milwaukee County or another law enforcement agency? If this revelation came out in the Rindfleisch sentencing (she is a fairly small-time player in this network), what will come out in the Russell trial starting next month?

The one certainty in all this is that Scott Walker has continued his pattern of building an appointed, political network at the state level to carry out his policies unencumbered; and likely coordinate with his campaign. We already know the investigation has expanded to Madison, and Badger Democracy has previously published an email from Keith Gilkes’ state email account discussing campaign assistance from a Walker supporter.

A highly placed Administration official has recently communicated information to Badger Democracy which confirms Walker’s pattern of crony appointments and corruption continues in Madison. As additional information is disclosed, additional blogs will be posted. Of specific importance are recent events at one of Walker’s newly reorganized agencies – Department of Safety and Professional Services (DSPS – formerly Regulation and Licensing). All information has been confirmed through independent inquiry.

Cronyism

The Walker Administration has replaced all Division Administration heads at DSPS with political appointees. The last non-appointee left on April 12, 2012. Former DSPS HR head Martha Zydowski retired from her $90,000/year + job earlier this year. Shortly after her “retirement” she was rehired at a part-time job working 3 days a week, earning $67,000/year. She is assigned to working “special projects.”

Only two raises have been awarded since 1/1/11 for full-time exempt employees. One was to Angela Herl, who is married to Dane County GOP chairman Mike Herl. The other was to Kathy Sotak, who was promoted to a Bureau Director. Just months after her promotion, she resigned. State records show Sotak formed “Sotak Solutions LLC” in 2010 – while working for the state. Sotak’s LinkedIn profile claims to have worked at Sotak Solutions since 1999. Her business specialty:

Chemical management and industrial hygiene, risk management, safety, training programs

This is identical to the work she was performing at her state job. Badger Democracy found state Vendornet records showing Sotak as a state subcontractor in 2007 (Kathy Sotak as Safety Consultant 2004-2007). It is apparent that Sotak has spent her time in state government coordinating subcontract opportunities for her own LLC. The revolving door of state government at work.

Further cronyism exists in the appointment of Bill Wendle as Assistant Secretary of DSPS. Wendl is the former CEO of the Wisconsin Builder’s Association (WBA); one of Walker’s largest donors, supporters, and lobby for Scott Walker’s policy agenda. According to Badger Democracy’s source, through Wendle, WBA “bought the codes.” Wendle is said to be planning to write and update the new building codes, favorable to WBA interests “after the committee hearings” are held. Current code updates are said to be receiving “little to no oversight” due to “lack of manpower.” Building Code review is 6 months behind any updating activity.

Secrecy and Corruption

Badger Democracy has received information that a private Gmail network has been set up in more than one Administration Agency – including DSPS. There is also an initiative being pushed to eliminate the IT support at DSPS and transition all IT/Email to DOA. This would place control of IT at DSPS into the hands of DOA. Noteworthy is the private email account which Kelly Rindfleisch conducted her illegal campaign work on was a Gmail account. Also, greater opportunity for corruption exists now that DSPS is led by political appointees of Scott Walker.

As with WEDC, it is apparent that DSPS is now in disarray, sacrificing effective administration for cronyism and secrecy. Badger Democracy will have more information in future posts.

While the John Doe investigation continues to roll on, it is unclear what the next move for the Milwaukee County DA will be.  We now have confirmation that Scott Walker had direct knowledge of campaign work happening in his County executive office. We also know that Walker has continued this at least immoral, possibly illegal activity in Madison.

It is also known that Walker is also being investigated at the Federal level. Of that, we have heard nothing…yet.

 

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Milwaukee County DA responds to Rite-Hite letter to employees

Milwaukee County DA John Chisolm’s office has responded to an inquiry regarding the controversial letter sent to Rite-Hite employees, informing them of the consequences of an Obama re-election. Here is the unedited text of the letter:

Every Rite-Hite employee in America should understand the personal consequences to them of having our tax rates increase dramatically if President Obama is re-elected, forcing taxpayers to fund President Obama’s future deficits and social programs (including Obamacare), which require bigger government.Rite-Hite is a Subchapter S corporation for taxes, meaning that our corporate tax rate is the highest personal tax rate. So what? Well, our RSP contributions are based on AFTER TAX profits. The tax rate we pay is not 17%, as Warren Buffet would have you believe; with state taxes it is roughly 45%. President Obama has announced that our planned tax rate would increase to roughly 65%, reducing our after tax income by 36% and dramatically reducing, if not eliminating, your and my RSP contributions.

