News of the Day

State Home Sales Rose 2.8% in January

Home sales in Wisconsin rose 2.8 percent in January, compared to January of 2017, according to the Wisconsin Realtors Association’s latest report.

The number of home sales rose despite a sharp decline in listings. The inventory of homes for sale in the state was down 16.4 percent in January to 24,607. That represents a supply (the time it would take to sell all of the homes on the market at a given time) of just 3.5 percent. That is a seller’s market. A 6-month supply is considered a balanced market.

The number of new listings in January was down 4.5 percent in the state, compared to January of 2017.

“Tight inventories dominated Wisconsin’s housing market throughout 2017 and that challenge has continued into the first month of the new year,” said WRA chairman Peter Sveum. “Strong economies typically translate into strong home sales. The only factor holding us back from an even stronger housing market is lack of supply.”

With rising sales and declining inventory, home sale prices continue to rise. The median home sales price in the state was up 6.8 percent in January, compared to a year ago, to $168,500.

“Rapid price growth is a result of high demand, fueled by a great economy and very low mortgage rates,” said WRA president and CEO, Michael Theo. “The good news is low mortgage rates, combined with solid income growth, have kept our housing affordable, even as home prices have grown at a rapid pace,” “One big concern, however, is that the strong economy has begun to generate more inflation, and the threat of inflation is what causes long-term interest rates to move up, which will further erode our affordability.”

Legislative Republicans Want Income Tax Rate Cut Paid for with Tax Code Tweaks

Legislative Republicans are contemplating an income tax cut paid for with tweaks to the state tax code as part of their end-of-session legislative sprint.

Rep. Dale Kooyenga, R-Brookfield, said Friday he is working on a bill that would make changes to Wisconsin’s tax code to conform with the recent changes in federal tax law.

If the state doesn’t make changes to its own tax law, state taxpayer income will be based on federal law prior to the tax law changes Congress and President Donald Trump recently passed.

If the state adopted all of the changes in federal tax law, it would reduce state tax revenues by $315 million, the fiscal bureau reported in a memo this week. The memo identified 41 different changes in state law that would be needed to conform with federal law, with 26 of the changes generating additional revenue and the others reducing tax collections or having a minimal impact.

Kooyenga said the changes to the state tax code being proposed would result in a net increase in tax collections of roughly $90 million. He wasn’t able to provide a list of which changes would be included and which wouldn’t.

To offset that tax revenue increase, he said the bill would likely include adoption of the income tax rate reduction Gov. Scott Walker proposed in his 2017-19 budget but Republicans ultimately rejected.

“This isn’t big sexy tax reform, this is maintenance of the tax code,” Kooyenga said. “We’ve got to make this easier for businesses and individuals.”

Walker’s income tax cut proposal would have reduced the lowest marginal tax rate from 4 percent to 3.9 percent and reduced the second-lowest rate from 5.84 percent to 5.74 percent while expanding the amount of income covered by that bracket by $30,000.

The income tax cut would cost about $100 million a year, according to the Legislative Fiscal Bureau. Walker’s office estimated the cut would save $139 over two years for a median-income, four-person family making about $86,000 a year.

Walker spokesman Tom Evenson said his office and the Department of Revenue were reviewing the proposal.

“We appreciate the legislators for putting this proposal forward,” Evenson said

State Assembly Approves Welfare Overhaul Package

The Assembly signed off on a package of special session welfare bills to set new requirements for various government assistance programs including food stamps. All but two of the bills passed on 62-35 party-line votes.

Initial combined cost estimates of the bills from the Department of Health Services and Department of Children and Families showed the legislation would collectively cost more than $90 million annually — excluding one-time start-up costs. But an updated overall figure isn’t yet available following the adoption of a series of amendments with the bills.

The package includes:

*SSAB 1, which would up the work requirement for FoodShare to 30 hours from the current requirement of 20 hours.

*SSAB 2, which would require expand work requirements for food stamps that now apply only to able-bodied adults to those have school-aged dependents.

*SSAB 3, which would create asset limits for food stamps, W-2 or Wisconsin Shares.

*SSAB 4, which would add drug screening to the application process for those seeking public housing.

*SSAB 5, which would create a two-year pilot program to make monthly payments to those who received the Earned Income Tax Credit rather than waiting until after they’ve filed their tax returns to send them a lump sum.

*SSAB 6, which would require DHS and DCF to create performance-based payment systems for W-2 and food stamps vendors.

*SSAB 7, which would allow DOA to contract with a private vendor to create a “pay for success trust fund.” Those with a proposal to address an issue with social, employment or correctional services provided to individuals could bring it to the state and then negotiate an incentive based on the expected budget savings. That money would be set aside and the state would only pay the vendor if the goal was achieved.

*SSAB 8, which would cut off from Medicaid those able-bodied adults who refuse to cooperate with a paternity test or comply with a child support order.

*SSAB 9, which would create a savings account program for Medicaid.

*SSAB 10, which would add photo IDs to food stamp cards.

The bills now head to the Senate.

