ARCADIA, Wis. (WKBT) -

The Mayor of Arcadia says he's confident the city's largest employer is not downsizing.

John Kimmel's comments come after reports that Ashley Furniture could lay off half its workforce.

Ashley was recently approved for a multi-million dollar tax break from the state. As part of the deal, Ashley would be allowed to lay off  workers in the future.

But the company says their intention is the exact opposite, they say they want to grow their presence in Arcadia, and the Mayor believes them.

Arcadia's Mayor is quick to tell you how important Ashley is to their community. "They help Arcadia and the surrounding areas to be great communities," said Kimmel. So when reports surfaced that the company could lay off half their workers, Kimmel wasn't worried.

"Ashley's grown jobs from the beginning, they are a company that, they put their vision out there and decide what they want then work tirelessly for perfection," said Kimmel.

Ashley Furniture Senior Executive Bill Koslo says the reports of job loses are completely wrong. Ashley says part of their application for a $6 million tax break from the state included the ability to reduce their workforce down to 1,950 workers.

But they say it's there as a precaution, not a plan to lay off. "It's a safe harbor number, if we go below that number as an act of god or a catastrophe," said Kolso, "no matter what we have to have this minimum number of employees even if they're not working, and if we go below that number we have to pay the money back."

"Ashley's interests is actually growing the company and they believe that they'll have more employees in the future, they're committed to growing, they just can't grow unless they ultimately can do so outside of the flood zone," said Governor Scott Walker.

That flood zone is why Ashley applied for the tax incentive. They plan to donate the tax break to the city so Arcadia can complete their flood control project. "Flooding has been an ongoing problem for the last few generations, 50 or better years," said Kimmel, "one of the reasons all of these years have past without getting these projects done is lack of funding."

The mayor calls the recent reports more political than anything else, and has every faith that Ashley will remain an important part their community. "They find a way to make it work, and they grow, and they find ways to say yes to Wisconsin when a lot of businesses, they don't" said the Mayor.

Ashley has also made a promise to make a $34.5 million capital investment in their Arcadia facility.

The tax credit comes from the Wisconsin Economic Development Corporation. They were approved for the credit, but still have to finalize the agreement.

The flood control project would improve the city's levee, pumps and relocate the Myers Valley Creek.

If the money comes through, the city hopes to start the project in the spring of next year.