September 21, 2018

ANALYSIS: The 2017-19 Wisconsin State Budget

It was 2 1/2 months overdue, but the 2017-19 Wisconsin state budget (2017 Act 59) is now in the books.

While the process was delayed and, at times, not pretty, the biennial budget is a good budget. Not a great budget, but a good budget.

By M.D. Kittle | September 20, 2017

Budget Blog: Walker Releases List of 99 Budget Vetoes

Gov. Scott Walker on Wednesday released the full list of the budget items he intends to excise with his powerful veto pen, and made the case why the provisions shouldn’t be in the state’s recently passed 2017-19 spending plan.

In all, the Republican governor announced he will veto or partially veto 99 sections from the budget including several items he committed to nix in a closing budget battle.

Walker took the unprecedented step of publicly declaring a partial list of vetoes immediately following party-line passage of the budget Friday night in the GOP-controlled Senate. Four conservative senators – Sens. Robert Cowles (R-Green Bay), Chris Kapenga (R-Delafield), Steve Nass (R-Whitewater), and Duey Stroebel (R-Saukville) – declared they would cast no votes without veto assurances from Walker.

The governor stayed true to his word and vetoed the budget provisions the reluctant Republican senators had asked to be deleted. He did so even after hearing an earful from Assembly Speaker Robin Vos (R-Rochester) who was clearly frustrated by the veto pledges and what he described as “renegade” senators taking the budget process “hostage.”

Walker’s vetoes cover the alphabet of state agencies, from DATCP (the Department of Agriculture, Trade and Consumer Protection) to DPI (the Department of Public Instruction).

The vetoes improve the state’s general fund balance by $16.5 million in the 2017-19 biennium and by an estimated $71 million in the 2019-21 biennium, according to a statement from the administration.

“The governor supports using some additional funds to enact broad-based tax reductions, including a sales tax holiday, and provide more aid for our rural schools through sparsity aid,” the governor’s office said. A sales tax holiday proposal in Walker’s blueprint didn’t survive the Legislature’s budget-writing process.

Many of Walker’s vetoes deliver relatively minor deletions to the budget, removing an “additional mandated report” here or an agency requirement there. Some are technical corrections. Others eliminate nonfiscal policy items from the budget, a class of vetoes Cowles in particular sought.

The more controversial vetoes involve provisions tucked into the $76.5 billion, two-year spending plan at the end of an elongated budget-writing session.

Public Finance Authority

With a stroke of his pen, the governor swept away a last-minute measure that would have expanded the authority of a shadowy Public Finance Authority. The provision, among other things, would have granted the tax-free, risky bond peddler the force of eminent domain. Walker said he vetoed the provision because the nonfiscal policy should be vetted as separate legislation.

Rep. Scott Allen (R-Waukesha) said he voted against the budget specifically because of the PFA provision. Allen has called for a legislative audit of the quasi-public Finance Authority, created by unanimous approval of the Legislature in 2009. He notes the Wisconsin-based agency has done very little investment in the Badger State, while doing billions of dollars in business nationwide. The JFC measure also would have opened the door for the Finance Authority to do overseas investment.

Education

Low Revenue Adjustment

One of the most significant vetoes, by far, involved changes to the low revenue adjustment for low-spending school districts. Walker’s original budget kept that adjustment where it was – $9,100 per pupil – without changes. With his veto pen, the governor maintains the original level, writing that a change to the low revenue adjustment results in “a substantial increase in property tax capacity that school districts may exercise without voter input.”

School district revenue limits were set in 1993 to prevent massive increases in local property taxes. Over the summer, it became clear that increasing the adjustment was a major priority for both houses of the Legislature. An education plan introduced by the Assembly Republican Caucus would have increased the limit to $9,800 in 2018. This would give low-spending school districts the ability to spend more per pupil, but would have increased their statewide levy authority – and property taxes – by $92.2 million.

Proponents of the plan said it would have sent more spendable money into the classroom while addressing a long-standing concern of school officials. However, immediate concerns about a property tax increase arose, especially considering Walker’s pledge to hold the line on taxes.

The Senate Republican Caucus followed up with a different plan that also increased the low revenue adjustment, but more gradually than the Assembly plan. That plan would have had the adjustment increase to $9,300 in 2017, to $9,400 in 2018, followed by annual $100 per pupil increases until 2022, when it would hit $9,800. That change would have limited potential property tax increases to $23.2 million statewide – concerning to many, but less than the Assembly’s proposal. JFC approved the Senate plan.

In a statement, Walker wrote that “school districts could pursue an increase in their revenue limit through a referendum, as is the case under current law.”

JFC Assembly Chair Rep. John Nygren (R-Marinette) tweeted about his disappointment in Walker’s veto list, and took special care to highlight the changes to the low revenue adjustment championed by the Assembly.

For his part, Walker focused on the lowering of property taxes while putting more money into classrooms.

Shared Services and Whole Grade Sharing

The budget allocates $2.75 million for several programs that would incentivize school districts to consolidate different services – namely, shared services aid and whole grade sharing aid.

The purpose of the initiatives is to provide grants to school districts that participate in whole grade sharing or shared services such as combined district administrators or human resources directors. Both would be new continuing appropriations to reward school districts that participate in such arrangements to save taxpayer dollars.

Walker vetoed both programs, asserting that the costly incentives defeat the purpose of savings.

“Sharing services will create savings for school districts; therefore, providing state grants would nullify savings to taxpayers that would result from local actions.”

Referenda Reform

This budget includes significant reform for referenda – in particular, those held by school districts. The occurrence of referenda has increased in recent years, with voters approving millions of dollars in spending and bonding outside of regular revenue limits each election. In many communities, the trend has raised property taxes.

There has been a lot of interest among legislators in reforming referenda, especially from Sen. Duey Stroebel. This session, he introduced eight separate bills that would address potential referenda abuse. The budget includes a few of those ideas, and Walker’s vetoes made them even stronger.

Referenda will be limited to primary or general election days. Final negotiations between the Senate and governor resulted in a further veto that will no longer allow school district referenda to be held in November of odd-numbered years. School districts will now be limited to holding referenda on two dates per year. This change will go into effect on Jan. 1, 2018, to ensure that already-scheduled referenda for this fall are not affected.

Off-cycle elections result in notoriously low voter turnout. With these reforms, a greater portion of each voting population is likely to weigh in on questions of massive spending and property tax increases.

Energy Efficiency Measures

In his original budget proposal, Walker had recommended altering rules for school districts using the energy efficiency adjustment. This program, established in the 2009-11 budget, allows school districts to increase their revenue limits by the amount they spend on energy efficiency projects. In February, Walker proposed changing those rules so that school districts would no longer be able to spend over their revenue limits without first holding a referendum.

The Joint Finance Committee’s final budget motion on education would have reopened that door, prohibiting districts from using the adjustment in 2018, but not altering the rules moving forward.

In a speech before the finance committee’s vote, Sen. Leah Vukmir (R-Brookfield) slammed the decision, saying that “it seems counterproductive to modify the governor’s recommendation” and that the provision “has been abused, and the governor was right when he eliminated it.”

Referencing a recent case in her own district, Vukmir went on to describe that “the voters of the West Allis-West Milwaukee School District rejected a referendum of $12.5 million. Four months later, the school district utilized this loophole for $12.8 million on what they called ‘energy efficient projects.'”

“This was an end-run around the taxpayers,” Vukmir continued. “The voters had said no. What is the point of having restrictions on referenda while at the same time providing a loophole for dodging the process?”

Walker seemed to agree, using his veto pen to restore his original plan.

Transportation

Prevailing Wage

Getting rid of Wisconsin’s prevailing wage law has been a conservative priority for some time, but the Legislature has been reluctant to do so. The 2015-17 budget eliminated prevailing wage on local projects, but that provision didn’t go into effect until Jan. 1, 2017. For the 2017-19 budget, lawmakers approved Walker’s proposal to repeal prevailing wage for state building and road projects, but they wanted to push off its effective date until Sept. 1, 2018. Walker’s veto puts prevailing wage changes in effect almost immediately, as three of the hold-out senators had requested.

“I am vetoing this section because I object to making the taxpayers of Wisconsin wait for nearly a year before they can begin to benefit from the cost savings to be created by the repeal of the state’s prevailing wage laws,” Walker explained.

Federal Swap

Even though Wisconsin will soon be rid of its prevailing wage laws, it is still subject to the federal prevailing wage laws under the Davis-Bacon Act. Any state project that includes more than $2,000 in federal funding must pay prevailing wage.

In 2015, Stroebel proposed limiting the number of projects affected by Davis-Bacon through a process called “Fed Swap.” Under his plan, the state would replace federal funding going to local projects with state funding. The Wisconsin Transportation Finance and Policy Commission Report in January 2013 found that this would save 25 percent on those projects.

There are other requirements associated with federally funded projects that inflate project costs. Rep. Dale Kooyenga (R-Brookfield) points to Waukesha County, where there were two identical projects involving 1.2 miles of road. One was locally funded and the other was federally funded. The local leg cost $6.28 million. The federal portion cost $8.2 million. That extra $2 million was due to oversight, relocation rates, labor, and over-construction.

Walker’s veto gets rid of a Joint Finance Committee provision calling for a Fed Swap study and gives the Department of Transportation more leeway in implementing the cost-savings measures. It delivers on the promise to the senators.

“The limitations placed on the amounts provided for the southeast megaprojects and the major highway projects, in particular, will inhibit the department’s ability to allocate funds in the most advantageous manner especially in light of the I-94 north-south corridor project funding provided for in separate legislation,” Walker wrote in his veto message. The latter project, I-94 north-south, is funded in the budget through bonding, contingent on a federal award.

“As a result of my partial vetoes of these sections, the department will be able to make dollar for dollar reallocations among all state and local road and highway projects – including the southeast megaprojects,” Walker wrote. “My veto will ensure that the state can maximize the use of federal matching dollars and begin to implement state efforts to reduce local government’s costs immediately.”

Tolling

Fed Swap wasn’t the only transportation item that JFC wanted to study. It also wanted to know how Wisconsin might be able to set up toll roads. It’s an idea that frequently comes up during transportation funding debates. The state of Wisconsin can’t just create its own toll road, however. It needs permission from the feds, and that’s a lengthy process. JFC wanted to get the ball rolling on it by conducting a study of potential traffic, revenue, and environmental issues all at a cost of $2.5 million. The problem is, they’ve been down that road before. Walker said further study is unnecessary.

Transportation Projects Commission

There is no escaping politics when it comes to picking road projects. Lawmakers are always going to advocate for projects in their own districts. The Transportation Projects Commission is supposed to limit the impact of politics on these projects and focus more on the state’s actual transportation needs.

A last-minute provision, critics argue, would insert more political influence into the commission. It certainly would create another layer of bureaucracy.

The TPC includes the governor, five senators, five representatives, three members of the public appointed by the governor, and the DOT secretary. The Legislature wanted to change the commission’s membership to the governor, three senators, three representatives, two governor appointees, four members of the public appointed by the legislative leadership, and the DOT secretary. Naturally this would reduce the governor’s influence on the TPC, making it immediate veto-fodder. The budget item would also create a new bureaucratic office to support the TPC. That office would include a four-person full-time staff and conduct reviews and evaluations of DOT projects. The three reluctant Republican senators wanted this provision nixed. Walker seems to whole-heartedly agree.

Other Items

Quarry Protections

Carve-outs and special protections have a way of making their way into budgets in the fierce pace at the end of the budget-writing process. That’s the case with a measure that would have prohibited local governments from issuing onerous restrictions on quarries. Conservative critics like the idea of ending onerous regulations for every business, but offering protections to one industry could leave others unprotected. Wisconsin’s sand mining trade was particularly worried about the language of the legislation.

Walker said he vetoed the provisions because he objects to inserting a major policy item into the budget without sufficient time to debate its merits.

“While I support the need to address quarry regulations and the ability to provide materials for public works projects in a timely manner, changes of this magnitude should be addressed as separate legislation where implications can be more carefully explored,” the governor wrote in his veto message.

$1 Million Capitol Basement Upgrade

The Legislature did not escape the governor’s veto pen. Walker vetoed $1 million in General Purpose Revenue-supported bonding for unspecified “State Capitol Basement Renovations.” The set-aside became the object of ridicule during an Aug. 28 committee debate, with Sen. Jon Erpenbach (D-Middleton) mocking the fact that no one could say what the money would specifically be used for. Walker’s veto leaves it to the State Capitol and Executive Residence Board to examine the funding proposal and decide whether the renovations are the best use of taxpayer money.

And Walker removed legislative funding for events celebrating the 100th anniversary of the State Capitol. The State Capitol and Executive Residence Board already has authorized money from the Capitol Restoration Fund, the governor said.

Pork and Other Problems

While the PFA and TPC changes were nixed, plenty of pork still made it through. In fact, almost all of the earmarks survived the veto pen.

Laptops For All

Walker didn’t touch a new entitlement that provides $9.2 million for laptops for high school freshmen beginning in 2018. The Assembly Republican caucus had first proposed spending $18.4 million for the electronic devices, which would be provided to students regardless of family income. Both the Senate and Joint Finance Committee cut the provision in half, beginning the initiative one year later. Once an entitlement is established, its hard to remove, putting taxpayers on the hook indefinitely for this feel-good initiative.

And Walker kept the DNR magazine. The Joint Finance Committee relented to some public pressure and voted to maintain the magazine’s publication, something Walker proposed ending. He didn’t veto the JFC’s act of salvation. Subscribers cover the cost of the magazine, but its production does take DNR employees away from their core duties.

