Wisconsin State Budget - Proposed
“New” Revenue Sources
In the May 15, 2007 edition of Tidbits, we presented a preview of the state budget process that
is occupying the majority of time of the Legislature,
Administration and lobbying corps. Among other items, we listed
the eight primary “new” (including increases in existing fees)
funding sources proposed by the Governor when he presented his
proposed budget in February. Below is an expanded discussion of
the revenue source proposals, including any action taken by the
Joint Committee on Finance (JFC) to date.
All of the proposed revenue sources
are controversial and include well organized proponents and
opponents of the increases of existing fees, new taxes or
transfer of funds. The information presented in this document
does not address the pros and cons of the respective sources
but, hopefully, helps to illustrate the proposed funding side of
the budget equation.
Real Estate Transfer Fee
The proposed legislation would:
-
Increase the amount paid by
sellers in all real estate transfers (personal dwellings and
commercial buildings) from $3 to $6 per $1000 value
transferred.
-
Increase the amount of the fee
that the state keeps from 80 percent to 90 percent and
reduce the amount the county receives from 20 percent to 10
percent.
-
Of the $6 paid, the state would
keep $5.40 (per $1000) which is up from $2.40 and the county
would keep $0.60 which is the same amount it currently
receives.
The entire amount collected by the
state would go into a new fund, the County Aid Fund, rather than
the general fund.
The increase in the real estate
transfer fee would increase state revenues by:
[JFC, on an 8-8 vote, left the
increased funding in the bill.]
Vital Records Fees
Vital records include birth, marriage, divorce and death
certificates.
The proposed legislation would
increase costs relating to vital records, including acquiring,
amending, searching and expediting. The increased revenue
collected would be split with 60 percent going to the state and
40 percent going to the local registrar.
The estimated total increase in
revenues to the locality would be:
-
$2,925,200 in 2007-08
-
$3,524,300 in 2008-09
The estimated total increase in
revenues to the state would be:
-
$7,111,100 in 2007-08
-
$8,581,300 in 2008-09
[JFC rejected the increases and
agreed to maintain current law on a 14-2 vote.]
Hospital Tax
The proposed legislation would create an assessment on
the gross revenues of hospitals not to exceed 1 percent of the
gross revenue. (The Administration has recently announced its
intention to support .8 of 1 percent in lieu of 1 percent.) All
of the revenue from the assessment would be deposited in to the
Health Care Quality Fund to increase medical assistance (MA)
rates for hospitals, and replace base General Purpose Revenue (GPR)
funding for MA benefits with segregated revenues from the Health
Care Quality Fund.
-
Provide $57,909,600 in
segregated revenue in 2007-08 to replace the same amount
that would come from the GPR
-
Provide $61,750,200 in 2008-09
The estimated revenue to be
generated from the assessment is:
-
$205,532,800 in 2007-08
-
$212,726,500 in 2008-09
The estimated rate increase for
services provided to MA and BadgerCare recipients:
-
$345,967,600 in 2007-08
-
$358,756,900 in 2008-09
The rate increase will include:
-
An increase in fee-for-service
rates to approximately 100 percent of cost
-
An increase in disproportionate
share hospital payments to critical access hospitals, and
-
An increase in the managed care
rate to approximately 80 percent of cost
The bill would also repeal the
current hospital assessment and delete the base MA benefits
funding supported by the assessment. The current assessment
totals $1,500,000.
[JFC has not addressed this issue to
date.]
Cigarette Excise Tax
The proposed legislation would:
-
Raise cigarette tax from $0.77
to $2.02. (An increase of $1.25 per pack)
-
Raise tobacco products tax from
25 percent to 65.5 percent of the manufacturer’s established
list price. (Tobacco products are defined as cigars,
cheroots, granulated; plug cuts, snuff, chewing tobacco,
clippings, and other forms of tobacco.)
The amount of the tax that
distributors are rebated for administration costs would be
reduced from 1.6 percent to 0.7 percent and the amount of time a
distributor has to pay the floor tax (a onetime payment on
current cigarette inventories) would be reduced to 30 days from
15 days. The proposal would also reduce the refund to tribes for
the excise tax on cigarettes sold on tribal lands to non-tribal
members from 70 percent to 50 percent
The estimated revenue from the
proposed Cigarette Tax is:
-
257,500,000 in 2007-08
-
249,000,000 in 2008-09
The estimated revenue from the
proposed tobacco products tax is:
-
18,200,000 in 2007-08
-
21,500,000 in 2008-09
The estimated increase from the
tribal refund is:
-
$10,300,000 in 2007-08
-
$10,200,000 in 2008-09
The resulting increase in tax
revenue would be deposited into a new fund, “The Health Care
Quality Fund,” which would be a source of funding for Badger
Care and Medical Assistance (MA).
[JFC has not addressed the cigarette
tax increase proposal to date.]
