Capitol Week-in-Review – December 7, 2017

Congress Begins Working on Reconciling Tax Reform Differences  

Late last week, the United States Senate approved its version of federal tax reform legislation. Because their proposal differs from the version approved by the United States House of Representatives, a bicameral Conference Committee has been created to reconcile the differences.

When the Conference Committee reaches consensus, their proposal will go directly to the floor of the House and Senate for an up-or-down vote. Subsequent approval by the President would be required before any federal tax code changes could go into effect.

The non-partisan Tax Foundation has published a very good summary of the major differences between the House and Senate tax reform plans.


WIB Lobbies for Civil Justice Reform Legislation

A group of state legislators led by State Representative Mark Born (R-Beaver Dam) and State Senator Tom Tiffany (R-Hazelhurst) has come forward with a legislative proposal that addresses the most pressing civil litigation challenge for Wisconsin employers – the escalating costs related to discovery.

By way of background, discovery is a process that begins after a lawsuit has been filed in order to allow the parties to prepare their case. Discovery may include responses to written or oral questions as well as the production of documents. Failure to answer or fulfill a discovery request may lead to fines and other sanctions.

The Born-Tiffany proposal aligns Wisconsin’s civil procedures for discovery to the corresponding federal rules. More specifically, their proposal:

  • establishes cost-benefit and proportionality requirements for discovery to prevent litigants from abusing the discovery process to leverage a higher potential settlement or engage in a “fishing expedition;”
  • puts on hold discovery and other proceedings pending the court’s decision on a motion to dismiss or other dispositive motions, protecting parties from costly discovery in cases that may be dismissed or where refinement of the pleadings may clarify the allegations and scope of relevant discovery;
  • provides notice of third-party litigation financing, if the financier has a right to receive compensation that is contingent on and sourced from the outcome of the action. This financing arrangement can increase the cost of litigation and cause lawsuits to be brought that would not otherwise have been financially justified;
  • limits discovery of electronically stored information (ESI) to address the escalating volume of ESI that is now one of the most significant discovery-related costs; and
  • unless otherwise stipulated or ordered by the court, limits discovery to 25 interrogatories, 10 depositions, none of which may exceed 7 hours in duration, and a look-back period of not more than 5 years prior to the accrual of the cause of action.

WIB has joined a broader coalition of business advocacy groups to lobby in support of this civil justice reform legislation.


Wisconsin’s State-Local Tax Burden Falls Again in 2017

According to a new report from the non-partisan Wisconsin Taxpayers Alliance (WisTax), Wisconsin’s combined state-local tax burden for 2017 was 10.7% of personal income, down from 10.8% in 2016. State-local taxes relative to personal income have declined six consecutive years since reaching 11.9% of income in 2011.

WisTax attributes this decline in the state-local tax burden to an 18.6% reduction in unemployment insurance tax collections ($922.6 million to $751.3 million) and the elimination of the 0.5% Brown County sales tax that paid for renovations of Lambeau Field.

Capitol Week-in-Review – November 24, 2017

State Assembly Leader Calls for Modernizing Wisconsin’s Tax Code

Earlier this month, Assembly Speaker Robin Vos (R-Rochester) directed the Assembly Ways and Means Committee to undertake a comprehensive review of Wisconsin’s tax code and make recommendations for a “new tax code that is fair and simple with lower rates” for consideration as part of the 2019-2021 State Budget.

To assist in this effort, Speaker Vos has appointed four additional members to the Committee and authorized the Committee to create Subcommittees. They are:

  • Subcommittee on Sales and Use Tax
  • Subcommittee on Personal and Corporate Income Taxes
  • Subcommittee on Local Government (Property) Taxes and Funding
  • Subcommittee on Excise Taxes and Fees

Each Subcommittee will report the history and purpose of the taxation device; current problems with the taxation device; and solutions or possible changes to the taxation device. Each Subcommittee will then present their findings and recommendations to the full Committee for inclusion in a comprehensive state tax code reform plan.

State Representative John Macco (R-Ledgeview), the Chair of the Assembly Ways and Means Committee, will oversee and guide this effort. Our Legislative Director, Brian Dake, recently met with him to discuss our tax policy priorities – full repeal of the personal property tax, broad-based income tax relief and tax code simplification.

Brian advised Representative Macco that WIB will be an active participant in the Committee’s work to modernize our state tax code. In turn, he asked that we solicit input from members.

We respectfully ask you to honor his request by completing the Committee’s online general tax survey.

Thank you in advance for your assistance.


WIB Backs Employment Law Standardization Act

Compliance with employment-related laws and regulations is particularly challenging for small employers. There are federal requirements, state requirements and in some limited instances, local requirements.

To ease this regulatory burden, we advocate for greater conformity between federal and state employment-related laws and regulations as well as statewide preemption of local ordinances which impose additional employment-related requirements or restrictions on employers. Our goal is one set of fair and reasonable rules for employers to follow.

Last week, a group of state lawmakers led by State Senator Chris Kapenga (R-Delafield) and State Representative Rob Hutton (R-Brookfield) came forward with a legislative proposal which preempts local units of government from enacting or enforcing ordinances related to various employment matters.

