Capitol Week-In-Review – March 2, 2017

Lawmakers Propose Management Changes to Highway Program

Recently, the Legislative Audit Bureau (LAB) published its evaluation of the management of the State Highway Program by the Wisconsin Department of Transportation (DOT).  Of note, the LAB found:

  • When a major highway project is considered for approval, the DOT provides the Governor and the Legislature with an estimate of total project costs, but such estimates were incomplete, in part, because they did not take into account that inflation would increase project expenditures over time; and
  • The DOT budgeted to complete more major highway project work than could be completed with its available funding because it did not sufficiently take into account the extent to which project expenditures increased over time as a result of inflation and unexpected cost increases.

Last Tuesday, the legislature’s Joint Audit Committee introduced legislation to address these management deficiencies. Their proposal requires the DOT to:

  • Provide state lawmakers with cost estimates that include all costs associated with potential major highway projects, including the effects of inflation; and
  • Regularly report information to state lawmakers about the ongoing costs of each major highway project and to report this information about each major highway project:

We support this bipartisan legislation and will be asking state lawmakers to enact these programmatic reforms.


Lawmakers Introduce Rural Broadband Expansion Legislation

State Senator Howard Marklein (R-Spring Green) and State Representative Romaine Quinn (R-Rice Lake) have introduced a rural broadband expansion legislation that combines elements of Governor Walker’s budget plan and the recommendations made by the 2016 Legislative Council Study Committee on Rural Broadband.

According to Senator Marklein, this bill:

  • Allocates an additional $15.5 million for Broadband Expansion (BEX) grants;
  • Provides the Wisconsin Public Service Commission (PSC) with a requirement that BEX grants go to areas of the state with the greatest need. In other words — “fill from the bottom up;”
  • Includes a policy that prevents broadband service providers from “cherry picking” high value customers, while ignoring the needs of residential customers.
  • Directs the PSC, in evaluating BEX grant proposals, to consider the impact of improved broadband on our students at home, and patients at home; and
  • Discourages the duplication of existing broadband service.

We are backing the Marklein-Quinn proposal and will be lobbying state lawmakers to enact this legislation.


Wisconsin’s Public Sector Workforce

Analysis of recently-released state and local government employment figures collected by the United States Census Bureau show that the State of Wisconsin had 49.6 government employees per 1,000 residents in 2015 – 2.1% less than the national average.

State and local governments in Wisconsin spent 6.3% less than the national average on public payrolls and the public payroll per employee was 4.2% below the national average.

Wisconsin’s public sector employed 286,000 full-time employees in 2015 of which 74% worked at the local level. Six out of ten government employees work in education, mostly in K-12 schools.

Capitol Week In Review – February 16, 2017

Governor Submits Budget Plan to Wisconsin State Legislature

Last Wednesday, Governor Walker presented his two-year state budget plan to a Joint Session of the Wisconsin State Legislature. Shortly thereafter, his proposal was introduced as 2017 Assembly Bill (AB) 64\Senate Bill (SB) 30 and referred to the Legislature’s budget-writing committee for further review.

We have just begun our due diligence of this 989-page bill. The first step in this process is an examination of the “big picture” budget metrics – spending, borrowing and tax\fee changes.

1. Spending

The Governor’s plan calls for a two-year operating budget of $76.1 billion. On an annual basis, the Governor’s all funds-budget (state taxes, state fees and federal aid) increases spending by 1% in fiscal year (FY) 2017-18 and 3.2% in FY 2018-19. From our perspective, annual spending increases should be at or below the overall growth in the state’s economy. By this metric, the spending levels in the Governor’s plan are prudent.

2. Borrowing

The Governor’s plan authorizes the State of Wisconsin to borrow an additional $661.9 million over the next two years – the lowest amount of new bonding authorization since 1997.

We believe the amount of new borrowing should be modest and sustainable. Excessive government debt puts pressure on state lawmakers to raise taxes and fees. We applaud the Governor for presenting a budget plan with a very limited amount of new borrowing. With that said, transportation-related debt continues to be a major concern. If state legislators approve the Governor’s new transportation-related borrowing, about 20 cents out of every dollar of revenue coming into the state’s Transportation Fund will be needed to repay existing debt. That level of debt is neither fiscally prudent nor sustainable.

