2007-09 Budget Update

Senate Democrats’ Healthy Wisconsin Plan

Milwaukee Jury Finds for Defendants; Against City
 in Lead Paint Case

U.S. Supreme Court Relaxes Election Ad Limits

Builders Win Case in U.S. Supreme Court

2007-09 Budget
Major Proposed New Funding Sources:

(Please see June 1 issue of Tidbits for greater detail on the proposed new funding sources.)

Real Estate Transfer Fee
Governor - Increase the amount paid by sellers in all real estate transfers (personal dwellings and commercial buildings) from $3 to $6 per $1000 value transferred.

Joint Finance - No Change

Senate - No Change

Vital Records Fees
Governor - Increase fees relating to vital records (includes birth, marriage, divorce and death certificates)

Joint Finance - Rejected the increases and agreed to maintain current law.

Senate - Same as Joint Finance.

Hospital Tax
Governor - Create a tax on the gross revenues of hospitals not to exceed 1 percent.

Joint Finance - No Change

Senate - Essentially no change; some language changes.

Cigarette Excise Tax
Governor - Raise cigarette tax from $0.77 to $2.02 and raise tobacco products tax from 25 percent to 65.5 percent of the manufacturer’s established list price.

Joint Finance - No Change.

Senate - No Change.

Automobile and Light Truck Vehicle Registration Fees
Governor - 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

Joint Finance - No Change

Senate - Increase the fee schedule for trucks over 8,000 pounds by 10% netting an additional $26 million for the Transportation Fund.

Tipping Fees
Governor - 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.

Joint Finance - No Change

Senate - Would increase the fee by an additional $4 to $10 per ton.

Oil Company Tax
Governor - 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 that would mandate that the increased cost could not be passed on to the consumer subject to civil and/or criminal penalties.

• And would convert $165 million in current general fund spending to be paid out of the Transportation Fund.

Joint Finance - No Change.

Senate - Would modify the oil company tax to create a graduated scale of rates at which gross receipts would be assessed from 0 percent to 3 percent, based on each supplier’s annual amount of gross receipts rather than a straight 2.5%.

Transfer from the Patients’ Compensation Fund

Governor - Proposes to transfer $175,000,000 from the Injured Patients and Families Compensation Fund.

Joint Finance - No Change

Senate - No Change

Other Items:

Combined Reporting

Governor - No provision.

Joint Finance - Not included.

Senate - Includes imposition of combined reporting for corporate income taxation beginning in tax year 2008. This 10% corporate tax increase is estimated to raise approximately $90 million.

Universal Health Care

Governor - No provision

Joint Finance - No provision

Senate - Includes a universal health care plan that creates a payroll tax formula for Wisconsin businesses and employees. The estimated cost is $15.2 billion. (see attached Healthy Wisconsin Plan update for further information)

Kenosha-Racine-Milwaukee Commuter Rail

Governor - No provision

Joint Finance - No provision

Senate - Allows the Southeastern Wisconsin Regional Transit Authority to assess a $15 rental car tax on every car rental in the three-county area to fund the development and construction of the KRM commuter rail line.

Domestic Partner Benefits

Governor - Provide health insurance coverage for domestic partners of state employees and state annuitants.

Joint Finance - Delete provision

Senate - Restores Governor’s recommendation and further allows local governmental employers to participate in the same group health insurance program for domestic partners.

Required Health Insurance Coverage for Autism Disorders

Governor - Require every health insurance policy and every self-insured health plan to provide coverage of treatment for autism disorders. Required coverage does not apply to a disability insurance policy that covers only certain diseases; a health care plan offered by a limited service health organization, or by a preferred provider plan that is not a defined network plan; a long-term care insurance policy; or a Medicare replacement policy or Medicare supplement policy.

Joint Finance - Delete provision.

Senate - Restores Governor’s recommendation.

School Choice
Governor - Provide $10 million in 07-08 and $18.7 million on 08-09 over the base year funding of $108 million in the appropriation for payments for the Milwaukee parental choice program. Further modifies the funding split for the Milwaukee parental choice program beginning with the 07-08 school year (55% for the first 15,000 pupils).

Joint Finance - No change

Senate - Deletes the provision modifying the funding split for the program resulting in an increase in the JJPS choice levy by $8 million in 07-08 and $12 million in 08-09.

Forward Wisconsin/ Commerce

Governor -

• Maintain current $320,000 funding for Forward Wisconsin

• Increase the Commerce budget by $590,000 per year for marketing and two positions

Joint Finance -

• Maintain current funding for Forward

• Remove the $590,000 annually for Commerce

• Provide $50,000 to Forward and Commerce to develop an updated marketing plan for Wisconsin

• Set aside $700,000 in a supplemental appropriation to be allocated by Joint Finance to Forward or Commerce or both after receipt of the updated marketing plan.

Senate - No Change from Joint Finance

Angel Investment & Early Stage Seed Investment Tax Credits

Governor -

• Increase the total amount of angel investment tax credits that can be claimed for all tax years by $17,500,000.

• Increase the aggregate amount of tax credits that could be claimed each year after 12/31/07 by $2,500,000.

Joint Finance - No change to the Governor’s proposal.

Senate - Delete the provisions.

Wisconsin Development Fund—Renewable Energy Grants and Loans

Governor - Include $15 million in new annual revenues for grants and loans for renewable energy as part of the Wisconsin Development Fund.

Joint Finance - Deleted the provision.

Senate - Restores the Governor’s recommendations.

TID Closure Under Levy Limits

Governor - Proposes changes to levy limit and TIF law, including “valuation factor” to alleviate problems associated with closure and levy limits in existing TIDs going forward and new TIDs that would be created.