They have dubbed their proposal the “Employment Law Standardization Act.” It would prohibit any city, village, town, or county from enacting or enforcing an ordinance regarding any of those matters:

  • Regulations related to employment discrimination;
  • Regulations related to wage claims and collections;
  • Regulation of employee hours and overtime, including scheduling of employee work hours or shifts;
  • The employment benefits an employer may be required to provide to its employees; and
  • An employer’s right to solicit information regarding the salary history of prospective employees.

WIB has joined with other small business advocacy organizations including the Wisconsin Restaurant Association, the Wisconsin Grocers Association and the Wisconsin Hotel and Lodging Association to back the Employment Law Standardization Act. Enactment of this legislation is on our lobbying “to do” list for 2018.


State Senator Sheila Harsdorf Appointed DATCP Secretary

Governor Walker has appointed State Senator Sheila Harsdorf (R-River Falls) to serve as the Secretary of the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). She replaces outgoing Secretary Ben Brancel who retired in August.

By way of background, DATCP has regulatory authority over a variety of commercial activities in Wisconsin including:

  • Enforcement of the state’s consumer protection laws;
  • Licensing and inspection of food-related businesses; and
  • Administration of financial security programs to protect agricultural producers.

Sheila graduated from the University of Minnesota with a Bachelor’s Degree in Animal Science after which she returned to River Falls to become a loan officer for the Production Credit Association while farming part-time on the family dairy farm. Shortly thereafter, Sheila and her brother, Jim, became partners in family farm.

She represented the 30th Assembly District in the Wisconsin State Assembly from 1989 to 1998. In 2000, Sheila was elected to the Wisconsin State Senate to represent the residents of the 10th Senate District – Burnett, Dunn, Pierce, Polk and St. Croix counties. During her service in the Wisconsin State Legislature, she served on the legislature’s budget-writing committee as well as committees with jurisdiction over agriculture-related laws, regulations and programs.

We applaud the Governor’s appointment and look forward to working with Secretary Harsdorf on issues of importance to WIB members.

 

Capitol Week-in-Review – November 9, 2017

House Tax-Writing Committee Unveils Federal Tax Relief  and Tax Code Reform Legislation

In early October, the President and the Republican-led Congress reached consensus on a framework to reform the federal income tax code. Since then, the Congressional tax-writing committees – the House Committee on Ways and Means and the Senate Committee on Finance – have been working to transform this framework into legislation.

Last Thursday, the United States House Ways and Committee released their federal tax relief and reform proposal which they have dubbed the “Tax Cuts and Jobs Act” (TCJA). Outlined below is a brief summary of the provisions which are most likely to impact WIB members.

Tax Brackets and Income Thresholds – the TCJA consolidates the seven federal individual income tax brackets into five brackets and establishes new income thresholds for each new bracket.

Rate                Threshold

0%                 $0 – $12,000 (single); $0 – $24,000 (married)

12%                up to $45,000 (single); up to $90,000 (married)

25%                $45,000 – $200,000 (single); $90,000 – $260,000 (married)

35%                $200,000 – $500,000 (single); $260,000 – $1,000,000 (married)

39.6%             over $500,000 (single); over $1,000,000 (married)

Basic Deductions – the TCJA replaces the standard deduction ($6,350 for single individuals and $12,700 for married couples) and the personal exemption ($4,050 each for taxpayer, spouse, and dependent) with a larger standard deduction of $12,000 for single individuals and $24,000 for married couples.

Child Tax Credit – the TCJA establishes a new Family Tax Credit that enhances and consolidates various tax credits associated with caring for dependents. The Family Tax Credit would be $1,600 for each child and at least $300 for other dependents in the taxpayer’s household. The Family Tax Credit would be refundable up to $1,000 (children only) as under current law, but would index that amount for inflation. Over time, the $1,000 amount would catch up to the larger $1,600 amount.

Death Tax and Generation-Skipping Tax – The TCJA doubles the amount of estate property that is exempt from the Death Tax, and then fully repeals the Death Tax after six years. The TCJA also repeals the generation-skipping tax – the federal tax on estates and gifts that are handed down to individuals more than one generation away from the donor or decedent, such as a grandfather and his granddaughter.

Alternative Minimum Tax (AMT) – the TCJA permanently repeals the federal AMT for individual and business taxpayers.

Modifications to Existing Itemized Deductions – the TCJA repeals the itemized deduction for state and local income taxes and sales taxes, but preserves the itemized deduction for state and local property taxes up to $10,000. Under the TCJA, the mortgage interest deduction would be available for interest paid on new mortgages for up to $500,000 in home acquisition indebtedness on principal residences. For existing mortgages, the TCJA allows for current law deduction on indebtedness of up to $1,000,000 and up to $100,000 in home equity.

“Pass-Through” Income – the TCJA separates pass-through business income from ordinary wage income, taxing business income at a maximum rate of 25%. Active business owners can choose between a simple formula and a more complex business capital formula to separate compensation income from non-compensation business income.

