Budget Progress? — An Analysis by
Hamilton’s Pat Osborne
After months of little or no progress on the state budget,
there are good reasons to suggest a budget deal will be
completed within the next couple of weeks: (1) the deadline for
certifying state aid to school districts is looming; (2) the
Senate has essentially pulled its Healthy Wisconsin proposal off
the table, and; (3) Gov. Doyle has become more directly involved
in negotiating a final deal.
School Aid Certification
By October 15, the Superintendent of Public Instruction is
required to certify to school districts the amount of state aid
they will receive so they can determine their revenues and
associated property tax levels.
When budgets have stalled out in the
past, this deadline has been the impetus for resolution. Neither
party wants to be held responsible for increasing property taxes
for failure to timely pass biennial increases in state school
aids.
To meet the October 15 deadline,
Superintendent Burmaster reported that DPI needs a two-week
processing time and, therefore, needs to have a state aid number
by September 28. If the budget is not resolved in
the next couple of weeks the Superintendent would likely have to
certify the current law cost-to-continue level of state aids
which, compared to the Governor’s proposed increase in school
aids, would constitute an estimated $600 million increase in
statewide property taxes; therein lays the urgency.
While both parties share the
urgency, they have yet to agree on how to beat the deadline.
The Republican-controlled Assembly adopted its answer on
September 18 by passing separate legislation (AB
506), which provides the Governor’s requested level of
school aid funding, and sending it to the Senate on a strong
70-27 bi-partisan vote.
The Democrat-controlled Senate
maintains it is not interested in adopting a piece-meal budget
and that serious budget negotiation can still yield a
comprehensive budget bill in time to beat the certification
deadline.
Healthy Wisconsin
The Senate health care initiative referred to as Healthy
Wisconsin has been one of the primary budget differences between
the two houses. The Senate plan would create a universal
coverage system supported by an estimated $15.2 billion per year
in new payroll taxes.
Most budget observers agreed that a
budget deal could not be reached as long as the $15 billion
“gorilla” was sitting in the room. On Friday, September 2, the
Senate took the first step towards serious negotiation by taking
Healthy Wisconsin “mostly” off the table.
“Mostly” because, technically, the
Senate agreed to drop Healthy Wisconsin in exchange for their
position on a proposed hospital tax, $1.25 increase in the
cigarette tax, transfer of funds from the Patients Compensation
Fund, the Governor’s BadgerCare Plus initiative, and several
other health related provisions --- but the exchange was more
symbolic than a true bottom-line trade position.
In pulling the initiative out of the
budget, Sen. Robson made it clear that Senate Democrats would
pursue Healthy Wisconsin as separate legislation this session.
The Assembly leader recognized the
concession as very productive and agreed to review the Senate
health package, but made it clear that the assembly was not
agreeing to any element of the Senate proposal, especially the
more than $1 billion in health-related tax increases in exchange
for dropping Healthy Wisconsin.
Governor Calls for Budget
Summit
The same day the Senate signaled the end of Healthy
Wisconsin (as part of the budget), Gov. Doyle called for a
budget summit with legislative leaders to expedite negotiations.
The first meeting was set for Monday
morning, Sept. 24, at the Executive Residence with Senate
Majority Leader Robson and Assembly Speaker Huebsch. Several
days of meetings are envisioned and the conference committee is
not expected to meet again pending those summit discussions.
The Governor’s direct involvement
responds to Assembly concerns regarding veto assurances as part
of an overall deal and raises the stakes for all parties to
reach a comprehensive compromise.
Not Necessarily a Done Deal
Despite the school aid deadline and the positive
developments outlined above, there is still a real question
whether the remaining sizeable differences between the Senate
and Assembly budgets can be worked out in a matter of days.
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The Assembly has already passed
its response to providing an increase in school aids and may
not feel compelled to cut a hasty budget deal, particularly
since budget delay at this point arguably puts pressure on
the Senate to pass the separate Assembly bill. Under that
scenario, a final budget deal could be weeks in the making
with the pressure off on school funding and a
cost-to-continue budget in place under current law.
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Even with Healthy Wisconsin off
the table, the two houses are still billions of dollars
apart on new taxes. The bulk of those taxes was included in
the Governor’s original budget, endorsed and enhanced by the
Senate and completely rejected by the Assembly. To date,
neither side has moved from its original position on taxes.
Ultimately, the tradition of working
out a state budget together with recent positive developments
suggest a budget deal is likely to happen over the next couple
of weeks. However, there are still some wildcards in play that
may put budget negotiations past the first week in October.
Should that occur, the budget process enters uncharted waters.
It should be an interesting two weeks.
Tax Revenues Increase Allows
Transfer to Rainy Day Fund
According to the Department of Revenue, tax collections were
$22.1 million higher than last June, an increase of 4.9 percent,
allowing Gov. Doyle to transfer $50 million to the state’s rainy
day fund – the first transfer of its kind in state history.
Individual income tax collections
were $18.8 million higher, and estate tax revenues were $4.1
million higher than estimated. General sales and use tax
revenues were $5.6 million lower than projected. Revenues from
most of the remaining tax sources were slightly more than the
estimates.
The final accounting of revenues and
expenditures for fiscal year 2006-07, will be included in the
state Annual Fiscal Report which will be issued on October 15,
2007. Figures in that report are not expected to deviate
significantly from these preliminary estimates.