Special Tax Exemptions

A measure that would have provided a sales and use tax exemption for broadcast equipment is history. Walker vetoed the provision because it “does not have any clear tax equity or economic purpose.” Vetoing the provision increases annual revenue collections by $928,000, beginning in fiscal year 2019-20.

Several new sales tax exemptions are also created for various industries, including beekeeping. Those who enter competitive tournaments and leagues and submit fees for prize money will also see a sales tax exemption. And if you manufacture dairy products containing more than 50 percent yogurt, but sell it in a separate retail store, you’re also off the hook for paying the sales tax. Walker did not veto these specialized tax breaks.

Airbnb

One provision gets the government more involved with emerging services like Airbnb. While the state would bar local governments from prohibiting short-term rentals of residences for seven consecutive days or more, it also adds many more onerous regulations on the independent hospitality trade.

Those who rent out their home for more than 10 nights a year would now need to get a “tourist rooming house” license from the state. They’d have to get a license from their local government, if the locals require it. The state would also begin collecting room tax dollars on those exchanges, as well as sales tax.

Regulations like these muddy up markets and without increasing public safety. Services like Airbnb are often effective at self-regulating, namely through user reviews. In fact, in the eyes of most users, the “riskiest” rooms to book on Airbnb are those with no reviews. These proposed new regulations would discourage serious Airbnb renters by forcing them to get a license.

Railroad Condemnation

The governor did delete at least one provision that strikes at a key conservative principle. No. 99 on the veto list is a challenge to property rights.

Walker vetoed a provision that would have restricted railroad corporation condemnation authority. In his veto message, he explains that the limitation “may be deemed an unreasonable interference with railroad transportation, which is prohibited under federal law.”

“In addition, I am vetoing these sections because the requirement that the Legislature must enact a law prior to the acquisition of property through condemnation may cause excessive delays in railroad projects necessary for economic growth in the state,” the governor wrote.

Sparsity Aid

The governor also maintained the Legislature’s changes to the sparsity aid program, which is meant to serve rural districts with low student populations that are highly spread out. Walker had proposed creating a new level of sparsity aid and increasing reimbursements for those already in the program, but the Legislature came up with a new plan that made it through to the final budget.

Now, when they grow too big to qualify for the aptly-named pot of money that is sparsity aid, school districts will be able to receive 50 percent of however much they received in the last year they qualified. That blurring of lines will likely grow spending in the program over time.

Ola Lisowski, Bill Osmulski, and Chris Rochester also contributed to this report.

By MacIver News Service | September 18, 2017

Sen. Stroebel Applauds Promised Vetoes Shortly Before Budget Vote

In an interview with MacIver News, Senator Duey Stroebel explains the vetoes agreed to by Governor Scott Walker that helped move him and other conservative senators from the No column to the Yes column. The budget passed the Senate Friday night 19-14.

MacIver News Service | September 15, 2017

Walker Veto Pledge Secures Senate Passage of Budget

After 36 hours of wondering whether Senate Majority Leader Scott Fitzgerald would have the votes to pass the 2017-19 state budget, four of five Republican senators who had been leaning no came through with yeses Friday night to push an amendment-free spending plan over the goal line.

The Republican-controlled Senate, on a mostly party-line vote of 19-14, approved the $76.5 billion budget with the support of Sens. Robert Cowles, Chris Kapenga, Steve Nass, and Duey Stroebel. Sen. Dave Craig (R-Town of Vernon) joined the 13 Democrats in voting no on the spending plan, which Craig has long said spends too much money.

After months of fits and starts, the two-year budget is nearly in the books. It now awaits the governor’s signature.

The budget eliminates multiple taxes, holds the line on property taxes, and continues the University of Wisconsin-System tuition freeze into its fifth and sixth years.

The four reluctant Republicans switched to the “yes” column by late afternoon after Gov. Scott Walker pledged vetoes of certain provisions, many of them inserted at the last-minute, that the conservative lawmakers couldn’t stomach.

“I didn’t think the budget was a bad budget, but I thought it could be better,” Stroebel, R-Saukville, told MacIver News Service. “I feel very good about some of the vetoes the governor is going to be making. I think it’s going to fashion this budget in more of the way that I think will be good for the conservative cause and good for the state of Wisconsin and all of its residents.”

The fiscal hawks, billed as “the Three Musketeers” by Nass, say they have received pledges that Walker would veto provisions extending the power of the shadowy, Public Finance Authority. The measure, among other things, would have granted the tax-free, risky bond peddler the force of eminent domain.

Walker also pledged a partial veto that will permit school districts to conduct referendums only on regularly scheduled and general election days.

A partial veto would reinstate the governor’s provision removing the energy efficiency exemption to school district revenue. The popular school program, critics say, has been abused and is a money grab without accountability to the taxpayer.

Stroebel gets the federal swap language that he has sought. A Walker partial veto would delete the requirement that the cost-savings measure first be studied, instead giving the state Department of Transportation the flexibility to enact a fed-swap policy.

And the governor has pledged to use his veto pen to more speedily implement repeal of the state portion of prevailing wage, which artificially inflates the cost of taxpayer-funded state building and highway projects.

Gone, too, would be a last-minute provision changing the makeup of the state Transportation Projects Commission. Walker assured the senators he would partially veto the measure, deleting the changes but leaving the independent engineering study included.

“I do believe some of those things that the governor will be vetoing out were kind of driven by special interests, and I’m glad that those are out because that certainly wasn’t where I was coming from nor the vast majority of our Senate, if any of them,” Stroebel said.

Less than an hour after the Senate passed the budget and sent it on to the governor’s desk, Walker, on his way home from a week-long economic development trip to Asia, released a longer list of what he intends to ax from the spending plan. The list, so far, includes the requests from the senators, as well as a provision in the budget that would provide $1 million in so-called state Capitol basement renovations, sought by the Assembly. And the governor said he would veto a measure that specially releases quarries from onerous local restrictions.

“Governor Walker is vetoing this item because he believes changes of this magnitude should be addressed in separate legislation,” the administration press release states. All vetoes, including full summaries, will be included in the governor’s veto message.

Walker praised the GOP-led Senate for finalizing a budget that’s 2 1/2 months overdue, a budget bogged down by internecine battles between Republican leadership driven in large part by philosophical differences on paying for Wisconsin’s transportation system.

“Thank you to the members of the State Senate for approving our budget that will put more actual dollars into K-12 education than ever before,” the governor said in a statement. “We are providing historic increases in funding for our public schools and we are lowering property taxes for the typical home at the same time.”

The budget pumps $639 million over current spending levels into K-12 education, while eliminating the state portion of the property tax and delivering more money for local road work. To the disappointment of Milwaukee-area Democrats and Republicans alike, the budget doesn’t provide funding for the third phase of the Zoo interchange or the East-West Interstate 94 mega projects.

Craig said he was satisfied with the positive provisions of the budget, but it “fails in its primary function – to appropriately limit the size, and thus the role, of government in our lives.”

As Ronald Reagan once said, ‘As government expands, liberty contracts,” the senator added.

While Walker’s vetoes may take away some Assembly and Joint Finance Committee provisions, Fitzgerald gave Assembly Speaker Robin Vos (R-Rochester) what he had asked for. As word spread about the Republican senator holdouts, Vos warned the Senate not to send his house back an amended budget.

It took some doing, but the Senate majority leader, with the help of the governor, was able to deliver the votes he needed for clean passage.

Cowles, considered to be a hard no on the budget earlier in the week, was wooed by veto promises and better-than-expected structural deficit numbers. He said his vote also was a matter of striking while the political iron was hot.

“I came to the conclusion that any kind of horse-trading between the houses would end up with more (non-fiscal) policy in the budget. I had fought that all along,” he said. The Green Bay-area Republican has long been adamant about limiting the budget to only fiscal items. “I came to the conclusion that there wasn’t a scenario where we could get any more out. At some point it’s done and I hope the governor vetoes the things.”

Cowles argued for the removal of the quarry protection language.

The minority Democrats, not surprisingly, hated just about everything in the Republican-dominated budget – even the things they usually like, such as significantly more spending for education. It wasn’t nearly enough, they said. Sure, it’s a record amount, but it doesn’t make up for the money cut from education – and elsewhere – in the dire state budget days of 2011, Dems explained.

Democrats forwarded 17 amendments, and spent much of the nearly nine-hour debate pitching them while castigating the Republican plan. They pushed changes (and much more money) to education and health care (another you-should-take-the-“free”-Medicaid amendment). And they decried legislation denying Milwaukee a crack at more funding. Each amendment was rejected on a party-line vote.

Two days after their colleagues in the Assembly rolled out the narrative of a “rigged” Republican budget, Senate Dems coined the “Foxconn First” rhetorical theme.

The budget was written and debated amid what has been billed by supporters as a “once-in-a-century” economic development opportunity – Taiwanese tech giant Foxconn’s plan to build its first North American Liquid Crystal Display plant in southeast Wisconsin. The Legislature this week finished off passage of a $3 billion incentives bills for Foxconn, which has said it would create 13,000 jobs on a $10 billion capital investment. Walker is expected to sign the bill Monday.

“We pay Foxconn first,” Sen. Janet Bewley (D-Ashland) declared during Friday’s debate. “We took care of Foxconn ahead of the people of Wisconsin.” Pushers of that narrative failed to note that many of the incentives are tied to job creation and construction of the manufacturing campus. They left out the part about the anticipated 10,000 construction jobs that would be needed, the thousands of spin-off jobs, and the billions of dollars added to the economy.

State Sen. Alberta Darling (R-River Hills) said the budget was one of the best she’s seen in her long legislative career.

“If you say yes to this budget, you are supporting the largest investment in K-12 education in state history. If you say yes to this budget, you are saying you want to put more money in the pockets of your constituents,” Darling said at the start of Friday’s debate.

The budget next goes to Walker’s desk for his signature, expected some time next week.

MacIver News Service | September 13, 2017

Budget Blog: After 11 Hours Of Debate, Assembly Passes Tax-Ending Budget

After 11 hours of debate heavy on Democrat-led shaming, recriminations, vilifications and fact smashing, the Republican-led state Assembly passed a $75.7 billion budget with generous spending increases for K-12 education, another round of in-state tuition freezes, and the death of several taxes.

The 2017-19 state spending plan, which passed on a vote of 57-39, saw five Republican defectors join the 35 Democrats in the lower house. The bill now moves onto the Senate, where, as of late Wednesday, it faced an uncertain future with the defection of three conservative senators.

Democrats turned much of Wednesday’s floor session into “segregation” day, accusing Republicans of creating a pre-Brown v. Board of Education system in the Racine Unified School District for a provision that would allow RUSD collar communities the right to decide whether they want to remain in a failed school district.

Rep. Therese Berceau (D-Madison), made it clear who the minority party was trying to reach in their stream of partisan diatribes against Republicans and their budget.

“To take care of something for the newsroom, ‘rigged, rigged, rigged,'” Berceau said just after 10 p.m., as the late TV newscasts were getting underway. It was a common mantra – the Republican-led budget is rigged in favor of the rich to the detriment of the poor, class warfare chestnuts the left is so fond of.

For good measure, she added that Democrats and Republicans are from different planets, and Republicans “are the aliens.”

At the end of a very long day, all the speeches and grand-standing was for the TV cameras and not much more. This Republican-led budget passed with few defectors, as was expected with an Assembly controlled by the largest GOP majority since the Eisenhower administration.

Republicans focused on the expansive tax cuts, increased services, and substantive government reforms including a full repeal of the state prevailing wage. Democrats plugged their noses and voted against a budget bill they despise.

“We know one thing for sure, not one Democrat will vote for this bill,” said Assembly Minority Leader Peter Barca (D-Kenosha).

The budget passed by the Assembly eliminates not one, not two, but three different taxes. The Forestry Mill Tax, the Alternative Minimum Tax, and a soda tax are swept away in this document. It holds the line on property taxes, and increases funding for local road maintenance without raising gas taxes or vehicle registration fees.

Democrats introduced 18 separate amendments to the budget – some spanning just a page or two, and others containing 50 or more pages.

They weren’t just amendments tinkering around the edges. Many contained substantive spending, providing a peek into what the debate might look like if liberals held the majority. Joint Finance Committee co-chair Rep. John Nygren (R-Marinette) pointed out the costs of those amendments.

Eleven amendments dealt with the Opportunity Schools Partnership Program (OSPP) and Racine Unified School District (RUSD). OSPP was written into law in the last budget and would have allowed a special superintendent to implement reforms in a handful of the worst-performing schools in the state.

One provision added by the Joint Finance Committee would give the troubled RUSD a year-long pass from OSPP, provided they comply with certain requirements. The motion’s language opens the door to a potential referendum down the line, allowing the villages within RUSD to split off and create their own school districts.

Democrats argued that such a move would increase racial segregation in the area. Some drew comparisons to landmark cases such as Brown v. Board of Education and Plessy v. Ferguson. Others still, such as Rep. Cory Mason (D-Racine), claimed the plan would mark a new era of racial segregation.

Members on both sides of the aisle spoke at length about education. Democrats repeated the notion that K-12 education budgets have been slashed year after year. Nygren called for a fact check on that number, and MacIver delivered.

Transportation was the sticking point between Assembly Republicans, who wanted more sustained revenue (gas tax increases and/or vehicle registration fee hikes) and less bonding, and Senate Republicans who sought more bonding and no tax hikes. Walker’s transportation plan, rejecting tax increases in a time of budget surpluses, won the day. The transportation battle is a big reason why the budget is nearly two and a half months past due.

Vos called the transportation compromise his “one great disappointment.”

