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Walker calls on legislators to reform his troubled economic development agency

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MADISON, Wisconsin — Gov. Scott Walker called on legislators Friday to reform his economic development agency in the wake of another scathing audit that found the organization hasn't followed state law or tracked job creation.

Walker's office announced he wants to lawmakers to restructure the Wisconsin Economic Development Corporation's operations to limit the state's risk and maximize the agency's strengths. Walker spokeswoman Jocelyn Webster wrote in the announcement that the governor wants to phase out direct loans to businesses and put those dollars instead toward tax incentives. The incentives would be earned as companies achieve clear goals.

The governor also wants to use $55 million he set aside in his state budget proposal for regional loans for worker training instead, Webster wrote.

"After reviewing the LAB's recent audit over the last week, we feel it is vital to move forward with meaningful WEDC reforms to help maintain the focus of the organization," Webster wrote. "It is clear that changes are needed to focus on priorities and maximize the effectiveness of the agency."

The announcement comes as the Legislature's Joint Finance Committee prepares to revise portions of Walker's budget dealing with WEDC on Thursday. Spokespeople for the committee's co-chairs, Rep. John Nygren, R-Marinette, and Sen. Alberta Darling, R-River Hills, didn't immediately respond to an email seeking comment.

Walker, an all-but-certain Republican candidate for president in 2016, created WEDC as a public-private partnership to replace the state Commerce Department shortly after he began his first term as governor in 2011. He still serves as chairman of its board.

But the agency has been beset with problems since the beginning, including not tracking past-due loans, leadership turnover and highly critical audits revealing mismanagement. Minority Democrats have heaped criticism on the agency at every turn.

The LAB released another audit last week that showed the agency's problems continued in 2014. Contracts with grant and loan recipients didn't comply with state law and the agency hasn't demanded proof that recipients are actually creating or retaining jobs.

Walker's budget called for merging WEDC with the Wisconsin Housing and Economic Development Authority to create a one-stop shop for businesses looking to grow. He later asked Republican lawmakers to implement the merger through a stand-alone bill, saying the idea deserved deeper scrutiny than it would get as part of the state spending plan.

Hours after last week's audit was released, Walker scrapped plans for the merger, telling lawmakers to stand down on the effort. Another Walker spokeswoman, Laurel Patrick, said then the decision had nothing to do with the audit. The governor made the move because legislators, stakeholders and members of both WEDC and WHEDA's boards had concerns about the merger, she said.

Assembly Minority Leader Peter Barca, D-Kenosha, and Sen. Julie Lassa, D-Stevens Point, are on the WEDC board. They issued a joint statement Friday saying that Walker's call to legislators was "inadequate" in the face of the agency's problems. They said the board hasn't been kept abreast of the agency's problems and wasn't consulted before Walker released his plan Friday.

"Once again, at the 11th hour of budget deliberations, Governor Walker is lurching from one half-baked idea to another," their statement said.

Asked if Walker consulted the board, Webster responded with an email saying only that it was vital to move forward with WEDC reforms.

Senate Majority Leader Scott Fitzgerald, R-Juneau, issued a statement saying he was pleased Walker was taking steps to improve WEDC.

"This move provides additional certainty for businesses and taxpayers that the agency will operate efficiently and accountably moving forward," he said.

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