Under state law, actual tax
collections in a fiscal year must be compared with the estimated
tax collections made for that fiscal year in the biennial budget
act. If actual collections exceed estimates and the required
general fund ending balance is fully funded for that fiscal
year, then 50 percent of the excess revenues must be transferred
to the rainy day fund. Since this law was first enacted in 2001,
excess revenues have not been sufficient to make a transfer to
the rainy day fund.
Attorney General Holding Seminars
on Open Meetings Law
Attorney General J.B. Van Hollen is hosting six free
seminars across the state of Wisconsin to promote public
awareness of and compliance with the state's open meetings and
public records law.
The first seminar took place in
Stevens Point on September 18, with the remaining seminars to be
held at Rhinelander (October 8), La Crosse (October 10), Madison
(October 29), Green Bay (November 6), and Milwaukee (November
8).
Each seminar is free and open to the
public.
Oral Arguments Scheduled on Open
Meetings/Records Applicability to Local Economic Development
Corporations
The Wisconsin Supreme Court has scheduled oral arguments for
November 6 of this year in the case of State of Wisconsin v.
Beaver Dam Area Development Corporation, involving the
application of Wisconsin Open Meetings and Public Records Law to
local economic development corporations.
The Beaver Dam Area Development
Corporation (BDADC) is a private corporation that promotes
economic development in Beaver Dam. The city of Beaver Dam is a
client of the BDADC and receives proposals and suggestions to
promote economic development in the city.
Former Attorney General Peg
Lautenschlager, on behalf of the State of Wisconsin, brought a
suit against the Beaver Dam Area Development Corporation seeking
a declaration that the BDADC was subject to both public record
and open meetings laws under Wis. Stats. §19.31and §19.81,
respectively. The trial court ruled that the BDADC is neither a
governmental nor a quasi-governmental corporation and that the
BDADC is not subject to either the public records law or the
open meetings law.
The State appealed the trial court’s
ruling and the court of appeals then certified the question to
the Wisconsin Supreme Court. The State argues that the BDADC’s
work for the city makes it a quasi-governmental corporation and
that the work produced by the BDADC must be made available to
the public.
The BDADC argues that having common
goals with the city and acting cooperatively to achieve those
goals does not make the BDADC a quasi-governmental corporation.
The State has also asserted claims against the individual
members of the board of directors for the BDADC, seeking
forfeitures for the alleged violations of the open meetings law.
On August 13, the Wisconsin Economic
Development Association, Wisconsin Realtors Association,
Wisconsin Association of Manufacturers & Commerce and the
National Association of Industrial and Office Properties,
Wisconsin Chapter, with the support of the Wisconsin Builders
Association, filed an Amicus Curiae (friends of the court) Brief with the
Wisconsin Supreme Court supporting the trial court’s conclusion.
Transparency Code for Government
Contracts
with Private Attorneys
In a commentary published in the National Law Journal,
the American Tort Reform Association has proposed new voluntary
standards designed to improve government transparency and
accountability when states (and other government entities) hire
outside counsel to litigate on behalf of state residents.
“With increasing regularity, states
are hiring personal injury lawyers from the private sector to
perform legal work for the state, and hundreds of millions of
dollars in contingency fees are sometimes at stake,” explained
ATRA President Tiger Joyce. “Yet some states award such
lucrative contracts to their political supporters without
competitive bidding and with little or no oversight from the
public or state legislatures.
“Wisconsin
deserves credit for its statutory requirements for special
counsel contracts. Room for improvement remains, however. Too
often these arrangements are governed by non-competitive
contracts that are negotiated behind closed doors,” Joyce said.
“In Wisconsin, these contracts originate in the governor’s
office, but the transparency principles would further
Wisconsin’s heritage for openness in the development of such
contracts, whoever represents the state.”
In Wisconsin,
the most high profile case involving outside counsel related to
the fees paid in the tobacco litigation of the late 1990s. The
recent lead paint litigation in Milwaukee also involved a
private attorney hired by the city on a contingent fee basis.
(The jury did, however, find against the city at the trial court
level.)
Seven states have enacted
legislation that aligns closely with the proposed code. The key
ingredients of the code are: disclosure, value, oversight and
reporting. “We hope state policy-makers will closely examine
these principles and begin a constructive dialogue about the
merits of a uniform process for hiring outside counsel,” Joyce
said. “If states are to be successful in pursuing and protecting
the public interest, they must have the full confidence of the
citizenry. Transparency and accountability are the foundation
of such confidence.”
In April, ATRA released results of a
survey in that showed a strong majority of Wisconsinites favor
posting outside lawyer contracts on the Internet for public
inspection and requiring those outside lawyers to keep detailed
records of their hours and specific work performed, among other
things.
Full results of that survey and the
detailed Transparency Code are posted on ATRA’s AGAgendaWatch
Web site at www.agwatch.org.
PSC Approves Sale of Point Beach
Nuclear Power Plant
with Conditions
The Public Service Commission of Wisconsin (PSC) on Tuesday,
Sept. 18, approved the sale of Point Beach Nuclear Power Plant
from Wisconsin Electric Power Company (WEPCO) to Florida Power
and Light Energy (FPL Energy).
The Commission made substantial
changes to the transaction aimed at improving its value to
ratepayers, and solidifying the state’s ongoing role in
important subsequent decisions related to the plant.
The PSC improved the potential value
of carbon dioxide credits, restricted nuclear waste storage and
ensured future decommissioning of the plant meets strict
environmental guidelines. Additionally, the parties agreed to
the Commission’s ongoing role in important future decisions at
the plant, including any potential sale to other companies and
the decommissioning of the facility.
For more information on legislation of interest to CTCW
members, go to the CTCW Tracking Report. |
