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.

Tax Deadline Two Weeks Away

The tax filing deadline is two weeks away and the Wisconsin Department of Revenue is reminding taxpayers to file their income tax returns by the deadline. Returns must be received or postmarked by midnight on Tuesday, April 18. The deadline is extended this year because April 15 is a Saturday and Monday, April 17 is a holiday in Washington, D.C. The Department of Revenue is sharing the following tips to make the filing process easier:
  • Use our self-service options. Use links to income tax forms and instructions or find answers to common questions about preparing your tax return, tax credits and much more.
  • Pay your taxes online. The department offers easy of your taxes on its website.
  • File an extension request with the IRS if you won’t make the April 18 deadline. You must request an extension from the Internal Revenue Service (IRS) by April 18 to avoid late filing penalties. Go to the IRS website and search “extension” for more information. Taxpayers who file an extension request with the IRS automatically receive an extension from the state. Keep a copy of the IRS federal extension application (Form 4868) for your records.
  • Call customer service during off-peak hours at 608.266.2772. Our customer service hours are 7:45 a.m. to 4:30 p.m. Monday through Friday. The best time to call is Tuesday through Friday, especially in the afternoon. Our call center is busiest on Mondays and during the lunch hour.
  • Remember DOR will not contact you by telephone or email regarding your income tax return. If the Department needs more information to verify items on your return, it will contact you by letter.

EPA Strikes Guidance to States on Clean Power Plan

The EPA launched its first strike on the Obama administration’s carbon dioxide standards for power plants by quashing proposals that would have aided states in implementing the rule and rewarded early compliance.

Following President Donald Trump’s March 28 executive order directing the Environmental Protection Agency to review its various climate change regulations, the agency canceled proposed guidance to states and model emissions trading rules for implementing the Clean Power Plan and an accompanying proposal that would reward states for taking early steps to curb carbon dioxide emissions before the rule was to take effect, according to a notice to be published in the Federal Register April 3.

“The EPA believes it should use this time to re-evaluate these [Clean Power Plan]-related proposals and, if appropriate, put out re-proposals or new proposals to ensure that the public is commenting on EPA’s most up-to-date thinking on these issues,” the agency said.

The U.S. Supreme Court has halted implementation of the Clean Power Plan,which set carbon dioxide emissions limits on the power sector in each state, while the legality over the rule is under review. The U.S. Court of Appeals for the District of Columbia Circuit heard a full day of arguments on the rule in 2016 but has not yet issued its opinion.

The EPA has asked that the lawsuits be halted while it reviews the Clean Power Plan. Likewise, the D.C. Circuit has canceled argument over comparable emissions limits for new and modified power plants while it evaluates an agency request to halt that litigation as well.

EPA Administrator Scott Pruitt was one of the leading challengers to the rules when he served as Oklahoma attorney general. In a March 30 letter, Pruitt told states they have “no obligation to spend resources” to comply with the rule because it has been stayed by the Supreme Court.

The ObamaCare Exchanges are Racing Toward a Crisis

Anthem’s reported plan to withdraw from many of the ObamaCare markets where it does business is the clearest sign that the exchanges face a near-term crisis. Yet even before Thursday’s news about the for-profit operator of Blue Cross and Blue Shield plans, there was plenty of reason to expect a white-knuckled, high-stakes showdown over ObamaCare’s future.

The official exchange sign-up data for the 2017 open enrollment period that ended Jan. 31 tell part of the story. The exchange population this year is smaller and tilts older than it did last year, both bad signs for the overall health of the risk pool and 2018 premiums. As the number of people signing up for exchange coverage unexpectedly fell by 463,000, or 4%, from 2016, the number of young adults (18 to 34) shrank by 230,000, while enrollees 55-and-up rose by about 19,000, an IBD analysis finds.

What happens in the ObamaCare-compliant off-exchange market is almost as important as what happens on the exchanges. The Congressional Budget Office says there are about 8 million individuals with unsubsidized off-exchange coverage, and most of those are lumped in the same risk pool as those why buy on the exchange. (Those who have grandfathered policies or buy from carriers that don’t offer exchange policies are in a separate pool.)

Besides pulling the plug on advertising to encourage people to enroll in late January and using his bully pulpit to criticize ObamaCare at every turn, Trump has taken one action that fundamentally undermines the operation of the exchanges. As reported by Reason’s Peter Suderman in February, the IRS acted on Trump’s executive order to ease compliance with ObamaCare regulations by undoing its rule to reject tax forms on which individuals fail to declare whether they had insurance coverage during the prior year.

Now that lax enforcement has been embraced by the Trump administration and publicized by the news media, the big risk for insurers is that ObamaCare will come to resemble the failed markets in states that passed rules requiring insurers to offer the same price to the sick and healthy but didn’t have a mandate to compel people to get coverage. Insurers likely already have felt some impact from lax enforcement of the mandate as customers who signed up for coverage opted not to pay their premiums.