Of equal importance, instead of the these profits being re-invested into Rite-Hite for future growth and profitability, the money will be sent into the abyss that is Washington D.C. So, on top of the burden of having your personal taxes increase dramatically, which they will, your RSP contributions and healthy retirement are also at risk, all for the sake of maintaining an over-sized government that borrows 42% of every dollar it spends.

The other big impact on Rite-Hite employees, if President Obama is re-elected, is the good chance of losing Rite-Hite insurance and being put into Obamacare. Employers have the choice (though competition in the marketplace will dictate), to continue their existing plans or to pay a penalty and have employees go into the Government Plan. Our plan costs much more per family than the penalty and hence the possible competitive need to drop the Rite-Hite Health Plan. Every opportunity to make up for lost profits to taxes will have to be evaluated.

Rite-Hite nor I will ever prejudice any employee for their political views, and, totally respect your right to vote as you choose. I simply am trying to present the facts as I know them and to protect the business you have helped build! Please think very carefully about your vote on November 6th.

This morning, Badger Democracy sent the following email to Chisolm’s office. Rite-Hite is located within Milwaukee County, and Chisolm’s office would have jurisdiction in this matter:

Dear DA Chisolm, 

Your office is most certainly aware of the letter Rite-Hite CEO/Owner Mike White sent to over 1,400 employees urging them to vote against President Obama in the upcoming election. If you have not seen the letter, I have attached a copy for your reference. 

I am asking your office to investigate whether this letter is a violation of Wisconsin Statute 12.07(3): 

12.07 Election restrictions on employers.

(3)No employer or agent of an employer may distribute to any employee printed matter containing any threat, notice or information that if a particular ticket of a political party or organization or candidate is elected or any referendum question is ‘s place or establishment will cease, adopted or rejected, work in the employer in whole or in part, or the place or establishment will be closed, or the salaries or wages of the employees will be reduced, or other threats intended to influence the political opinions or actions of the employees.

 

My opinion is that Mr. White violates the above statute several times in the letter. To wit:

 President Obama has announced that our planned tax rate would increase to roughly 65%, reducing our after tax income by 36% and dramatically reducing, if not eliminating, your and my RSP contributions.” (par 2) 

“So, on top of the burden of having your personal taxes increase dramatically, which they will, your RSP contributions and healthy retirement are also at risk” (par 3.) 

“…if President Obama is re-elected, is the good chance of losing Rite-Hite insurance and being put into Obamacare. Employers have the choice (though competition in the marketplace will dictate), to continue their existing plans or to pay a penalty and have employees go into the Government Plan. Our plan costs much more per family than the penalty and hence the possible competitive need to drop the Rite-Hite Health Plan.” (par 4) 

The final paragraph is clearly a statement that should President Obama be re-elected, employees’ current health plan will be dropped. 

Most disturbing is the direct connection between this letter and a call to action by the Romney campaign. On June 12, 2012, Mitt Romney held a “Town Hall” conference call with NFIB members. While NFIB refuses to disclose its member list, I have it on good authority that Rite Hite is an NFIB member. 

Here is the link to the call audio: http://bcove.me/e07ifp0d 

At 25 minutes in, Mr. Romney is addressing questions regarding Obamacare. At 26:30 in, Mr. Romney urges employers to communicate to their employees their opinions on this election, and the potential consequences of an Obama victory in the election. As an NFIB member, Mr. White would have access to this call and audio, and his letter is clearly an attempt to influence his employees using company resources and his influence as CEO. This is in direct violation of 12.07(3). 

I appreciate your prompt attention to this matter.

At 1:00pm, the following response was received:

Thank you for this notice.  Mr. Chisholm is aware of this information and has forwarded the concern to Assistant District Attorney Bruce Landgraf, who reviews election related matters.  If you have additional information, please direct it to our attention. 

Sheila Stanelle

Senior Executive Assistant to District Attorney John Chisholm & Chief Deputy District Attorney Kent Lovern

Something tells me Mr. White will be corresponding with ADA Landgraf in the very near future.

 

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Breaking : Paul Ryan’s Big Campaign Finance Problem

A story first reported on “Politicker” is picking up steam and has been confirmed. Paul Ryan appears to have violated FEC laws on campaign finance by paying for Republican National Convention expenses out of his Congressional Campaign account. By FEC law, candidates running for two offices simultaneously must keep separate accounts for each campaign.