Automobile and Light Truck
Vehicle Registration Fees
The proposal would increase:
-
passenger registration from $55
to $75
-
light trucks not more than 4,500
pounds from $48.50 up to $75
-
trucks not more than 6,000
pounds from $61.50 up to $84
-
trucks not more than 8,000
pounds from $77.50 to $106
The estimated increase in
transportation fund revenue would be:
-
$71,054,800 in 2007-08
-
$96,894,500 in 2008-09
The amount of that revenue
attributable to the increase in passenger vehicle registration
would be:
-
$52,906,900 in 2007-08
-
$71,782,700 in 2008-09
The amount of revenue attributable
to the increase in light truck vehicle registration would be:
-
$18,147,900 in 2007-08
-
$25,111,800 in 2008-09
[JFC left the registration fee
increases in the bill as proposed by the Governor.]
Tipping Fees
A tipping fee is the amount charged for disposing either
waste at a landfill or waste processing facility.
The proposal would double the
recycling tipping fee for waste disposed of in Wisconsin
landfills on or after July 1, 2007 from $3 to $6 per ton. The
fee is assessed on waste other than high volume industrial
waste, but there are a few exceptions.
The fees are deposited in the
segregated recycling fund. The total tipping fee paid for most
municipal and industrial waste would increase from $3.80 to
$7.90 per ton. Estimated increase in revenue is $18,000,000 in
2007-08 and $24,000,000 in 2008-09.
The following programs are funded
from the segregated recycling fund:
-
Commerce Renewable Energy Grants
and Loans
-
DNR Waste Reduction and
Recycling Demonstration Grants
-
DATCP Clean Sweep Grants
-
DATCP Anaerobic Digester
Research and Development
Gov. Doyle’s proposed transfer from
the segregated recycling fund:
-
$13,000,000 transfer to the
general fund in 2007-08
-
$20,000,000 transfer to the
general fund in 2008-09
The proposed legislation would
increase the environmental repair solid waste tipping fee
imposed on municipal and non high-volume industrial waste by
$1.10, which would take the current price of $0.50 to $1.60 per
ton for waste disposed of in Wisconsin landfills on or after
July 1, 2007.
-
0.75 cents of the increase would
be deposited in the non-point account of the segregated
environmental fund;
-
0.35 cents of the increase would
be deposited in the environmental management account of the
environmental fund
Total tipping fees under the
proposal:
Estimated increase in revenue from
the additional tipping fee:
Amount generated to the
environmental management account:
-
$2,310,800 in 2007-08
-
$3,080,000 in 2008-09
[JFC on an 8-8 vote left the tipping
fee increases in the bill.]
Oil Company Tax
The Governor’s proposed tax on oil companies would
create:
A 2.5 percent tax on the gross
receipts of an oil company but would not include the sales of
bio-diesel fuel or 85 percent ethanol fuel.
An anti-pass through provision. The
tax would be assessed at the point of the first sale in the
state but the legislation would mandate that the increased cost
could not be passed on to the consumer. Under the proposal, oil
companies could be assessed civil and/or criminal penalties.
The estimated increase to the
transportation fund would be $116,710,000 in 2007-08 and
$158,460,000 in 2008-09. This money would be deposited in the
Transportation Fund. The budget proposal also converts $165
million in current general fund spending to be paid out of the
Transportation Fund.
[JFC, on an 8-8 vote, left the oil
company gross receipts tax and the shift of CPR costs onto the
Transportation Fund, as proposed by the Governor, in the bill.]
Transfer from the Patients’
Compensation Fund
The Governor’s budget bill proposes to transfer
$175,000,000 from the Injured Patients and Families Compensation
Fund (“fund”). The fund was developed to provide excess medical
malpractice coverage to participating health care providers for
medical malpractice claims that would exceed the primary
malpractice insurance that Wisconsin health care providers are
required to maintain by law.
Revenue is generated for the fund by
annual assessment paid by participating health care providers,
and investment income generated by the assets in the fund. The
proposed bill would transfer the $175,000,000 to the Health Care
Quality Fund.
Total Proposed Amount:
[JFC has not addressed the issue to
date.]
Joint Finance Action on
Transportation Finance
As predicted, the Joint Committee on Finance voted eight to
eight to leave the Governor’s proposal to impose a gross
receipts tax on oil companies in the current budget document.
Under the proposal, the tax could not be passed on to the
consumers. All eight Republicans supported a motion to remove
the provisions and all eight Democrats opposed removal.
The action came after a flurry of
activity that included three separate memoranda questioning the
constitutionality of the Governor’s proposal. One memorandum, addressed to a labor organization, was written
by former Democrat Attorney General Peg Lautenschlager and her
former Deputy, Dan Bach, both of whom are practicing law with
Lawton and Cates, a prominent Madison firm that has represented
labor unions for years.
The second memorandum was written by Attorney David Crass of
Michael Best & Friedrich and addressed to Wisconsin
Manufacturers & Commerce (WMC).