“We should have done more, but in a time of political compromise we got as much as we could,” the speaker said, calling out “intransigent folks” in the “smaller house,” referring to the Senate.

While legislators knew the budget would pass the Assembly floor before gaveling in, its chances in the Senate is another question. As debate raged on in the Assembly, the Senate GOP met in a closed caucus, hoping to find the 17 votes needed to pass the bill.

Three Senate conservatives also released a document outlining their objections to the budget. At the beginning of the day, Speaker Robin Vos (R-Rochester) declared that he would not allow anyone to hold the document “hostage,” saying that the Assembly would take only technical but not substantive amendments.

Vos reiterated that position at the end of the long debate.

“We will not be coming back next week,” he said.

Now, with the budget out of the Assembly, the ball is in the Senate’s court. Senate Majority Leader Scott Fitzgerald (R-Juneau) said Wednesday that he did not yet have the votes to pass the budget bill, but he was still planning on taking up the vote Friday morning.

MacIver News Service | September 8, 2017

Conservatives Concerned With Last-Minute Budget Additions

Did leadership add enough reforms to secure passage?

There are a lot of big wins for conservatives in the newly-approved JFC state budget.

Plenty of pork, too.

For the 2017-19 state budget, the question is, will the recently added budget fat turn off lawmakers looking for a smaller, leaner government enough to vote no, or are there enough tax cuts and pro-taxpayer reforms to earn their vote on the final budget bill?

The GOP-controlled Joint Finance Committee late last month did away with the Forestry Mill Tax. And the committee closed its work on the budget Wednesday evening by nixing Wisconsin’s Alternative Minimum Tax (AMT). Democrats like to call it the “wealth tax,” but the AMT has been ensnaring more middle-income earners.

“Any time you can eliminate a tax from off the books, whether it’s AMT or the Forestry Mill Tax…you take that opportunity as an elected official,” Rep. John Nygren, finance committee co-chair, told MacIver News Service Thursday morning during an interview on the Jay Weber Show on NewsTalk 1130 WISN.

“Now when you get your property tax bill in the future there’s not going to be a state tax on the property tax bill,” the Marinette Republican added. “Eliminating that tax, for me, my colleagues, I know for the governor, we see that as a huge win as we continue to put the people of Wisconsin first rather than the government.”

While the AMT is more of an extension of Wisconsin’s income tax, it serves as a kind of income tax system unto itself. Its elimination will save $7 million per year beginning in 2019. The mill tax is the last remnant of the state property tax. Killing it will save taxpayers a combined $180 million over the biennium.

Eliminating a tax is like the solar eclipse of limited-government reform: It happens very infrequently.

The last time the Legislature struck a tax from the books was 2008, marking the beginning of the phase-out of Wisconsin’s Estate Tax.

You have to go back to the late 1990s, when the gift tax was eliminated, then back to 1974 and the death of the Oleomargarine Tax to find complete tax removal.

That’s basically it over the last 40 years, according to Gov. Scott Walker’s administration.

Walker and the Legislature’s Republican majority four years ago all but did away with state income tax on Wisconsin manufacturers and farmers through the manufacturing and agriculture tax credit. The tax savings total nearly $300 million, according to the Legislative Fiscal Bureau.

Liberty-minded legislators are concerned about some of the items added to the Republican-led spending plan through omnibus and wrap-up motions.

Like granting the tyrannical power of eminent domain to an unelected, quasi-public authority.

Of course budgets are about giving and taking, winning and losing. While small businesses and property taxpayers continue to see relief, the tax cuts come at the expense of income tax reductions. The governor’s budget blueprint originally called for $200 million-plus in income tax relief. Shifting priorities, JFC members say. Nygren says the trade-off was worth it.

“The money belongs to the taxpayers, not the state of Wisconsin, and if there’s opportunities for us to let people keep it we’re going to do that,” he said. “We’ve done that in personal property taxes, we’ve done that in property taxes…We’re going to continue to look for ways to do that while balancing the priorities of the state.”

This budget comes with some key conservative reforms, too. The JFC brought back Walker’s proposal eliminating what remained of Wisconsin’s Great Depression-era prevailing wage law. Beginning in 2018, taxpayers will no longer be on the hook for a system that artificially inflates wages on government building and highway projects. A previous study from the Wisconsin Taxpayers Alliance found that taxpayers could have saved as much as $300 million on 2015 construction projects had the reforms been in place then.

The budget sausage making, of course, comes with an abundance of pork that isn’t sitting well with fiscal hawks.

Like the $100,000 to help pay for improvements to the Monroe Arts Center.

Like the $583,000 in annual payments over the next five years to the city of Janesville under the state’s Expenditure Restraint Program. It would seem a combined $2.9 million to the municipal government isn’t exercising much in the way of expenditure restraint.

Like the $900,000 the state will pay to cigarette manufacturers and distributors to affix the mandated tax stamp on smokes.

“This is not any type of giveaway. This is actually payment for a service they are providing for the state of Wisconsin,” Nygren said of the ‘cigarette discount’ provision.

The JFC co-chair noted the so-called “999” wrap-up motions, the group of various provisions up for approval at the end of the committee’s budget work, was much less extensive this year. The controversial list of items, once numbering in the 80s or 90s, dropped to 26 this session, half of those technical or clean-up measures.

But it’s in the wrap-up where a lot of the budget fat can be found.

Like sales tax exemptions for “food consisting of more than 50 percent yogurt that is prepared by a retailer away from its retail establishment…”

Like sales tax exemptions for Tournament or League Entrance fees. The measure would provide a sales and use tax exemption for tournament or league entrance fees “advertised and set aside as prize money.”

Beekeepers get a tax break, too. They would be entitled to sales and use tax exemptions on tractors and machines used in their business – business inputs like bees and beehives, and electricity and fuel.

Farm-raised fish producers get a cut of the sales tax exemption, as well.

And it appears out-of-state, major broadcasters get a bit of a break.

It’s not the tax cuts or exemptions that are concerning to conservative lawmakers, it’s the carveouts for special interests that define the exemptions. If it’s good enough for fish farmers or frozen yogurt or Disney, why not every other business?

And so it goes with the JFC’s final transportation funding plan that includes specialized protections for quarries. The question posed by committee Democrats and others is this: What do quarries have to do with the transportation budget?

Nygren explained that restrictive local laws are making it more difficult for gravel and rock quarries to locate near road construction projects, forcing haulers to travel farther to move the key road-building components. Wisconsin’s growing sand mining industry, too, sought such protections, but members of the Republican caucuses “did not want to go that extent,” Nygren said. The idea behind the provision is to restrict local units of government from passing onerous restrictions on quarries, a benefit that regulation reformers assert should be extended to all businesses.

Reforms to the University of Wisconsin System, to municipal referenda, and federal-state transportation funding partnerships might help move the meter for some conservative lawmakers. But some of these reform measures have been watered down or don’t go far enough for passionate advocates of government accountability, transparency, and fiscal responsibility.

Legislative leadership is in the business of counting noses. With big majorities in the Assembly and Senate, GOP leaders may not have the same sense of urgency they would have with thinner margins. But a few reluctant fiscal hawks in the Senate could present some number challenges when it comes to the final floor vote in the days ahead.

The Assembly is scheduled to take up and debate the budget bill next Wednesday. The Senate hopes to finish its work on the budget the following week.

For the latest information and insider insight, visit MacIverInstitute.com often and follow us on Twitter at @MacIverWisc.

Listen to the full interview with Rep. Nygren here.

MacIver News Service | September 7, 2017

A Look at the Joint Finance Committee’s Last Week of Work on the 2017-19 Budget

With one final gavel, Wisconsin’s Joint Committee on Finance (JFC) on Wednesday night moved the state’s 2017-19 biennial budget one step closer to becoming law.

After being stalled for more than two months, the committee wrapped up its work, with the JFC voting this week on the final big budget items: Foxconn, transportation funding, and taxes.

As we prepare for next week’s debates on the Assembly and Senate floors, let’s take a look back at JFC’s last few evenings of work that stretched late into the night.

1. Transportation: No Gas Tax Hike

The budget committee started strong on Tuesday, moving through a $3 billion incentives package for Foxconn — read more on that issue here. Later that night, the JFC pivoted back to the budget and took on the single most contentious issue of the entire summer: transportation.

The final product closely resembles Gov. Scott Walker’s initial transportation budget that he presented almost seven months ago. It also satisfies his requirement of not raising the gas tax or registration fee on gas vehicles.

Despite a massive push to raise taxes on Wisconsinites, the committee eventually settled on a package that bonds $410 million in total.

For his part, Gov. Walker both tweeted his thoughts and released an official statement.

2. A Full Repeal of the State’s Prevailing Wage Law

Two years after the Legislature repealed much of the state’s antiquated prevailing wage law, the DOT budget motion finished the job. After being signed by Walker, the prevailing wage will be repealed for state building and highway projects as of Sept. 1, 2018.

Walker had included the proposal to eliminate the prevailing wage in his budget introduced back in February, but it was pulled by JFC as a non-fiscal policy item. With the vote on Tuesday, the much-needed reform has finally arrived.

The potential taxpayer savings of prevailing wage repeal are enormous. A study released by the nonpartisan Wisconsin Taxpayers Alliance found that state and local governments could have saved as much as $300 million on vertical construction projects alone in 2014 had there not been a prevailing wage requirement.

3. Doubling the Size of the Special Needs Scholarship Program

The committee started Tuesday’s debate by removing barriers to the special needs scholarship program (SNSP).

Most notably, students will no longer need to be denied from the public school open enrollment program before being eligible to apply for the SNSP. That change is estimated to bring 50 more students into the program beginning in 2018.

Another rule change dictated that students would not need to have been enrolled in a Wisconsin public school for the entire year prior to applying. That reform is expected to bring 200 more students into the program.

With an estimated 250 more students allowed access into the program, JFC’s changes effectively doubled the size of the program.

Democrats didn’t let the changes go without a fight, making age-old, anti-school choice arguments such as their claim that there’s a lack of accountability for private schools.

Rep. Mary Felzkowski (R-Irma) launched a passionate defense of the program and of the parents’ right to choose the best education for their own children.

4. Repeal of the Working Families Tax Credit and the Alternative Minimum Tax

With about two hours of debate, the committee’s motion on general fund taxes took up much the discussion Wednesday night. In that motion, JFC agreed to eliminate Wisconsin’s Alternative Minimum Tax (AMT) and “Working Families Tax Credit.”

While Democrats claimed the GOP plan would give tax breaks to “the rich” and hurt working families, Rep. Dale Kooyenga (R-Brookfield) pointed out that just .01 percent of Wisconsin families get the Working Families Tax Credit. Most families spend a significant amount of time applying for the credit only to find out they don’t qualify, like the vast majority of Wisconsin’s working families, Kooyenga argued.

The tax credit was just a gimmick so politicians could write a press release about it, Kooyenga said.

Kooyenga has also taken the lead in the battle to repeal the AMT, which he says makes the tax code unnecessarily complicated and is hitting more and more middle-income families. Wisconsin is one of just six states that still have an AMT.

Rep. John Macco (R-Ledgeview), Chairman of the Assembly Committee on Ways and Means, tweeted his praise.

5. Repeal of the Personal Property Tax for Machinery, Tools, and Patterns

While the governor had proposed income tax cuts in February, word quickly spread that there could be more appetite for a different kind of tax reform in the budget. On Wednesday, JFC sealed the deal. The committee would swap Walker’s proposed income tax cuts for a repeal of the personal property tax, which they said was more popular both in their caucus and in their constituencies.

The tax is a levy on business equipment in addition to the real estate property taxes already paid by the same businesses. As a result, the middle class is hit particularly hard by the additional layer of government and taxation.

JFC’s budget repeals that property tax on non-manufacturing machinery, tools, and patterns, beginning on Jan. 1, 2018.

6. Budget Wrap-Up Motion

The all-encompassing “999” budget wrap-up motion came last. Readers will remember that the committee attempted to make substantial changes to the state’s open records law in the last budget’s 999 motion, resulting in a major public outcry.

This year’s wrap-up motion was much more mundane. It re-introduced Walker’s initial proposals to track and publicly report UW System teacher workloads and broaden the qualifications for UW System leadership positions. JFC threw those proposals out early into the process, also as non-fiscal policy items.

With the budget finally clear of the Joint Finance Committee, the next step is a vote on the Assembly floor, scheduled for next week.

MacIver News Service | September 5, 2017

JFC Approves Transportation Budget

No Gas Tax Or Gas Vehicle Registration Fee Increase, Prevailing Wage Repeal Included, Bonding Down, Two Major Projects Delayed And Tolling To Be Studied

The Joint Committee on Finance finally approved a transportation budget Tuesday night – and by doing so removed the biggest roadblock in passing the 2017-2019 Wisconsin State Budget.

The final product to come out of JFC closely resembles Gov. Scott Walker’s proposed transportation budget that he presented almost seven months ago. It also satisfies his requirement of not raising the gas tax or registration fee on gas vehicles.

However, JFC’s version creates a new $100 fee for electric vehicles and a $75 fee for hybrids. Owners of electric and hybrid vehicles would pay this new fee on top of the existing $75 registration fee. Walker recently said he was okay with such an electric/hybrid fee because these vehicles use public roads but don’t contribute enough to the road fund. This item is expected to raise $8.4 million over the biennium.

Gov. Walker originally proposed spending $1.701 billion for the State Highway Rehabilitation Program, $670 million for the Major Highway Development Program and $122 million for the Southeast Wisconsin Freeway Megaprojects Program.

