Budget

WIB State Budget Agenda: 2015 – 2017 State Budget

WIB Priorities

We have completed our preliminary analysis of Governor Walker’s 2015-2017 state budget recommendations. This review was based upon publicly available information from the Department of Administration (DOA), the Legislative Fiscal Bureau as well as testimony by Cabinet Secretaries during the state agency briefings before the Joint Finance Committee.

Governor Walker’s budget plan addresses several priority issues of interest to WIB and its members. Outlined below is a brief summary of these initiatives.

Fiscal Policy Priorities

1. Property Tax Relief – School Levy Tax Credit Increase

The school levy credit is one of the three tax credit programs where credits are paid to municipalities and shown on property tax bills. School levy tax credits are distributed based on each municipality’s share of statewide levies for school purposes.

The Governor’s 2015-2017 state budget plan recommends increasing the distribution amount for the school levy tax credit by $105,600,000 beginning with property taxes levied in December, 2015. WIB supports the Governor’s recommendation. Property taxes in Wisconsin are among the highest in the country and nearly 24% above the national average according to the most recent data from the United States Census Bureau. Although the amount of property tax relief is modest, it is relief nonetheless.

WIB favors broad-based tax relief by that we mean tax relief that is provided to the most taxpayers. The School Levy Tax Credit is a broad-based tax relief mechanism whereby all Wisconsin property owners benefit.

2. An Adequate, Equitable and Sustainable Transportation Funding Plan

Wisconsin’s transportation network includes roads (114,800 miles), bridges (13,700), rail lines (3,600 miles), airports (131) and commercial ports (29). The cost of building and maintaining this integrated network exceeds $2.5 billion annually. Ongoing construction, repair and maintenance costs continue to rise but the revenues necessary to fund needed transportation projects have not.

Going into the next two-year budget cycle, the Wisconsin Department of Transportation faces a $974 million deficit. The perfect storm is now at our doorstep. The State of Wisconsin cannot borrow its way out of the problem, more aid for Washington is unrealistic and the primary revenue source to pay for transportation infrastructure improvements is not generating the necessary funds.

The Governor’s 2015-2017 state budget plan recommends $1.3 billion in bonding for state highway construction projects. State aid for state highway maintenance and local transportation projects and services is held at current levels. WIB has concerns with the Governor’s transportation funding recommendations. In particular, we are concerned with the proposed borrowing. It is the highest in 20 years. Transportation-related debt service is projected to reach 25% of state transportation revenues if the Governor’s plan is approved. That’s an unsustainable level of borrowing.

WIB is a member of the Transportation Investment Coalition (TIC) –  a coalition that includes private sector employers, local units of government, chambers of commerce and economic development organizations. Along with our TIC partners, we are asking lawmakers to come up with a more adequate, equitable and sustainable transportation funding plan.

3. Increased Funding for Broadband Expansion Grants

Two years ago, lawmakers created the Broadband Expansion Grant Program administered by the Public Service Commission (PSC). This program provides reimbursement for equipment and construction expenses incurred to extend or improve broadband telecommunications service in underserved areas of the state.

The Governor’s plan provides $6.0 million in new funding for Broadband Expansion Grants and creates an ongoing funding source for these grants. WIB supports the Governor’s recommendation. Access to high-speed Internet service is a “must have” tool of commerce.

Unfortunately, for many small, independent businesses in northern Wisconsin (north of Highway 64) and western Wisconsin (Platteville northeast to Eau Claire), there are very few broadband service providers. Furthermore, we view investments in infrastructure as a wise use of taxpayer dollars.

Non-Fiscal Policy Priorities

1. Increased Penalties for Unemployment Insurance (UI) Fraud

State law imposes a civil penalty against UI claimants who commit fraud in connection with state or federal UI programs. The penalty is 15% of the amount of UI benefits obtained by fraud. State law also dictates that any person who knowingly makes a false statement or representation to obtain UI benefit payments may be fined not less than $100 and not more than $500 or imprisoned for not more than 90 days, or both. Each such false statement or representation constitutes a separate offense.

The Governor’s 2015-2017 state budget plan recommends increasing the monetary penalty from 15% to 40% of UI benefits erroneously paid to a UI claimant as a result of one or more acts of concealment. Furthermore, his plan recommends increasing the criminal penalties for a person who knowingly makes a false statement or representation to obtain any UI benefit payment. The graduated fines and criminal penalties are based on the value of fraudulently UI benefits obtained.