The final memorandum was written by Bill Ford, Senior Staff
Attorney for the nonpartisan Wisconsin Legislative Council, and
was prepared at the request of Assembly Speaker Mike Huebsch.
All three memoranda place serious
doubt on the constitutionality of the anti-pass through
provision in the bill.
Ballast Water Debate Heats Up
On Thursday, May 23, the Senate Committee on Environment &
Natural Resources held a public hearing on Senate Bill 119 that would
prohibit oceangoing ships from using ports in this state without
obtaining a permit from DNR to ensure DNR that its ballast water
does not hold invasive species. The day before the hearing a
coalition of 90 environmental groups issued a statement calling
for all oceangoing/saltwater vessels to be locked out of the
Great Lakes until Congress requires their ships to sterilize
their ballast water.
The Wisconsin legislation would, of
course, apply only to ports in Wisconsin. Proponents and
opponents alike agree that aquatic invasive species are a
problem and that federal action would be desirable. Proponents
of the legislation believe that Wisconsin should move forward
even if Congress and other states do not follow on the basis
that the situation has reached crisis proportions.
Business and economic development
groups oppose Wisconsin creating its own ban since it would put
Wisconsin industries and port communities at a competitive
disadvantage. These groups also suggest that the legislation
ignores other vectors that have been ways of introducing
invasive species in our lakes and the Great Lakes. These groups
do support action at the federal level to avoid a patchwork of
state laws that put their respective states and ports at a
competitive disadvantage.
Rental Car Fee Increase Deadlocks
in Committee
A motion to include a $13 car rental fee increase in the
state budget lost on a tie vote--along party lines--in the
Legislature's Joint Finance Committee this week. The proposed
increase was directed at helping to finance a commuter rail line
connecting Milwaukee, Racine and Kenosha in the proposed 2007-09
state budget.
The fee currently is $2 and the
proposed $13 increase would have represented a 650 percent
increase. The Democrats on the panel supported the fee increase,
while the Republicans opposed it. The plan would have identified
a “local” funding source that the transit authority would have
used to apply for up to $50 million in bonds for the commuter
rail project.
Doyle Signs Bills into Law
The following bills were recently signed into law by Gov.
Jim Doyle:
-
Assembly Bill 36 allows the DNR
to expedite urban forest grants to communities following
catastrophic damage in an urban area for which the Governor
has declared a state of emergency. Act 13
-
Assembly Bill 227 changes the
minimum continuing education requirement for obtaining a
building permit from six hours per year, to twelve hours
every two years. Act 14
-
Senate Bill 7 cleans up
technical language to clarify terminology affecting mobile
homes, manufactured homes, modular homes, manufactured
buildings, recreational vehicles, and mobile and
manufactured home communities. It also makes minor changes
to regulation and monthly fees. Act 11
-
Senate Bill 110 authorizes
Department of Natural Resources to refuse to reveal the
electronic mail addresses of persons who subscriber to its
periodicals and other publications. Act 12
-
Senate Bill 180 exempts Tax
Incremental District 3 in the city of Altoona from a 2001
statute requiring that a joint review board approve an
amendment to a project plan not less than ten days nor more
than 30 days after receiving the resolution to amend the
plan from the common council for village board. Act 10
Wisconsin Supreme Court Rules on
Worker’s Compensation Exception
Exceptions provided in the worker’s compensation statutes
allowing one employee to sue another employee should be given a
narrow interpretation according to a recent opinion handed down by the Wisconsin Supreme Court.
The court determined that Statute
102.03 provides the exclusive remedy for an employee against an
employer, but provides exceptions for suits against co-employees
in a few situations. The exception in front of the court was
the right to bring a suit “against a co-employee for negligent
operation of a motor vehicle not owned or leased by the
employer.”
The court held that when an action
is undertaken to provide maintenance or repair to a motor
vehicle, while the condition of the motor vehicle is such that
it could not be driven on a public roadway, the action does not
constitute “operation of a motor vehicle.”
The court held that the purpose of
the Worker’s Compensation Act is to 1) allocate the cost of
workers’ injuries to the industry in which they occur and 2) to
protect workers from the financial burdens of co-employee suits.
Wisconsin Women in Government
Host Annual Banquet
Elizabeth Edwards spoke at Wisconsin Women in Government's annual fund-raising dinner
last week, saying her husband, John Edwards, is the best
presidential candidate for women. Despite a recurrence of her
breast cancer, Edwards said she’s still campaigning, not, she
says, for her husband, as much as for the uninsured and
impoverished women in this country.
WWIG holds the annual dinner each
year to fund a scholarship program for women interested in
pursuing careers in government. Amy Boyer, of the Hamilton
Consulting Group, has been a member of the board since 2004.
For more information on legislation of interest to CTCW
members, go to the CTCW Tracking Report. |