Corporate Tax Rate – the TCJA reduces the federal corporate income tax rate from 35% to 20%.

Business Expensing – the TCJA would allow all businesses for a five-year period to fully and immediately expense the cost of property and equipment that is currently eligible for bonus depreciation. This will apply to purchases of used property as well as new property. Full and immediate expensing would apply to property and equipment acquired and placed in service after September 27, 2017. The current cost recovery rules for real property and self-created and purchased intangibles are maintained in the TCJA.

Net Operating Losses (NOLs) – the TCJA modifies current NOL rules and allows for indefinite carryforward of NOLs, while generally disallowing carrybacks of NOLs. Additionally, the deduction allowed with respect to an NOL carryforward in any year is limited to 90% of the business’s net taxable income for such year. The value of NOLs that are carried forward would be preserved through applying an interest factor that compensates for inflation and provides a real return on capital. In limited situations, a one year carryback would be allowed for NOLs attributed to certain disaster losses for certain small businesses and farms.

President Trump and the leaders of the Republican-led Congress have stated their intent to reach consensus on federal tax relief and legislation before Christmas. The TCJA is the starting point for this effort. We will keep members apprised of relevant developments.


State Senate Unanimously Approves UI Reform Legislation

Every two years, the Unemployment Insurance Advisory Council (UIAC) is required to submit its recommended changes to Wisconsin’s Unemployment Insurance (UI) law to the State Legislature for review and consideration.

Last week, the State Senate unanimously approved the UIAC recommendations for the 2017-2018 legislative session. While the majority of the proposed changes are technical modifications, there are three provisions which should directly or indirectly benefit WIB members. They are:

UI Benefit Ineligibility for Concealment of Holiday, Vacation, Termination, or Sick Pay

UI claimants who conceal wages on a UI claim are ineligible for UI benefits for that week. Under the UIAC proposal,  claimants who conceal  holiday, vacation, termination, or sick pay would also be ineligible for UI benefits in the week they conceal such pay.

UI Benefit Ineligibility for Failure to Provide Information

The Wisconsin Department of Workforce Development (DWD) may require any UI claimant to answer questions relating to the claimant’s eligibility for UI benefits. A UI claimant is ineligible to receive UI benefits for any week in which the UI claimant fails to comply with a request by DWD to provide the information until the UI claimant complies with the request. If a UI claimant later complies with such a request, the UI claimant is eligible to receive UI benefits as of the week in which the failure to provide information occurred.

The UIAC proposal specifies that UI claimants who fail to answer DWD eligibility questions are ineligible for UI benefits beginning with the week involving the eligibility issue, not the week in which the claimant fails to answer the Department’s questions.

Revisions to Pre-Employment Drug Testing

Wisconsin employers may report the name of anyone who either fails or refuses to take a pre-employment drug test that is a condition of the offer of employment. Failing or refusing to take a pre-employment drug test is presumed to be a refusal of suitable work. If a UI claimant fails a pre-employment drug test (without a valid prescription) and has not established that they had good cause, the UI claimant will be offered the option to attend treatment and complete a skills assessment before UI benefits are denied.

Under the UIAC proposal, employers who submit information to DWD about individuals who fail or refuse to take drug tests would be provided with civil immunity for acts or omissions with respect to such submissions. Furthermore, the UIAC proposal clarifies that all information related to drug testing and prescription medication is confidential.

While we support the UIAC recommendations, we are disappointed that the Council failed to come up with reasonable changes to the work search requirements for seasonal employees. The existing requirements make it difficult for seasonal employers to retain their workers.

We will continue to lobby on this issue. In the interim, we encourage members who operate seasonal businesses to review this guidance document published by the DWD.


WEDC Board Signs Off on Foxconn Contract

In late September, state lawmakers approved legislation to implement an agreement between the Governor and the Foxconn Company. The agreement called for the State of Wisconsin to provide up to $3 billion in an economic incentive package in exchange for Foxconn making a capital investment of up $10 billion and creating up to 13,000 full-time jobs with an average annual salary of $53,875.

Since then, the Wisconsin Economic Development Corporation (WEDC) and Foxconn have been in negotiations on a binding contract that would set forth the specific terms and conditions under which the State of Wisconsin would provide the economic incentives to Foxconn. Those negotiations concluded yesterday. The WEDC has provided this summary of the contract

Governor Walker and Foxconn Chairman Terry Gou are expected to ratify the contract tomorrow thereby clearing the way for the company to begin construction of its manufacturing facilities in Mount Pleasant, Wisconsin.

Capitol Week-in-Review – October 26, 2017

OCI Approves Worker’s Compensation Premium Credit for Hiring Apprentices

Late last month, the Wisconsin Office of the Commissioner of Insurance (OCI) approved the Wisconsin Apprenticeship Credit Program as proposed by the Wisconsin Compensation Rating Bureau (WCRB). The program will benefit employers who hire and currently employ an apprentice through the state’s Registered Apprenticeship program.