There’s little question that the exchanges were in need of shoring up, regardless of who was elected, but now the situation has become more dire. The Kaiser Family Foundation’s Cynthia Cox noted that there are 200 counties — where Anthem is the only insurer — that could be left without an exchange option if it exits.


Time to REIN in the Bureaucracy

One of the most important priorities of state government is creating an environment that is conducive to job creation. To do this, there are many factors involved: a strong education system, an educated work force, quality infrastructure, and a competitive tax code.

However, another key factor is also creating a regulatory environment that doesn’t stifle business growth and prosperity. Wisconsin’s regulatory environment is heavily impacted by state agencies such as the Department of Natural Resources or the Department of Transportation. These agencies have the ability to create regulations that have the same impact and force as laws passed by the Legislature. However, even though these bureaucratic rules have the force of law, the bureaucrats making these rules were never elected by the public, and elected officials often never voted to approve these rules.

This is why we introduced the REINS – Regulations from the Executive in Need of Scrutiny – Act. This legislation makes several changes to improve the transparency of the administrative rule-making process in Wisconsin.

Rule-making is often a mundane affair. State agencies use rules to add additional clarity to state laws. Pending rules are referred to legislative committees, who can choose whether or not to act on them. Certainty is important to businesses, so some amount of bureaucratic red tape is inevitable.

However, the process for approving an expensive rule is no different than a rule that has little impact on taxpayers.

In 2010, the Department of Natural Resources (DNR) put forward a new rule – new requirements to limit phosphorus in surface waters in Wisconsin – to comply with a federal requirement. While a laudable goal, estimates varied substantially over how much the rule would cost. Worse still, the rule went above and beyond what was required by federal law. Unfortunately, without even a committee vote, the rule was allowed to move forward.

It was only when the DNR began to implement the rule that many local communities started to grasp the size of the problem this new rule had on them. Subsequent legislation required a detailed cost analysis. The result was alarming: The rule would cost $7 billion (including interest) to businesses and local governments (taxpayers).

Thankfully, the Legislature has taken steps in recent years to mitigate the impact of this rule on our economy. Still, more than six years later, we are still trying to undo the worst aspects of this rule. And the uncertainty continues to be a drag on Wisconsin’s economy.

The REINS Act would have prevented problems like this in the following ways:

  • Allow the Legislature to require an independent economic impact analysis.  This would permit an impartial third party to determine the cost of a rule instead of relying on bureaucrats.
  • Require very expensive rules – those that cost more than $10 million over two years – to get approval by the full Legislature before they are enacted.

At the very least, taxpayers have a right to know what these expensive bureaucratic mandates will cost them. The REINS Act improves rule-making transparency and empowers the public to hold legislators accountable.

Rep. Adam Neylon (R-Pewaukee) and Sen. Devin LeMahieu (R-Oostburg) are the lead authors of the REINS Act (Assembly Bill 42, Senate Bill 15).

Governor Makes Veto Threat as Republican Lawmakers Heighten Transportation Fight

Gov. Scott Walker used his Twitter account late Wednesday to threaten his Republican legislative colleagues as they were briefed on his plan for the state’s next transportation budget, vowing to veto a gas tax increase if lawmakers defy Walker’s no-new-tax plan.

Walker’s tweet upended Wednesday night’s budget hearing in which lawmakers, many of them Republicans, squared off with his Department of Transportation Secretary, Dave Ross. In the hearing, lawmakers on the budget-writing Joint Finance Committee roundly battered Walker’s proposed transportation budget for the two-year period starting in July.

The tense exchange deepened fissures among statehouse Republicans on how to square a growing imbalance in Wisconsin’s transportation-funding ledger.

Sen. Luther Olsen, R-Ripon, said the state can’t keep delaying highway projects or borrowing to fund them. Olson said lawmakers “are prepared to bite the bullet and raise some revenue” for transportation, but leadership from the DOT is needed. “We’re going to be spiraling down into a hole where it will cost us so much to get our roads into shape, that we’ll never get it done,” Olsen said.

Rep. Mary Felzkowski, R-Irma, said townships in her rural district are hurting for road and bridge funds.

“If you can find savings, we’re going to be there with you,” the committee’s co-chairman, Rep. John Nygren, told Ross. “But simply reforms are not going to fix the problem.”

Walker’s tweet appears to ratchet up his showdown with some of his GOP legislative colleagues who have remained open to increasing gas taxes or vehicle fees — the two main sources of revenue for the state’s transportation fund. Previously, Walker only said he would veto any increase to gas or other taxes not offset by cuts to other taxes in the budget.

“Let’s be clear. I don’t support spending less on K-12 education than what’s in my budget and I will veto a gas tax increase,” Walker’s tweet read.


Constitutional Convention Proposals Draw Strong Reactions

A Republican lawmaker who wants Wisconsin to join other states in pushing for a constitutional convention acknowledged altering the constitution is “a big deal” as Democrats prodded him for details of his plan.

Sen. Chris Kapenga has proposed a resolution calling for a convention of states to add an amendment to the U.S. Constitution require a balanced federal budget. At a joint Assembly and Senate committee hearing Tuesday, opponents nervous about the dangers of opening up the Constitution for editing warned of a runaway convention while supporters reiterated the importance of sending a message to Congress about addressing national debt that nears $20 trillion.