3. Tax\Fee Changes

The Governor’s plan reduces net taxes and fees by $199.2 million in FY 2017-18 and $233.8 million in FY 2018-19.

From our perspective, Wisconsin’s overall tax and fee burden is already too high and should be reduced. Moreover, we favor tax relief that is broad-based and beneficial to small, independent businesses. While we appreciate the Governor’s ongoing commitment to income and property tax relief, we are disappointed that the Governor did not recommend any changes to the state’s personal property tax. On this issue, we will have to make our case to state legislators.

The next step in our due diligence process is to identify and analyze provisions within the Governor’s budget plan which directly impact small, independent businesses. It will take us about three weeks to complete this work. From there, we will develop our budget-related lobbying “to do” list that we will share with members and state legislators in mid to late March.


WIB Supports Work Permit Reform Legislation

Last Thursday, the Assembly Committee on Labor held a public hearing on legislation, 2017 Assembly Bill (AB) 25, authored by State Representative Amy Loudenbeck (R-Clinton) which lowers the age requirement for a work permit to anyone under the age of 16. Outlined below is a brief summary of the issue, the legislation and our advocacy.
Under state law, a work permit issued by the Wisconsin Division of Equal Rights is required before anyone under the age of 18 is allowed to work in any job with the exception of agriculture or domestic service work. To obtain a work permit, the minor must:

  1. provide proof of age;
  2. get written consent from a parent or legal guardian to work;
  3. have a signed letter from the employer describing the job duties, hours of work, and the time of day the minor will be working; and
  4. pay a $10 permit fee – payment of the fee is the responsibility of the employer.

AB 25 eliminates the requirement that minors aged 16 or 17 obtain a work permit. In her testimony before the Committee, Representative Loudenbeck noted:

  1. Wisconsin is one of just 15 states that require a work permit for all residents under the age of 18. There are currently 18 states that have age requirements similar to AB 25 including Minnesota, Iowa, and Illinois.
  2. AB 25 does not impact the times of the day that minors can work, the number of hours a minor is allowed to work, or the minimum statutory ages established for different types of employment.

WIB has registered its support for AB 25 and we will be lobbying state lawmakers to enact this legislation.


Scam Alert: Electric Utility Service Disconnection

Over the past two weeks, small businesses in western and southeastern Wisconsin have been targets of the so-called “Electric Utility Service Disconnection” scam. In this scheme, an individual claiming to be a representative of an electric utility company calls the small business to advise them of their past due account and threatens to turn off the power unless a payment is made immediately.

These fraudsters are very sophisticated. They typically contact the small business during the busiest time of the day. Rather than sending the past due amount to the utility service provider, the small business is directed to make a payment using a pre-paid debit card. They are also manipulating the Caller ID feature to make it appear as if they are calling from the electric utility company.

If you or any of your employees receive such a call or doubt the authenticity of someone claiming to be with the power company, hang up and then call your electric utility service provider.

According to the Wisconsin Public Service Commission, a utility must send a notice before service is disconnected unless the disconnection is due to a safety hazard or self-reconnection. The reasons for the disconnection, when the disconnection can happen and the means by which to contact the utility must be included in the notice.

 

Capitol Week-in-Review – February 2, 2017

WIB Delivers “Repeal the Personal Property Tax” Petitions to the Governor’s Office

Last Tuesday, the Coalition to Repeal Wisconsin’s Personal Property Tax (Coalition) hand-delivered more than 3,500 signed petitions from individuals and business owners who favor the elimination of this onerous and unfair tax to the Office of Governor Scott Walker.

Our Legislative Director, Brian Dake, was there to present more than 700 signed petitions from WIB members. Grassroots supports from WIB members greatly enhance our lobbying efforts in the State Capitol!

Along with the signed petitions, the Coalition asked the Governor to “make repeal of the personal property tax a top priority for his administration by including an exemption for new equipment in the 2017-2019 state budget and committing to a phase out of the remaining personal property tax.”

Next Wednesday, Governor Walker will present his 2017-2019 state budget proposal to a Joint Session of the Wisconsin State Legislature. We hope it includes a plan to repeal this tax.


State Highway Program Audit Shows Room for Improvement

Last year, the Wisconsin State Legislature directed the non-partisan Legislative Audit Bureau (LAB) to conduct a comprehensive evaluation of the management of the State Highway Program (SHP) by the Wisconsin Department of Transportation (DOT). By way of background, the SHP is Wisconsin’s largest and most expensive transportation program. The SHP funds the construction, repair and maintenance of Wisconsin’s 11,800 miles of interstate and major state highways and bridges.