JFC on Tuesday approved $1.619 billion for the State Highway Rehabilitation Program, a 4.8% decline from the Governor’s original proposal. JFC approved $563.7 million for the Major Highway Development Program, down 15.87% from Walker. And while JFC approved $353.6 million for the Southeast Wisconsin Freeway Megaprojects Program, a substantial 189% increase compared to the Governor, there is a caveat. Approximately $252 million of the $353 million in the Megaprojects Program approved by Finance has been earmarked for one project – the I-94 North-South Corridor Project that was approved earlier in the day during the debate on the massive Foxconn project. If you take out the Foxconn $252 million for comparison, JFC approved $101 million for the Southeast Wisconsin Megaprojects Program, a 17% decrease compared to Gov. Walker.

One of the most contentious issues throughout the transportation debate was over bonding. Walker’s original budget included $500 million in new road bonds. Assembly Republicans have generally been opposed to any new bonding without additional revenue increases or new revenue sources to help pay for it. They have argued that the state borrows too much for roads and that we should adopt a pay-as-you-go approach to transportation funding. In the end, JFC approved $402 million in new bonds, approximately 18% less than Walker. That is the lowest amount of new road bonding since the 2003-05 budget and the $252 million for Foxconn road building is included in the $410 million total.

While JFC approved new funding for the I-94 North-South Corridor Project, the committee decided to hit the brakes on two other important projects in southeastern Wisconsin. JFC included language in their motion that specifically prohibits any sort of funding for the north leg of the Milwaukee Zoo Interchange project during this 2017-2019 biennium. The north leg is the unfinished part of the massive Zoo Interchange project that has been under construction for years. The provision also explicitly prohibits the Department of Transportation from using savings from contract negotiations to fund the north leg of the Zoo project. The Finance Committee also did not appropriate any money for the I-94 East-West expansion between the Zoo and Marquette Interchanges, effectively preventing any work on this critically important project for at least two years.

JFC Co-Chair Rep. John Nygren (R-Marinette) explained to reporters, “This budget shows you’re not going to make a commitment that you can’t pay for, and that’s the bottom line. If we don’t have the resources to fund the east-west or the north leg of the Zoo, then we shouldn’t be making that commitment.”

There are also several items in the JFC transportation motion that attempt to satisfy the need of fiscal conservatives to find taxpayer savings from within the DOT. One provision included in the omnibus motion requires DOT to eliminate 200 positions over the biennium, many of them currently vacant according to the Legislative Fiscal Bureau, saving $13 million annually. Another provision would require the department to sell $4 million worth of land it holds and transfer the proceeds directly to the transportation fund.

Walker’s proposal to eliminate the prevailing wage in state building and highway projects made it into the final version, a big victory for fiscal conservatives in the Senate. The effective date of this provision was moved back to September 1, 2018, however. For an idea of the potential taxpayer savings, conservatives point to a study released by the nonpartisan Wisconsin Taxpayers Alliance that found state and local governments could have saved as much as $300 million on vertical construction projects in 2014 if there was no prevailing wage requirement. Remember, too, the story we did on the water towers in the village of Grafton.

JFC also approved language that addresses a concern expressed by Sen. Duey Stroebel (R-Saukville) and was the subject of a story that we wrote about earlier this year. It has to do with the rebuilding of Janesville Road in Waukesha County. The 1.2 mile stretch of Janesville Road that was rebuilt with local funds cost approximately $6 million to complete while the 1.2 mile stretch of Janesville Road, the exact same road, that was rebuilt with federal dollars cost almost $8 million. While Sen. Stroebel wants to direct the DOT to save money on local projects by swapping Surface Transportation Program (STP) funds with federal funds from the state highway program, the language in the transportation motion only requires the DOT to study this idea of federal/state aid swap and report back to the Finance Committee. Then there’s “Replace-In-Kind” alternatives for highway development plans that require the DOT to show what the project would cost without bike lanes, extra vehicle lanes, and by making other design changes. An item sure to be noticed in Mayor Barrett’s office is a provision that would prevent the City of Milwaukee from shifting expenses from its streetcar onto TIFs, the county, or the state.

All property owners in the state have scored an important win in the Finance motion, while certain property owners appear to have lost some ground. The motion contains language that prohibits local governments from condemning private property in order to build recreational trails, pedestrian ways, or bike paths. The motion also includes language that requires a railroad to go through extra steps before it acquires private land through the condemnation process.

The setback has to do with the regulation of quarries. The Joint Finance transportation motion has over five pages on the local regulation of quarries. While we are still researching and analyzing the language, it appears to change substantially the way local units of government can regulate these businesses. As we find out more about this provision, we will immediately pass it along to you.

Not everything in the JFC motion will likely get the governor’s approval. The Legislature is trying to limit the governor’s influence on the Transportation Projects Commission (TPC). This commission is responsible for recommending which major and mega highway projects should be built, so there’s a lot at stake. The JFC plan takes away one of the governor’s appointments and creates four new public positions appointed by the Legislature. The motion also creates three new independent staff positions to support the TPC, thereby creating a whole new bureaucracy that will only grow with time.

The approval of a transportation budget by Joint Finance does not mean the transportation funding debate has been put to rest for good. Nygren told reporters, “We’re not going to come up with a long term solution for transportation, that’s disappointing. But you live to fight another day. You don’t get everything you want.”

By Ola Lisowski | September 5, 2017

Budget Blog: Joint Finance Passes Education Plan

The K-12 education budget that the Joint Committee on Finance passed last week makes substantive changes to the state’s school choice, charter, and open enrollment programs.

Access to Private School Choice

The most significant change is an increase in the income limit for the Wisconsin Parental Choice Program, also known as the statewide choice program. Families of four earning just shy of $54,000 annually – 220 percent of the federal poverty level (FPL) – will be eligible. Until now, the statewide limit had been 185 percent of FPL, or nearly $45,000 for a family of four.

While the move to 220 percent is important, the statewide choice program will still be different than the other choice programs. Participation in the Racine and Milwaukee parental choice programs is limited to 300 percent of FPL, or nearly $73,000 annually. School choice advocates had hoped to increase the statewide income limits up to the same level, but fell short of that goal.

“The increase to the income limit for the WPCP from 185 percent to 220 percent of the federal poverty level is a step in the right direction but still leaves many working class families on the outside looking in,” Jim Bender, President of School Choice Wisconsin, said in a statement following the vote.

Ironically, the State of Illinois recently created an expansive statewide school choice program for students whose families earn up to 300 percent FPL. That program, a new tax credit scholarship for private school tuition, prioritizes students in families under 185 FPL as well as those in school districts with poor results. Students who receive the scholarship must also take the state accountability test.

As a result, Chicago will become the third biggest city in the country with access to parental choice once the program launches. The initiative will be funded by charitable donations made by individuals, who will receive a state income tax credit in exchange for their donation. Illinois’ program will expire after five years if legislators do not renew it.

As for Wisconsin’s vote, Sen. Leah Vukmir (R-Brookfield) voted for the package but said she would have preferred a bigger increase.

“A lot of times there are things in an omnibus that you like, and there are things that you don’t like,” Vukmir said. “And while I’m pleased that we’ve increased the participation in the school choice program from 185 percent to 220 percent of federal poverty level, everyone knows that I would’ve preferred a greater expansion, both in terms of that as well as the removal of the [pupil participation] cap.”

The cap that Vukmir referred to is the number of students that may enroll in the statewide parental choice program. Currently, no more than 2 percent of the pupils in any public school district may participate in the statewide program. However, neither the Milwaukee nor Racine programs have enrollment caps.

If more than 2 percent of pupils in a school district apply, DPI conducts a random lottery for admission and places the rest of the students on a waiting list.

The Finance Committee did make one important change to how students on the waiting list are treated. Right now, students apply for the statewide program only when entering kindergarten, 1st, or 9th grade. If a child is refused admission and placed on a waiting list but a spot opens up after he or she has graduated to the next grade, they are out of luck. They are denied entry into the program. With a limited number of openings during kindergarten and 1st grade, many students often miss the crucial 1st grade entry point – locking them out of the program until high school.

Under the budget passed by JFC, students who are placed on a waiting list and later admitted will be able to enter the program regardless of grade level. An estimated 100 more students will be able to participate as a result of those changes.

Paul Gnan, Executive Director of Sheboygan Lutheran High School, thanked the legislature for the changes, saying he knows of at least five families who have missed out on participating in the program because of the waiting list rule alone. As for the increase in the income limits, Gnan said he thinks it will “open up the eyes” of some people who will see that “it’s kind of a low-middle income program, and a lot more families are going to be able to take a choice, and make the best educational choice for their child.”

“We have 160 to 170 students in our school. I’d say last year we had 20 families that were just over the threshold and what this does, is now it opens it up,” Gnan said. “Every one of my teachers will be eligible.”

Another change adopted by the Finance Committee will allow students, who are new to Wisconsin, to apply for the statewide parental choice program. Currently, applicants must have attended a public school within Wisconsin the prior year in order to be eligible.

JFC’s budget also eliminated a provision that required school choice participants to annually verify their family’s income with DPI. As long as the student participated in the Milwaukee, Racine, or statewide programs the prior year, the family’s income will no longer need to be verified. Another provision will allow private school students to enter a school choice program regardless of grade level, as long as that student meets income and other requirements.

JFC also made changes to summer school funding. Until now, private schools could only receive payment for choice students attending at least 15 days of summer school, among other requirements. Under the budget motion passed by JFC, schools will be able to prorate their payments, receiving proportional funding for students attending summer school.

Gnan said his school was still reviewing those changes and others, but said that he thinks they will be very helpful for students.

“I’m just very grateful to the legislators for listening to us and at least coming partway,” Gnan said, striking a note of compromise. “I think it’s going to be really good.”

Access to Charter Schools

The budget passed by JFC also adds more authorizers for charter schools. Current law only allows the University of Wisconsin’s Office of Educational Opportunity (OEO), the chancellors of UW-Milwaukee and UW-Parkside, and the boards of Milwaukee and Gateway technical colleges to authorize new charter schools. JFC’s budget allows any UW chancellor and any technical college board to authorize a new charter school.

Perhaps even more significantly, JFC’s budget allows independent charter schools to be created statewide. Current law limits the locations in which authorizers can contract for a new school to Madison and Milwaukee.

One pro-charter group, the National Alliance for Public Charter Schools, celebrated the provision in a statement, highlighting that “the independent charter schools in Milwaukee are the highest performing sector of public schools in the city.”

For the first time, independent charter schools will receive summer school funding from the state beginning in 2018. The budget also requires DPI to write a new report on virtual charter school funding that would compare actual educational costs to the amount that the state pays. That report must be presented to the legislature by 2019.

Open Enrollment

Another program – often called the state’s most popular form of school choice – will see a funding increase. Public school open enrollment allows over 55,000 students across the state to attend other public school districts within Wisconsin. The program is open to students in kindergarten through 12th grade.

Under JFC’s budget plan, schools will receive an increase of $100 every year from 2017 through 2020 for every non-special education open enrollment pupil.

In the 2016-17 school year, schools received a $6,748 “aid transfer” for every incoming student. As a result of the changes, that amount will rise to $7,148 in the 2020-21 school year, not counting other potential adjustments.

Even despite the reimbursement increase, funding for open enrollment falls several thousand dollars short of average per pupil costs in Wisconsin. New school districts do not receive as much in the per-pupil aid transfer as they do for regular in-district students. Districts that “lose” students to other places as a result of open enrollment keep the difference in funding.

More than 41,000 applications for the 2015-16 open enrollment program were submitted, according to a December 2016 DPI report. Students can submit up to three applications.

The popular program began in 1998. With no set cap on student participation, public school open enrollment has far outpaced other forms of school choice in Wisconsin.

—

The finance committee has yet to vote on two programs related to education: the special needs scholarship program and the school levy tax credit. Both votes are expected to take place in the coming days, as the committee wraps up its work on the 2017-19 budget. As always, the MacIver Institute will be there, watching out for any final surprises to the taxpayers. Follow along the debate at @MacIverWisc and @NewsMacIver.

MacIver News Service | August 24, 2017

Joint Finance Votes to Eliminate the State Forestry Tax

n its first budget meeting in more than two months, the Joint Committee on Finance hit the ground running Thursday as it voted along party lines to eliminate the Forestry Mill Tax, the last remaining state portion of the property tax.

“Here in Wisconsin we are not only reducing taxes, we’re eliminating taxes altogether,” said Rep. Dale Kooyenga (R-Brookfield). “You want to talk about history? We’re making history right here.”

Rep. Katrina Shankland (D-Stevens Point) talked about the history of the tax, arguing that it has been crucial to stewardship of the state’s forests. Shankland and other Democrats suggested that forest fires could become more of a problem for the state without an earmarked tax just to protect forests, quipping, “I guess when there’s a massive forest fire, you guys want to do a 13:10 [finance meeting] and get that [funding] approved?”

Sen. Tom Tiffany (R-Hazelhurst), an author of the motion to eliminate the tax, slammed the claim that the state would no longer fight forest fires.

“To the point on fire – the state providing fire protection for forest fires is statutory. That is not going to go away. We are going to continue to make that a number one priority.”

Democrats also questioned whether there could be a “better way” to spend the $181 million that the Forestry Mill Tax generates. Both Kooyenga and finance co-chair Rep. John Nygren (R-Marinette) took issue with that mindset, calling it “government-centered.”

“The thing you’re missing in your argument, is this money, it’s not ours,” Nygren said. “It’s not ours. The people that sent us here, the people that we represent, they are the ones that should be asking that question.”

Eliminating the tax was part of Gov. Scott Walker’s original budget proposal submitted to the Legislature earlier this year. In a statement released shortly after the committee’s vote, Walker said, “We are eliminating an entire tax. Once passed in the budget and signed into law, there will be no state property tax collected for the first time since 1931. I applaud the members of the Legislature’s Joint Finance Committee for supporting tax reform and relief!” the statement read.