According to the latest Ryan for Congress campaign finance report , Ryan’s Congressional campaign spent $59,603.41 specifically itemized as Convention Expenses (beginning on page 1219 of the report pdf).

The Ryan Campaign expenses include multiple rooms at multiple hotels during the convention, including the largest single expense of $34,854.35  at the Marriott Tampa Waterside, the Romney campaign’s base at the convention.

Ryan’s Campaign also paid $4,183.20 for hotel rooms at the Grand Hyatt Tampa Bay, while the Wisconsin delegation was staying in a different hotel operated by the same chain, the Hyatt Regency Tampa. From the article on Politicker:

When we responded asking why so many rooms were purchased, Mr. Seifert sent another email claiming the additional rooms were for “other staff members.” He also provided initial information about the campaign’s spending at the Hyatt.

“As I said when we spoke, the 5 members of the Ryan for Congress staff were there for the full convention. Other staff members of Congressman Ryan’s attended parts of the convention–most notably Congressman Ryan’s keynote address,” Mr. Seifert wrote. “Ryan for Congress reserved 20 rooms at the Marriott and had a couple rooms at the Hyatt, where the Wisconsin Delegation was staying.”

Based on their own disclosure reports Mr. Seifert’s claim Mr. Ryan’s congressional campaign purchased rooms at the hotel where the Wisconsin delegation was staying is untrue. Mr. Seifert has also not responded to a request asking for an explanation of this discrepancy.

Unless Ryan can prove these expenses were clearly for his Congressional Campaign use at the RNC, these discrepancies could be a significant issue – particularly in his local campaign for Congress. The race for the 1st CD has taken a back seat to the Presidential ticket, and challenger Rob Zerban is mounting a considerable challenge to Ryan.

Badger Democracy has emailed both Zerban and Ryan campaigns at this late hour for comment. Updates will be posted as available.

 

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About the latest employment numbers, Governor Walker…how’s austerity working?

Scott Walker was quick to take credit for continued modest gains in employment after the latest quarterly numbers were released (QCEW) on Thursday. From Walker’s weekly radio address:

The fiscal reforms we put in place coupled with reforms like reducing frivolous lawsuits and bringing certainty and accountability to state regulations, have established a strong foundation for job growth.

Walker has also been quick to blame Barack Obama and the national economy for Wisconsin’s lag in job growth:

“While Wisconsin still faces the challenges of a stagnant national economy, Governor Walker’s upcoming budget will focus on creating jobs, and growing the state’s economy.”

Wisconsin continues to lag far behind most of the nation in job growth, a pathetic 38th overall. Growth was virtually non-existent at 1.22%, 45th in rate of growth (image courtesy Milwaukee Journal Sentinel):

The US and most Midwestern states saw growth around 2% for the same time period. Walker is taking credit where no credit is due. In fact, his austerity measures targeting public employees have been a large reason Wisconsin is lagging in job growth. The austerity measures in place in Wisconsin have resulted in a real tax increase and burden on the middle class. Less income for a majority of Wisconsinites means less revenue, and slower growth.

The data from the Bureau of Labor Statistics (BLS) is proof positive that any employment growth in Wisconsin is largely due to the direction of the overall national economy. And that the policies of Scott Walker are holding us back.

Given the long-term nature of employment growth or loss, let’s go back to 2002 for the 10-year trend.

Wisconsin 2002-2012 QCEW report (full spreadsheet linked)

March 2002 – 2,639,035

March 2007 – 2,728,963

March 2010 – 2,568,348

March 2012 – 2,638,987

Wisconsin is barely back to 2002 employment levels. That is not the case nationally. Scott Walker’s austerity measures have had a direct short-term impact (negative) on employment. The national numbers show that Walker is riding the coat tails of a modestly growing national labor economy:

US QCEW 2002-2012 (full spreadsheet linked):

March 2002 – 127,303,773

March 2007 – 134,280,105

March 2010 – 126,228,228

March 2012 – 130,175,438

Notice the trend there? The difference is that the national (and most other states’) economies are outpacing Wisconsin, significantly exceeding 2002 levels.

Three graphs, displayed on the linked Employment PDF Graphs here, demonstrate the commonality in the overall employment trend – with Wisconsin lagging in growth from 2010-2012, as the above data indicates. Walker’s continual politicization of the employment data has made matters worse, pursuing ideological agenda over real bi-partisan economic policies.