WIB supports the Governor’s recommendations. UI benefits are provided to workers who have lost their job through no fault of their own. To preserve and protect UI benefits for honest, law-abiding workers, stiffer penalties should be imposed on those individuals who seek to defraud the program. A 2013 study by the St. Louis Federal Reserve found that in 2011 $108 billion in UI benefits were paid nationally, of which $3.3 billion was obtained fraudulently. The largest share of fraudulently obtained benefits was attributed to individuals who continued to claim UI benefits after returning to work.

2. Suitable Work Definition for UI Claimants

Under current state law, a UI claimant may refuse work for good cause and maintain eligibility for UI benefits if the new work involved wages, hours, or other conditions that were significantly lower or less favorable than similar work in the locality, and the UI claimant had not had reasonable opportunity (up to six weeks) to find a new job substantially in line with the individual’s prior job.

The Governor’s 2015-2017 state budget plan recommends that the Wisconsin Department of Workforce Development (DWD) define, by administrative rule, what constitutes suitable work for UI claimants, including to specify different levels of suitable work based upon the number of weeks that a UI claimant has received benefits in a given benefit year.

WIB supports the Governor’s budget recommendation. Over the past few years, state lawmakers have taken steps to provide greater clarity to the enforcement of existing UI laws and regulations. This is another step in the right direction.

3. Drug Testing for UI Benefits

States may test UI claimants who were terminated from employment because of the use of controlled substances. Under Wisconsin law, a UI claimant who is terminated for the use of controlled substances may be disqualified for UI benefits if the use of controlled substances is found to be misconduct. States may test a UI claimant for whom suitable work is only available in an occupation that regularly conducts drug testing. The United States Department of Labor will determine, by regulations that are not yet final, which occupations regularly conduct drug testing.

The Governor’s 2015-2017 state budget plan recommends that DWD establish a program to require certain UI claimants to submit to tests for the unlawful use of controlled substances. Furthermore, the Governor’s budget plan allows employers to voluntarily submit to the DWD the results of a test for controlled substances that was conducted as a pre-employment screening. If the prospective employee fails the drug test or refuses to take the drug test, the prospective employee may be ineligible for UI benefits.

WIB supports the Governor’s budget recommendations. In order to receive UI benefits, a claimant must be ready and able to work. That’s not possible when they are abusing drugs. Drug use in the workplace is inherently dangerous. An employee who is under the influence of a controlled substance can harm themselves, other employees as well as customers and clients. Responsible employers who want to minimize or mitigate this risk can take advantage of these programs to create and promote a safer workplace.

Programmatic Priorities

1. Office of Lean Government

In the private sector, companies use lean manufacturing to reduce costs by streamlining and\or eliminating those activities and processes that do not add to the value of the products and services sold. Executive Order 66, signed by Governor Scott Walker in July 2012, requires each of Wisconsin’s cabinet agencies to participate in a Lean Government Initiative to improve customer satisfaction, reduce the cost of government, improve the working environments for our state employees and change government culture.

The Governor’s 2015-2017 state budget plan recommends the creation of an Office of Lean Government to establish and administer programs for state agencies “to increase the value of goods and services that state agencies provide with the fewest possible resources.” The Office would also conduct research and analysis and develop policy and program proposals related to efficiency and continuous improvement practices in state government.

WIB supports the Governor’s budget recommendations to create an Office of Lean Government. In January 2012, the Governor’s Commission on Waste Fraud and Abuse recommended the creation of a Lean Enterprise Solutions Unit called the Center for Excellence within the Department of Administration staffed by trained Lean consultant(s). The Governor’s proposal is wholly consistent with the recommendation of the Governor’s Commission on Waste Fraud and Abuse. In fiscal year 2013, the Wisconsin Department of Transportation (DOT) saved more than $800,000 pursuant to the directives set forth in Executive Order 66. The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) utilized Lean Government principles to improve the processing of food safety lab samples which has resulted in better customer service and additional savings.

Proposed Federal Budget Would Hike Defense Spending, Cut EPA

President Donald Trump is proposing major defense spending increases and big cuts to the Environmental Protection Agency, State Department and other federal agencies in a proposed budget to be presented soon to Congress, said a person familiar with the plan.