To conduct its evaluation, the LAB analyzed: a) trends in program expenditures and state highway conditions; b) DOT management of the planning, engineering, and construction phases of state highway projects, as well as its maintenance of state highways; and c) DOT use of performance measures to help manage and improve its operations.

The LAB released their evaluation of the SHP last Thursday and the key findings were:

Road Condition – the proportion of state highways rated in good condition decreased steadily from 53.5% in 2010 to 41% percent in 2015.

Planning – the initiation of major highway projects requires legislative approval. To guide this decision-making process, the DOT must provide state lawmakers with an estimate of the overall project cost. The LAB reviewed the initial cost estimates for 19 recently-completed road projects and 16 ongoing major highway projects. They determined the DOT did not sufficiently take into account the effects of inflation and unexpected cost increases on project expenditures.

Construction – state law generally requires the DOT to solicit bids for state highway construction contracts and award the contracts to the lowest bidders. According to the LAB, the DOT generally had effective oversight of the processes for soliciting bids and awarding construction contracts and took steps to control construction costs. However, the DOT could have potentially achieved considerable additional savings if it had met its performance measure goals.

Maintenance – the DOT is responsible for maintaining state highways, but counties perform most maintenance work under contract with DOT. Maintenance work is intended to preserve state highways and includes removing snow and applying salt in the winter, sealing cracks, and filling potholes. The LAB found that DOT generally had effective oversight of its maintenance program and took steps to control maintenance costs.

Based on its evaluation, the LAB has recommended two dozen administrative changes for the DOT to improve the management, planning, engineering, construction and maintenance of state highways; and five changes in law to improve legislative oversight of the SHP.

From our perspective, there are three important “takeaways” from the LAB evaluation.

  • The condition of Wisconsin’s network of interstate and state highways continues to deteriorate. Repairing bad roads costs much more in the in long run;
  • The DOT and state lawmakers should seriously consider adopting the recommendations made by the LAB; and
  • The potential savings identified by the LAB are not enough to fund the ongoing projects that will keep interstate and state roads safe for commuters and reliable for commerce. As such, state lawmakers need to enact a long-term transportation funding solution.

Wisconsin DOR Accepting E-filing of Tax Returns

The Wisconsin Department of Revenue (DOR) is now accepting electronically filed state income tax returns.

The DOR is encouraging Wisconsin taxpayers to consider using the Wisconsin E-file online tool to file their state income taxes. For more information on this option, please visit the DOR website.

 

Capitol Week-in-Review – January 19, 2017

Protecting Your Business from Fraud

WIB has partnered with Master Your Card – a non-profit public education initiative – to provide members with practical information and guidance on electronic payment processing.

Here is a short video from Master Your Card in which you will learn more about how fraud awareness and the use of the latest technology can protect your business. The video highlights four steps you can take to ensure protection – prevention, prediction, detection and resolution.


WIB Requests Legislative Support for REINS Act

Last week, State Representative Adam Neylon (R-Pewaukee) and State Senator Devin LeMahieu (R-Oostburg) asked their legislative colleagues for support of an omnibus state government regulatory reform proposal that they have dubbed the “Wisconsin Regulations in Need of Scrutiny (REINS) Act.”

Yesterday, a group of business-oriented advocacy organizations, including WIB, sent a memo to all members of the Wisconsin State Legislature asking them to co-sponsor this proposed legislation.

In brief, the Wisconsin REINS Act:

  • Empowers the Wisconsin State Legislature to hold state government agency bureaucrats accountable for the regulations they write. Under this proposal, the most expensive rules – those that will cost $10 million or more to implement – would need approval from the full Legislature to move forward;
  • Gives the Wisconsin State Legislature the ability to request independently-prepared economic impact analysis for proposed regulations. This reform will help ensure accuracy and will make certain that state government agencies, state lawmakers and the general public understand the true financial impact that new regulations will have on our state’s economy; and
  • Empowers the Wisconsin State Legislature to require state government agencies to hold public hearings before they begin drafting a new regulation. Currently, state government agencies are only required to hold a public hearing after a draft regulation has already been written. This reform would make sure that for comprehensive new regulations, the public gets to weigh in at the front-end of the process.

