News from the Capitol and around Wisconsin
We hope that you had a great weekend, and that you enjoyed your Mothers' Day activities.
This week, we will bring you the latest on the large transportation and tax reform plans unveiled in the Capitol the week before last. We will also touch on the plans for a new Wisconsin prison, and share some recent news regarding WEDC's loan program, the potential shift to state self-insured model, and a Democratic proposal regarding preexisting health conditions. We will also bring you the latest news in Wisconsin's farmland value.
As always, we hope you find this weekly report to be interesting and informative. If there are ever any issues that you would like to see included, or if you ever have any questions or comments, please reach out to us at email@example.com.
Have a great week,
Following the announcement of the Assembly GOP plans for transportation funding tethered to a tax reform plan, the legislature and media was waiting to see how it would all unfold.
First, the nonpartisan Legislative Fiscal Bureau last week said it would not change any of its future revenue estimates for the coming two years, as the numbers have remained on course from its previous estimates.
With that, Governor Walker signaled that since the state's fiscal estimates have remained on course with the LFB's estimates, there would be no need to raise taxes, essentially keeping the governor's position firmly planted against raising the gas tax as a long-term solution to the state's transportation funding woes.
Meanwhile, Speaker Vos guaranteed the public that the budget will not include high levels of borrowing to fix transportation, calling any plan that borrows hundreds of millions of additional dollars "a non-starter" for his chamber. The Speaker, along with Joint Finance Committee Co-Chair Rep. John Nygren both called on the Senate to formulate their own transportation plan.
In response, Senate Majority Leader Scott Fitzgerald told reporters that he does not believe that the massive Assembly GOP Transportation-Tax plan introduced two weeks ago has any momentum, and that he still believes the best immediate solution to fix transportation is backing new borrowing with state general purpose revenue fund, in addition to considering toll roads for the long-term.
With both Governor Walker and Senate Majority Leader Fitzgerald seemingly standing against the plan, it seems unlikely that the highly-publicized transportation and tax reform proposals will be passed into law in their entirety during this budget.
Then later in the week, some Joint Finance members threw around the idea of pulling transportation out of the entire state budget, and working on the fix while passing the rest of the two-year state budget. The idea was dismissed by Governor Walker's office and met with skepticism from Majority Leader Fitzgerald, however no decisions have been made by either legislative leader.
Funding for state government runs out on June 30th, with the new fiscal year beginning on July 1st.
For right now, it's a wait-and-see game, but we will keep you up to date as anything unfolds in the ongoing transportation saga. Let me know if you have any questions at firstname.lastname@example.org.
Self-insurance model dead in committee
The Joint Committee on Finance last week said it plans to nix one of Governor Walker's signature items in the budget- the state moving to a self-insurance model. The committee affirmed, however, that they will continue to explore other ways to save money in the state's current employee health insurance system.
The plan would have had the state pay medical claims directly on behalf of state employees, rather than paying a premium to health insurance companies. Essentially, the state would have acted as its own health insurance provider, contracting with six companies, rather than 17 HMO providers currently used by the state.
The Walker administration said that the plan would save $60 million over the next two years, and the savings would be divvied up and given to K-12 funding and UW System funding. Department of Administration Secretary Scott Neitzel said the Walker administration is in "disbelief" that the committee would reject the plan.
Lawmakers propose plan to sell 120-year-old Green Bay Correctional Institution, build new facility
Republican lawmakers Senator Frank Lasee and Representative Dave Steffen have put forth a proposal that would sell the 120-year-old Green Bay Correctional Institute, and build a new prison in a nearby county.
In their co-sponsorship memo, the lawmakers cited the overpopulation of the current prison, in addition to its much-needed repairs and updates. Under their plan, a private company would build and own the prison, and local governments could collect property tax on the facility.
The current prison employs around 350 people, and has just over 1,000 inmates. The capacity for inmates is 749. Fixing the current prison could cost about $628 million to fix and maintain, whereas a new prison would cost about $475 million to lease and maintain. The current prison cost $37 million to operate last year.
WEDC loan program reinstated
After a 2015 audit uncovered that the Wisconsin Economic Development Corporation (WEDC) was awarding loans without oversight, not tracking job creation, and other discoveries, the Joint Finance Committee began a phase out in the last budget.
Last week, JFC voted to reinstate the loan program, along a party line vote (12-4). WEDC, which has undergone many reforms since the audit uncovered large discrepancies, and according to leadership, all of the concerns have been properly addressed.
Under the new loan program, Governor Walker added new caveats, including awards only being funded with repaid loans, and loans cannot be forgiven unless they use common practices used by commercial lenders.