This new program will offer a 2% premium credit up to $2,500 on an employer’s Worker’s Compensation premium if they employ an apprentice through the Wisconsin Bureau of Apprenticeship Standards. The credit would be optional for policies written in the voluntary market and mandatory for companies in the Insurance Pool effective October 1, 2018.

Members should contact their individual insurance carrier for details. Questions about the Wisconsin Apprenticeship Credit Program can be directed to the Wisconsin Compensation Ratings Bureau at 262-796-4540.


Federal Health Care Law Update

The Wisconsin Office of the Commissioner of Insurance (OCI) has released information and guidance on the 2018 Open Enrollment period for Wisconsinites enrolled in health insurance plans offered through the federal health insurance exchange. The relevant details are:

  • Open Enrollment runs from November 1, 2017 until December 15, 2017. Coverage begins on January 1, 2018. Individuals seeking coverage under an exchange-offered plan should sign up before December 15, or risk being locked out of the individual insurance market until 2018. Individuals facing a loss of their group coverage or other special situations may be eligible for special enrollment periods.
  • Anthem Blue Cross\Blue Shield, Molina Healthcare and Health Tradition Health Plans will not be offering plans through the health insurance exchange for 2018. According to OCI, about 75,000 Wisconsin residents will be impacted. The federal government will assign these individuals to a new health insurer if the individual does not purchase coverage through the exchange. This process is called “alternative enrollment.” To avoid alternative enrollment, impacted individuals are encouraged to explore their options and shop around for coverage.

State of Wisconsin Ends Fiscal Year with $579 million Surplus

State law requires the Wisconsin Department of Administration (DOA) to prepare and publish a comprehensive annual financial report (CAFR). The CAFR provides a full accounting of incoming tax revenues and the expenditure of those revenues for each fiscal year.

Last Monday, the DOA published the 2017 CAFR for fiscal year which ended on June 30. The highlights from the report are:

  • Tax revenues for FY 2017 were $15.518 billion, an increase of $420 million or 2.8% from the previous year;
  • Taxpayer-funded expenditures for FY 2017 were $41 million less than the budgeted expenditure allocation;
  • The State of Wisconsin began FY 2017 with a $331 million surplus and ended the fiscal year with a $579 million surplus; and
  • At the close of FY 2017, the balance in the state’s “Rainy Day” Fund was $282.9 million.

A sizable surplus and nearly $300 million set aside in the “Rainy Day” fund leaves the State of Wisconsin well-positioned to address near-term fluctuations in revenue growth and/or state agency spending.

Capitol Week-in-Review – October 12, 2017

WIB Backs Legislation to Reform Duplicative FMLA Law

In 1988, Wisconsin lawmakers approved a Family and Medical Leave (FMLA) law. Five years later, federal government enacted a nationwide FMLA law. These laws have never been harmonized, leaving Wisconsin employers to wade through two confusing laws to ensure compliance.

Last week, State Senator Alberta Darling (R-River Hills) and State Representatives Joan Ballweg (R-Markesan) and Mike Rohrkaste (R-Neenah) proposed legislation that they have dubbed the “Family and Medical Leave Simplification Act.” Under their proposal:

  • Wisconsin’s FMLA does not apply to a Wisconsin employer that is required to provide leave under the federal FMLA law;
  • Wisconsin’s FMLA does not apply to a Wisconsin employer that opts to provide leave under the federal FMLA law to an employee who is not an eligible employee, so long as the employer provides leave to such an employee in the same manner as the employer provides leave to an eligible employee; and
  • An employee is not prohibited from taking leave under Wisconsin’s FMLA law to care for a spouse, child, parent, domestic partner, or parent-in-law who has a serious health condition.

Their proposal reduces red tape and compliance costs. Moreover, it clarifies for employers and employees what the law is, what the benefits are and assist in planning for upcoming leave events. For these reasons, WIB will be lobbying state lawmakers to approve the Family and Medical Leave Simplification Act.


WIB Joins Worker’s Compensation Employers Coalition

Late last month, WIB became a founding member of the Worker’s Compensation Employers Coalition (WCEC). Along with our Coalition partners, we are seeking legislative approval of the agreed-bill from the Worker’s Compensation Advisory Council (WCAC), which includes the creation of a medical fee schedule as a means to reduce Wisconsin’s worker’s compensation medical costs.

The first official action taken by the WCEC was a memorandum to all Wisconsin lawmakers entitled: Support Reining in Out-of-Control Work Comp Medical Costs. Meetings with State Senators and State Representatives to discuss this issue in greater detail have been scheduled. Our goal is to get this legislation to the Governor’s desk for final approval before the end of the year.

President Takes Executive Action to Expand Access to More Affordable Health Care Coverage

Earlier today, President Trump signed an Executive Order that is intended to increase competition, choice, and access to lower-priced, high-quality healthcare options. More specifically, the order directs the:

  • Secretary of the United States Department of Labor to consider expanding access to Association Health Plans (AHPs). A broader interpretation of the Employee Retirement Income Security Act (ERISA) could potentially allow employers in the same line of business anywhere in the country to join together to offer healthcare coverage to their employees.
  • United States Departments of the Treasury, Labor, and Health and Human Services to consider expanding coverage through low cost short-term limited duration insurance (STLDI) which are not subject to the mandates and regulations set forth in ObamaCare; and
  • United States Departments of the Treasury, Labor, and Health and Human Services to consider changes to Health Reimbursement Arrangements (HRAs) so employers can make better use of them for their employees.