Enactment of the Wisconsin REINS Act is one of our top public policy priorities for the 2017-2018 legislative session. A long list of legislative co-sponsors enhances our chances of success.


Governor Delivers State of the State Address

Last Tuesday, Governor Walker delivered his seventh State of the State Address to a Joint Session of the Wisconsin State Legislature. This annual speech provided the Governor with a forum to outline his public policy priorities for 2017. They include:

  • Increase funding for public education;
  • Reduce tuition for all Wisconsin undergraduates throughout the UW System;
  • Continue to streamline state government to make it more effective and accountable to the people of Wisconsin;
  • Additional state funding to expand broadband access to rural communities;
  • Additional state funding for road repair and maintenance; and
  • Approval from the federal government to allow the State of Wisconsin more control over the administration and operation of entitlement programs.

These are laudable goals.  WIB will be lobbying for additional state funding to expand broadband access and more state funding for road repair and maintenance. We are glad to have the Governor on our side on these two issues.

 

Capitol Week-in-Review – January 5, 2017

Our Lobbying “To Do” List for the 2017-2018 Legislative Session

The 103rd Session of the Wisconsin State Legislature has begun. Starting next week, we will be meeting with State Senators and State Representatives to share with them our priorities for the 2017-2018 Legislative Session. Outlined below is a brief summary of our lobbying “to do” list.

  • Repeal of Wisconsin’s personal property tax;
  • Enactment of a sustainable, long-term transportation funding plan that allows the Wisconsin Department of Transportation and local governments to build, repair and maintain a safe, reliable transportation infrastructure network;
  • Regulatory relief for small, independent businesses with special emphasis on state government laws and regulations relating to: unemployment insurance; labor and employment; and state tax code administration and enforcement;
  • Streamline the process by which obsolete and\or unnecessary state government regulations are eliminated;
  • Bring more accountability, private sector economic expertise and additional small business input to the processes used by state government agencies to create new regulations;
  • Additional state funding for the expansion of broadband service throughout Wisconsin as well as changes in state laws and regulations that help facilitate the deployment of broadband infrastructure; and
  • Reduce employer health care costs in Wisconsin’s Worker’s Compensation system through an amendment to Wisconsin’s Worker’s
    Compensation law that establishes a schedule of the maximum fees a health care provider may charge an employer or insurer for health services provided to an injured worker who claims Worker’s Compensation benefits.

DOT Releases Tolling Feasibility Study and Policy Report

Tolling is one of several funding options being considered by state lawmakers to fund the construction, maintenance, and repair of Wisconsin’s transportation infrastructure network.

Last Thursday, the Wisconsin Department of Transportation (DOT) published the results of a study to evaluate the feasibility of tolling the Interstate highway system throughout Wisconsin as well as a policy report which identifies the legal and policy issues that state lawmakers would need to address should a decision be made to toll the Interstate highway system.

According to the feasibility study, if the State of Wisconsin were to toll the entire 875 mile Interstate system from 2020 through 2050, between $14 billion and $46 billion in net revenue could be collected depending upon the chosen toll rates. The $14 billion figure is based on a tolling rate of $0.04 per mile while the $46 billion figure is based on a tolling rate of $0.12 per mile. For comparison purposes, the tolling rate for two-axle cars on the Interstate Turnpike Systems in Indiana, Kansas, Ohio and West Virginia range from $0.03 to $0.07 per mile.

According to the policy report, tolling of the Interstate Highway System in Wisconsin is currently prohibited under federal law and as such the State of Wisconsin would need authorization from federal lawmakers. Beyond federal authorization, the report identifies several major legal and policy considerations including:

  • Governance Structure – the Wisconsin Constitution arguably restricts a tolling program to being governed directly by DOT. It may also be feasible to initiate a tolling program under the direction of a quasi-independent toll authority or board.
  • Revenue Use – generally, tolling programs are more likely to withstand legal challenges if the use of toll revenue is restricted to the roadways where the tolls are collected. The use of toll revenues more broadly, for projects that are only indirectly related, increases legal risks associated with revenue use.
  • Rate Setting – there are a wide variety of toll rate setting processes employed throughout the country. Two best practices that have merged are for enabling statutes to insulate the rate setting process as much as possible from political pressure, and to allow for maximum rate setting flexibility within the boundaries of appropriate delegation of legislative authority.
  • Toll Collection – increasingly, toll authorities are moving away from cash toll collection toward all-electronic toll collection. While electronic toll collection is more efficient and offers increased customer convenience, it also introduces concepts such as enforcement, privacy and  data retention that must be considered.