Austerity is a job killer. Period. Forget “regulation” or “uncertainty”, all of which are corporate conservative propaganda. The real damper on job creation can be found in the policy manuals of Scott Walker, Paul Ryan, and Mitt Romney.

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Federal Agency says WEDC just a “third party contractor”…block grant program in shambles

This afternoon, Federal officials have weighed in on the Walker Administration’s mishandling of a critical federal block grant program. Badger Democracy has learned from US Department of Housing and Urban Development (HUD)officials that the DOA response to HUD’s highly critical report is currently under review by the federal agency(link to August 16, 2012 HUD letter to DOA). HUD expects to have a written response in 30-45 days.

According to HUD, DOA “…lacks the administrative and management capacity to properly oversee the (CDBG) activities of WEDC.”

Meanwhile, the federal agency is making clear their position that the Wisconsin Economic Development Corporation (WEDC) is merely a “third-party contractor” in the eyes of the Federal Government.

In addition, serious questions remain as to whether DOA is functionally capable of administering and overseeing WEDC, required under the pending (and still under review) agreement with the federal agency. Hanging in the balance are millions of dollars in Community Development Block Grant (CDBG) money, a critical program to local governments.

The entire fiasco raises the question exactly how WEDC is making government “more efficient” than the previous Department of Commerce (DOC)? Even if the agreement between DOA and HUD is approved, DOA will be required to have full oversight of WEDC for the administration of federal grant programs. So much for eliminating the middle man and streamlining government.

Also of significant concern is the failure to re-allocate a total of $43 million in local revolving loan funds (RLF) which have been repaid from previous projects. In its criticism of the state administration of the program, HUD officials stated:

In 2010 and 2011, local revolving funds could have contributed over $7,000,000 to economic development projects benefitting residents of their counties. Instead, the State of Wisconsin funded the projects using CDBG grant funds.

State officials interviewed by HUD officials gave the reason for this practice in their report (pg 18 of the linked document):

The State of Wisconsin has different loan terms than local RLFs that are more favorable to companies such as lower interest rates and forgivable loans. 

The HUD report provides increasing evidence that Scott Walker’s signature “state agency” has nothing to do with “streamlining government.” Rather, it has everything to do with being a conduit for public money into private corporate capital.

On May 21-24, and again on May 30, 2012, HUD officials were on-site at DOA and WEDC to conduct monitoring of the CDBG program administration. HUD’s monitoring objectives were to determine whether the state has been administering the block grant program in compliance with Federal Law, and if the state has a financial management system in place to “adequately safeguard the funds.”  Some key report findings after financial audits and staff interviews:

1. The state fails to follow its own program guidelines. In one case, a  loan for Kapco corporation in Polk County was approved with a per job benefit of $20,000; in spite of a state plan maximum of $10,000. The loan to Kapco was eventually forgiven, in spite of written state policy that “loans are only forgivable under extraordinary circumstances.” Since 1/1/11, eleven of twenty loans under this plan were forgiven. As part of interview comment, WEDC staff told HUD officials:

Certain jobs were considered more valuable to the state, so limits were exceeded, projects received forgivable loans.

The HUD report was scathing, saying the process had no documentation where there should be a “transparent and defensible process.”

2. Underwriting – Two CDBG awards received no underwriting, bringing into question a wide range of accountability issues. Gilman Corp in Grafton was “skipped to accommodate the business timeline” according to interviewed state staff. Morgan Aircraft in Sheboygan County was claimed to have been performed by WEDC, but as of the report date, no underwriting had been submitted to HUD.

3. Administration and financial management – From 7/1/11 – 3/7/12, WEDC awarded $9,634,470 in CDBG funds that were unauthorized – as it was not recognized as a state agency and oversight by DOA had not been approved by HUD.

The severity of this utter fiasco cannot be overstated. According to the report, “DOA lacks the administrative and management capacity to properly oversee the activities of WEDC.”

As of today, the federal government considers WEDC a “third-party contractor” with the state. Whether DOA will meet the federal oversight guidelines remains to be seen. Meanwhile, the block grant program remains in limbo, and Scott Walker’s signature “agency” is nothing more than a conduit to public funds for private corporations. WEDC as a non-state entity has less accountability, and DOA has yet to demonstrate the ability to monitor its own programs adequately.

The Joint Legislative Audit Committee should launch an immediate audit into the entire program, as it is displaying a tremendous lack of transparency and accountability. Where is the $43 million in repaid revolving fund loans?

