News of the Day

Heavy Truck Fee Concept Emerges in Budget Talks

Senate Majority Leader Scott Fitzgerald said the possibility of collecting a new fee on heavy trucks emerged Wednesday in his budget talks with Gov. Scott Walker and Assembly Speaker Robin Vos.

Fitzgerald, R-Juneau, said he’s not sure if Republican senators support the concept, adding they need to learn more about it. That marks a shift from just a day earlier, when Fitzgerald dismissed the proposal, offered by GOP state Rep. Amy Loudenbeck, R-Clinton, as a “nonstarter.”

The concept is the latest to be entertained by state leaders as they attempt to craft the state’s next budget. July 1 is when the budget is supposed to be passed and take effect, a deadline Walker and lawmakers now appear certain to miss.

At least four other states collect heavy truck fees, and such a proposal could generate hundreds of millions in new revenue for roads. But it also would meet strong opposition from some of the state’s most powerful business groups, including Wisconsin Manufacturers & Commerce. A lobbyist for the group, Scott Manley, slammed the proposal Wednesday as “punitive and unfair.”

“For a state that grows and produces as much as we do, it really provides a significant disincentive to produce more,” Manley said of the concept.

Still, Wednesday’s developments hinted at possible progress in budget talks. Contrast that with a day earlier, when Assembly-Senate negotiations broke down and Vos and Fitzgerald vented their frustrations to reporters, each calling the other’s budget positions “laughable.”

“It feels like things are kind of moving a little bit compared to what we saw yesterday,” Fitzgerald told reporters Wednesday.

Vos, R-Rochester, also was more optimistic Wednesday that a deal could be reached, saying the two Republican caucuses are “closer than we have been.”

Transportation is the biggest sticking point in budget talks, with Vos and Assembly Republicans maintaining the state needs a long-term revenue infusion to pay for road projects. Other issues still unresolved include how to boost funding for K-12 schools and how to cut taxes.

Walker has said he opposes increasing gas taxes or vehicle fees, the two main state funding sources for transportation, and would veto a gas tax hike if lawmakers pass one. Fitzgerald and Senate Republicans have said they won’t back either of those options because Walker won’t.

Opposing views on fee

Manley said the truck fee concept discussed by Walker and GOP legislative leaders would be collected on a per-mile basis for heavy trucks traveling on Wisconsin roads. It could generate more than $130 million a year for state roads and bridges, he said. Those figures were not confirmed independently by Walker’s office or legislative leaders.

Bill McCoshen, a lobbyist for the state’s DRIVE Coalition, a group representing business, tourism and agriculture interests that advocates for more funding for roads, said he was heartened by the truck fee discussion.

“Every credible study says our roads and bridges are some of the worst in the country, and the only way we’re going to address those is to generate new revenue,” McCoshen said.

If lawmakers don’t find more money for roads, it could mean delays to large highway projects under construction or scheduled for future construction.

Instead of new revenues, Walker has proposed $500 million in borrowing, and Fitzgerald, $850 million in borrowing, to fund road projects. But Vos and Assembly Republicans object to that approach, saying it’s unwise to put more on the state’s credit card. On Tuesday, Vos said the Assembly Republicans’ position was to refuse to discuss additional borrowing without also discussing ways to boost revenue.

But some Senate Republicans aren’t sold on the need for new revenue. Fitzgerald said Wednesday that many GOP senators think cost-saving measures must be weighed at the Wisconsin Department of Transportation.

“There’s still a lot of people that think DOT is an agency that needs significant reform,” Fitzgerald said.

Legislative leaders also have discussed highway tolling as a potential revenue source. But even if lawmakers approved it and secured a federal nod to start tolling Wisconsin’s U.S. Interstates, tolls likely wouldn’t be collected for at least four years — meaning they wouldn’t have an impact for the next state budget, covering the two-year period from July 2017 through June 2019.

 

Wisconsin Sees Reduction in Worker’s Compensation Rate for Second Consecutive Year

The Wisconsin Commissioner of Insurance has approved an overall 8.46% rate decrease for Worker’s Compensation (WC) premiums for business this year following a 3.19% decline last year. Some specific industries, like manufacturing, will see even greater decreases of 9.28%. This overall decrease represents a savings of nearly $170 million for employers.

“This is the second consecutive year Worker’s Compensation rates have declined in Wisconsin, reaffirming our commitment that Wisconsin is open for business,” said Governor Walker. “The magnitude of savings is a result of employers working with their employees to emphasize the importance of safety in the workplace.”

