‘Have-Mores’ Clean Up at Corporate Welfare Trough

Campaign donors get substantially more help than non-contributors

March 16, 2005

Madison- Millions of dollars a year in aid meant to help low and middle income people get good jobs are being diverted by the state to corporate welfare, with by far the biggest handouts going to contributors to state election campaigns, according to a report by the Wisconsin Democracy Campaign.

The report, “Serving the Have-Mores,” shows how the long term influence of powerful special interests and their campaign contributions have changed the way government does business. Programs designed to help fledgling businesses, struggling farmers and those living in poverty are being used as lines of credit and outright welfare to help build headquarters for multi-billion dollar corporations, expand factory farms and aid affluent communities.

WDC reviewed more than 5,100 state Commerce Department grants, low-interest loans and tax credits awarded between 1999 and September 2004 and found:

  • Those who made campaign contributions received grants, cheap loans and tax breaks eight times greater per capita than non-contributors
  • Among the corporations deemed in need of state help were Fortune 500 companies and household names including Wal-Mart, General Motors, Kohler Company, Procter & Gamble and Home Depot
  • The state did not follow the original intent of some of these aid programs, namely to create jobs in distressed areas whose populations need work and an economic boost. Instead, it gave money to large companies for projects in affluent areas whose populations also generate large amounts of campaign contributions
  • The department doled out $16.6 million to dairies and farmers, much of which went to four dozen large farms commonly known as corporate farms or livestock factories. Agriculture industry recipients who had a history of making campaign contributions received awards nearly 10 times larger, per capita, than non-contributors
  • One program handed out about $344,000 between 1999 and mid-2004 to help companies pay for sending employees on trade junkets around the world

WDC found that recipients of state aid who did not make campaign contributions received awards averaging $129,990 while those who made contributions received awards averaging $1.04 million.

"If it’s a coincidence that campaign donors get so much more help than non-contributors, then it’s one hell of a coincidence," WDC executive director Mike McCabe said.

Wal-Mart, the world’s largest retailer that turned a $9 billion profit in 2003, has received $2.2 million in state commerce and transportation aid and $7.8 million in local aid and tax breaks since 1999 to open facilities in Tomah and Beaver Dam.

The Arkansas-based Walton family, which owns Wal-Mart, and company executives made $17,600 in contributions during the first six months of 2004, coinciding with a $500,000 Commerce Department award for its Beaver Dam distribution center.

Opponents of so-called "big-box" retailers argue that these chains put smaller retailers out of business, thereby doing little or nothing to create jobs, which goes to the heart of why state business aid programs were created.

Norlight Telecommunications, Kohl’s and the insurance company ACUITY collectively received $12.5 million in tax credits or loans to build or expand their headquarters in Brookfield, Menomonee Falls and Sheboygan. None of these areas were "distressed" and all three had poverty and unemployment rates well below the statewide average at the time. However, each of these locations ranks high in generating campaign contributions, particularly to former Republican Governors Tommy Thompson and Scott McCallum and current Democratic Governor Jim Doyle.

"These economic development programs were intended to help those who most need the help. Now the government’s power is being used to make the big bigger and the small disappear," McCabe said.

No Oversight

An open records request by WDC for all documentation on 10 projects that received grants, loans or tax breaks revealed no evidence of state audits or site visits to ensure the recipients were spending the money on the projects it was meant for or that the recipients had retained or created the jobs that were promised.

In four cases, there was no evidence the recipient had submitted the required self-evaluations on the project’s progress.

In four cases involving aid to start or expand corporate farms, documents showed each project would create four to 20 jobs each, most of which paid $11 an hour or less and in one case did not plan to offer benefits.

Loans to these operations to buy cows are being funded with community development block grant money intended to help low and moderate income people get good-paying jobs

The review also showed 48 of the state’s 135 corporate farms received $6.4 million of the $16.6 million in state aid awarded to more than 600 farmers and dairy operations. Commerce Department documents also showed, like large corporations, at least some of these recipients did not appear to need state aid.

One Winnebago County operation whose owner lives in Ireland received a $337,500 low-interest loan from the state even though documents described him as an individual "with significant net worth."

Another problem with helping these operations buy hundreds of more cows is that it ultimately results in an increase in milk production which lowers milk prices. That phenomenon hurts smaller family farms which have fewer resources to weather low milk prices.

The winners are large corporate farms, 86 of which also received about $27 million in federal farm subsidies, and large cheese producers like Kraft Foods because lower milk prices help them cut their production costs and increase profits from cheese sales.

Executives of Kraft and its parent company have contributed nearly $27,000 to Thompson, McCallum and Doyle whose administrations have generously helped corporate farmers.

Doyle received $12,013 from agricultural interests between January and June 2004. It was the second highest amount he has ever received in a six-month period from agricultural interests. The governor was not up for reelection in 2004 but the contributions occurred during a time when he signed a controversial bill to create state standards to dictate where and when permits for large livestock operations must be granted by local officials.

One Commerce Department program has given five dozen companies about $344,000 to send their employees on trade junkets around the world. The program grant was intended to cover the cost of promotional materials and exhibit and entry fees. However, the WDC review found 65 of 71 grants were for the program’s maximum allowable grant of $5,000.

“Serving the Have-Mores,”