This fiasco has been ongoing since HUD’s first letter to DOA in February 2011. Did Paul Jadin’s exit have anything to do with the current state of affairs?

If WEDC cannot meet a basic federal standard as a state agency, was the point of replacing the DOC merely to get away from public accountability? How has this streamlined government?

This story will be updated as it evolves. Previous Badger Democracy articles on this topic can be found here, here, and here.

Repeated attempts at comment from DOA have not been returned.

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Huebsch “apology” to WEDC Board means little, raises more unanswered questions

Wisconsin Department of Administration (DOA) Secretary Mike Huebsch issued an apology by phone to Wisconsin Economic Development (WEDC) board members late Thursday.

Following the exposure of a Federal Agency letter (HUD) suspending WEDC from awarding or administering a federal block grant program; and Scott Walker’s disastrous press conference on Wednesday, Huebsch could be taking the fall for this fiasco. His apology reveals there is real cause for concern about WEDC and the block grant program administration.

Both DOA and WEDC were aware of the issues HUD has raised with the current administration of the program – the WEDC Board was just not informed. Huebsch actually lies about this in his “apology,” stating that HUD communications were with DOA. There is record of WEDC being informed of the Feds’ concern.

There are numerous critical, unanswered questions. There are units of local government that are working on, and negotiating contracts for CDBG funds through the state. Badger Democracy has learned they are negotiating with WEDC. Is DOA acting as the administrator of the program, with WEDC making the awards? That would seem to be in violation of federal statute, according to the HUD letter.

Is it legal for DOA to be acting as a “rubber stamp” for WEDC in this program?

If that is the case, DOA would be funneling the money to WEDC. Where is the money going? There is virtually no oversight or accountability of WEDC – as recently expressed by the Legislative Audit Bureau. Does WEDC use the CDBG funds for purposes OTHER then the public program? Venture capital? Quasi-private development?

Take away the role of governmental oversight and regulation; combined with ideology over responsibility,  and this is the result. State government administration is currently a shambles. Huebsch may end up the fall guy, but there are scores more who are avoiding accountability.

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Walker denies severity of Feds’ rebuke of DOA/WEDC…with spin and lies

Unedited audio of Scott Walker answering reporters’ questions after the Wisconsin Economic Development Corporation (WEDC) press conference Wednesday afternoon has been obtained by Badger Democracy. The press conference was supposed to be an unveiling of the new “In Wisconsin” campaign and re-branding of WEDC.

Instead, Walker was barraged with questions about the Federal Housing and Urban Development review of the DOA/WEDC administration of the Federal Community Development Block Grant program (CDBG). The story was first reported yesterday morning by the Wisconsin State Journal, albeit incompletely. Badger Democracy reported on the story shortly after, posting the full letter and a thorough investigation.

In his comments to reporters, Walker stated the HUD criticism surrounded issues that “…go back a decade,”  and the DOA “…is waiting to hear back from HUD…DOA is working with HUD, and we are waiting for more correspondence from HUD as to whether the DOA plan is acceptable.”

When pressed by a reporter on whether to WEDC Board should have been notified, Walker stated, “…it (the letter) didn’t require specific action by the board…there were no policy changes required by the board.”

Another reporter pressed Walker on the issue of HUD not recognizing WEDC as a state agency with authority to administer or make awards under the CDBG program. Walker replied, “…HUD is looking at a variety of things prior to our Administration…that is just one component. The focal point of the letter wasn’t that.”

The Walker portion of the press conference then came to an abrupt end.

The May 17, 2012 letter in question from HUD to the DOA puts Walker’s comments in a very bad light. While DOA may be “corresponding” with HUD, it is clear the letter in question is proof that Walker’s comments are at best, spin; at worst, an outright lie.

Regarding each of Walker’s points – First, the May 17 letter made clear the DOA “Administrative Agreement” was unacceptable and lacking. As of today, HUD maintains that WEDC is not an “instrumentality of the state.”

Second, the letter specifically references WEDC as a “subrecipient” under the CDBG program and cites sixteen specific reforms required to fulfill statutory requirements under the CDBG program. Eleven of the sixteen requirements specifically reference necessary WEDC reforms under state and federal statutes, and administrative rule.

Third, the focal point of the letter is most definitely the “instrumentality” of WEDC as a state agency. There is absolutely no reference in the May 17 letter to the old Department of Commerce; the previous state agency administering the Block Grant program.