The President’s efforts to expand access to more affordable health care coverage for small employers and their workers are most appreciated. We hope the Trump Administration will move quickly to transform these departmental directives into specific policies. When those important details are available we will share them members.

Capitol Week-in-Review – September 28, 2017

President Unveils Unified Framework on Federal Tax Reform

Yesterday, President Trump unveiled a “Unified Framework for Fixing Our Broken Tax Code” that will serve as a template for the Congressional tax-writing committees – the House Committee on Ways and Means and the Senate Committee on Finance – to develop federal tax relief\reform legislation.  The most consequential provisions for small employers and their employees are:

  • Limit the maximum tax rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations to 25%;
  • Reduce the corporate tax rate to 20%;
  • Allow businesses to expense the cost of new investments in depreciable assets other than structures made after September 27, 2017, for at least five years;
  • Repeal the death tax, the generation-skipping transfer tax, the individual Alternative Minimum Tax (AMT) and the corporate AMT;
  • Partially limit the deduction for net interest expense incurred by C-corporations;
  • Preserve business credits for research & development;
  • Consolidate the seven federal individual income tax brackets into three brackets of 12%, 25% and 35%;
  • Eliminate most itemized deductions, but retain tax incentives for home mortgage interest and charitable contributions; and
  • Double the standard deduction to $24,000 for married taxpayers filing jointly and $12,000 for single filers via consolidation of existing standard deduction and personal exemptions.
Any changes to the federal tax code require approval by the Congress and the President. We will be monitoring the work of the Congressional tax-writing committees and reporting back to members on any relevant actions taken.

Governor Walker Announces Small Business Agenda

On Tuesday, the Governor announced a four-step approach to help and strengthen Wisconsin small businesses. The elements of his Small Business Agenda are:

  • Reduce business costs by lowering property taxes; stopping unemployment insurance fraud; streamlining regulations and reducing frivolous lawsuits;
  • Prepare the workforce by investing in K-12 education, increasing worker training, expanding technical college educational opportunities; and strengthen ties between the UW System and the workforce;
  • Remove barriers to work by ending the public assistance benefits cliffs; requiring able-bodied adults to work or receive employability training; require able-bodied adults to pass a drug test before receiving public assistance; and target specific populations – veterans, people with disabilities and ex-offenders – to enter the workforce; and
  •  Attract new talent by marketing workforce opportunities within Wisconsin.

We intend to work with the Governor and the Wisconsin State Legislature on these pro-small business initiatives. Of particular interest to WIB are the Governor’s initiatives to reduce businesses costs.

While the Governor did not specifically indicate the steps he would take to lower property taxes, we believe full repeal of Wisconsin’s personal property tax would definitely reduce the property tax burden on small employers.

With the support of WIB, state lawmakers have created stiffer civil and monetary penalties for Unemployment Insurance (UI) fraud. From our perspective, tougher criminal penalties for individuals convicted of UI fraud is the next logical step.

The Governor endorsed the “Sunset Clause” legislation as a means to streamline state government regulations. Under this legislation, every chapter in Wisconsin’s code of regulations would be subject to re-approval, modification or repeal every seven years. WIB has already been lobbying state lawmakers to enact this legislation.

While the Governor did not specifically indicate the steps he would take to reduce frivolous lawsuits, WIB has consistently supported legislation that will help reduce unnecessary litigation costs for small employers.


Governor Appoints Dan Meyer to Lead DNR

On Monday, Governor Walker appointed Dan Meyer to serve as Secretary of the Department of Natural Resources (DNR).

Dan Meyer represented the citizens of Oneida and Vilas County in the Wisconsin State Assembly from 2001 to 2013. Prior to that, he served as Mayor of Eagle River and the Executive Director of the Eagle River Chamber of Commerce and Visitors Center.

We applaud the Governor’s decision. The DNR has broad and far-reaching regulatory authority over business actions and activities which impact the land, air and water. Secretary Meyer’s legislative experience, local government background and work with hometown businesses will be put to good use.

Capitol Week-in-Review – September 14, 2017

Budget-Writing Committee Approves Partial Repeal of the Personal Property Tax

Last week, the legislature’s budget-writing committee approved an amendment to the state’s next two-year budget that would result in the most significant reduction in Wisconsin’s personal property tax since 1981 when business inventories and farmers’ livestock were taken off the property tax rolls. The amendment is pending final approval by the Wisconsin State Legislature and Governor Walker.

Beginning with the property tax assessments as of January 1, 2018, the amendment repeals the personal property tax on machinery, tools, and patterns, not including such items used in manufacturing. The amendment also directs the State of Wisconsin to reimburse local municipalities for the loss of revenue resulting from this tax exemption.