JFC will meet again on Monday to vote on funding for K-12 education. As always, MacIver News will be there.

MacIver News Service | July 20, 2017

Budget Breakthrough? Walker Deal Trades Income Tax Cuts For Transportation

Is there a budget breakthrough brewing?

There certainly seemed to be significant movement Thursday in snapping the stalemate that has bogged down work for months and pre-empted passage of a biennial state budget, now three weeks past due.

But don’t prepare your 2017-19 budget scrapbook just yet. Senate Majority Leader Scott Fitzgerald (R-Juneau) late Thursday said, No deal – at least not yet – to a compromise proposal by Gov. Scott Walker.

“There’s no deal yet. That’s for sure,” Fitzgerald told reporters following a conference call with all 19 members of the Senate GOP caucus. “And I don’t know if the letter the Assembly sent out necessarily moved anything.”

In a hand-delivered letter Thursday to the governor, 14 Assembly Republicans, including Speaker Robin Vos (R-Burlington) said they accept. That is, they accept Walker’s latest peace offering, which would shift money slated for income tax cuts into the troubled transportation fund – a move designed to bring the GOP majority closer to finalizing the budget.

The proposal also contemplates trading personal property tax repeal, an initiative with widespread support from Republicans in both houses, for bonding-free transportation spending, according to state Rep. Dale Kooyenga (R-Brookfield). Kooyenga, a member of the Legislature’s Joint Finance Committee, was one of the 14 members to sign the Assembly’s letter to the governor.

“We believe this compromise utilizes our current resources wisely by taking all or a significant portion of the proposed income tax cuts from this budget and using the savings to provide funding for the transportation system,” the Assembly Republicans wrote.

More so, according to Vos and company, Walker’s offer includes the “possibility” of no new transportation bonds.

Some of the Senate’s fiscal hawks find it hard to stomach the political horse trade of income tax cuts for transportation, particularly in light of an audit showing a Department of Transportation riddled with inefficient and wasteful practices that have cost taxpayers billions of dollars. And Fitzgerald said his caucus isn’t budging on personal property tax relief.

“No, our caucus is not there. They still want to see something done on the personal property tax,” the majority leader said. “Whether it’s full repeal or something short, they still want to see something done, that is phasing out the personal property tax, whether it’s in this budget or maybe the next budget. They want it phased out.”

Assembly Majority Leader Jim Steineke (R-Kaukauna) praised the governor for his leadership in coming up with a “solution that works and is conservative, that helps keep the major projects on track.” It’s not the long-term fix Assembly Republicans had hoped for, Steineke said, but it “adheres to” their principles.

Walker and Senate Republican leadership have been dead set against gas tax hikes and fee increases suggested by the lower house. The compromise would hold true to that pledge, but at a cost to taxpayers.

“The tradeoff reflects what I’ve been trying to explain for the last few months. If you are going to use general revenue to fund transportation you are going to have higher income taxes,” Kooyenga said, noting that taxpayers are on the hook for the principle and interest on transportation bonds. “By forgoing income tax cuts now we can probably afford greater tax cuts down the road.”

Steineke said it’s a fair trade.

“I think a vast majority of people do understand the importance of transportation infrastructure. If you talked to them and said, ‘You could have a few dollars back in your paycheck every week or invest it in transportation,’ I think they’d probably say, ‘Use it, as long as we get reforms (to the DOT) done,” the majority leader told MacIver News Service.

Senate Republicans aren’t sold just yet. Fitzgerald said the income tax cut swap is linked to the big-ticket transportation projects. Members want to know what projects could benefit through revenue shifting.

Earlier this week, Senate Republicans unveiled their own budget, a proposal that stays fairly faithful to Walker’s plan but includes $712 million in new transpo bonding. Fitzgerald has said his caucus is not interested in new revenue (tax hikes) to pay for transportation until the DOT gets it’s financial house in order. On Thursday, the senator said Vos continued to raise the topic of tax increases, at least on electric vehicles.

While Assembly Republicans have stood firm against borrowing, in the letter to Walker they say they understand there is a “possibility of new bonding based on future federal appropriations and revenue-supported bonding.”

The Assembly’s bonding position has caused some confusion, Fitzgerald said.

“Based on their letter and the conversations I’ve had, I’m not clear if they’re at zero bonding right now, or if they’re at higher number,” he said.

Vos did not return requests for comment. Neither did Walker spokesman Tom Evenson. Members of both houses, however, say the compromise deal is straight from Walker. Fitzgerald said it was floated to bring Vos on board. Its sounds like the Assembly appreciates the offer.

“We believe the broad framework that you provided is responsible because it acknowledges that the state should not issue more transportation bonds without having a sustainable way to pay for that debt,” the letter states.

The authors conclude with a hope for a “renewed effort to negotiate in good faith and pass a budget in the very near future.”

Talk of getting the Joint Finance Committee back together next week is a bit aggressive, Fitzgerald said. He’s thinking more like the week after.

No deal. Not yet, anyway.

MacIver News Service | July 18, 2017

Senate Unveils Budget Plan Amid Impasse

Looking to get stalled budget negotiations “back on track,” Senate Republicans on Tuesday rolled out a budget blueprint that, not surprisingly, looks a good deal like Gov. Scott Walker’s two-year spending plan – but built on heftier borrowing.

Now, said Senate Majority Leader Scott Fitzgerald, the budget ball is back in the GOP-led Assembly’s court.

“My point is to try to get the process back on track,” said the Juneau Republican, surrounded by seven members of his caucus at a Capitol press event that, like the budget process, was delayed.

The budget plan and the accompanying press conference were manifestations of a Senate caucus that has been toiling in recent weeks to complete the people’s business, even as the Assembly has lacked a “sense of urgency,” Fitzgerald asserted.

Assembly Majority Leader Jim Steineke, R-Kaukauna, was less than impressed.

“There was nothing new in anything that they said. I found that kind of surprising. I thought there would be some kind of revelation,” Steineke told MacIver News Service.

Indeed, much is the same. The Senate plan includes the budget items already approved by the Legislature’s budget committee, staying true to much of the governor’s 2017-19 budget proposal.

The Senate trims about $427 million in all-funds spending from Walker’s version, with help in part from a reduction in 400-plus state jobs (255 of them at DOT). And it leans a lot heavier on borrowing than Walker’s original $500 million transportation bonding proposal. The Senate’s $712 million ask is significantly higher than the Republican governor’s $300 million transportation bonding compromise deal offered earlier this month as a negotiations spur.

Assembly Republicans have stood as dead set against that kind of bonding as Walker and Senate Republicans have been against gas tax hikes and vehicle fee increases. Fitzgerald said his caucus remains against “revenue enhancers,” and it would seem Assembly leadership isn’t budging on bonding.

Fitzgerald noted that the Senate has come down from its previous bonding position, of $850 million, thanks in large part to savings elsewhere.

Not nearly enough, said Steineke.

“It’s unsustainable, a rounding error difference from what they proposed before,” the lawmaker said.

Sen. Alberta Darling, co-chair of the Joint Committee on Finance, said Assembly Republican’s resistance to borrowing for road projects is “totally unrealistic.”

“It is impossible to pay for these projects in cash. It’s not smart to do that,” the River Hills Republican said. Darling added that the so-called mega transportation projects in southeast Wisconsin, which carry massive price tags, are vital to Wisconsin’s economy, and delays would only cost business opportunity – and, ultimately, taxpayers.

Fitzgerald asserts the Senate budget proposal keeps all of the mega projects on track, including the Interstate 94 east-west reconstruction project. Walker’s budget did not include planning money for the project, estimated to cost $1.1 billion.

As MacIver News Service’s Bill Osmulski reported this week, it is virtually impossible for state and local governments to fund highway projects without borrowing at some level.

“Without bonding, some projects would likely be delayed regardless of perceived need, and priorities would need to be reconsidered to assure the delivery of a balanced program within available resources,” stated the Wisconsin Transportation Finance and Policy Commission in its 2013 report to the governor and Legislature.

The piece also notes that governments impose borrowing limits, and Steineke and others worry Wisconsin may be crossing that threshold if it continues to bond hundreds of millions of dollars annually for transportation projects. They assert a more sustainable solution to Wisconsin’s transportation budget issues must be found. Such a solution, it seems, would involve motorists paying more at the pumps or for the privilege of driving their vehicles.

Total bonding in the Senate GOP plan approaches $900 million. On the transportation side, $350 million would come from general fund supported bonding, another $362 million from the segregated transportation fund.

The Senate proposal also eliminates three state taxes – the forestry/mill (state property) tax, the alternative minimum tax, and the personal property tax (in the second year of the biennium).

“The personal property tax is a burdensome tax on Main Street Wisconsin created in the 1840s. This repeal is long overdue,” said state Sen. Duey Stroebel, R-Saukeville in a statement.

Stroebel, who attended Tuesday’s press event, said the Republican focus should be on repealing taxes “rather than raise taxes.”

The Senate budget plan calls for $24 million more in K-12 spending than Walker’s generous education budget. Among other provisions, the proposal increases the revenue adjustment for low-spending school districts from the current $9,100 per pupil in the first year, going up $100 per pupil each subsequent year until it hits $9,800 in 2022-23. It’s similar to an Assembly education plan, but the increases are phased in over a longer period.

Senate Republicans also embrace the Assembly’s laptops-for-high-school-freshmen idea, although the Senate would provide half of the funding the Assembly proposed, or $9.2 million, attached to matching school district money. That giveaway would begin in the second year of the budget.

The Senate proposal also ups the income threshold for enrollment in the statewide school choice program to 220 percent of the poverty level, which would capture 550 new students. And it brings back a version of Walker’s lifetime teachers’ license proposal, an initiative that the Joint Committee on Finance stripped from Walker’s budget plan.

Walker spokesman Tom Evenson tweeted that the governor, “welcomes the initiative by the state Senate to move the process forward while keeping his priorities largely intact.”

The official Assembly Republican leadership statement was markedly less enthusiastic.

Speaker Robin Vos (R-Burlington), Steineke, and Rep. John Nygren (R-Marinette) made sure to note that Assembly Republicans “first put out a budget framework for transportation in January, a comprehensive tax and transportation plan in May, and an educational proposal in June.”

“It’s good to see Senate Republicans have solidified their positions and are ready to come back to the table to complete work on the state budget,” Assembly leadership stated. “Assembly Republicans will give the proposal fair consideration as requested.”

The lawmakers added that they appreciate Fitzgerald admitting that “additional revenue is needed for our roads; if not today, sometime in the future.”

The Senate majority leader said that increased funding may eventually be needed, but not until the Legislature gets a handle on the troubled state Department of Transportation.

“As we look at the DOT, there’s a lot of members who have talked to me, and we’re not comfortable putting more money, that is increasing revenue, into that agency until we feel comfortable with that agency and the decisions the DOT is making,” Fitzgerald said.

He readily acknowledges that he doesn’t have the 17 votes required to pass the budget proposal, mainly because of smaller, “parochial” issues. And he doesn’t have a “Plan B” if Assembly Republicans reject the proposal outright. Fitzgerald said the plan is about jump-starting a stalled budget process.

In a letter to Vos, Fitzgerald says his caucus believes the “proffered solution presents a reasonable compromise on the major outstanding issues.”

“Furthermore, we have confirmed that Governor Walker believes this proposal meets his key priorities of funding K-12 education, holding the line on property taxes, and insuring sound investments in transportation without raising taxes,” the majority leader wrote.

The governor has the power of the veto pen, and the support of the Senate. So what’s the Assembly’s next move?

“They have to understand, and I think the speaker understands, that it has to be something that’s going to be palatable to the Senate and certainly to the governor at this point,” Fitzgerald said at the press conference. “I’m hoping they take kind of a measured approach to how they do that.”

MacIver News Service | June 27, 2017

Capitol Press Get Front Row Seat To Republican Budget Impasse Fireworks Show

The fireworks began a few days early, and reporters in the Capitol press room got the best seat in the house Tuesday.

They were treated to the latest incendiary display of budget discord between Republican leadership in the Assembly and Senate.

After less than 45 minutes of futility, Senate Majority Leader Scott Fitzgerald stormed out of GOP budget talks declaring that the Senate was “done,” Assembly Speaker Robin Vos told reporters during an impromptu visit.

Fitzgerald then paid a call on the press room to set the record straight, according to a spokeswoman for the Juneau Republican. The senator told reporters he wasn’t angry, just direct.

State Rep. Jim Steineke (R-Kaukauna), the Assembly majority leader, tweeted his displeasure.

Steineke was among a wave of Republican leadership to flow into the Capitol press room Tuesday.

The problem, in the parlance of “Cool Hand Luke,” is a failure to communicate among Republican friends who, some argue, have treated each other more like enemies over key budget differences – principally how to fund transportation.

Vos (R-Rochester) has oft-repeated that if the two houses can’t reach a deal, the state’s troubled Department of Transportation would be funded at base levels, with no new cash for delayed projects.

Fitzgerald called that position “laughable.”

Assembly Republican leadership has long said all options must be on the table to deal with a disputed $1 billion transportation budget shortfall. That includes increases to the gas tax, vehicle registration fee hikes and other “revenue enhancers.” The Senate effectively has stood by Gov. Scott Walker‘s budget plan, which calls for $500 million in borrowing, delaying some major projects, and absolutely no tax increases.

