News of the Day

UI Trust Fund Projected to Exceed $1.2 Billion on Key Date

The Department of Workforce Development (DWD) recently released the 2017 Unemployment Insurance (U) Financial Outlook Report, which projects continued growth for the Wisconsin UI Trust Fund throughout the projection period. In addition to continued growth, the UI Trust Fund is predicted to have a balance of $1.2 billion or greater on June 30th, which would result in the third straight year that Wisconsin employers who participate in the UI program would experience a tax reduction. Due to the vastly improved Wisconsin economy and common-sense reforms made to the UI program, when combined with the reductions for the 2016 and 2017 tax years, tax schedule changes are estimated to reduce total UI taxes by over $150 million.

“Wisconsin’s UI Trust Fund has come a long way over the past six years, from a deficit of over $1 billion which brought over $360 million in additional costs to employers due to borrowing money from the federal government to a healthy UI Trust Fund balance of over $1 billion,” DWD Secretary Ray Allen said. “Wisconsin’s Trust Fund is continuing to grow, but we must ensure that we avoid the additional burden that borrowing money to pay benefits puts on the employers who fund UI benefit payments.”

The projections are included in the state’s 2017 UI Financial Outlook report, which DWD submitted on April 14 to the Governor and legislative leadership as required by statute.

Highlights of the report include:

  • Wisconsin’s UI Trust Fund ended 2016 with a positive balance of roughly $1.2 billion
  • UI benefits are expected to stay at historically low levels throughout the projection period, and the UI Trust Fund is expected to grow to over $1.5 billion by the end of 2019
  • Wisconsin’s UI Trust Fund balance is projected to be greater than $1.2 billion on June 30, which will move UI taxes to the lowest tax schedule, schedule D. This would result in a tax reduction for the third straight tax year for most Wisconsin employers covered under the UI program.

Other indicators of the health of Wisconsin’s UI program and overall economy include:

  • Initial UI claims ended 2016 at their lowest level since 1988. Year 2017 initial UI claims are running at their lowest levels in at least 30 years
  • Continuing UI claims ended 2016 at their lowest levels since 1973. Year 2017 Continuing UI claims in Wisconsin are running at their lowest level in at least 30 years.

14-State Coalition Defend Executive Order to Ease Over-Regulation

Attorney General Brad Schimel and West Virginia Attorney General Patrick Morrisey are leading a 14-state coalition urging a federal court to uphold an executive order aimed at reducing the regulatory burden on state governments and citizens.

“In recent years, bureaucrats in Washington, D.C. have been expanding their power and reach through regulatory actions, and little has been done to remove unnecessary federal regulations,” said Attorney General Schimel. “This executive order will protect Wisconsin from more years of the same, allow Wisconsinites to operate in a simplified regulatory environment, and protect our state’s sovereignty.”

The friend-of-the-court brief, filed late Monday, defends the “1-in-2-out” rule, which strives to eliminate unnecessary and costly regulation by requiring the federal bureaucracy to do away with two regulations for every new rule it creates. The coalition argues that the executive order effectively reins in a bureaucracy that has implemented a far greater regulatory burden than Congress ever envisioned.

The brief further contends past presidents, of both political parties, have enacted similar mechanisms to ensure review of regulations within the executive branch. Such measures have instructed agencies to consider the cumulative costs, the impact on the national economy and the effect of rules on state and local government.

Wisconsin and West Virginia filed the coalition’s brief before the U.S. District Court for the District of Columbia. Other states participating are Alabama, Arizona, Arkansas, Georgia, Kansas, Louisiana, Michigan, Nevada, Oklahoma, South Carolina, Texas and Wyoming.

President Trump to Sign ‘Buy American, Hire American’ Executive Order

President Trump will sign a double-barreled executive order Tuesday that will clamp down on guest worker visas and require agencies to buy more goods and services from U.S. companies and workers.

Trump will sign the so-called “Buy American, Hire American” executive order during a visit to Snap-On Tools in Kenosha, Wis., Tuesday, said two senior administration officials who briefed reporters on the order Monday.