Each of Walker’s points are addressed and proven false in the  paragraphs of the May 17, 2012 (full) letter.

First point (DOA awaiting acceptance of its “Agreement”):

In response, on March 14, 2012 DOA provided HUD an executed Administrative Agreement (the Agreement) for review. On April 12, 2012 HUD advised DOA that WEDC must immediately cease the award and administration of all CDBG funds until an appropriate…written agreement between the Wisconsin DOA and the WEDC is received and approved by HUD.

HUD had not, and has still not approved of the DOA plan. This has been ongoing since 2011.

Second point (the letter did not require action by WEDC Board):

Prior to the execution of the agreement, on February 21, 2012, Governor Scott Walker announced that the WEDC had awarded CDBG funds to the Wisconsin cities of Arcadia, Chippewa Falls…At the time of this award, WEDC had no legal authority under the CDBG program to award or administer CDBG funds 

An agency of the Federal Government has just informed a state agency that one of its “subrecipients” is in violation of federal law. And Walker denies it was necessary to inform the WEDC Board.

Third, that “the focal point” of the letter was not the “instrumentality” of WEDC as a state agency:

This correspondence is being provided to transmit the results of HUD’s review of the Administrative Agreement executed between the Wisconsin Department of Administration (DOA) and its subrecipient, the Wisconsin Economic Development Corporation (WEDC).

The function of WEDC was the very purpose of the letter.

Thus far, the fallout has been far-reaching. Rep. Peter Barca and State Senator Julie Lassa, legislative board members to WEDC issued a scathing statement late Wednesday.

“It’s inexcusable that this letter was not shared with the WEDC Board at its meeting last week,
even though the administration received it in August”

President of FluGen Paul Radspinner and WEDC Board Member has sent a letter threatening resignation from the board:

“If the WEDC leadership is not held accountable to proactively keep the board informed in a timely manner on issues affecting the future of this corporation and its reputation then I cannot fulfill my fiduciary responsibilities nor can I continue to serve as a member of the board”

Further confusing the issue is a Wisconsin community leader who spoke with Badger Democracy on Wednesday morning. This community is in the process of completing a CDBG contract for downtown revitalization. The grantor on the contract is WEDC.

A HUD spokesperson told Badger Democracy yesterday that at this time, the Federal Agency does not recognize WEDC as an authorized state agency.

Badger Democracy has arranged a press call with HUD officials on Monday morning, at which time the agency will update and answer questions regarding the CDBG program in Wisconsin.

All WEDC Board members and officers have been contacted for comment and have not replied.

Stay tuned…

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Feds’ letter to DOA suspends block grant program, says WEDC not state agency

UPDATED 2:45pm – see end of blog.

Badger Democracy has obtained a letter from the US Department of Housing and Urban Development Milwaukee Office (HUD) dated May 17, 2012 to Department of Administration (DOA) Secretary Mike Huebsch. HUD was not just critical of DOA/State oversight of the new Wisconsin Economic Development Corporation (WEDC); the federal agency suspended the critical Community Development Block Grant (CDBG) program.

The agency went so far as to state that WEDC is not an “…instrumentality of the state.” The full letter can be found at this link: HUD Letter to WEDC

While local press have given the letter some attention, the broader implications of this communication have been largely ignored. The HUD review of the WEDC  “Administrative Agreement” executed by DOA exposes a negligence in the statutory authorization of WEDC  to act as a state agency. It also underscores growing concern over lack of accountability and oversight of WEDC.

DOA has been aware for this issue for over one year.

On August 25, 2011, HUD informed DOA that the “…administrative role of WEDC (was) limited because the state was unable to provide an Attorney General (AG) opinion certifying the WEDC as a ‘instrumentality of the state.'”

September 20, 2011 HUD held a conference call with DOA staff and “…reiterated (that) absent an AG opinion HUD does not recognize WEDC as an instrumentality of the state…(WEDC) is not authorized to administer the CDGB program.”

On March 14, 2012, DOA sent an “Executed Administrative Agreement” (Agreement) regarding WEDC and its authority to administer the CDBG program. The May letter was a review of this “Agreement” – which HUD found seriously deficient.

In February, the Walker Administration knowingly disregarded the HUD letter and conference call  advising them of HUD’s position on WEDC.