As of June 30th of 2016, WEDC had 189 loans outstanding, totally about $73 million, and had received about $9 million in loan repayments, and forgave about $7 million. New estimates are expected to be released as early as this week.
WPT Weekly Member Poll Results:
Transportation proposal, tax reform proposal, flat tax proposal, toll road possibility, and your sunny weekend plans
Last week's Special Capitol Report was focused on the massive tax reform and transportation plan that was put forth by the Assembly Republicans, and authored by Rep. Dale Kooyenga. We also wanted your thoughts on the possibility of toll roads in Wisconsin, the idea of shifting state income tax to a flat tax, and what your weekend plans were!
Let's get down to it!
Based on what you have read, do you support the transportation proposal?
About 43 percent like the transportation proposal, and about 35 percent do not.
"Toll roads are a pain."
"Some thing has to be done with our roads. I am sure the Gov. will veto any proposal that comes to his desk!"
"Don't want sales tax on gas- $40 worth of gas will cost at least $2 more- gas may not stay cheap forever! NO toll roads! Why not just raise the gas tax a nickel? Get rid of that mandated inflated wage-Yes! Many road projects seem to have massive cost overruns- Why?"
Based on what you have read, do you support the tax reform proposal?
Nearly 40 percent do not like the plan, and about 35 percent support it.
"Wealthiest obtain the greatest 'relief.'"
"How will the cuts be offset?"
"Just don't know if a flat tax is the way to go."
"We will wind up paying more in the name of "reform'!"
Do you support the state moving the income tax to a flat tax?
Nearly half think a flat tax is a good idea. Just under 30 percent of respondents don't like it.
"Wealthiest receive greatest relief."
"Where is the state going to generate this lost revenue?" According to Rep. Kooyenga, each year that Wisconsin has cut taxes, it's revenues have grown. According to the DOR Secretary, last year was the largest revenue year for Wisconsin in history. If that trend theoretically were to continue, Wisconsin would see economic growth, resulting in higher revenues.
Do you support the idea of toll roads in Wisconsin?
About 56 percent of respondents do not support the idea of toll roads, while about 30 percent do support the idea.
"The income from toll roads would help fix our roads."
"It cost too much and the payback is years down the Road."
"They have toll roads in "Flatland" and their roads aren't any better. Toll roads impede traffic especially in winter. Another way to squeeze more money out of us. Ask Jim Doyle why he got us into this mess by raiding the transportation fund!"
"Work - to pay my tax :)"
"Family is coming to help celebrate Mothers Day, This past weekend had a Bridal shower. Weekends are getting busy."
"Mother's day weekend at the cabin!! Lots of grilling out!"
"Going north to ride the ATV trails."
"No big plans except calling Mom for Mothers Day. Last weekend I did work putting crops in."
"Celebrate Mothers Day!"
"Mothers Day activities at our daughters"
"Mothers Day coming up, enjoying with the family! Worked most of the time."
"I have to see (feel) mid 70's before I will believe it. Low ground needs warm dry weather so we can work it and get it planted. Too much rain and cold Lake Mich breezes."
Wisconsin farmland values continue to outpace region
The growth of farmland property value continued to dominate the upper Midwest region of the country according to the latest survey of agriculture lenders.
According to the 7th Federal Reserve District, values in the region between January and March of 2017 stayed about the same as a year ago, however ag property increased by five percent from last year, and is already up two points from the 4th Quarter of 2016. Indiana and Michigan values dropped, Illinois was stagnant, and Iowa was slightly up.
As far as the forecast, about two thirds of lenders see farmland as remaining stable during the second quarter, and farmland loans are expected to decrease, as 2016 saw higher levels of loan renewals and extensions.
After House action and Walker comment, Dems introduce pre-existing conditions bill
Two weeks ago, Governor Walker said he "certainly would consider" opting out of federal requirements mandating that insurance companies cover individuals with pre-existing conditions, legislative Democrats last week introduced a series of bills aimed at requiring insurers to provide coverage regardless of federal law.
The package of bills introduced by Sen. John Erpenbach (D-Middleton) and Rep. Daniel Riemer (D-Milwaukee) would:
Ban insurance companies from setting limits on insurance benefits (annual or lifetime)
Ban insurance companies from refusing to cover people with pre-existing conditions or raising rates based on pre-existing conditions
Mandate insurance plans cover preventative services at no cost to the patient
Mandate insurance plans cover 10 categories of essential health benefits currently in the Affordable Care Act
Allow family planning clinics to receive Medicaid reimbursements
The bills were also in response to the House of Representatives voting to repeal and replace the Affordable Care Act (aka Obamacare) the week before last, as well.
Governor Walker tweeted last week: "It is a given that WI will ensure coverage for people with pre-existing conditions."