Worker’s compensation rates are adjusted yearly by a committee of actuaries from the Wisconsin Compensation Rating Bureau (WCRB). The committee studies the prior losses (claims) of hundreds of categories and professions throughout the state’s employment pool and submits a rate recommendation to the Office of the Commissioner of Insurance (OCI) who has final approval over the rates.

“Wisconsin businesses are dedicated to ensuring a safe working environment and this decrease in workers compensation rates reflects that,” said Commissioner of Insurance Ted Nickel. “These savings will allow Wisconsin businesses to continue to strengthen their ability to operate affordably and efficiently.”

 

Commercial Docket Pilot Starts July 1

On July 1, the Wisconsin court system will launch a three-year pilot project for the handling of large-claim business and commercial cases filed in Waukesha County Circuit Court and in the circuit courts of the Eighth Judicial Administrative District in northeastern Wisconsin.

There is also potential availability of a commercial docket for cases venued outside of those jurisdictions, when the parties agree to the change in venue, and a judge participating in a commercial docket agrees to the transfer. The commercial docket is intended to ensure that large business and complicated commercial cases are resolved timely and effectively.

“This is a significant step forward for the Wisconsin court system. It is our hope that the commercial docket will result in efficient resolutions of complex business-related controversies, and in the process, improve the efficiency of the justice system for everyone,” said Wisconsin Supreme Court Chief Justice Patience Drake Roggensack.

The Court approved the pilot project in an order issued April 11. If successful, and after a thorough review of the pilot program, the Court may consider a statewide commercial docket.

Roggensack convened the Business Court Advisory Committee in the fall of 2016 to draft a proposed rule petition to be considered in the event that the Court approved a commercial docket. The committee created the framework and forms necessary to implement the project, and the committee remains available to assist the Court with any adjustments that may be necessary moving ahead, Roggensack said.

The commercial docket will handle disputes involving, among other things: the governance of business organizations, including financial institutions; unfair competition or prohibited business activities; sales and mergers; securities sales and regulations; intellectual property rights; franchising; and cases involving claims or disputes under portions of the Uniform Commercial Code, when the amount in controversy exceeds $100,000 exclusive of interest, costs, and attorney fees.

Detailed criteria for cases to be assigned to the commercial docket, as well as cases that may be taken on a discretionary basis, are listed in the appendix attached to the Court’s order. Commercial court docket cases will be integrated with the existing circuit court eFiling system, making it easy for lawyers involved in the cases to submit and track filings.

Foxconn Expects to Expand

The chairman of Taiwanese electronics giant Foxconn said Thursday it may spend more than $10 billion to set up manufacturing in the United States, and will announce investment plans by early August for at least three states.

Terry Gou gave no new information about where Foxconn will locate a U.S. display panel factory he said in January would cost up to $7 billion to build. That announcement triggered a flurry of lobbying by state leaders hoping to attract the investment, which he said might generate as many as 50,000 jobs.

Foxconn is the biggest contract manufacturer of smartphones and other devices for Apple, Sony, Blackberry and other brands. Its success has made Gou Taiwan’s richest businessman. The company raised its profile with its purchase in March 2016 of struggling Japanese electronics brand Sharp for $3.5 billion.

The company plans to develop operations in the U.S. that combine hardware manufacturing and software development in technologies including artificial intelligence and automation, Gou said at a meeting with shareholders. Asked later at a news conference how much Foxconn might invest during the five-year plan, he said it might exceed $10 billion.

Gou mentioned Ohio, Pennsylvania, Michigan, Illinois, Wisconsin, Indiana and Texas as manufacturing states with which Foxconn hopes to work but gave no indication whether any of them might be in the investment agreement. Gou said in January that Pennsylvania was the leading candidate for the panel factory, which would work with Sharp.

Details for each state were not settled, but overall, “we will provide at least tens of thousands of job opportunities,” said Gou at the news conference.

Expansion into the United States would reduce Foxconn’s reliance on China, where it has the bulk of its operations and employs about 1 million people.

 

 

Senate GOP Unveils Draft of Health Bill

Senate Republicans on Thursday released a health-care bill that would curtail federal Medicaid funding, repeal taxes on the wealthy and eliminate funding for Planned Parenthood as part of an effort to fulfill a years-long promise to undo Barack Obama’s signature health-care law.

The bill is an attempt to strike a compromise between existing law and a bill passed by the House in May as Republicans struggle to advance their vision for the country’s health-care system even though they now control both chambers of Congress and the White House.