At this time, WIB has not taken a formal position on the tolling of Wisconsin’s Interstate System. If, or when, state lawmakers come forward with a tolling proposal, our advocacy will be guided by input from members.


Small Rise in Statewide Property Tax Levy in 2016

According to the non-partisan Wisconsin Taxpayers Alliance, the statewide net property tax levy is projected to rise from $9.62 billion in 2015 to $9.78 billion in 2016 – an increase of 1.6%.

Final figures will be available later this year.

 

Capitol Week-in-Review – December 22, 2017

DWD Publishes New Worker Classification Educational Video

State law requires Wisconsin employers to classify each worker as either an “employee” or “independent contractor.” Worker classification determines whether or not the employer has legal obligations under the law for unemployment insurance, worker’s compensation, wage payments, work hours, record keeping and civil rights protections.

The Wisconsin Department of Workforce Development (DWD) has a website designed to provide employers with a clear and understandable process to assist them in determining if their workers are employees or independent contractors.

We encourage members to visit this site and watch the new educational video published by DWD on the proper classification of workers.


Assembly Lawmakers Hold Informational Hearing on DOT Budget Plan

Earlier this month, the State Assembly Transportation Committee held a daylong informational hearing on the two-year budget plan put forward by the Wisconsin Department of Transportation (DOT). This plan complies with the directives given to the agency by Governor Walker.

The morning session began with a one-hour presentation from DOT Secretary Mark Gottlieb followed by nearly two hours of back-and-forth questioning from committee members. During the afternoon session, organizations representing counties, cities, towns, manufacturers, farmers, tourist attractions, railroad companies and port operators provided their input on the DOT proposal.

It was an extraordinary hearing and there was plenty of insightful commentary. For us, the key points were:

  • Increasing inflationary costs alone will be four times higher than the growth in annual Transportation Fund revenues over the next five years;
  • Without any new funding, transportation-related debt service will continue to worsen and exceed 22% of state transportation fund revenues by 2019. To put this figure into context, the federal debt is approaching $20 trillion. Interest expenses on this debt is 7.7% of revenues;
  • Under the DOT Budget Plan, it will take as long as 70 years to rebuild the Southeastern Wisconsin highway system. This network of roads which carries the majority of all Wisconsin inbound and outbound commercial freight was originally constructed more than 50 years ago. DOT has spent $3.4 billion to reconstruct segments of this system, but another $4.4 billion is needed to complete the modernization; and
  • By 2018, 21% of Wisconsin highways will be in poor condition and the percentage of state highways in poor condition doubles by 2027 under the DOT plan. Bad roads are less safe and more congested. They are also more costly to fix.

The Republican-led Assembly intends to use the information and input provided at this hearing to develop an alternative transportation financing plan. We are supportive of their efforts.

Without major reform, the condition of state highways and rural roads will continue to deteriorate, debt will increase dramatically and the state will fall further behind in the necessary maintenance – costing everyone more money in the long run.


Governor Seeks More Cooperative Relationship with the Federal Government

On Tuesday, Governor Walker sent a letter to President-elect Trump asking for a greater role for individual states in federal government decision-making, block grant funding to states for shared responsibility programs and regulatory flexibility. More specifically, the Governor requested:

  • Federal government agencies to inform states of any work it is conducting within a state boundary; confer with the states before starting master planning, policy, regulatory changes or other actions; defer to state permit decisions for delegated programs; and provide timely review and feedback of any state implementation of a delegated program;
  • Federal block grant funding to the states for Medicaid, education and transportation; and
  • Federal government approval or favorable federal action to allow the State of Wisconsin to:

– Implement drug screening, testing, and treatment of food stamp recipients who are participating in Employment and Training Programs;

– Require childless adults who are receiving Medicaid benefits to pay higher premiums if they purposefully increase their health risks;

– Have a broader role in the resettlement process for refugees from countries with terrorist ties; and

– Manage the state’s gray wolf population.

We believe these are reasonable requests.