Capitol reporters at the barrage of Republican leadership point-counterpoint, seemed to gleefully tweet about Tuesday’s back-and-forth. Vos, according to one of the accounts, said Fitzgerald spent a lot of time “talking at us, seeming angry and then said, ‘We’re done.'”

Vos’ spokeswoman said Vos was not available for comment Tuesday. Rep. John Nygren (R-Marinette) was in meetings Tuesday afternoon.

Fitzgerald told reporters the Assembly doesn’t seem interested in compromise – or reality.

“As the senator told the press room today, he didn’t feel the Assembly came prepared to negotiate and he doesn’t believe (their proposals) could be approved by both chambers and the governor,” Myranda Tanck told MacIver News Service.

While the major legislative players have their differences, the Republican governor holds the veto pen. The Assembly’s failure to recognize Walker’s very powerful budget weapon is getting in the way of completing a timely budget, at least that’s the sentiment of Senate leadership.

The clock is ticking. The Legislature will not have a budget to Walker’s desk by Friday, the end of the fiscal year. Capitol insiders tell MacIver News that the Joint Finance Committee isn’t likely to meet again this week, further setting back the timeline.

Fitzgerald said he doesn’t “know where to go from here.”

Tomorrow is another day, however. Senate Republicans plan to caucus Wednesday, and Vos and Fitzgerald are supposed to meet with Walker.

On a more conciliatory note, Tanck said Republican leadership is “fairly close” on a “vast majority” of provisions in the K-12 education budget.

“There is agreement on most of the big issues on that budget area. Now it’s just a matter of cementing this together,” Tanck said.

She said there is “significant support” in the Republican Senate caucus and from many Republicans in the Assembly on repealing the state’s personal property tax, a move that could save businesses hundreds of millions of dollars.

MacIver News Service | June 15, 2017

JFC Rejects Self-Insurance, Directs Insurance Board to Save $63.9 Million Within Current System

The Joint Finance Committee followed through on its plan to reject Gov. Scott Walker’s self-insurance proposal on Thursday, instead directing the Group Insurance Board (GIB) to come up with $63.9 million in savings within the current health insurance system.

Walker’s budget proposed the switch to self-funded health insurance for state employees, where the state would collect premiums and pay claims itself, rather than go through the current network of private HMOs. GIB estimated the switch would have saved $60 million over the biennium.

JFC has questioned the proposal for months, and formally rejected the self-insurance contracts on a 16-0 vote without discussion at its executive session Thursday. Instead, the committee adopted a motion directing GIB to work within the existing network of HMOs to find slightly more savings than Walker’s proposal.

“The governor originally tied $60 million in savings to self insurance. As I mentioned the ACA was miscalculated, so that’s another $3.9 million. So the net savings that we come up with today will be $63.9 million,” JFC co-chair Rep. John Nygren (R-Marinette) told reporters before JFC gaveled in.

Part of the savings would be achieved by forcing GIB to draw down its reserves by $25.8 million in general purpose revenue (GPR) over the biennium. JFC co-chairs Sen. Alberta Darling (R-River Hills) and Nygren have been critical of how much money GIB has been setting aside in reserves, saying keeping excessive cash in reserves leaves savings on the table.

“That means we haven’t been realizing the savings that could have been there to both state agencies and to the employees themselves,” Nygren said.

The insurance board would also have to find $22.7 million GPR by negotiating further savings within existing plans.

In addition, GIB would have to re-structure plans offered to state employees, increasing the number of health plan tiers from three to five and emphasizing Consumer Driven Health Plans, which have higher deductibles but also are paired with tax-advantaged health savings accounts.

Rep. Katrina Shankland (D-Stevens Point) claimed offering more high-deductible options would force people to forego life-saving medical care like breast exams.

Nygren shot back, saying Shankland “should be ashamed” of her over-the-top rhetoric. He cited his own high-deductible plan that saves $2,400 a year in reduced premiums. That, combined with pre-tax contributions to his HSA, more than cover his out-of-pocket costs.

Under the JFC motion, any cost increases from plan design changes would be capped at 10 percent. That cap would apply to increased premiums and any out-of-pocket costs in 2018 and 2019. The cap ensures state employees, who currently cover just 10.8 percent of their own medical costs, will continue to enjoy generous taxpayer-funded benefits.

Rep. Mary Felzkowski (R-Irma), a health insurance agent by trade, added that consumer-driven health plans are designed to give employees more control over their health care dollars. Employers have an incentive to keep their employees healthy and productive, she said. “Even if government doesn’t regulate it…it’s what employers do.”

After JFC’s unanimous vote to reject self-insurance, Rep. Gordon Hintz (D-Oshkosh) called Walker’s proposal a “scam,” creating a seemingly rare moment of unity between JFC’s leaders and Walker.

“Self insurance in and of itself is not a bad thing or a bad idea,” Nygren said.

Darling said she doesn’t think the governor was trying to “pull one over on us.” She said she just thinks “this is the wrong time for us to be making shifts in the marketplace.”

In another notable moment of comity with the governor, JFC also voted Thursday to finally phase out the state’s Local Government Property Insurance Fund. The fund, which competes with the plethora of private sector insurers, dates back to 1911 when private insurance was literally still in the horse and buggy days and local governments couldn’t find insurance coverage for their property.

Times change, and in this case, government actually changed, too. The LGPIF will be a thing of the past by the time the books close on the 2017-19 biennium.

MacIver News Service | May 23, 2017

Struggling to Find Consensus on Tuition Cut, JFC Puts Off UW System Vote

The Senate and Assembly haven’t yet come to a consensus on whether or not to lower the UW System’s tuition by 5 percent in 2018, according to Joint Committee on Finance (JFC) co-chairs Sen. Alberta Darling (R-River Hills) and Rep. John Nygren (R-Marinette).

JFC was meant to take up provisions of Gov. Scott Walker’s 2017-19 budget relating to the University of Wisconsin System today, but put off that vote entirely. Nygren said that the Assembly is not in favor of Walker’s proposal to cut tuition, while the Senate has not yet come to a position.

Nygren said that the Assembly would prefer to continue the tuition freeze and use the $35 million allocated for a tuition cut on other initiatives. Nygren and others in the Assembly who disagree with the cut have said they would prefer not to spend taxpayer dollars for an across-the-board cut that would also help students who can already afford tuition, instead preferring to grow need-based financial aid programs.

In April, Nygren went so far as to compare the provision to Bernie Sanders-esque “redistribution” policies.

Darling said that the tuition cut made up the entirety of the disagreement and that legislators are mostly in agreement with the rest of the Governor’s UW budget proposal, such as a provision to tie UW System funding with performance on state priorities. That model, Darling said, has done well in the tech college system.

It is unclear when, exactly, the committee will vote on the UW.

By Ola Lisowski | May 22, 2017

Biennial Budget Analysis: Spotlight on UW

Before the budget debate gets going, a look into the major provisions for the University of Wisconsin System

**May 22, 2017: Update** This week, the Joint Finance Committee will finally be voting on budget provisions relating to the UW System! In our continued efforts to keep our readers informed of all things fiscal at the UW System, we have republished our original analysis on UW’s budget below. It’s been a few months since these numbers were first made public, but they all start coming into play this week when the all-powerful budget committee begins voting.

Will JFC reject the continued tuition freeze for 2017? What about the 5 percent tuition cut for 2018? We’ll all find out when they vote on May 23. Stay tuned for more updates and a full analysis after the vote!

Want more coverage? Check out our twitter feed, @MacIverWisc, where we’ll be live-tweeting every crucial hearing of the budget process.

**April 10, 2017: Update** The Joint Finance Committee has scrapped all non-fiscal policy items from the Governor’s budget proposal, including many items described in this piece. Read more about the latest move out of the budget committee here. In the below piece, any policy items with an asterisk beside them are now struck from the budget and may be introduced as separate bills.

[Madison, Wis…] In February, Gov. Scott Walker introduced his biennial budget for 2017-2019, officially launching this year’s budget season. With the news that the Joint Finance Committee has finalized its dates for the forthcoming public hearings around the state, it’s a good time to review what’s in the queue for the University of Wisconsin System in this budget.

Overall, I summarize the goal for the System in one word: efficiency. As someone who hates the phrase “common sense” to describe policy, I found myself using it a lot in reviewing this portion of the budget. Many provisions had me shaking my head, asking, “this isn’t already law? Crazy!”

Out of concern for you, the taxpayer, let’s start with a basic overview of the scope and numbers of this proposal.

• Total state spending (GPR): $2,191,070,500, a 3.65% increase
• Total full time positions, all funds: 35,560.08, an increase of 159.22 positions
• Total full time positions, general purpose revenue: 18,035.88
• Total proposed spending, all funds: $12,431,997,800
• Percent difference from the last budget: 1.94% funding increase
• Portion of overall state spending: 6%

What’s the Takeaway?

The Governor’s budget grows the size of the University of Wisconsin System. Unlike prior budgets, Gov. Walker comes right out of the gate with $77 million more in state funding compared to 2017. That’s an increase of over 3 percent from last year, and to no one’s surprise, it’s been warmly welcomed by System officials.

The biggest string on that funding increase? Performance. The Governor’s budget provides $42.5 million to be distributed to institutions that perform well on the following state priorities:

• affordability and attainability (30%)
• work readiness (15%)
• student success in state workforce (30%)
• efficiency (10%)
• service (5%)
• additional criteria specified by the Board of Regents and approved by the Secretary of the Department of Administration (10%)

By tying funding to performance, the Governor makes it clear that there’s no such thing as a free lunch. Kudos. This $42.5 million is split evenly across the biennium and will be distributed based on the listed state priorities. The Board of Regents would have to rank each institution’s performance based on five sets of criteria for each fiscal year and would weigh each criteria accordingly, with affordability, attainability, and student success in the state workforce ranked by the Governor’s office as the most important criteria.

Now that the overall numbers are out of the way, it’s time to cover the most important UW-related provisions in this budget, starting with the one that has caused the most ruckus…

Frozen Tuition in Year One, Tuition Cut in Year Two

Gov. Scott Walker revealed his hope to cut resident undergraduate tuition at the UW System early this year during his State of the State Address to immediate outcry. Legislators on the left and the right immediately leapt at this provision, saying it would either drain the system’s resources or be far too expensive for the state.

Under the Governor’s proposal, resident undergraduates would enjoy a fifth year of the tuition freeze, setting the cost of a year of tuition at UW-Madison at $9,273. In the 2018-19 school year, tuition would be lowered by 5 percent, down to $8,809. The Governor’s budget specifically allocates $35 million to the System to offset the lower amount of tuition dollars flowing in – just as System officials asked.

As a free marketer, I don’t believe that a freeze is a sustainable long-term solution, but given the student debt crisis we’re in now, it’s the best option out there. Ever since the government began offering guaranteed loans for prospective students, the cost of higher education has skyrocketed. Rather than growing government at the latter end by creating new loan and grant programs, it’s best to control costs to begin with and keep the cost of tuition from growing.

Rather than growing government at the latter end by creating new loan and grant programs, it's best to control costs to begin with and keep the cost of tuition from growing.

From the second Gov. Walker uttered the words “cut tuition” in his State of the State address, it was clear that some legislators wouldn’t bite. It’s a bit ironic that many legislators – who I will bet have boasted about the tuition freeze and how much money they’ve saved young Wisconsinites on nearly many pieces of lit that they’ve produced in the last four years – are balking at the cost.

Under the proposed reforms, students who began as freshmen at UW-Madison in 2015 would save $12,105 for a degree compared to the pre-freeze trend. How do you go after a growing student debt crisis? Cut the cost of a four-year degree by a full fourth.

Pathways to Three-Year Degrees*

Under another proposal, the UW System would be charged with to creating pathways to three-year degrees for 10 percent of programs by 2018, and 60 percent of programs by 2020. The System will also have to report on the number of three-year graduates and the percentage of programs for which a three-year pathway exists in an annual accountability report.

This proposal doesn’t add additional burdens on students or ask the System or universities to create completely new programs. Rather, universities will have an opportunity to examine bloated degree requirements while shedding light on meaningful options for students. If passed, this proposal would save students valuable dollars – the benefits of which need not be explained here.

For purposes of transparency, the additional reporting requirement is a nice touch. Now let’s work on that full audit.

Credit Transferability

One new requirement would have the UW System and Wisconsin Technical College System Board (WTCSB) ensure that for each course of study, no fewer than 60 core general education credits are transferable within and between each system institution. The System will also be required to submit a report to the Legislature describing any barriers to credit transferability by 2018. Under current law, only 30 credits are fully transferable within and between institutions.

Perhaps more than any other provision on higher education in this budget, this one is a no-brainer. Wisconsin’s set of universities and tech colleges exist to serve our residents and get them prepared for the future, and any provision that helps them get there and streamlines the bureaucracy between institutions should be a welcome one.

Wisconsin’s state institutions should be as flexible as possible for our residents and students while maintaining the high quality of education that the public expects. In this vein, the institutions should strive to complement one another and to maximize the ways in which students can benefit from them and complete their degrees. It’s tough to tell how many students, exactly, will benefit from this provision, but the number is undoubtedly not zero. Besides, this should have been the rule from the beginning.

By requiring that a substantial number of credits transfer between each institution, each school’s bureaucracy steps out of the way – just the slightest bit – in the favor of students.

Report Cards*

Similar to report cards for K-12 schools, each System institution will be required to publish single-page report cards beginning in 2018. The report cards will summarize each institution’s performance during the prior year, based on the performance funding criteria and with metrics determined by the Board of Regents.

Any provision that increases transparency for the public is a good thing. Let parents and students have easier comparisons for and between each state institute. Another no-brainer.