According to the Wisconsin Department of Revenue, this category of personal property includes the machinery, tools, patterns, dies, jigs, equipment, and implements of commercial warehouses; contractors; heating and air conditioning companies; landscapers, plumbers, repair or fix-it shops; and welding shops. Owners of this category of personal property list them in Schedule C of the Statement of Personal Property.

In 2017, the statewide value of personal property categorized as non-manufacturing machinery, tools and patterns was $3.35 billion. The non-partisan Legislative Fiscal Bureau estimates that the exemption of this category of personal property from taxation will reduce personal property taxes statewide by about $75 million per year.

WIB has been lobbying state lawmakers to end this antiquated and unfair tax on small, independent businesses for the last three years. Our persistence and perseverance has finally been rewarded, but we have more work ahead of us.

For now, we must continue our lobbying efforts to make sure this partial repeal of the personal property tax is approved by the Republican-led Legislature and signed into law by Governor Walker. If we succeed in this effort, we will then turn our attention to repealing the other categories of personal property that are still subject to taxation.


DATCP Offers Guidance on Equifax Data Breach

Last Thursday, Equifax, one of the nation’s three major credit reporting agencies, reported a data breach that may affect as many as 143 million Americans – nearly 44% of the United States population.

According to Equifax, hackers gained access to certain files between mid-May and late July of this year. Information in the breach includes names, Social Security numbers, birth dates, and addresses. Some credit card numbers, driver’s license numbers, and dispute documents (that contain personally identifying information) were also accessed.

Equifax has established a dedicated call center at 866-447-7559 to answer questions about the breach. The call center is open daily from 6:00 a.m. to Midnight. The company has also set up a website that allows consumers to check if their information may have been exposed in the breach.

The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) advises all affected Wisconsin consumers to take the following additional steps to protect their credit record:

  • Consider placing a free 90-day (renewable) fraud alert on your credit reports by contacting one of the three major credit reporting bureaus: Experian (888-397-3742), TransUnion (800-680-7289), or Equifax (888-766-0008). When you place a fraud alert with one bureau, that bureau will relay the request to the other two companies on your behalf. A fraud alert warns creditors of potential identity theft victims.
  • Request a free credit report from the three credit bureaus by visiting www.annualcreditreport.com or calling (877) 322-8228 and check the report for irregularities.

WHEDA Announces New Small Business Financing Tools

On Tuesday, the Wisconsin Housing and Economic Development Authority (WHEDA) announced that new capital funds will be available to help small businesses expand.

The newly-created WHEDA/LRC Wisconsin Business Opportunity Fund totals $5 million and will finance equipment purchases and other types of hard assets for small businesses through the federal New Markets Tax Credits (NMTC) program. NMTCs allocated by WHEDA are a resource to help generate job creation and economic development by promoting equity investment in low-income urban and rural communities.

An additional $6.1 million is being made available to support WHEDA’s Participation Lending Program approved in 2012 by Governor Walker and the state legislature. The Participation Lending Program can be used for purchases such as land, facilities and equipment as well as long term working capital.

The $11.1 million of capital for the two new programs is being provided by PNC Bank, Johnson Bank and Milwaukee LISC. A minimum of $3 million will be targeted for the Milwaukee area with the balance available statewide.

For more information on this program, members should contact WHEDA toll-free at 1-800-334-6873.

Capitol Week-in-Review – August 31, 2017

DWD Seeks Greater Conformity between Federal and State Employment-Related Regulations

Last Monday, the Wisconsin Department of Workforce Development (DWD) – the state agency which oversees employment-related regulations – announced two new initiatives to bring greater conformity between the federal and state government employment-related regulations.

The first initiative will modify and update state regulations relating to hours of work and overtime pay to conform to the standards specified by the federal Fair Labor Standards Act (FLSA) and align state and federal policies in the following areas:

  • Meal Periods – under current state regulations, employers are required to pay employees for on-duty meal periods but the regulations do not address off-duty meal periods. The DWD proposal would clarify that an off-duty meal period of at least 30 minutes is not paid time, regardless if the employee is required to stay on the premises or allowed to leave premises.
  • Employee Exemptions for Overtime Pay – Under current state regulations, there are exemptions for certain employees relating to overtime pay requirements. The DWD proposal specifies that the standards for determining overtime exemptions for executive, administrative and professional employees shall be the same as the current standards incorporated under the FLSA.
  • Determining Applicability of Overtime Requirements – the DWD proposal will incorporate standards followed under FLSA for determining the applicability of overtime requirements to an employee compensated on a salary basis.