The Senate proposal largely mirrors the House measure with significant differences, according to a discussion draft circulating Wednesday among aides and lobbyists. While the House legislation would peg federal insurance subsidies to age, the Senate bill would link them to income, as the Affordable Care Act does.

The Senate measure would cut off expanded Medicaid funding for states more gradually than the House bill but would enact deeper long-term cuts to the health-care program for low-income Americans. It also would eliminate House language aimed at prohibiting federally subsidized health plans from covering abortions, a provision that may run afoul of complex Senate budget rules.

Like the House bill, the Senate measure is expected to make big changes to Medicaid, the program that insures about 74 million elderly and lower-income Americans and was expanded in most states under the ACA. In effect, the revisions would reduce federal spending on the program.

The Senate measure would transform Medicaid from an open-ended entitlement to one in which federal funding would be distributed to states on a per capita basis. The Senate measure would also seek to phase out the program’s expansion – although at a more gradual rate than the House version.

Yet the Senate bill is expected to go further than the House version in its approach to cutting Medicaid funding in the future. In 2025, the measure would tie federal spending on the program to an even slower growth index than the one used in the House bill. That move could prompt states to reduce the size of their Medicaid programs.

In a move that will please the health-care industry, the draft also proposes repealing all the ACA taxes except for its ‘‘Cadillac tax’’ on high-cost health plans in language similar to the House version. Senators had previously toyed with the idea of keeping some of the ACA’s taxes.

It would also eliminate Medicaid reimbursements for Planned Parenthood for one year. Federal law already prevents taxpayer funding to pay for abortions except to save the life of the woman or in the case of rape or incest. But some Republicans want to ban all federal funding for Planned Parenthood, which also provides health services such as birth control, because their clinics provide abortion services.

Like the House measure, the Senate bill would eliminate two central requirements of the current health-care law: that individuals provide proof of insurance when filing their annual tax returns and that companies with 50 or more employees provide health coverage for their workers.

In a move that is critical to insurers, the Senate measure would continue to fund for two years cost-sharing subsidies that help 7 million Americans with ACA plans. House Republicans have challenged the legality of the $7 billion in subsidies – which help cover consumers’ deductibles and copays – in court, and insurers have warned that they will have to increase premiums dramatically next year unless the federal government commits to continuing the payments.

Anthem to Stop Selling Obamacare Plans in Wisconsin

Health insurer Anthem Blue Cross and Blue Shield says it will largely stop selling insurance plans in Wisconsin on the marketplaces set up through the Affordable Care Act next year, citing a volatile market for insurance plans that comply with the law.

Anthem will be the second large national insurance company to stop selling health plans on the state’s marketplaces. UnitedHealthcare pulled out last year.

About 14,000 people are covered by the Anthem health plans sold on Wisconsin’s marketplaces. That works out to less than 6% of the 242,863 people who were enrolled in health plans sold on the marketplaces as of Jan. 31. Anthem said its decision does not affect its health plans for employers, its Medicare Advantage plans or Medicaid plans.

It also will continue to renew its so-called transitional plans that were sold before March 2010 and December 2013. Those plans, which are not available to new customers, cover about 4,500 people in Wisconsin.

Anthem previously pulled out of the marketplaces for Milwaukee, Racine and Kenosha counties. But Molina Healthcare, Common Ground Healthcare Cooperative, Children’s Community Health Plan and Network Health sold plans in Milwaukee County this year.

Other health insurers selling marketplace plans in the state include Dean Health Plan, Unity Health Insurance, Security Health, Gundersen Health Plan and Aspirus Arise Health Plan of Wisconsin.

All of the insurers, though, have struggled.

“The Wisconsin individual market remains volatile, making planning and pricing for ACA-compliant health plans increasingly difficult,” Anthem said Wednesday in a statement.

Among the factors Anthem cited were a shrinking and deteriorating market and uncertainty at the federal level.

 

 

 

Court to Tackle Partisan Gerrymandering

The Supreme Court will once again wade into the world of partisan gerrymandering – that is, the practice of purposely drawing district lines to favor one party and put another at a disadvantage. The justices announced today that they will review Wisconsin’s appeal of the decision by a three-judge district court striking down, as the product of partisan gerrymandering, the redistricting map that the Republican-controlled legislature created after the 2010 census.

The lower court also ordered the state to create a new redistricting plan by the fall, but a deeply divided Supreme Court today put that order on hold. The Supreme Court’s ruling in the case, which is likely to come next year, will almost certainly be a major one that could affect redistricting efforts for decades to come.