Academic Freedom

The Governor’s budget allocates $10,000 for the UW System to review and revise policies related to academic freedom. The Board of Regents will be charged with producing new language that codifies its commitment to students’ right to free speech.

In an age of “free speech zones” on campuses – where every inch should be considered a free speech zone, not just a small corner – this provision is relevant and timely, as we’ve written here before.

After all, college is a time for young people to open their eyes to new experiences and perspectives. No, it’s not always comfortable. It’s not supposed to be.

It’s important to note that the UW Board of Regents already adopted written free speech principles known as the Chicago Principles in 2015, and reaffirmed them in 2016. However, such commitments to free speech haven’t played out.

In November, protestors physically blocked conservative pundit Ben Shapiro from speaking on UW-Madison’s campus. Shapiro eventually spoke, but protesters shouted down him and his supporters, including Vicki McKenna, who was repeatedly shoved and harassed but nevertheless kept filming.

The continual sifting and winnowing of ideas in the pursuit of truth can only occur if dissent in speech is continually protected. On, Wisconsin, indeed.

Freedom of Expression

In a similar vein to the academic freedom provision, the Board of Regents and each institution and UW College campus is charged with committing to free and open inquiry for the UW community as a whole. This provision for the UW System specifies that all members of the UW community share the responsibility to maintain a climate of mutual respect, and that concerns about civility can not be used as a justification for closing off the free and open discussion of ideas.*

This provision goes on to specify that while the UW’s commitment to free speech and debate is crucial to its mission, the Board and institutions may restrict any expression that breaks the law, falsely defames a specific individual, constitutes a genuine threat or harassment, or that unjustifiably and substantially invades privacy. The Board and each institution are expressly given permission to “reasonably regulate” such speech as long as the fundamental commitment to the principle of discussion of ideas is not harmed. The bill language specifically writes that UW community members may not obstruct or interfere with the freedom of others to express their views on campus, even while they may reject or loathe such views. Rather, they are free to criticize and contest views with which they disagree, and the Board and each institution is charged with protecting the freedom of debate and deliberation.

I’ll be curious to see what such “reasonable regulation” actually looks like, but I maintain heartened by the fact that this provision, and the one before it, make clear the System’s commitment to free speech.

Faculty Workloads*

The System will be charged with creating a new system to monitor faculty and adjunct workloads, and rewarding those who teach more than the standard workload. By 2018, the System will have to devise policies for faculty members to regularly report their teaching hours on an accountability dashboard.

As a proud alumna of UW-Madison, I value my alma mater’s reputation as a research institution. I also valued my professors having time to help me understand their classes and more than anything, I valued those classes that were engaging, thought-out, and comprehensive.

Ask any student if they can tell which professors showed up to class unprepared. They’ll be honest with you. By tracking and reporting faculty workloads, professors will have the ability to be honest, too.

Opting Out of Seg Fees*

One provision would allow students to opt out of allocable segregated fees (known as seg fees) starting in the 2018-19 school year. Students would be able to decide whether or not they want to fund student organizations such as Sex Out Loud, the Tenant Resource Center, and Associated Students of Madison (ASM) bus passes.

One essential distinction – which is described in detail by ASM here – is that between allocable and non-allocable fees. This provision would not affect the non-allocable fees, which remain 83 percent of overall seg fees. Non-allocable fees fund things such as University Health Services, Recreational Sports, the Union, as well as all debt services and ongoing payments for building projects.

I’d be curious to see a breakdown of how many students would actually opt out of paying seg fees. My gut instinct tells me the majority of students would continue paying the fee because they enjoy the presence of such services on campus. But if they don’t? That’s their prerogative, and that’s the way it should be.

Increased Flexible Options

The budget proposal requires the Board of Regents to expand the number of degrees offered through the UW Flexible Option program by at least 50 percent by December of 2019. At least one of the new programs created must be geared towards helping certified nursing assistants in becoming registered nurses, and another must help prepare nonteacher school district employees successfully complete standardized exams as a condition of becoming certified teachers. The proposal also offers $700,000 in financial aid for students who are enrolled in programs through the UW Flexible Option platform.

Currently, the Flex Option offers five degree programs and three certificates. The program is “made for busy adults” and catered towards individuals who want to get their degrees but who may already be working full time, supporting a family, or otherwise unable to attend traditional college courses.

Only UW-Milwaukee, UW-Parkside, and UW Colleges offer the Flex Option.

Wisconsin Tech College System

It’s not just the UW System – WTCS is also affected by the Governor’s budget. The biggest provision is one which would freeze tech college tuition for two years, providing $5 million to offset lost program revenues. According to the Governor’s office, revenue per full-time enrollee at tech colleges has risen over 20 percent over the last five years and is at its highest level ever. Clearly, the system won’t be bled dry by letting students save more of their hard-earned dollars.

Local tech college districts will be allowed the flexibility to drop tuition lower* than the statewide frozen amount. I won’t hold my breath and wait for any districts to jump at the opportunity to make less tuition money, but it’s nice that they’ll be allowed the option.

WTCS will also be required to submit an annual accountability report* to the Governor and Legislature, just as the UW System already does. Such transparency is necessary and welcome.

Required Work Experience*

I’ve written on this issue here, leaning heavily on my experience as a young graduate who has never had to be told that getting a job is important. Maybe that’s just me, though. ¯_(ツ)_/¯

Other Odds and Ends

I could wax poetic on all the provisions in this budget for thousands of words, but in the interest of keeping my readers awake, I’ll go through the last of the provisions here:

• $11.6 million for a general wage adjustment for UW employees. This will fund both the expected inflation increases in fringe benefit costs as well as two 2 percent bumps in general wages, slated for September 2018 and again in May 2019.
• $168 million in additional program revenue and 159.22 additional positions to reflect increases in tuition revenues and positions funded by that revenue.
• $200,000 for the System’s rural physician residency assistance program, spread evenly across the biennium.
• Tuition fee remission for the children and spouses of deceased or disabled veterans: this provision expands tuition fee remission to the children and spouses of veterans who lived in the state prior to serving, rather than just those individuals who lived in the state after service.
• *Student Housing Leases: the Board of Regents would be responsible for all student housing leases, rather than exempting the Board’s lease authority for leases of real property as student housing, as is current law.

That’s about it, folks. In your opinion, what’s the most important provision related to higher education in this budget? As always, follow us at @MacIverWisc to stay up-to-date on all the latest state budget issues.

* indicates that the item has been removed from the budget, as of April 10, 2017.

MacIver News Service | May 18, 2017

JFC Rejects Dems’ “Free Tuition” Stunt

The Joint Finance Committee took up the first of the big education agencies today when voting on budget provisions for the Wisconsin Technical College System. Most notably, JFC bucked Gov. Scott Walker’s proposal to freeze tuition at the tech colleges and voted instead to send that money towards scholarships.

The committee cast a 12-4 party-line vote to delete the proposed tuition freeze and instead provide $2.5 million annually for need-based Wisconsin Grants for technical college students. Rather than spending $10 million in GPR across the biennium, the approved motion spends $5 million during the same period of time.

The stunt of the day came when Democrats on the committee tried to pass a motion that would spend $545 million in GPR to make tuition and fees at the tech colleges completely free. The legislators took great lengths to describe the food insecurity that tech college students face that they claimed could all be solved by this motion. Not mentioned, of course, was the multitude of research showing that affluent students typically benefit the most from “free college” schemes.

The one-page motion did not include any information on how the legislators would pay for the massive new expenditure.

JFC Co-chair Rep. John Nygren (R-Marinette) noted that the expense would throw off the entire budget and reminded Democrats on the committee that “Bernie Sanders lost.” With that, the committee went to a vote, which failed 12-4.

The last major tech colleges-related issue was that of performance-based funding. Walker’s budget proposal would change the way that funding is allocated to each of the colleges, relying more heavily upon each school’s performance. Rather than approving the Governor’s plan, the committee voted to keep the current law’s allocation mechanism.

MacIver News Service | May 16, 2017

Property Taxes Might Go Up

Not all Republican lawmakers in Wisconsin want to see the forestry tax go away, even though it would save property taxpayers $180.5 million over the next biennium – and keeping it could mean an overall increase in property taxes.

“Right now there are very passionate views on both sides,” Senator Alberta Darling told reporters on Tuesday.

Gov. Walker wants to eliminate the tax, which is the last remaining portion of the state property tax. However, Joint Committee on Finance Co-Chairs, Senator Darling and Representative John Nygren, said there is division in their caucuses whether or not to do that.

“I think there’s some in our caucus that have concerns about the funding that the mill tax – things it funds with forestry – especially when you get into more rural parts of the state, but we also know it’s been a little bit of a slush fund,” Nygren said.

Nygren said he agrees with the governor on eliminating the tax. Darling said lower property taxes is a shared priority between the governor and legislature, but was less committal about where she stands on the issue.

“I think if you ask the regular person, what’s the most onerous tax? They’d say the property tax,” Darling said. “So that’s why we have it as a priority, and why it’s going to be a big issue of whether to accept the governor’s proposal on the forestry mill tax, or to have an alternative.”

According to the governor’s budget proposal, eliminating the forestry tax will save the median value homeowner $27 a year.

A Legislative Fiscal Bureau analysis shows, altogether, the governor’s budget will save the median value homeowner $20 the first year and $1 the second year. That means if the forestry tax is kept in place, the median value homeowner could see an increase of $7 the first year and $26 the second year.

The last time property taxes increased was in 2015, when the “typical” homeowner went from paying $2,833 to $2,850. That’s still over $400 less from the trajectory under Governor Doyle, according to the Walker administration. They’re currently at $2,824.

In any case, going from a proposed decrease this year to a possible increase in property taxes is probably not something the governor wants to see in this budget.

But, as Sen. Darling put it, “It’s being debated so stay tuned.”

MacIver News Service | May 12, 2017

Tackling the Easy Stuff First

The Joint Committee on Finance chipped away at the budget this week, focusing on some of the least contentious items of Gov. Scott Walker’s proposal.

On Tuesday, it took up Secretary of State, WEDC, Military Affairs, Legislature, and Justice. Then on Thursday it addressed Financial Institutions, PSC, DSPS, VA, Legislature and DHS (MA Administration). The lack of controversy was evidenced by about three dozen items approved unanimously.

All week, everyone’s attention seemed focused on the Assembly Republican’s transportation and tax plan, which was released on May 4th. The plan would lower the gas tax and minimum markup rate, but then apply sales tax to gas purchases. It would also put the state on the path toward a 3.95 percent flat tax by 2028, eliminating several credits right away like the marriage credit, working families credit, first dollar credit, and rent credit.

Walker immediately dismissed the plan as a tax hike. On Wednesday, Senate Majority Leader Scott Fitzgerald said it was a non-starter. He suggested more bonding and toll roads as a more appropriate solution to transportation funding. The Assembly is sticking with its plan, but Rep. John Nygren said they were at an impasse.

Thursday morning, JFC co-chairs Sen. Alberta Darling and Nygren said they might take transportation out of the state budget and deal with it as a separate bill. That could be complicated because some options involve transferring money from the general fund to DOT. Both Walker and Fitzgerald said they do not support that idea.

In addition to transportation, there is also disagreement between the governor and the legislature on self-insurance. The governor says the state could save $60 million by switching to a self-insurance model for 225,000 state employees. JFC is opposed to that idea. There is talk lawmakers are working on a high-deductible state health care plan, including health savings accounts.

On Wednesday, the Legislative Fiscal Bureau reported that year-to-date tax collections match the estimates made in January. Nygren said he’s satisfied with that news and many states aren’t so lucky.

Next week JFC is scheduled to take up: Lower Wisconsin State Riverway Board, Kickapoo Reserve Management Board, State Fair Park, Elections Commission, Ethics Commission, Administration (General Agency Provisions), Health Services (Care and Treatment Services), and Children and Families, Labor and Industry Review Commission, Wisconsin Technical College System, Historical Society, and Shared Revenue.

May 2, 2017

Joint Finance to Finally Swing Into Action This Week

The Joint Finance Committee begins voting on the 2017-2019 state budget today by taking up some of the least contentious parts of Governor Scott Walker’s proposal. Some of the first items include funding for the courts, insurance, Administration, Division of Gaming, Board for People with Developmental Disabilities, Board on Aging and Long-Term Care, Environmental Improvement Fund, and the Employment Relations Commission.

That means the controversial issues and many points of friction that have materialized in the last few months will be voted on further down the road. Those issues include transportation funding, increased aid for K-12 schools, a variety of reforms for the UW System, and a proposal to switch state employees' health insurance to a self-funded model - all likely to gum up the process.

Earlier in April, JFC took the rare step of removing all 83 non-fiscal policy items from Walker's budget, just the second time in 25 years the committee completely stripped all policy items from a governor's budget. Each proposal stripped from the budget now needs to be drafted as separate legislation.

Several of the removed items are popular with conservatives, such as a full repeal of the state's antiquated prevailing wage law, a measure prohibiting government from requiring union-friendly project labor agreements on taxpayer funded projects, a proposal to allow UW students to opt-out of certain fees, and a requirement that UW campuses track faculty workloads.

Which raises the question: Will fiscal conservatives and budget hawks vote for the budget if these popular conservative items do not make their way back?

JFC also completely scrapped Walker's transportation budget, the first time in ten years the committee threw out an entire portion of a governor's budget. Even though the governor and leaders in the Assembly have been trading barbs over the transportation budget for months, many insiders were surprised that the Legislature would make such an audacious and aggressive move.

Transportation funding is sure to be the most contentious issue as the budget process unfolds. Walker has been steadfast in sticking by his pledge not to raise the gas tax or vehicle registration fee, while Assembly leaders say they want to keep all tax increase options open to bridge what they claim to be a billion-dollar funding shortfall and too much transportation bonding.