 

Capitol Week-in-Review – December 8, 2016

Biennial Budget Picture Comes into Focus

The biennial budget process began in July when Governor Walker sent a letter to all state government agency leaders in which he provided them with guidance on the formulation of the state’s next two-year budget. State agencies were directed to submit their biennial budget requests to the Wisconsin Department of Administration (DOA) by mid-September.

Over the past two months, DOA budget analysts have been reviewing each agency request to ensure compliance with the Governor’s directives. This process has been completed and DOA has released financial data for each state agency request along with preliminary state tax revenue estimates for the state’s current fiscal year (July 1, 2016 to June 30, 2017) and the state’s next two fiscal years.

These estimates give us a sense of the state’s overall budget outlook. The chart below summarizes the revenue projections.

Actual State Tax Collections for Fiscal Year 2016:               $15.097 billion

Estimated State Tax Collections for Fiscal Year 2017:         $15.440 billion (2.3% increase)

Estimated State Tax Collections for Fiscal Year 2018:         $15.888 billion (2.9% increase)

Estimated State Tax Collections for Fiscal Year 2019:         $16.370 billion (3.0% increase)

These projections are just that – projections. Actual state tax collections are heavily influenced by national economic factors beyond the control of state lawmakers.

The good news is that state tax revenues are expected to rise thereby easing the pressure on state lawmakers to raise taxes. Unfortunately, the projected tax revenue growth is not strong. In a robust economy, annual state tax revenue growth is typically at or above 5%.


Governor Calls for Legislative Action on New Broadband Expansion Initiative

Wisconsin’s Broadband Expansion Grant (BEXG) program provides reimbursement for equipment and construction expenses incurred to extend or improve broadband telecommunications service in underserved areas of the state. The Wisconsin Public Service Commission (PSC) is authorized to award BEX grants to public and private entities that meet the eligibility requirements. Annual BEX grants funding is set at $1.5 million.

Last Thursday, Governor Walker unveiled a new legislative proposal that builds upon the existing BEXG program. The key elements of Governor’s proposal are as follows:

  • Increase BEX grant funding in Fiscal Year 2017 from $1.5 million to 15.5 million;
  • Prohibit the Wisconsin Department of Natural Resources (DNR) from requiring any appraisal or charging any fee prior to granting of
    an easement for the construction of broadband infrastructure in underserved areas; and
  • Prohibit the Wisconsin Department of Transportation (DOT) from charging any fee for the initial issuance of any permit necessary to construct broadband infrastructure in underserved areas.

When the Wisconsin State Legislature reconvenes in January, we intend to lobby in support of the Governor’s proposal.

The additional funding will improve access to broadband service in rural Wisconsin. Furthermore, the “fee remission” provisions ensure the BEX grant funds are used exclusively to build-out the broadband infrastructure.


Scam Alert: Cut-Rate or Free Gift Cards

The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) advises holiday shoppers to be cautious of online solicitations for cut-rate or free gift cards.

According to DATCP, gift cards have been used as “clickbait” in a number of social media, text message and email scams. In one major nationwide scheme, fake websites with bogus free gift card offers were created in order to trick consumers into providing their mobile phone numbers. The scam operators then placed monthly subscription fees for a variety of “services” on consumers’ mobile phone bills without their authorization.

In other fraudulent operations, illegal spam text messages have promised gift cards from a major retailer in exchange for completing a (phony) survey or providing personal information. Respondents never received a gift card and their information may have been sold to other scam operators and identity thieves.

DATCP advises consumers to buy gift cards directly from the retailer or from an authorized merchant.

For additional information or to file a complaint, members should visit the Consumer Protection Bureau, send an e-mail to datcphotline@wisconsin.gov or call the Consumer Protection Hotline toll-free at 1-800-422-7128.

 

Capitol Week-in-Review – November 23, 2016

Breaking News: Judge Halts Implementation of Federal Overtime Pay Regulations

On Tuesday, the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction of the United States Department of Labor (DOL) Salaried Basis Rules – often referred to as the “Overtime Pay” Regulations.

By way of background, the new regulations were scheduled to become effective on December 1, 2016. The new changes to the Fair Labor Standards Act (FLSA) regulations are applicable to employers covered by FLSA, which includes enterprises with two or more employees and an annual business dollar volume of $500,000 or more, or otherwise engage in interstate commerce.