When the Supreme Court last tried to take on the issue of partisan gerrymandering in 2004, the result was deeply unsatisfying for almost everyone involved. In a challenge to Pennsylvania’s redistricting plan, four justices – Justice Antonin Scalia, joined by then-Chief Justice William Rehnquist and Justices Sandra Day O’Connor and Clarence Thomas – agreed that courts should never review partisan-gerrymandering claims, because it is too hard to come with a manageable test to determine when the role of politics in redistricting is too influential. Four other justices – Justices John Paul Stevens, Ruth Bader Ginsburg, David Souter and Stephen Breyer – believed that courts should be able to review partisan-gerrymandering claims. The key vote in the case came (as it so often does) from Justice Anthony Kennedy, who agreed that the Supreme Court should stay out of the Pennsylvania case but left open the door for courts to have a role in reviewing partisan-gerrymandering cases in the future if a workable standard could be found.

Thirteen years later, it appears that the justices are ready to try again. In its brief seeking review of the district court’s decision, Wisconsin complains about various aspects of the lower court’s ruling. It argues, for example, that the plaintiffs cannot challenge the map in its entirety, but instead need to go district by district, and that the plan cannot be a partisan gerrymander if it is also consistent with traditional redistricting principles. But the state is also playing for all the marbles. It observes that “wasteful and fruitless litigation” over partisan gerrymandering has continued over the past 13 years, and it maintains that because this “additional experience has failed to yield a ‘limited and precise’ standard” for evaluating partisan-gerrymandering claims, the Supreme Court should rule that such claims “are nonjusticiable.”

Wisconsin filed its request for review in March, but in May it also asked the justices to put the lower court’s order requiring new maps on hold until they can resolve the state’s appeal. In an order issued shortly after the justices left the bench this morning, the Supreme Court agreed to do so. Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan indicated that they would have denied the state’s request. But the fact that the state could muster the five votes needed for the stay bodes poorly for the challengers, because one factor that the justices had to consider in making their decision was whether the state is likely to succeed on the merits of its claim.

No matter how the Supreme Court ultimately rules, its decision will be significant. If the justices were to hold that courts cannot review partisan-gerrymandering claims, their ruling could insulate redistricting maps from challenges, allowing the political party in power to extend its control for decades: The dominant party will be able to draw districts to maximize its chances of maintaining control of the state legislature, which will in turn allow it to draw the new map after the next census. On the other hand, a ruling that courts can evaluate partisan-gerrymandering claims could open the door to a flood of litigation challenging existing and future maps. Of course, this assumes that the Supreme Court rules on the merits of the case at all: Today’s announcement also indicated that the justices would put off a decision on whether the court has jurisdiction to review the case until they hear the merits of the case. Postponing the determination of whether the court has jurisdiction could prove to be just a formality, or it could provide a way for the justices to sidestep a ruling on the merits if the case proves too hard – only time will tell.

The case will likely be argued in November or December, with a decision to follow next year – perhaps only a few months before the 2018 elections, and less than two years before the 2020 census.

Progress on Education Funding, but Transportation Still an Issue in Wisconsin Budget Negotiations

An agreement on education funding may be in sight, but Wisconsin lawmakers still have a long road ahead before they reach a deal on the state’s transportation budget.

The Legislature’s Joint Finance Committee resumed work on Gov. Scott Walker’s two-year budget proposal on Thursday after a two-week hiatus prompted by stalled negotiations over those two areas.

As negotiations began to deteriorate early this month, Senate leaders raised the possibility of splitting the budget into separate proposals between the two houses, and Assembly Republicans proposed their own education plan designed to bring relief to school districts that spend less than most others.

Assembly members including Joint Finance co-chair Rep. John Nygren, R-Marinette, and committee member Rep. Mary Felzkowski, R-Irma, toured the state promoting their plan, which would direct an additional $92 million in revenue limit authority for school districts that spend less than most others and an additional $30 million for the state’s general schools funding mechanism than what the governor proposed in his own spending plan. At the same time, the proposal would offer about $70 million less than Walker’s proposed $649 million increase in per-pupil aid.

Senate Majority Leader Scott Fitzgerald, R-Juneau, dubbed the plan a nonstarter before it was even released, arguing it “raises property taxes and picks winners and losers within our school districts.”

But Senate Republicans have since shown a willingness to address low-spending districts, if not in the exact way proposed by their Assembly counterparts.

“I’m not thinking education will be that large of a stumbling block,” Nygren told reporters on Thursday. “I do think transportation, their position with GPR borrowing, is going to be a stumbling block.”