Wisconsin would be the 30th of 34 states required for a constitutional convention, making it increasingly likely the procedure could be used for the first time since the Constitution was completed.

“Unmistakable warning signs of the consequences of our debt are evident, yet Washington takes no action,” Kapenga said. “We will move one step closer to putting our nation's fiscal house in order.”

Democratic Rep. Chris Taylor said in a statement that amending the Constitution to require a balanced budget might sound harmless but debt can be a necessary tool for the federal government to respond to emergencies, support social security and boost the economy during recessions.

Kapenga said it is unlikely an amendment could pass without bipartisan support because the Constitution requires at least 38 states to ratify an amendment before it can take effect. “There's a lot of misinformation going around,” he said. “We're getting calls from people who are afraid we're going to take away guns.”

A constitutional convention called by 34 states has never been held, but both conservatives and liberals have floated the idea over the years. Article V details two ways to amend the Constitution. Two-thirds, or 34, of the states can require Congress to call a convention of the states or two-thirds vote of the U.S. Senate and House can refer an amendment to the states. Both methods require at least 38 states to ratify an amendment. The GOP controls 33 state legislatures.

President Trump to Order Review of Clean Power Plan

President Trump is set to make a trip to the Environmental Protection Agency Tuesday to sign an executive order that will “initiate a review” of the Obama administration's Clean Power Plan and unravel a handful of other energy orders and memorandums instituted by his predecessor.

The Clean Power Plan caps the amount of greenhouse gases that can be emitted from power plants. The White House argues that the regulation, and others sanctioned by former President Barack Obama, are burdensome to the American economy.

“The president’s been very clear, he’s not going to pursue climate or environmental policies that put the American economy at risk,” said a senior Trump administration official Monday evening.  “[The president] believes that we can serve the twin goals of protecting the environment — providing clean air, clean water, getting EPA back to its core mission, while at the same time… [protecting] energy production in the U.S.,” the official said.

Upon the Clean Power Plan's signing in 2015, President Obama called it “the biggest, most important step we have ever taken to combat climate change,” but the law isn't currently being enforced. In February 2016, the Supreme Court stayed implementation of the law pending judicial review.

Attorneys general from 28 states — led by EPA Administrator Scott Pruitt, then Oklahoma's attorney general — joined together to claim that the plan presents too broad an interpretation of the 1963 Clean Air Act, originally designed to restrain air pollution across the country.

Tuesday's executive order will not address the Paris Agreement, a 2015 United Nations plan to reduce greenhouse gas emissions set to go into effect in 2020, of which the U.S. is a signatory. The official who commented upon the order said the administration's stance on the Paris Agreement is still under discussion.

Wisconsin Voters to Field 65 School District Requests

The push by Wisconsin public schools to ask for more money from local property taxpayers isn’t stopping, with 65 referendums going before voters in the spring election.

About half of the districts will ask voters on April 4 to sign off on new debt while the other half want permission to exceed revenue caps, which prevent districts from spending more than they get from property taxes and state aid. Because enrollment numbers factor into state aid calculations, school districts with declining numbers of students tend to hold referendums to exceed revenue limits. Those asking to borrow are more often located in growing areas and want the money to build more space.

“In 2016 and early 2017, we will have had $2 billion or more of debt questions, which is an incredible spike,” said Todd Berry, president of the Wisconsin Taxpayers Alliance. He attributes it to voters’ increased appetite for referendums and the fact that many districts are retiring debt they used in the late 1990s on buildings now overdue for updates.

The biggest ask next month will come from the school district of Verona, a Madison suburb. The district wants to borrow $162.5 million to fund projects including a new swimming pool, more athletic fields and a new high school. The population in Verona has been booming thanks to Epic Systems, the ever-growing health care software company that employs close to 10,000 people.

Burlington, a city west of Racine, wants to borrow $94.4 million to build a new middle school and a performing arts center and expand the high school’s athletic facilities.

Unlike debt referendums, revenue limit referendums come with a property tax increase unless the school is eliminating spending elsewhere.

West Allis Superintendent Marty Lexmond said his district hopes that by raising the revenue cap it can avoid eliminating music lessons, downsizing its athletic program and increasing class sizes, among other changes. The district has spent down its reserve and is projected to lose 200 students next year. It estimates an extra $12.5 million in funding over the next five years will increase residents’ annual property taxes by $58 for every $100,000.

Green Bay Area Public School District will hold its first revenue limit referendum to deal with a projected $18 million funding deficit that could cost the district 150 jobs, spokeswoman Lori Blakely said. But Blakely notes it would not raise residents’ property taxes because it coincides with decreased debt payments.

“We’re in kind of new territory,” Blakely said. She said she’s not sure what to expect from voters but hopes they’ll recognize a need.

Green Bay will also ask voters to sign off on new debt of $68.5 million to rebuild an elementary school the district has outgrown and fund upgrades including more secure entrances.