A MacIver Institute report in March debunked the billion dollar narrative and explained how "Madison math" was used to come up with the inflated figure.

And no one in the legislature has responded to MacIver's 2015 report on the Bridge Too Near, a $3.6 million dollar pedestrian bridge built unnecessarily less than a two-minute walk from an existing bridge.

One persistent rumor making its way around the Capitol is that Assembly Speaker Robin Vos believes he has fifty votes in his house for a 10-cent gas tax increase.

The hopes of some in the Assembly and special interests groups to raise the gas tax were dealt a blow earlier in the year when a Legislative Audit Bureau report found the Department of Transportation had been low-balling cost estimates to the legislature, failed to comply with state law and its own policies, and didn't adequately track cost overruns, among other problems.

Walker's proposal to cut UW tuition by 5 percent in the second year of the budget for in-state undergraduates has also hit a snag at JFC. After Walker's state of the state address, Assembly Speaker Robin Vos said the cut wasn't a priority, and JFC co-chair John Nygren has also thrown cold water on the idea, stating he prefers targeted financial aid to a tuition cut for all students.

Walker's budget increases K-12 funding by $648.2 million, a proposal many thought would get the same treatment as his transportation budget, but JFC decided to consider the proposal as-is. A sticking point for some is sure to be a caveat that ties the increased aid to Act 10 compliance.

In order to qualify for the increased aid, a district must demonstrate that its employees are contributing 12 percent to their health insurance. But some districts, including the Madison Metropolitan School District, protest that since they've shopped around for better deals on their insurance they should be given leeway.

Walker's K-12 increase relies partly on finding $60 million in savings on state employee health insurance. The governor proposes switching the state to a self-funded insurance system where the state would pay claims, rather than farming it out to a network of private insurance companies. The proposal has also met a chilly reception in the Legislature.

Later this week, state Rep. Dale Kooyenga, a leader of the Republican CPA caucus and a conservative thought leader, is expected to forward for consideration a comprehensive transportation and tax proposal that some believe may bring the politicians and the different warring special interests together to agree on a deal. As more details of the proposal become available, MacIver will bring you up-to-the-minute updates on this situation and any others that arise.

JFC will continue its executive sessions on the budget throughout the month of May. The Assembly and Senate could then potentially hold floor votes in June. The state's fiscal year ends on June 30th, which is the unofficial deadline for the budget. However, speculation abounds that this fierce budget debate could drag the process out to October. Stay tuned.

April 11, 2017

Vukmir, Hutton Re-Introduce Prevailing Wage Repeal

Days after a provision to repeal the state's prevailing wage law was yanked from Gov. Walker's 2017-19 budget by leaders of the Joint Finance Committee, Sen. Leah Vukmir and Rep. Rob Hutton have re-introduced the measure as standalone legislation. On Thursday, JFC co-chairs Sen. Alberta Darling and Rep. John Nygren removed prevailing wage repeal along with 82 other items in the budget identified by the Legislative Fiscal Bureau as non-fiscal policy items. The memo states those items need to be re-introduced as standalone legislation.

While removing some policy items from the budget is routine, this is just the second time in 25 years that JFC stripped all non-fiscal policy proposals from a governor's budget. Darling and Nygren said they were open to returning some of the items after they receive individual public hearings.

Vukmir said she was disappointed the repeal proposal was pulled. "I think it has a direct impact on the transportation budget. I don't think the budget gets passed without a full repeal," Vukmir told the Wheeler Report.

"As lawmakers, we have a responsibility to manage the transportation budget efficiently," Vukmir said in a joint statement with Hutton. "It's unrealistic to do so without the accessibility of all tools. Repealing this burdensome red tape will ensure the use of taxpayer dollars are maximized."

There's a chance the repeal could be returned to the budget, but Hutton was optimistic that prevailing wage repeal could pass as a standalone bill. "While I was encouraged that the Governor put complete repeal of prevailing wage in the budget, the fact that the legislature can now pass this as a standalone piece of legislation shows that we are taking our responsibility as legislators seriously," he told Wheeler.

"Two years ago we passed prevailing wage reform for local governments," Hutton said in the statement. "It is now time to finish what we started and pass full prevailing wage repeal. As we look at the transportation budget this spring, we must ensure taxpayers are receiving the best value for their tax dollars."

The prevailing wage law, which mandates artificially inflated wages and increases labor costs, was repealed for local projects in the last budget, but without full repeal, state projects remain on the hook.

April 6, 2017

JFC Dumps Governor's DOT Budget, UW Reforms, and Prevailing Wage Repeal

The Joint Committee on Finance released its budget procedures memo on Thursday outlining what items they will consider from the governor's budget and what items they are rejecting.

JFC stripped all 83 non-fiscal policy items out of Gov. Walker's budget proposal, including many proposals popular with conservatives like prevailing wage repeal and numerous reforms for the UW System and K-12 education.

While removing some policy items from the governor's budget is routine, this time JFC removed all of them - a rare move, especially with a governor of the same party. This is just the second time in 25 years that JFC stripped all non-fiscal policy proposals from a governor's budget.

In addition, JFC scrapped Walker's transportation budget entirely, choosing to ignore the agency request and the governor's proposal. Instead, the committee will start from scratch on the contentious question of how to fund the state's transportation system. This is the first time in ten years that JFC has scrapped an entire portion of the governor's budget.

JFC will be using a method called "base-year doubled" budgeting in building a transportation budget, which simply means taking this year's level of funding and doubling it to see what a cost-to-continue scenario would look like over the next biennium. This technique was used last summer (with other alterations) to create the illusion of a billion-dollar transportation deficit, which started the gas tax debate. MacIver's analysis of that dubious math can be found here.

The 83 non-fiscal policy items JFC stripped from the governor's budget will be drafted as individual bills separate from the budget. JFC co-chairs Rep. John Nygren and Sen. Alberta Darling both indicated some could be put back into the budget after each gets a public hearing. However, many of the conservative policy items were important to balancing out the governor's proposed spending increases - both fiscally and politically.

JFC will also remove 83 non-fiscal policy items from the governor's proposal, which will be drafted as individual bills separate from the budget. Some of the more notable items include:

• DPI: Eliminate required hours of instruction for public schools
• DPI: Eliminate requirement for monthly school board meetings
• SPS: Create occupational license review council
• UW: Segregated fees opt out
• UW: Three-year degrees
• UW: Credit transfer program
• UW: Faculty workload reporting
• UW: Freedom of expression
• Repeal prevailing wage
• Project labor agreements

For the rest of the budget, JFC will use the governor's proposal as its starting point, including Walker's K-12 education proposal. There had been concerns that the committee would also start from "base-year doubled" for K-12, which could have meant less aid compared to the governor's plan.

March 30, 2017

UPDATED: First Week Twists and Turns

On Thursday, JFC held the third and final day of agency briefs. It heard from the heads of the PSC, DNR, the Tech College System, UW, DPI, the Historical Society, DWD and the Labor and Industry Review Commission. That hearing wrapped up a week of twists, turns, and sparring over the governor's budget.

"Got a little punchy last night, because we're here a long time. But the Senator [Darling] did a good job trying to keep order," Rep. Nygren said at the start of the marathon 13-hour hearing on Thursday.

Democrat members of the committee continued to push the department heads, but with less ferocity than the day before. PSC talked about the governor's plan to invest $15.5 million into broadband expansion.

DNR Secretary Kathy Stepp talked about the decision to stop publishing Wisconsin Natural Resources magazine. She said 0.1 percent of Wisconsin residents choose to subscribe to the magazine, and that the internet is much more efficient in sharing the DNR's activities with the public.

"Every budget there's something typically that a lot of people see as a smaller issue that gets a lot of attention, and this year it's the magazine," Nygren commented.

Next up came the Wisconsin Tech College System. Administrators there testified against the proposed tuition freeze for the tech colleges, saying that they believed a freeze could jeopardize quality.

Multiple legislators expressed concerns about the provision to require the tech colleges to increase credit transferability from 30 to 60 credits. Sen. Luther Olsen (R-Ripon), Chair of the Senate Committee on Education, worried that the switch would contribute to the agency "mission creep" and effectively make the tech colleges the same as two-year UW campuses. (MacIver News covered this issue in a 2015 video report: Tech Colleges and the UW Colleges: Do We Need Both?)

Moving forward on education, next came the UW System. President Ray Cross expressed his support for the Governor's UW budget proposal, calling it "the best UW budget in a decade." President Cross agreed with several legislators, including Sen. Leah Vukmir (R-Brookfield), that he supports the intent of requiring students to attain internships before graduating, but wasn't sure how to make the provision mandatory.

President Cross spent several minutes fervently defending the importance of free speech on campus. He lamented the fact that college students with opposing views don't listen to each other anymore, but simply shout each other down. That's not what college is for, Cross stressed.

The Department of Public Instruction (DPI) testified after the UW System, with State Superintendent Tony Evers highlighting the massive increases to mental health funding in the budget, alongside the investments in rural schools and MPS summer school.

The Superintendent expressed his concerns about the provision requiring public school district employees to contribute an average of 12 percent to their healthcare costs. That provision is known as "Act 10 compliance," referring to the famous law that first required public employees to contribute those amounts.

One notable moment came when Sen. Vukmir asked the Legislative Fiscal Bureau about funding for public schools compared to the choice program, referencing one particularly confusing memo which showed that students in the choice program receive more state funding than public school students. LFB debunked that claim themselves, clarifying that when state and local levies are included, public school students receive nearly $5,000 more than choice students.

The Wisconsin Historical Society testified after DPI. Representatives discussed their move to a new office and artifact storage facility and the potential to preserve the Ringling Bros. circus after it announced it would no longer tour.

Following the Historical Society was the Department of Workforce Development (DWD). Secretary Ray Allen touted Wisconsin's low unemployment rate and high labor force participation rate, as well as the budget's investment in the Fast Forward program and other job training measures.

Sen. Olsen praised the agency and its work, but also expressed concern that the state's rock-bottom unemployment rate of 3.7 percent could indicate to employers that all Wisconsinites are already employed and push them away. Allen replied that one way to grow the workforce is to encourage people not in the labor force to enter it by making it as easy as possible to find a job.

Rep. Shankland also sparked some confusion when she tried grilling Allen over the proposed repeal of prevailing wage, which Allen said was the purview of the DOA, not his agency. The question was quickly resolved, and Shankland moved on to asking about Project Labor Agreement reform, which Allen said is also outside his agency's area of authority.

The night wrapped up with testimony from the Labor and Industry Review Commission (LIRC), which the budget dismantles and transfers its responsibilities to other departments. This generated controversy among some JFC members because there is a risk that complaints now filed with LIRC will be handled less efficiently in a not-yet-known process. The change may also have adverse consequences for victims, particularly of workplace discrimination, some JFC Democrats contended.

Overall, the week was filled with plenty of intrigue around the budget and other upcoming battles in the legislature. As Secretary Dave Ross answered hours of questions about the proposed DOT budget, Governor Walker reiterated his position on his K-12 education budget and opposition to a gas tax increase in a tweet.

In real time, Sen. Jon Erpenbach mentioned the governor's tweet during the day's marathon Joint Finance Committee hearing as committee members grilled Ross on the transportation budget.

Meanwhile, Senate Majority Leader Scott Fitzgerald announced the state Senate will not override a veto by the governor on a gas tax increase. That echoed Sen. Luther Olsen's comment at Joint Finance that the Senate does not have a hard-and-fast position on the idea of a gas tax increase. The Wisconsin State Journal said Fitzgerald's announcement "flatlined" any attempt to raise the gas tax.

At the same time, Assembly Speaker Robin Vos criticized DOT Secretary Dave Ross's position against a gas tax hike as "delusional" and said, "...to say it's only a spending problem is to ignore the reality of the governor's own three commissions that have all said it's a revenue problem and the audit that says we have some of the worst roads in the entire country," according to the Wisconsin State Journal.

Fitzgerald and Vos also found themselves at odds over a proposed Article V Constitutional Convention. Last week, a bill that would add Wisconsin to a list of states calling for a convention to amend the U.S. Constitution with a balanced budget amendment cleared a state Senate committee on party lines. Fitzgerald's support for the measure was tepid out of concern about the scope of such an unprecedented convention.

Vos, on the other hand, said that now is the time for such an amendment. If the bill passes, Wisconsin will become the 30th state to endorse a Constitutional convention. A call for convention must pass 34 states for convention to convene.

March 28, 2017

And We're Off - Legislature Takes Up 2017-2019 Budget

On Tuesday, the legislature began to hold hearings on Governor Scott Walker's 2017-2019 budget proposal, which spends approximately $76 billion over the biennium. The Joint Committee on Finance, the legislature's budget committee, will hold agency briefings in Madison this week on the proposal before heading out on the road to give the public another opportunity to voice their opinion.

One of the major debates was over the state's plan to switch to self-funded insurance. While Governor Walker and the Department of Administration say switching to a self-funded model for state employees' health insurance will save $60 million, members of JFC expressed their hesitation.

Walker's budget also boosts funding for K-12 education, but much of that funding is tied to mandatory Act 10 compliance. Committee members were confused over many of the requirement's details.

Of course, transportation was a topic of lengthy debate. DOA Secretary Scott Neitzel defended the budget's focus on safety and maintenance of the existing infrastructure, and Sen. Jon Erpenbach (D-Middleton) grilled him on whether the governor thinks Wisconsin's roads are safe.

The concept of shared services, where state agencies work together to perform functions like human resources and information technology - streamlining government operations and saving money - also generated its share of questions.