Fitzgerald said last month Senate Republicans would likely pursue financing some roads borrowing with general purpose revenue. Walker’s proposal includes $500 million in borrowing, the lowest level since the 2001-03 state budget, but Assembly Republicans say that’s still too much.

Earlier this month, Fitzgerald said he doesn’t think Senate Republicans’ support has moved far from what Walker initially proposed in his transportation budget.

“The Senate wants more. The Assembly wants less. Goldilocks would say, that makes our budget just right,” Walker said last month.

Legislators are aiming to complete work on the budget before the start of the new fiscal year on July 1, but Assembly Speaker Robin Vos, R-Rochester, called that an “artificial deadline” on Wednesday. If a new budget doesn’t pass by the start of the new fiscal year, state programs will continue to operate under the previous budget.

Lawmakers Reject Governor’s Proposed Move to Self-Insurance

The state budget committee voted unanimously Thursday to reject Gov. Scott Walker’s proposal to move about 250,000 state workers to a self-insurance system.

Under the proposed change, the state would pay employee medical bills directly through a third-party administrator instead of paying premiums to an insurance provider.

Lawmakers had previously signaled they planned to reject the move, arguing it’s too risky. Leaders of the finance committee reiterated that point Thursday.

“Our competitive marketplace is really a model for the nation, and we think with what’s happening nationally this is the wrong time for us to make major shifts in the marketplace,” said Sen. Alberta Darling, R-River Hills, co-chair of the budget committee.

The governor had linked $60 million in estimated savings to the proposed move to self-insurance. The budget committee identified $63.9 million in other savings.

Those changes include $22.7 million in negotiation savings, $25.8 million from the state insurance board’s reserve fund, and $15.4 million from increased usage of health plan tiers and plan design changes. They say they’ll achieve those by making changes to employee benefit plans and using money from the state insurance board’s reserve fund.

Committee co-chair Rep. John Nygren, R-Marinette, said those plan design changes will not result in state employees seeing premiums, co-pays or other expenses rise more than 10 percent in each of the 2018 and 2019 calendar years.

REINS Act on the Verge of Becoming Law

Wisconsin this week could become the first state in the nation to pass a REINS Act, legislation demanding greater oversight of state bureaucratic rule-makers. The Regulations from the Executive in Need of Scrutinycommonly known as the REINS Act, is slated for floor debate Wednesday in the Assembly, where the bill enjoys wide support from majority Republicans.

Early last month the Senate passed the bill – co-authored by Sen. Devin LeMahieu (R-Oostburg) and Rep. Adam Neylon (R-Pewaukee). Last session the Assembly passed a similar REINS Act bill on a party-line vote, but it died in the Senate as time wound down on the session.

Neylon says the GOP majority in the Assembly hasn’t changed its stance. “I think we are in a very good position. There is no wavering support. I believe it will (pass) on a party-line vote,” he said.

Gov. Scott Walker included the reform measure in his biennial budget plan, but REINS was one of 83 “non-fiscal” policy items stripped from the Joint Finance Committee’s starting budget document.

“State agencies currently have the power to pass harmful regulations with little oversight from the legislature that can cost Wisconsin businesses and citizens tens of millions of dollars in compliance and lost revenue,” LeMahieu said in a statement following passage. “The REINS Act improves transparency in the rule making process and gives the legislature more power to hold unelected bureaucrats accountable.”

The REINS bill is similar to legislation moving through Congress, but with lower thresholds. It provides greater legislative oversight of the regulations adopted by state agencies. Any rule or regulation with an economic impact of more than $10 million would require legislative approval.

And it gives the Legislature’s Joint Committee for Review of Administrative Rules more muscle. The committee would be empowered to request a public hearing earlier in the rule-making process and call for an independent review of the proposed regulation’s economic impact.

The REINS Act, proponents say, is ultimately about transparency and preventing “rogue” government agencies from implementing onerous and costly “rules in the dark of night without public scrutiny.””This bill will limit the power of these rogue agencies” and limit the power of governors who want to circumvent the legislative process with executive orders, Neylon said.

“It goes to the heart of checks and balances within our system. We elect people to set policies. If we as taxpayers and voters don’t like these policies, we have the ability to fire those lawmakers,” the Republican said. “When you have rogue bureaucrats who have been there for decades, they have the ability to basically make laws.”

Wisconsin’s REINS Act has earned the praise of fiscal hawks and limited-government advocates such as Grover Norquist and his Americans for Tax Reform. Norquist said Wisconsin over the past six years has been a national leader in enacting “transformative, pro-taxpayer policy reforms.”