By combining aspects of immigration policy with federal procurement regulations, Trump is using executive action to advance his philosophy of economic nationalism without waiting for action from Congress.  But like many of his previous executive orders, the order will largely call on cabinet secretaries to fill in the details with reports and recommendations about what the administration can legally do.

Specifically targeted: The H-1B visa program, which allows 85,000 foreign workers into the United States each year to take specific high-skilled jobs with U.S. companies. The program is popular with the information technology industry, which Trump has accused of “importing low-wage workers on H-1B visas to take jobs from young college-trained Americans.”

The “Buy American” portion of the order will tighten the waivers and exemptions that agencies use to get around procurement laws that favor American-made goods, and require agency heads to sign off on those waivers. It will require agencies to consider whether foreign governments are using unfair trade practices when considering the lowest responsible bidder. And it includes language requiring transportation projects to use steel “melted and poured” in the United States.

Finding More Markets for Wisconsin Dairy Products

With the U.S. saturated with milk and Wisconsin dairy farmers desperately seeking buyers, a new state-led dairy trade mission to Mexico announced Thursday comes at a critical time.

Ben Brancel, secretary of the Wisconsin Department of Agriculture, Trade and Consumer Protection, will lead a delegation of state officials and representatives from nine dairy and agricultural companies to Aguascalientes, Mexico, May 4-7 where they will attend Expo Leche, Mexico’s largest annual dairy industry conference. State officials say the goal is to strengthen Wisconsin’s relations with its existing dairy customers but also to find new opportunities for the state’s dairy businesses.

Brancel said the trade mission to Mexico was in planning long before the recent situation that was created when Grassland Dairy Products Inc. of Greenwood informed several dozen Wisconsin dairy farms it no longer would accept milk from them after May 1. Grassland lost its Canadian customers, who each day purchased more than 1 million pounds of ultra-filtered milk, a product with elevated protein content that’s typically used in cheese production, so Grassland had to reduce its milk intake.

With U.S.-Mexico relations strained from recent actions by the Trump administration over construction of a border wall and a pledge to reopen negotiations for the North American Free Trade Agreement, Brancel wants Mexico to know Wisconsin values its trade partnership. About $3 billion in Wisconsin exports went to Mexico in 2016, making it the state’s second-largest trading partner behind Canada.

“But we also are trying to identify new distributorships so we can market (Wisconsin dairy) products,” he said. A significant player and potential major customer could be the Domino’s Pizza operation in Mexico, Brancel said.

“We want to encourage them to use Wisconsin cheese on their pizza,” Brancel said. “Another aspect of this trip is to make sure our customers in Mexico are getting what they need, payments are coming to (Wisconsin) and products from Wisconsin are arriving in good quality with no problems.”

Brancel also has meetings scheduled with Mexico’s minister of agriculture and other government officials to discuss potential opportunities for Wisconsin dairy products. Wisconsin sends a lot of finished products to Mexico, including cheese, but there could be opportunities for whey protein and other milk products as well as ingredients used in food production, he said.

Mexico purchased about $247 million in dairy products from Wisconsin last year, according to state estimates.

 Mark Stephenson, director of dairy policy analysis at UW-Madison, believes Mexico could purchase more dairy products despite a strong U.S. dollar.

“One of the reasons we have to focus on Mexico is that they are one of our biggest trading partners,” Stephenson said. He said other dairy producing nations, including New Zealand, also may see opportunity in Mexico, but the U.S. has the advantage of proximity.

“The strong dollar, I’d categorize that more as headwinds and shouldn’t impact sales too much, but we may have to discount prices to make our products more competitive on the global market,” Stephenson said.

WisDOT Announces Funding Available for 21 Highway Projects

The Wisconsin Department of Transportation (WisDOT) has realized let savings over the course of the state fiscal year. “Today, I am directing WisDOT to advance $65 million in projects statewide (see map) into state fiscal year 2017,” Governor Scott Walker said. “In addition, WisDOT is projecting an additional $38 million in revenues, which the Legislature can allocate into the 2017-19 biennial budget. In total, these actions free up more than $100 million in funds for additional transportation projects due to new revenues and savings.”