Prior to the “Agreement” execution, WEDC announced awards to Arcadia, Chippewa Falls, Birchwood, Soldier’s Grove, and Mercer on February 20, 2012. From the HUD program director:

WEDC had no legal authority to award or administer CDBG funds.

As of April 12, 2012 WEDC must immediately cease the award and administration of all CDBG funds. Access to the IDIS system is suspended as of April 20, 2012.

In order to reinstate WEDC, HUD set forth a set of sixteen “critical provisions…not included” in the DOA Administrative Agreement. Here are six of the most critical (numbers in parentheses correspond with the document):

1 (1). Since the DOA had already violated CDBG statutes in the February 2012 awards, HUD is rejecting the DOA request to make its Agreement retroactive to 7/1/11. Any agreement would have to be effective the date the order is signed – 3/7/12 in this case.

2 (3). The CDBG program is defined incorrectly under the “Agreement.” Local Governmental Units are not required to pay back grant funds to the state. They are grants. (BD Note – has this been used as a budgeting gimmick by DOA? Accounting for grant “repayments” as revenue?)

3 (5). There is no provision in the “Agreement” requiring DOA (or any other state agency) oversight of WEDC.

4 (9). Article 21 must comply with Federal Statutes prohibiting use of funds for inherently religious purposes. No such clause exists.

5 (11). Provisions must address the issues of “Job Pirating,” Underwriting,” and “Public Benefit.”

6 (16). No “certifying officer” is named in the DOA “Agreement.” One is required under statute.

Badger Democracy has attempted to determine the status of the CDBG program and state access to the IDIS program, beyond DOA comment to media. No reply from DOA has been received.

DOJ has not responded as to whether the AG has submitted a formal opinion on WEDC as an “instrumentality of the state.”

Sernorma Mitchell, program director from HUD – Milwaukee is at a conference today. The Public Affairs officer from HUD has been attempting to reach her this morning for an update on HUD’s position on the CDBG program.

A public official who wished to remain anonymous spoke with Badger Democracy this morning. This official’s community is currently in the process of completing a CDBG award contract, and the named agency on the contract is WEDC. It was this person’s understanding that DOA is now acting as the oversight agency for the program, and the money is coming from WEDC. That could not be confirmed.

The actual program status is unknown at this time. Are we witnessing the unraveling of a “shell game” to operate WEDC as a quasi-governmental agency with no oversight or accountability; investing state funds and resources for private profit at public expense?

Has DOA bypassed the HUD concerns and oversight of WEDC by acting as the “state authority” and virtual rubber stamp for any program administered by WEDC through DOA?

Badger Democracy will update as more information becomes available.

It is apparent that WEDC is a hastily contrived, singular vision agency put together with no consideration for statewide public impact. While it may serve the corporate development elite in the state, it is keeping the general public (which fund its existence) in the dark as to its activities and investments.

The HUD letter raises serious concern as to whether WEDC should continue to be funded by Wisconsin taxpayers.

UPDATE 2:45pm – A HUD official confirmed to Badger Democracy that DOA has not taken the necessary steps to have WEDC recognized as a state agency authorized to administer any federal program. The question of legality of DOA acting as the “front” agency for WEDC in the Block Grant Program was raised, and HUD will be scheduling a press call when the program director is available.

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Tommy and Medicare…2008 – 2012 – From “Death Panels” to “Death to the system”

Two videos, four years apart illustrate a dramatic departure from political and economic reality for Tommy Thompson. In a recent speech in front of the “Lake Country Defenders of Liberty”  at Olympia Resort and Conference Center (Oconomowoc), Thompson laid out the plan to end Medicare. Four years earlier, in an October 2008 online interview, Thompson supported a commission to reform end-of-life treatment limitations as a way to help save Medicare. This extreme ideological shift begs the question – is Thompson even capable of independent thought and responsible governance anymore?

In the recent speech, Thompson outlines the textbook neo-conservative methodology for killing a government program . In the words of Grover Norquist:

I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.

Thompson asks “…who better than me, I already finished one program, Welfare, to do away with Medicaid and Medicare?” His answer follows the Norquist blueprint. “Give people a choice,” says Thompson, between taking the current government-run Medicare or purchasing their own insurance with a subsidized voucher.

Thompson continued the attack, “…no one will accept it (the current plan), because Medicare will be broke by 2022.” The same strategy is being used to weaken public pension plans. As more people “opt out” the participant pool diminishes. Revenue going into the program decreases to the point that it becomes incapable of paying out current benefits. It can then be “drowned in the bathtub.”