Wisconsin Electricity Rates Among Highest, Use Low

Wisconsin has some of the highest electricity prices in the nation, although the average customer spends far less on electricity than in most states.

The average residential price for a kilowatt of electricity was 10.67 cents in 2016, according to numbers released this week by the U.S. Energy Information Administration. Only 15 states had higher residential rates, a reversal from 20 years ago, when Wisconsin had the 14th lowest rates in the nation.

Commercial rates are 15th highest in the nation, while industrial rates are 18th.

So why are Wisconsin’s rates so high?

“Built-in costs,” said Gary Radloff, director of Midwest Energy Policy Analysis for the Wisconsin Energy Institute. “It’s a combination of legacy infrastructure and legacy business models.”

Utilities have invested heavily in power plants and transmission lines — such as the CapX2020 and Badger Coulee projects through western Wisconsin — that are paid off over decades through customer rates set by the Public Service Commission.

In 2013, a group of Wisconsin utilities agreed to spend $1.2 billion to upgrade coal plants to settle a case brought by the Environmental Protection Agency over emissions of sulfur dioxide and nitrogen oxide.

The PSC acknowledged rising rates in its last statewide energy assessment, though the report said investments are necessary to replace aging facilities and comply with federal regulations. The regulatory agency says it is continuing to investigate ways to mitigate rate increases and suggests customers can offset the impact by conserving energy.

Bill Increasing Penalties for UI Benefits Fraud Advances

A panel of lawmakers has given its approval to a bill that would increase the penalties for unemployment claimants who fraudulently obtain jobless benefits.

State law already has penalties for people who conceal material facts related either to their ability to obtain jobless benefits or to the wages they had earned while working. Those who are found to have committed a violation known as concealment can be forced to pay back the money they received from the state plus a penalty equal to 40 percent of that amount.

Aside from those civil penalties, a person can also face criminal charges for concealment and be hit with penalties ranging from $100 to $500 in fines and as many as 90 days in prison.

Assembly Bill 710, and its companion in the state Senate, Senate Bill 542, would ratchet up those criminal penalties, making them go up in accordance with the amount of benefits a claimant illegally obtained. If the benefits fraudulently obtained totaled $2,500 or less, a claimant would face a maximum of $10,000 in fines and nine months in prison.

For those who obtained between $2,500 and $10,000 worth of benefits, the offense would become a felony and the criminal penalties would be three and a half years in prison and a maximum of $10,000 in fines.

For claimants who had fraudulently obtained more than $10,000 worth of jobless benefits, the crime would also be a felony but the maximum penalties would be $25,000 in fines and 10 years in prison.

The bill would allow a series of violations to be prosecuted as a single crime.

The Assembly Committee on Public Benefit Reform voted 5-3 on Tuesday, along party lines, to recommend the bill for adoption.

State Rep. Debra Kolste, a Democrat, had proposed amending the bill so that it would also apply to employers. However, that amendment failed on a 5-3 vote on party lines.

Both bills still need to be approved by the full Legislature and signed by Gov. Scott Walker to become law.

 

President Trump Unveils Infrastructure Plan

The 53-page document lays out his vision: To turn $200 billion in federal money into $1.5 trillion for fixing America’s infrastructure by leveraging local and state tax dollars and private investment.

Half of the new federal money, $100 billion, would be parceled out as incentives to local government entities.

An additional $20 billion would go toward “projects of national significance.”.

Another $50 billion is earmarked for rural block grants, most of which will be given to states according to a formula based on the miles of rural roads and the rural population they have. States can then spend that money on transportation, broadband, water, waste and power projects.

The rest of the money would support other infrastructure-related undertakings, including existing loan programs like the one operated by the Environmental Protection Agency under the Water Infrastructure Finance and Innovation Act, which White House officials said could leverage up to $40 in local and private money for every $1 in federal investment.

The plan proposes to cut federal permitting to two years, down from five to ten. Former President Obama also tried to address the problem through an executive order that instructed agencies to use better technology and work concurrently on their reviews in order to cut down on approval times.

The plan also calls for changes aimed at widening the pipeline of skilled construction workers, such as allowing Pell Grants to be used for short-term credentials from places like community colleges and targeting federal work-study funding toward on-the-job training.

Finally, the plan proposes to allow the federal government to quickly and more easily sell assets that it says “would be better managed by state, local, or private entities.” As examples of property that could be divested, the plan named the Ronald Reagan and Dulles International Airports, the Tennessee Valley Authority and Bonneville Power Authority’s transmission assets, and the Washington Aqueduct, which supplies Washington, D.C. with fresh drinking water.

 

Governor’s Reinsurance Proposal Could Help Lessen Key Problem in ACA

Wisconsin is on track to join states such as Minnesota and Oregon that have a program to help lessen the problems with the Affordable Care Act.

Gov. Scott Walker, a longstanding opponent of the law, has proposed using a mix of federal and state dollars to lower premiums — or at least check future increases — for insurance sold directly to individuals and families.

The proposed program would pay as much as 80% of the insurance claims of people with high medical bills, lowering insurers’ costs and enabling them to set rates with more certainty.