“Savings on the highway projects we planned for this year allows us to do more projects with existing funds. This June, WisDOT will fund 21 additional projects around the state,” noted Wisconsin Department of Transportation Secretary Dave Ross.

Lower fuel prices and more competitive bids on projects have resulted in increased savings on road projects. Using these savings now means WisDOT will accomplish more road work in the current fiscal year and provide additional resources to the Legislature in planning the next budget. Improving more roadways and bridges now, before inflation reduces purchasing power, and taking advantage of the savings will help preserve our assets and maintain infrastructure.

“We are also generating more revenue for transportation without raising the gas tax or registration fees,” noted Secretary Ross.

WisDOT just completed an updated revenue forecast and is projecting an additional $38 million in available revenues. This amount will be added to the Transportation Fund’s FY18 opening balance:

​Additional FY17 Revenue ​$12,969,800
​Additional 2017-19 Revenue ​$25,225,400
Total Additional Revenue ​$38,195,200

“The redirected let savings and increased revenue forecasts are great news for the state,” said Governor Walker. “We’ll do more projects and bond $44.8 million less than planned. We are working and winning for Wisconsin.”

 

President Scraps Tax Plan, Timetable Threatened

President Donald Trump has scrapped the tax plan he campaigned on and is going back to the drawing board in a search for Republican consensus behind legislation to overhaul the U.S. tax system. Administration officials say it’s now unlikely that a tax overhaul will meet the August deadline set by Treasury Secretary Steve Mnuchin.

White House aides say the goal is to cut tax rates sharply enough to improve the economic picture in depressed rural and industrial pockets of the country where many Trump voters live. But the administration so far has swatted down alternative ways for raising revenues, such as a carbon tax, to offset lower rates.

Trump, who brands himself as a deal-maker, has not said which trade-offs he might accept and he has remained noncommittal on the leading blueprint, from Rep. Kevin Brady, chairman of the Ways and Means Committee. Brady, R-Texas, has proposed a border adjustment system, which would eliminate corporate deductions on imports, to raise $1 trillion over 10 years that could fund lower corporate tax rates.

But that possibility has rankled retailers who say it would lead to higher prices and threaten millions of jobs, while some lawmakers have worried that the system would violate World Trade Organization rules. Brady has said he intends to amend the blueprint but has not spelled out how he would do so.

Other options are being shopped on Capitol Hill. One circulating this past week would change the House Republican plan to eliminate much of the payroll tax and cut corporate tax rates. This would require a new dedicated funding source for Social Security.

Sen. Rob Portman, R-Ohio, a member of the Senate Finance Committee, said that all of the trial balloons surfacing in public don’t represent the work that’s being done behind the scenes. “It’s not really what’s going on,” Portman said. “What’s going on is they’re working with on various ideas.”

 

DNR Points to Informal Deals as Pollution Penalties Drop

Reports of environmental violations rose in 2016, but the Wisconsin Department of Natural Resources sought fewer financial penalties for polluters than in any year since 2011. Court-enforced fines have become less frequent and less severe since Republican Gov. Scott Walker took office in 2011 and appointed home builder Cathy Stepp to head the DNR saying he “wanted someone with a chamber-of-commerce mentality.”

Last year, the DNR sent 25 violations to state attorneys for court action. An average of more than 60 environmental violations per year were referred to the state Department of Justice for court action in 2009 and 2010, the last two years of Democratic Gov. Jim Doyle’s administration, according to data provided by the DNR.

Former DNR secretaries said financial penalties for the worst polluters are an important deterrent, but current department officials say they have sought fewer fines because they have placed emphasis on talking to violators to achieve quick corrections of illegal pollution.

By gaining swift voluntary compliance with the law, the department stops pollution before it poses significant harm to public health or the environment, DNR spokesman Jim Dick said.

The department accepted 310 cases for initial investigation and issued 335 notices of violation in 2016. Both numbers are very close to the average for the last eight years.