The second initiative will modify and replace outdated state regulations related to the employment of minors to conform to the standards specified by the FLSA and align state and federal policies. More specifically, the DWD proposal:

  • Expand prohibitions related to logging and sawmills to include forest fire fighting.
  • Incorporate provisions of FLSA that allow minors, under specified conditions, to use power-driven equipment to process wood products.
  • Clarify that the prohibition on use of Power-Driven Hoisting Equipment includes tending, riding upon, working from, repairing, servicing, or disassembling an elevator, crane, derrick, manlift, hoist, or high-lift truck.
  • Expand the definitions of “high-lift truck” to include backhoes, front-end loaders, and similar pieces of equipment.
  • Clarify that the Meat Processing prohibitions include work in poultry slaughtering establishments.
  • Allow minors to operate portable countertop mixers similar to those used in private homes.
  • Allow minors to operate certain pizza-dough rollers under certain conditions.
  • Clarify that use of all balers and compactors is prohibited, including those not designed or used to process paper; clarifies the exemption that allows minors to load only certain scrap paper balers and paper box compactors.
  • Clarify that chain saws, reciprocating saws, wood chippers, and abrasive cutting discs are prohibited to all minors.
  • Codify a U.S. Department of Labor enforcement position that allows minors to work as lifeguards, swimming instructors and aides at age 15 if they possess safety certification.
  • Clarify that minors aged 16 and 17 may operate skid-steers and similar lifts in agricultural employment.
  • Permit minors to operate a key-cutting machine if it has a properly equipped and functioning key saw guard.

We are supportive of these two initiatives. Greater conformity between federal and state policies reduces compliance costs, confusion and red-tape for small employers.

The DWD will be working on the details of these proposed changes over the next few months. We will be monitoring this effort. Before any of these proposed changes can go into effect they must be approved by the Governor and the Wisconsin State Legislature.


Mark Your Calendar for the Governor’s 2017 Small Business Summit

Registration is now open for the Governor’s 2017 Small Business Summit. This day-long annual event provides Wisconsin small business owners with the opportunity to discuss topics of interest and concern with Governor Walker, Lieutenant Governor Kleefisch and state government agency leaders.

The event details are as follows:

When:    Tuesday, September 26, 2017; 8:00 a.m. – 4:00 p.m.

Where:   Stoney Creek Hotel & Conference Center; 1100 Imperial Avenue, Rothschild, Wisconsin

The event registration deadline is September 15 and seating is limited. Interested members can go here to learn more about the meeting as well as register for the event.


DWD to Retire Automated Telephone System for UI Weekly Claim Filing

Beginning on August 30, the DWD will continue the transition to online services by retiring the 1990’s-era automated telephone system for unemployment insurance (UI) weekly claims.

According to the DWD, more than 90% of all UI claimants file for weekly benefits online. Claimants unable to use weekly claim online services can still call the automated telephone system at 414-438-5395 or 608-261-9990.

Capitol Week-in-Review – August 17, 2017

Governor Signs “REINS” Act into Law 

Last Wednesday, Governor Walker signed 2017 Senate Bill 15 – the Regulations from the Executive in Need of Scrutiny (REINS) Act – into law as 2017 Wisconsin Act 57. Enactment of this legislation was one of our top lobbying priorities for the 2017-2018 legislative session.

Over the past five years, with the support of WIB, state lawmakers have enacted new laws to improve the state’s regulation-making process, but there are still some material weaknesses in this process such as:

  • The full compliance costs of a proposed state agency regulation often become known only after significant steps in the regulation-making process have been completed;
  • The regulation-making process is lengthy and there are steps along the way for public input, but that opportunity to provide input occurs after the state agency has drafted the regulation; and
  • State agencies often lack the technical expertise and private sector experience to discern the true compliance costs of a proposed regulation.

Act 57 addresses these material weaknesses and brings more accountability, private sector economic expertise and small business input to the processes by which state government agencies create new regulations. More specifically, Act 57:

  • requires passage of separate legislation before a state government agency can create a regulation that would result in implementation and compliance costs of $10 million or more over any two-year period;
  • allows the Wisconsin State Legislature to require a state agency to hold preliminary public hearings and comment periods before the agency starts drafting a new regulation; and
  • authorizes the Wisconsin State Legislature to request and receive independent economic analysis when there is uncertainty regarding the financial impact of a proposed regulation.

State of Wisconsin Receives Credit Upgrade

The State of Wisconsin may borrow money to finance the construction, rehabilitation and maintenance of state–owned facilities and state highways as well manage cash flow. Periodically, credit rating agencies independently evaluate the credit worthiness of the State of Wisconsin.

Last Friday, for the first time since 1973, Moody’s Investors Service upgraded the State of Wisconsin’s General Obligation debt rating from Aa2 to Aa1. According to the report:

“The upgrade to ‘Aa1’ reflects the proven fiscal benefits of the state’s approach to granting and funding pension obligations when many other states are experiencing stress from rising costs and heavy liabilities; an economy that delivers steady but moderate growth; conservatively managed budgets, and adequate liquidity.”

This is welcome news.

As a result of this credit upgrade, the State of Wisconsin will see a reduction in its borrowing costs on about $8 billion of outstanding general obligation bonds. The savings to Wisconsin taxpayers will depend on market conditions at the time of borrowing.


Wisconsin’s Real Estate Market Continues to Grow

On Tuesday, the Wisconsin Department of Revenue (DOR) has released its annual Equalized Value Report.