The program, known as reinsurance, addresses one of the key problems with the Affordable Care Act: The health plans have drawn too many people with high medical bills and not enough healthy people to offset the costs.

That has contributed to health insurers incurring large losses that lead to steep increases in premiums. The hope is that a state-run reinsurance program would lower rates and pull more healthy people into the market.

A similar program in Minnesota is estimated to have lowered premiums by 20% compared with what they would have been otherwise this year. Reinsurance also has worked well in the market for Medicare prescription drug plans, known as Part D, sold by private health insurers.

Wisconsin Assembly, Governor Walker Propose Child Rebate, Tax Holiday

Wisconsin families with school-aged children would receive a one-time $100 tax rebate this summer and state sales tax would be waived on certain purchases the first weekend in August under a deal Gov. Scott Walker and Assembly Republicans announced on Thursday.

The Assembly will approve the plan later this month, Vos said. It’s not clear what will happen in the Senate, which must also approve it before it goes to Walker. Republican Senate Majority Leader Scott Fitzgerald’s spokesman did not immediately return a message seeking comment.

Under the deal, families with children who were between the ages of 5 and 17 last year and are now living at home would receive $100 for each qualifying kid. The money, estimated to come to about $122 million of the state’s budget surplus, would be delivered to all families regardless of income sometime in July. That is unchanged from what Walker had originally proposed.

“As I promised, when we have a surplus, we will give it back to you,” Walker said in a statement. “It’s your money.”

Walker originally wanted to offer a refundable income-tax credit starting in 2019, but that plan has been scrapped. Instead, there will be a one-time waiver of the state’s 5 percent sales tax on certain purchases, provided they cost less than $100 and are made in the first weekend in August. The total estimated cost to the state in lost tax revenue would be about $50 million.

“Our goal is actually to increase the economic ability of families this year,” Vos said, noting that the benefit will extend to all families regardless of income.

 

Wisconsin Exports up 6% in 2017

Wisconsin businesses exported $22.3 billion in goods and services to 202 countries in 2017, a 6.1 percent increase over 2016.

“Not only is Wisconsin becoming more attractive to global companies seeking to expand or establish operations in the U.S., but existing state businesses are experiencing more success in selling their products overseas,” Governor Walker said. “The boost in exports is yet another example of the economic success we experienced in 2017 and is a trend we expect to continue as more companies are accessing new markets and new customers through exporting.”

Wisconsin’s export growth in 2017 was generated by significant increases in shipments to Canada, Mexico, and China, the state’s three largest export destinations.

  • Exports to Canada grew by 4.3 percent to $6.9 billion, driven by increases in the export of miscellaneous mineral products and electrical machinery.
  • Exports to Mexico were up 4.8 percent to a record $3.2 billion, mostly because of an increase in the export of electrical machinery and oil seeds (primarily soybeans).
  • Exports to China jumped by 21.6 percent to $1.7 billion in 2017 – also a record for exports to that country. Driving the growth in exports to China were increases in the shipments of aircraft and parts; industrial machinery; dairy products; wood and wood products; and raw hides and skins.

Wisconsin exported more than $3.5 billion in agriculture products to 147 countries in 2017, a 3.6 percent increase over 2016. The state saw increases agriculture exports to Canada (up 1.5 percent); Mexico (up 14.2 percent); China (up 27.6 percent) and Korea (up 0.3 percent).

Exports of dairy, eggs and honey products in 2017 were up 19.9 percent over 2016 to $297 million. The state ranks fifth in the U.S. in exports of those products.

Overall, Wisconsin saw increases in numerous key product categories, including electrical machinery (up 12.4 percent to $2.2 billion); vehicles and vehicle parts (up 21.7 percent to $1.9 billion); industrial machinery (up 3.6 percent to $5.4 billion); plastic products (up 2.8 percent to $1.1 billion); aircraft and parts (up 27.8 percent to $750 million); paper products (up 3.1 percent to $881 million); prep vegetables, fruits and nuts (up 8.9 percent to $341 million); oil seeds, miscellaneous grain, seed and fruit (up 35.7 percent to $310 million; and wood and wood products (up 13.3 percent to $254 million).

Industrial machinery continued to be Wisconsin’s top export product category at $5.4 billion, accounting for 24 percent of all state exports. Tied for second were electrical machinery and medical and scientific instruments, both coming in a $2.2 billion – and each garnering 10 percent of the total exports.

 

 

Legislative Democrats Push for ‘Local Wage Act’

Democratic state lawmakers argue it’s time to give local governments more control over how businesses treat their employees.

The package of bills, deemed the “Local Wage Act,” would repeal a state law that prevents local governments from setting their own minimum wage and would allow them to enact their own family and medical leave standards.

Wisconsin’s minimum wage of $7.25 an hour was last increased in 2009, when Democrats were in charge of state government. State Senator Dave Hansen (D-Green Bay) says Republicans have done nothing to address the issue for the past eight years, while the state has fallen behind. “It is time to give back the right of communities, local control, to set their own standards for how they value work and the people who do it,” he says.

The proposals are unlikely to see much movement under the current Republican-controlled Legislature.