By Caitlin Shuda
WISCONSIN RAPIDS – If there are two things Wisconsin lawmakers agree on in central Wisconsin, it’s that they want to help restart the paper mill that has been shut down for a year in Wisconsin Rapids, and members of the other party are playing games.
On Wednesday, the state Senate sent a bill to Gov. Tony Evers that would provide up to $50 million in federal pandemic aid loans to a timber cooperative that's seeking to buy and operate the mill that Verso closed in Wisconsin Rapids last year. The bill also authorizes a loan of up to $15 million for a cooperative to buy a second paper mill that closed in Park Falls. The Senate passed the legislation this week.
But it is unclear whether the loan – coming from funds available to the state through the American Rescue Plan Act of 2021 – would apply to a third party purchasing a paper mill that stopped operations due to the COVID-19 pandemic.
And that question has been at the heart of the political sparring on the measure.
Those funds were designed to “address an economic harm resulting from or exacerbated by the public health emergency.” Recipients would have to explain the economic hit to loss of earnings or revenue because of the COVID-19 public health emergency.
When Verso announced last June its plans to idle paper mills in Wisconsin Rapids and Duluth, Minnesota, the company said the decision stemmed from a decline in demand for graphic paper due to the COVID-19 pandemic.
Applicants would also need to show how the funding would help address those problems, but the program is aimed primarily at helping ongoing businesses.
While both sides agreed on the need to assist the cooperative, they sparrred over the language in the bill and over amendments proposed by Evers and legislative Democrats that would have given the Wisconsin Economic Development Corp. more discretion in how to structure a loan and open the door to alternative funding sources if the U.S. Treasury Department rules that third party borrowers are not eligible for the funds.
Evers, during an appearance in Green Bay on Thursday, said he "hasn't seen the bill yet," and his support for it "depends on where the money is coming from."
Mayor Shane Blaser said he saw pros and cons in both the bill as it was originally written and also in the amendments. The amendments allowed the cooperative more flexibility when it came to funding the purchase of the mill, while the bill itself required the cooperative to secure other funds before it would qualify for the federal ARPA loan.
"Either way, no matter which version is there, it's still support for our mill," Blaser said. "Madison can figure out what they're doing and how they want to do it, but the important thing is that there are opportunities."
At last week’s Assembly floor session, Rep. Katrina Shankland, D-Stevens Point said the governor and a group of Democrats had put together the amendments in an attempt to strengthen the bill and give it more security in the face of the uncertainty about whether the cooperative would qualify for the loan.
At the time, Shankland also referenced a June 16 memo from Wisconsin’s Legislative Fiscal Bureau, which stated the U.S. Treasury Department has final word on whether a loan to the cooperative would be an eligible use of the federal funds. If the project would be ineligible, the state would need to repay the Treasury for the amount of the loan.
“It should also be noted that a loan or a grant to a third party, such as the Consolidated Cooperative, to purchase another company’s distressed assets is not directly discussed in the rule or guidance,” the memo stated. “For this reason, it is unclear whether the proposed loan would be an allowable use of SFRF funding.”
Among the concerns is that the state may have to repay the federal government the amount it loans the cooperative if it's later determined that the project is ineligible. The cooperative would then continue to repay the state.
The memo went on to suggest amendments to the bill to give WEDC more flexibility.
The suggested amendments, which Republican lawmakers rejected, included allowing the WEDC to make the loan forgivable or set an interest rate below the market rate.
“Without (these amendments), it doesn’t look like we’re able to get the support (for the cooperative) that is needed,” Shankland said at the time.
However, Republican Rep. Scott Krug of Nekoosa an author of the bill, said he is not worried about the project’s eligibility, as the language allowed affected industries and small businesses to receive the loans to help build back economies hit by the pandemic. Krug said the amendments were only presented at the last minute, and he doesn't foresee President Joe Biden or the Treasury turning down funding for a local cooperative working to restart a shuttered paper mill.
“I wouldn’t have written the bill if I didn’t think the federal government would be supportive,” Krug said.
Tim Pavlik, the president of the United Steelworkers Union Local 2-94 said union members encouraged other USW local members to contact their state senators, asking them to support the bill with the addition of the amendments.
Pavlik said he hopes the authors of the bill ensured it would qualify for the federal loans, but no one can say with certainty if that will be the case.
Blaser said municipalities and states all over the country got various amounts of ARPA funds, and many are questioning which projects are eligible. The city, for example, it waiting to hear if road projects are eligible, or if the money is only allowed to be used for water and sewer projects. Blaser said some rules for using earlier rounds of pandemic recovery money were relaxed over time, and he hopes the same thing happens with this round.
Dennis Schoeneck, the president of the Timber Professionals Cooperative, said the cooperative would accept whatever help it can get to purchase and operate the mill, regardless of the form of the aid.
The final version of the bill passed by both Assembly and Senate would allow WEDC to award the loans to the Consolidated Cooperative or another eligible borrower for the Wisconsin Rapids mill and to the Park Falls Mill Multi-Stakeholder Cooperative or another eligible borrower. the Timber Professionals created both cooperatives.
Schoenek said opening up the loans to other eligible borrowers could attract other companies and groups who want to take advantage of the loan and low interest rates, and the cooperative would then be competing to buy the mills.
While lawmakers continue to argue about the details of the bill and the proposed amendments, they all shared a sense of urgency to get the mill up and running a year after Verso announced its plans to idle. Many lawmakers at last week's floor session pointed to the ripple effect the closure has had on not only more than 900 employees and their families, but the communities and adjacent industries like logging and forestry.
Pavlik said the converting operation is still running in Wisconsin Rapids, sheeting paper from Verso's two mills in Michigan, but if the pulp and paper operations can be restarted, it will bring back many jobs that have supported families in central Wisconsin for generations.
"The USW members stand ready to support whoever may restart the mill," Pavlik said. "I look forward to a day when white plumes of smoke come from the stacks and the smells of papermaking return to Wisconsin Rapids."