Politics & Government
11:12 am
Wed May 8, 2013

Watchdog Group Warned of Potential Problems Prior to WEDC Creation

The executive director of a Washington DC watchdog organization published a report prior to the creation of WEDC warning of potential transparency and accountability problems with similar public-private economic developments groups elsewhere.

Democratic lawmakers called Tuesday for increased oversight of the state’s economic development agency, WEDC. That’s the public-private entity that replaced the state Department of Commerce more than two years ago.

WEDC, the Wisconsin Economic Development Corporation, is under fire after a scathing report by the Legislative Audit Bureau. It chronicled the agency’s misuse of taxpayer money, and other problems. Governor Walker has called an emergency meeting with the WEDC board later today. He chairs the board. Tomorrow, a state panel will hold a hearing on the audit.

Just before the state created WEDC, a national watchdog group released a study that detailed risks associated with privatizing state economic agencies. Greg LeRoy is Executive Director of Good Jobs First, a non-partisan Washington DC-based group that published the report.

LeRoy says several elements of the newly created agency raised red flags including:

  • Other states that created similar organizations such as WEDC had problems with excessive secrecy, conflicts of interest and resistance to accountability.
  • Governors should not lead public private economic development agencies, rather there be an "arms-length" relationship between a state's top elected official and the agencies to preserve ethical oversight.

LeRoy says the Legislative Audit Bureau report on WEDC details a host of what he calls "elementary errors" by the agency including:

  • Record keeping was so bad the LAB could not evaluate the effectiveness of WEDC programs.
  • Less than half of the companies involved with WEDC filed performance reports and there was no independent verification of those reports.

LeRoy says problems at WEDC, according to the LAB report, are so severe that if the agency was a private company, one would wonder why its board had not resigned.

The Good Jobs First report is entitled "Pubic-Private Power Grab: The Risks in Privatizing State Economic Development Agencies." It was published in January, 2011.

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