Walker job-creation officials tell legislators they're working to improve

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MADISON, Wisconsin — Officials with Republican Gov. Scott Walker's floundering job-creation agency promised again to do a better job in the wake of another scathing audit and the departure of their second chief officer in just four years.

Tricia Braun, the Wisconsin Economic Development Corporation's deputy secretary and chief operating officer, told the Legislature's audit committee on Wednesday that the agency has hired an outside consultant and is constantly evaluating its operations. Dan Ariens, chairman of WEDC's board, said he likens the agency's issues to problems a typical start-up company experiences.

"I am confident we are poised to become an organization you will be proud to call your economic development engine," Ariens said.

Walker created the WEDC in 2011 to replace the state Department of Commerce. The agency has been plagued with problems since the start. In 2012 its first chief executive officer, Paul Jadin, quit. State audits in 2013 and 2014 revealed the agency routinely failed to adhere to its own rules or state law when awarding cash to businesses and lacked documentation justifying spending on expenses and grants.

A third audit this May found that the WEDC's problems continued in fiscal year 2014, noting contracts with grant and loan recipients haven't complied with state law and the agency hasn't demanded proof that recipients are creating or retaining jobs. Later that month word broke that Walker aides had pressed for a $500,000 loan to a failing construction company owned by Walker donor William Minahan.

In June, the WEDC released documents showing that the agency gave out more than $124 million to companies without a proper review. Some of that money included the Minahan loan. CEO Reed Hall announced in August he would resign later this month; Walker quickly replaced him with Mark Hogan, a bank executive who contributed to the governor's campaign.

Hall didn't attend the hearing — Braun said Hall was attending a small business summit in Eau Claire — but she Ariens and Hannah Renfro, the WEDC's chief attorney and compliance officer, took turns assuring the audit committee that the agency is turning the corner.

They said they've adopted or toughened dozens of internal policies and given the board more oversight of awards to businesses and insisted questionable awards like the Minahan loan wouldn't fly today.

The agency also has been giving the board quarterly reports on past due loans and late performance reports from award recipients and hired an outside consultant to examine its operations, they said.

"WEDC takes seriously its stewardship of taxpayer resources," Renfro said.

Republican lawmakers tread lightly with the agency's leaders Wednesday, blaming their problems on the now-defunct Department of Commerce and asking how they can help the agency.

Sen. Robert Cowles, R-Green Bay, one of the committee's co-chairs, got a lukewarm reaction when he said he'd like the committee to craft legislation that would prohibit the WEDC from handing out tax credits to businesses without a contract and require all credit recipients to increase net employment in Wisconsin. Both recommendations were included in the May audit, but Braun and Rep. John Nygren, R-Marinette, said such changes could make WEDC less responsive to companies looking for subsidies and drive them to other states.

The committee's minority Democrats grilled the officials, though.

"Two years ago you didn't have policies," Sen. Kathleen Vinehout, D-Alma, said. "Now you have policies and you're not complying with them."

They hammered away at Renfro in particular, asking her why she never realized the agency was violating state law and its own policies since she's the head lawyer and compliance officer.

"You said those questionable loans couldn't happen today but the same legal counsel remains in place," Sen. Janet Bewley, D-Ashland, told Renfro. "How could these massive, very serious and very troubling mistakes have been made when it is your responsibility to follow the law?"

Renfro said she tries to follow the letter of the law but can't catch everything.

"It still bothers me that you are in charge," Rep. Terese Berceau, D-Madison, fired back. "The audit frankly caught you."

This story has been updated to correct Hogan's last name.

Follow Todd Richmond on Twitter at https://twitter.com/trichmond1

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