By way of background, Equalized Value represents an estimate of a taxation district’s total taxable value, and provides for the fair apportionment of school district and county levies to each municipality. Changes in Equalized Value do not necessarily translate into a change in property taxes.

The report shows that Wisconsin’s total statewide equalized property value as of January 1, 2017, was $526 billion, a 4% increase over the prior year. Among the classes of property:

  • Residential property was valued at $369 billion, an increase of 4.3%, or $15.1 billion.
  • Commercial property values were $102 billion, an increase of 5.1% or $5 billion.
  • Manufacturing property was valued at $14 billion, an increase of 2.4% or $338 million
  • Personal property was valued at $12.9 billion, an increase of 2.4%.
  • Agricultural land was valued at $2 billion, an increase of 1.3%.

The DOR report also shows construction activity continues an upward trend. Wisconsin added $8.1 billion in new construction during 2016, including $3.6 billion in residential property, $3.8 billion in commercial property, and $389 million in manufacturing property. In total, new construction value increased by 13.6% from the prior year.

Capitol Week-in-Review – August 3, 2017

Global Leader in Electronics Manufacturing Coming to Wisconsin 

Last Wednesday, Foxconn Technology Group – a Taiwanese-based electronics manufacturer – announced their intention to produce liquid crystal display (LCD) panels for a variety of industries from automotive to health care to entertainment in Wisconsin.

In its Memorandum of Understanding (MOU) with the State of Wisconsin, Foxconn intends to invest up to $10 billion to construct manufacturing facilities at a yet to be determined location (most likely Racine or Kenosha County). Facility construction is expected to begin next year and be completed in two phases over a six-year period. Manufacturing of the LCD panels is scheduled to begin in 2020. Foxconn plans to create up to 13,000 jobs with an estimated average salary of $53,875 during this six-year period.

The State of Wisconsin pledges to provide up to $3 billion in performance-based tax incentives, expedite permitting reviews in various state government agencies and expand tax incremental financing (TIF) limits for the community or communities where the Foxconn facilities are located.

On Friday, Governor Walker called a Special Session of the Wisconsin State Legislature to consider legislation that implements the state’s portion of the MOU. The Special Session began on Tuesday and we expect final approval of this legislation by the end of the month.

Of particular interest to WIB are the performance-based tax incentives.

Under this legislation, Foxconn would be eligible to claim up to $1.5 billion in refundable state income tax credits equal to 17% of wages paid and up to $1.35 billion in refundable state income tax credits equal to 15% of capital invested. If Foxconn employs 13,000 full-time workers and makes capital expenditures of at $10 billion, the company would receive the full amount of the tax benefits – $2.85 billion.

A state sales and use tax exemption is created for the purchase of taxable building materials, supplies, equipment and services used in the construction of the Foxconn manufacturing facilities. The estimated value of this exemption is $150 million.

The income tax breaks are structured as “pay-as-you-grow” incentives whereby Foxconn does not receive any tax benefits unless, or until, it makes capital expenditures or hires full-time workers.

The State of Wisconsin may recoup the tax benefits if Foxconn fails to maintain employment levels or capital investments in property required by the MOU; supplies false or misleading information to obtain the tax credits; leaves to conduct substantially the same business elsewhere; or ceases operations and does not renew operation of the business or a similar business within 12 months.

Later today, the Assembly Jobs and the Economy Committee will hold a public hearing on this proposed legislation. We will be there to learn more about this legislation and the Foxconn project.


State of Wisconsin Responds to Flooding Problems

Flooding in southeast and western Wisconsin during the month of July has caused widespread property and infrastructure damage.

Teams comprised of officials with the Federal Emergency Management Agency (FEMA), the Small Business Administration and Wisconsin Emergency Management are conducting preliminary damage assessments in Kenosha, Racine, and Walworth Counties to determine whether federal aid will be available to homeowners, businesses and communities.

Local damage assessments from these counties show three homes destroyed, 92 homes with major damage, and more than 4,000 with minor damage. In addition, ten businesses sustained major flood damage and 26 reported minor damage. Flooding also caused more than $8.4 million in damage to public infrastructure such as roads, bridges, and dams, and emergency protective measures.

Governor Walker has declared a State of Emergency for 17 counties following torrential rains that fell throughout western Wisconsin during the third week of July. The counties in the declaration include Buffalo, Crawford, Dane, Grant, Green, Iowa, Jackson, Juneau, La Crosse, Lafayette, Monroe, Pepin, Richland, Rock, Sauk, Trempealeau, and Vernon.

By Executive Order, the Governor directed state agencies to help those affected by the storms and called the Wisconsin National Guard to state active duty to assist local authorities in the recovery efforts.

Members should contact their County Emergency Management office to report any flooding-related property damage to their business. If you have further questions or need additional information, please contact us toll-free at 1-800-362-9644.


Wisconsin Bankruptcy Filings at Historically Low Level

For the first six months of 2017, 8,921 bankruptcy petitions were filed in federal courts in Wisconsin – the fewest number of filings in more than a decade and down significantly from the first half of 2010 when nearly 16,000 bankruptcy petitions were filed.

Let’s hope this trend continues.