Joint Finance - No change

Senate - No change

Manufacturing Extension Center Grants

Governor - No provision.

Joint Finance - Provides $350,000 GPR annually to increase funding for manufacturing extension center grants to $1.2 million annually

Senate - No change to Joint Finance.

Senate Democrats’ Healthy Wisconsin Plan
The “cornerstone” of the Senate Democrats’ version of the 2007-09 budget proposal is a $15.2 billion universal health care plan. Please see The Hamilton Consulting Group's Update by Pat Osborne for details of the “Healthy Wisconsin Plan.”

The Republicans in both Houses have indicated strong opposition to the proposal while the Governor appeared skeptical without expressing outright opposition, again touting his own version of expanding BadgerCare.

Milwaukee Jury Finds for Defendants; Against City
in Lead Paint Case
On Friday, June 22, a jury in Milwaukee entered a verdict in which, on a 10-2 vote, it determined that NL Industries was not negligent and would not have to pay the City of Milwaukee any money for reimbursement for the city’s lead-cleanup effort. (The city was seeking $52.6 million from NL Industries.)

While the jury determined that the presence of lead paint in some of the city’s housing stock created a public nuisance, that finding did not translate to liability absent the showing of negligence (actual causation) on the part of the defendant.

The Milwaukee verdict was among several significant developments in lead paint litigation over the past two weeks - all favoring defendants - and two of the cases specifically addressing public nuisance allegations and theories.

On June 12, the Missouri Supreme Court ruled against the city of St. Louis, rejecting a market share theory and holding that actual cause must be shown in a public nuisance case. On June 15, the New Jersey Supreme Court held for defendants and against 26 municipalities and counties, stating that plaintiffs’ view of the law would improperly stretch the theory of public nuisance to impose strict liability upon manufacturers of ordinary consumer products that were legal when sold.

(On June 20, the Ohio Supreme Court let stand a lower court decision that refused to allow plaintiffs to sue former manufacturers of lead paint pigment or their alleged successors without identifying who made the lead pigment in their homes - actual causation - and rejected the market share liability theory proposed by the plaintiffs.)

Please see the Hamilton Consulting Group’s new Update on Recent Developments in Lead Paint Cases for additional information.

For more information on legislation of interest to CTCW members, go to the CTCW Tracking Report.

U.S. Supreme Court Relaxes Election Ad Limits
The United States Supreme Court released a 5-4 decision on Monday, June 25, relaxing restrictions that prohibited corporate and union funded television election ads close to elections. 

The case was brought by the Wisconsin Right to Life (WRTL) after the 2004 election when the WRTL wanted to run television ads urging voters to contact Senators Kohl and Feingold to prevent a filibuster from delaying the voting on judicial nominations.  The Bipartisan Campaign Reform Act prohibited the WRTL from running such an ad because Feingold was up for reelection at that time. 

The case was accepted to the Supreme Court as an “as applied” challenge meaning that it would only evaluate the law as it applied to these particular litigants, facts and circumstances surrounding the television ads.  The court ruled that the black out time before elections did violate the WRTL’s right to free speech. 

This ruling will allow corporations and labor organizations to sponsor issue advocacy communication in the upcoming 2007-2008 election cycle. This activity has prohibited since the Bipartisan Campaign Reform Act went into effect in 2002. 

Commentators believe the ruling will end efforts to adopt electioneering communication standards at the state level.  It still remains to be seen how this ruling will be applied to future organizations, but there is no doubt that it will be tested through future litigation.

Builders Win Case in U.S. Supreme Court
The U.S. Supreme Court recently released a decision in favor of the National Association of Home Builders over the Defenders of Wildlife in a 5-4 decision. The case was based on the Home Builders’ consultation requirements included in the Endangered Species Act.

A federal appeals court in the case required that the U.S. Environmental Protection Agency to consider the protection of “listed” species before allowing the state of Arizona to have Clean Water Act permitting authority. The current criteria for obtaining Clean Water Act permitting does not include any such requirement.

The objection came from builders who were denied permits until building sites had been inspected using the guidelines for an Endangered Species Act consultation. In one such case dealing with a protected species, the U.S. Fish and Wildlife Service estimated that the Act delayed development by 5 to 18 months and increased costs by 1.7 to 2.7 million dollars. The increase in time and money to builders in turn drove up the cost of housing.

The builders contended that it was unfair to deny them water pollution permits until an inspection for a completely unrelated matter could take place. Justice Samuel Alito wrote for the majority that stated when it comes to the federal EPA delegating authority to a state, it is up to the local authority to decide how to interpret the Endangered Species Act.

Democrats advance state budget: Milwaukee Journal Sentinel, June 27, 2007. Senate plan includes universal health care.

Senate passes universal health care plan as part of budget: Wisconsin State Journal, June 26, 2007. A sweeping universal health care plan that would cover virtually every person in Wisconsin cleared the Democratic-controlled state Senate on Tuesday as part of the two-year budget.

For more Wisconsin News, go to Hamilton Consulting News Clips.

July 10

• Sen. Alberta Darling (R-River Hills), Saukville

• Rep. Lee Nerison (R-Westby), Prairie du Chien

July 11

• Sen. Bob Wirch (D-Kenosha), Madison

July 15

• US Sen. Russ Feingold (D), Middleton

• US Sen. Russ Feingold (D), Milwaukee

July 26

• Rep. Jeff Fitzgerald (R-Horicon), Wisconsin Dells

For details, go to Hamilton Consulting Fundraiser Calendar.

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