The principal changes are to minimum salary requirements for employees exempt from overtime pay under the executive, administrative and professional exemptions. More specifically:

  • The minimum salary threshold is raised from $455/week to $913/week ($47,476 for full year worker).
  • The minimum salary for the highly compensated employees exemption will be raised from $100,000 to $134,004. These are employees who are not required to meet the duties test for the managerial, administrative or professional exemptions and are exempt based solely on compensation.
  • Non-discretionary bonuses, incentive pay, and commissions can be counted as salary (up to 10%) providing the payments are made on at least a quarterly basis. (Previously not counted.)
  • Salary levels will automatically be updated every three years commencing January 1, 2020. Minimum salary is to be set at the 40th percentile of full-time salaried workers in the lowest wage census region and 90th percentile for highly compensated employees.

In its decision, the Court states, “the Department’s Final Rule described at 81 Fed. Reg. 32,391 is hereby enjoined.” The Court then goes on, however, to specifically cite regulation changes the DOL is enjoined from “implementing and enforcing.” The specific cites do not include all changes in the Final Rule including changes regarding “highly compensated” employees. While WIB believes that the entire Final Rule is enjoined, we will be watching to see how the DOL addresses any ambiguities.

Litigation over the Final Rule changes may well continue for another year or two and WIB will attempt to keep members informed on its status. In the meantime, the December 1, 2016 implementation date is no longer in effect.

To the extent members have already changed compensation or payroll procedures to comply with the Final Rule, such changes may no longer be necessary. Nonetheless, WIB suggests you seek individual advice from your attorneys before removing changes already implemented.


DWD Launches Online Form to Report Worker’s Compensation Fraud

The Wisconsin Department of Workforce Development (DWD) has launched a new form for the public to submit tips and potential instances of abuse of the Worker’s Compensation system by workers, employers, insurers and providers.

If, upon investigation the evidence provides a reasonable basis that Worker’s Compensation fraud occurred, DWD will refer the case to the Wisconsin Department of Justice (DOJ) for possible prosecution.

We applaud the Department’s efforts to combat Worker’s Compensation fraud.


Legislative Leaders for the 2017-2018 Legislative Session

The transition from one legislative session to the next begins with the selection of legislative leaders by the majority and minority parties in the State Senate and State Assembly.

For the 2017-2018 Legislative Session, the four “Caucus” leaders are:

Assembly Speaker: Robin Vos (R-Rochester)
Assembly Minority Leader: Peter Barca (D-Kenosha)
Senate Majority Leader: Scott Fitzgerald (R-Juneau)
Senate Minority Leader: Jennifer Shilling (D-La Crosse)

The Assembly Speaker and the Senate Majority Leader preside over the legislative and administrative activities of their respective chambers.

 

Capitol Week-in-Review – November 10, 2016

The Voters Spoke…the Transition Begins

On Tuesday, more than 2.9 million Wisconsin voters cast ballots. Overall voter turnout was 66% with 28% of the votes cast via absentee ballot. As expected, the voters had a lot to say.

For the first time since 1984, Wisconsin voters elected the Republican nominee. Donald Trump bested Hillary Clinton by a narrow margin – 1,409,467 to 1,382,210.

In the state’s Congressional races, Wisconsin voters favored the incumbents. Republican Senator Ron Johnson was given another six-year term. Paul Ryan (R-Janesville), Mark Pocan (D-Madison), Ron Kind (D-La Crosse), Gwen Moore (D-Milwaukee). Jim Sensenbrenner (R-Menomonee Falls), Glenn Grothman (R-Glenbeulah) and Sean Duffy (R-Wausau) were re-elected to the U.S. House of Representatives. Voters in Northeast Wisconsin chose Mike Gallagher (R-Green Bay) to replace retiring Congressman Reid Ribble.

At the state level, Republicans expanded their majorities in the State Legislature. For the 2017-2018 legislative session, Republicans will hold a 64-35 partisan advantage in the State Assembly and a 20-13 edge in the State Senate. The Republican majority in the State Senate may expand even further. In the 32nd Senate District, incumbent Senator Jennifer Schilling (D-La Crosse) leads challenger Dan Kapanke (R-La Crosse) by only 58 votes – 43,565 to 43,507. A recount may be needed to discern the winner.

It’s now transition time in Washington, D.C. and Madison, Wisconsin.