The department held 306 enforcement conferences to discuss violations with polluters and seek agreements on preventing pollution and conducting environmental cleanups. The number of conferences was higher than the eight-year average of 248. The enforcement conferences typically are the last step before the DNR seeks financial penalties. In some cases, several conferences are held if a polluter resists making improvements or when new violations are discovered.

Judge Gorsuch to be Sworn-in

Judge Neil Gorsuch took the first of two oaths to be sworn in as the newest Supreme Court justice Monday, having survived a grueling confirmation process where he faced Democrats still angry over Republicans’ blockade of former President Barack Obama’s nominee last year.

Gorsuch took the Constitutional Oath in a private ceremony, administered by Chief Justice John Roberts in the Supreme Court’s Justice’s Conference Room. That oath will be followed by a public ceremony at the White House where Justice Anthony Kennedy – Gorsuch’s former boss – will administer the Judicial Oath.

Gorsuch takes the seat of the late Justice Antonin Scalia, who died in February last year, and whom Gorsuch has been compared favorably to by conservatives hopeful for another originalist on the court.

Gorsuch is likely to cast a deciding vote in a number of high-profile cases, which in part explains the terse and partisan hearing the 49-year-old faced. The high stakes led Republicans to trigger the “nuclear option” last week to kill the 60-vote filibuster threshold for Supreme Court nominees.

Budget Committee Starts from Scratch on Transportation Funding

In another sign of trouble for Gov. Scott Walker’s plan to borrow more and delay road construction projects, the Legislature’s Republican-controlled budget committee announced Thursday it would start its negotiations from scratch rather than from the governor’s road-funding proposal.

The procedural decision announced by co-chairs of the Joint Finance Committee is significant because it means they are ignoring Walker’s much-criticized approach to solving a projected $1 billion Department of Transportation shortfall. The panel could still go along with Walker’s call to borrow half a billion dollars and delay projects to plug the gap, but it will be harder than the usual practice of working off the governor’s proposal.

Doing what Walker wants on roads will now require a majority vote to add it to the budget, rather than a majority vote to remove it. That is an unusual break from tradition, and especially noteworthy that the 16-member committee is controlled by Republicans — the same party as Walker.

Walker, in a prepared statement, ignored the committee’s decision to remove his roads plan and cut dozens of other proposals. Instead, he thanked them for not changing — for now — his plan to increase funding for K-12 schools by $649 million.

In all other areas of the $76 billion budget the committee will be starting from what Walker proposed and making changes from there.

Committee co-chairs also identified 83 policy items in the budget they are removing, meaning they will have to take the more difficult route of passing as stand-alone bills rather than being a part of the massive budget.

Lawmakers Tackle Dairy Farmers’ Problems

A group of state lawmakers is asking University of Wisconsin System leaders to come up with creative and alternative uses for milk, as an oversupply is driving prices down.

Two dozen Assembly Republicans sent a letter to UW System President Ray Cross this week asking schools to start researching the issue. The letter points out how the development of ethanol helped Iowa corn farmers.

The news coincides with Grassland Dairy announcing this week it will stop buying milk from 75 farmers, mostly in Wisconsin, because it can no longer sell dairy products to Canada. Grassland blames new dairy regulations in Canada. Grassland is ending their deal May 1st, giving farmers less than 30 days to find a new buyer for their milk.

Gov. Scott Walker weighed in on Wednesday, describing the steps he’s taking to remedy the problem.

“This is a direct correlation to what has happened in Ontario and what’s happened in a larger context in Canada itself. Now, they overall are our largest trading partners, so we want to have… continue to have good trading relationships with them, but when it comes to the dairy industry we think they’re just plain wrong on this and we expect that the World Trade Organization will help,” the governor said.

U.S. Senator Ron Johnson (R-Wisconsin) is urging the White House to work with Canada on this trade issue.

“Our state’s dairy farmers are some of the best in the world, and they should not be the victims of a trade dispute they didn’t start. I urge the administration to work with the Canadian government and swiftly find a way to resolve this matter before hardworking Wisconsin farm families are hurt,” Johnson said.