Aside from the ideology over economics, Thompson’s claim requires a fact and reality check. The Thompson claim that “Medicare will be broke by 2022″ is inaccurate. Further, the voucher policy he supports, coupled with the repeal of the Affordable Care Act (Thompson has stated his support for repeal) would make Medicare even less stable.

According to the Medicare Trustees’ report from this year:

“The Medicare Trustees Report shows that the Hospital Insurance (HI) Trust Fund is expected to remain solvent until 2024, the same as last year’s estimate…The ACA is giving the CMS the ability to do this work, with tools to lower costs, fight fraud and change incentives so that Medicare pays for coordinated, quality care, not the number of services…without the Affordable Care Act, the HI Trust Fund would expire 8 years earlier, in 2016.

Much of the neo-conservative propaganda about Medicare and the ACA being touted by Thompson et al, comes from an independent paper published by a Public Medicare Trustee  Charles Blahous.

To ensure the ACA does not worsen the federal fiscal outlook, fully two-thirds of the ACA’s new health-exchange subsidies must be repealed, or financing offsets must be found before 2014…the ACA will add some $530 billion to federal deficits by 2021 and that the Obama administration employs “double counting” in its savings estimates.

Blahous is a “Senior Research Fellow” at the Mercatus Institute – funded by Charles and David Koch. The Blahous paper has been skewered by more rational minds, namely Jonathan Chait and Paul Krugman. From Chait:

You may wonder what methods Blahous used to obtain a more accurate measure of the bill’s cost. The answer is that he relies on a simple conceptual trick. Medicare Part A has a trust fund. By law, the trust fund can’t spend more than it takes in. So Blahous assumes that, when the trust fund reaches its expiration, it would automatically cut benefits.

The assumption is important because it forms the baseline against which he measures Obama’s health-care law. He’s assuming that Medicare’s deficits will automatically go away. Therefore, the roughly $500 billion in Medicare savings that Obama used to help cover the uninsured is money that Blahous assumes the government wouldn’t have spent anyway. Without the health-care law, in other words, we would have had Medicare cuts but no new spending on the uninsured. Now we have the Medicare cuts and new spending on the uninsured. Therefore, the new spending in the law counts toward increasing the deficit, but the spending cuts don’t count toward reducing it.

Krugman illustrates this accounting absurdity using a budgetary example relative to the Bush Tax Cuts:

“…the whole of the Bush tax cuts will expire at the end of this year. If that’s your baseline, then plans like the Ryan budget, which not only maintains those tax cuts but adds another $4.6 trillion to the pot, are wildly deficit-increasing — in fact, the Ryan plan would be a huge budget-buster even if hell freezes over and his secret loophole-closers turn out to be real.”

The absurdity of this accounting of Medicare persists with far right-wing GOP candidates – including Thompson. The reason is obvious – it creates panic and confusion about fiscal reality. In fact, it is now replacing fiscal reality with ideology. The proof is Tommy Thompson in 2008 talking about how to save Medicare.  

Thompson’s ideas to reform (not kill) Medicare:

1.  “I would put a Medicare base closing commission together which is going to make the tough decisions such as age, such as taxes, such as when you’re on your death-bed, what sort of treatments do you get, and when you get in the last 12 months of your life where 30% of the cost of Medicare dollars are expended.”

2.”The second thing you have to do is you have to fix SCHIP. This is the program for poor children and you got to be able to put together a bipartisan support on SCHIP and I think that’s imminently doable.”

3. “…the third thing you have to do is you have to fix what we call the reimbursement formula for doctors. It has been postponed now for five years, and every year that it’s postponed, it’s causing more money and that’s got to be fixed.”

4. “…we got to do something about Information Technology and have national standards for an electronic medical record and put the cost to credits in there that’s going to be the inducement for doctors to use electronic medical records and actually prescribe using a computer instead of handwriting.”

5. “…we really educate America to eat properly, exercise and take care of themselves and that’s where chronic illnesses come in, because most of chronic illnesses are either self-inflicted or exaggerated and exacerbated by what we do, what we put into our bodies and our failure to exercise”

 Who was that Tommy Thompson? Such is the influence of corporate money and influence on politics. Merely four years ago, Thompson was talking of bi-partisan reform, and was even in support of what has now been demonized as “death panels” to reform end-of-life care treatments.

Today, Thompson has become an ideologue, putting the corporate takeover of democracy over responsible governance.

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