President-elect Donald Trump is busy assembling his leadership team and meeting with leaders of the Republican-led Congress to discuss their policy priorities for 2017. Legislative Republicans and Democrats are meeting to select their leaders for the 2017-2018 legislative session.


Member Input Needed on Unemployment Insurance and Worker’s Compensation Programs

In Wisconsin, the Worker’s Compensation and Unemployment Insurance programs are guided by advisory councils that make recommendations to the Wisconsin Legislature on changes to their respective programs every two years. This recommendation process begins with a public comment period that is now open.

We strongly encourage WIB members to share their concerns, ideas and suggestions with the Unemployment Insurance Advisory Council (UIAC) and the Worker’s Compensation Advisory Council (WCAC).

Written comments may be submitted to:

Unemployment Insurance Advisory Council
Janell Knutson, Chair
P.O Box 8942
Madison, WI 53708
UILawChange@dwd.wisconsin.gov

Worker’s Compensation Advisory Council
B.J. Dernbach, Chair
PO Box 7901
Madison, WI 53707
WCAdvisoryCouncil@dwd.wisconsin.gov

The deadline for submitting comments to the UIAC is Friday, November 18. The public comment period for input on the Worker’s Compensation program ends on Friday, December 2.


WIB Calls upon Obama Administration to Halt Implementation of Federal Overtime Pay Regulations

In less than a month, the salary threshold for overtime pay for white-collar workers will double. Yesterday, we sent out a press release calling upon the Obama Administration to halt implementation of this expensive, excessive federal government mandate.

By way of background, earlier this year, the United States Department of Labor (DOL) finalized new regulations that will entitle most salaried white collar workers earning less than $913/week ($47,476/year) to overtime pay. These regulations are scheduled to go into effect on December 1. According to DOL, the first year compliance costs for employers exceed $650 million.

We believe this costly new regulation deserves further scrutiny by the newly-elected President and Congress. In its current form, this federal directive fails to take into account the negative impact this change in overtime pay will have on small, independent businesses.

 

Capitol Week-in-Review – October 27, 2016

State of Wisconsin Ends Fiscal Year 2016 in the Black

Last Monday, the Wisconsin Department of Administration released its Comprehensive Annual Fiscal Report (CAFR) for Fiscal Year 2016. This report is a complete accounting of incoming state tax revenues and outgoing state expenditures for the period of July 1, 2015 through June 30, 2016.

The State of Wisconsin ended the fiscal year with a positive balance of $313.8 million and an additional $281 million set aside in the state’s Rainy Day Fund. For the year, tax collections were below projections by 0.5%. Overall taxpayer-funded spending came in below projections by $103 million.

A positive fiscal outlook for the first year of the biennial budget is a good sign, but there is no guarantee that this trend will continue into the second year of the 2015-2017 state budget. The ending balance in the second year of the biennial budget is always more important because it serves as the baseline for the next two-year state budget.


FEMA Approves Disaster Declaration for Western Wisconsin

The Federal Emergency Management Agency (FEMA) has approved a major disaster declaration for ten western Wisconsin counties impacted by flooding in September. The counties are Adams, Chippewa, Clark, Crawford, Jackson, Juneau, La Crosse, Monroe, Richland, and Vernon.

The major disaster declaration is for Public Assistance, which covers eligible projects submitted by counties, cities, townships, and certain private, not-for-profit organizations. Under this program, FEMA provides 75% of eligible costs, while state and local agencies share the remaining 25%.

Homeowners and businesses are not eligible for assistance under this program. We are awaiting further guidance about federal and\or state government aid to non-governmental entities.


Vehicle Miles Traveled in Wisconsin Hits Record High in 2015

Vehicle Miles Traveled (VMT) is a nationally-agreed upon metric of highway use. It is calculated by combining data on statewide fuel consumption, highway performance monitoring system and automatic traffic recorder continuous traffic count information.

Last year, drivers traveled 62.1 billion miles on Wisconsin roadways – an increase of nearly 2.1 billion miles over 2014 data and the largest annual percentage jump in Wisconsin VMT in 17 years. For perspective, 62.1 billion miles is equal to about 334 round-trips between the Earth and Sun.

The Wisconsin Department of Transportation attributes the increase in VMT to several factors including a strengthening economy, growing population, lower gas prices and continued growth in commercial motor vehicle traffic.