The outline of the budget will be made public as early as Monday, according to two White House officials. They declined to comment further on what the budget may entail. Trump is scheduled to make an address to Congress on Tuesday night.

Congress ultimately determines how the federal government’s money is spent, and the White House budget is mostly an opening bid in what could be a protracted process to set a federal spending plan for the upcoming fiscal year.

Treasury Secretary Steven Mnuchin said Trump’s first budget won’t touch entitlement programs such as Social Security or Medicare. It will instead focus on ways to produce long-term economic growth by slashing taxes, he said in an interview taped Friday and broadcast Sunday on Fox News Channel.

The New York Times reported Sunday evening that the budget will assume economic growth of 2.4 percent, below the 3 percent growth Trump has pledged. Mnuchin said that the administration thinks a combination of tax cuts and regulatory relief will lead to economic growth of 3 percent or higher. “We’re going to make sure this works,” he said in the Fox interview. “This is all about creating growth.”

Defense Budget

A spokesman for the Office of Management and Budget, which compiles the document, declined to comment on its details. He said the outline wouldn’t address entitlements or tax changes, which would be included in a fuller budget proposal later in the year.

“The president and his Cabinet are working collaboratively to create a budget that keeps the president’s promises to secure the country and restore fiscal sanity to how we spend American taxpayers’ money,” the spokesman, John Czwartacki, said in an e-mail.

One top national security official said the budget’s main thrust is to boost defense spending, as Trump has repeatedly promised. The president has called the U.S. military, the world’s largest, “badly depleted.”

“We’re also putting in a massive budget request for our beloved military,” Trump said in a speech Feb. 24 at the Conservative Political Action Conference. “We will be substantially upgrading all of our military, all of our military, offensive, defensive, everything, bigger and better and stronger than ever before. And hopefully, we’ll never have to use it, but nobody’s gonna mess with us, folks, nobody.”

Restructuring, Cuts

Trump’s budget outline will show the president’s “commitment to fixing VA,” Veterans Affairs Secretary David Shulkin said in an interview that aired on Fox News on Monday. Shulkin said it’s not about increased funding, but a matter of restructuring the system.

The State Department will not share in the largesse. One of the agency’s deputy secretary positions, in charge of management and resources, is expected to be eliminated and its staff reassigned, people familiar with the plan said. Trump and his aides also are reviewing whether to eliminate many special envoy positions, the people said — diplomatic staff assigned to key regions and issues, including climate change, anti-Semitism and Muslim communities.

The EPA, meanwhile, has been a consistent target for Trump. He’s said the agency has too many regulations that burden companies and cause long delays for businesses trying to get approvals for new factories.

Trump’s pick for EPA administrator, Scott Pruitt, was a long-time foe of the agency as Oklahoma’s attorney general. Trump is slated to sign documents as soon as Monday compelling the EPA to begin undoing recent regulations, including the Clean Power Plan that slashes greenhouse gas emissions from electricity generation and the Waters of the U.S. rule that defined which waterways are subject to pollution regulation.

“Its clogged the bloodstream of our country,” Trump said of the agency earlier this month. “People can’t do anything, people are looking to get approvals for factories for 15 years.”

Two-Thirds Cut

The EPA is a perennial target for budget cuts for some conservatives in Congress, and advisers on Trump’s transition team said its funding and staff could be slashed below its $8.3 billion budget this fiscal year. Myron Ebell, who led the Trump transition team focused on the EPA, said the agency’s workforce could be cut to a third of its current size — about 15,000 employees nationwide.

The White House’s budget outline, a so-called “skinny budget,” is essentially a summary document often used by new presidents to provide advance looks at an administration’s policy and funding priorities. Typically, more details come from the White House in a fuller budget document later.

House and Senate committees don’t have to embrace the president’s proposals, as presented. They will hold hearings to establish a congressional budget resolution laying out a framework for anticipated revenues and discretionary spending allocations for the 12 annual appropriations bills for the next fiscal year, which begins Oct. 1. That budget resolution is adopted by Congress, but is not signed by the president.

Governor Walker’s Budget Extends Funding for Extra Tax Auditors

Gov. Scott Walker is proposing to increase funding for an enhanced tax auditing program that generated nearly $27 million in additional revenue last year — more than enough to cover the cost, but about $4.6 million short of its goal.

Business groups are closely monitoring the Audit 2020 initiative, which the Walker administration promoted two years ago as focusing on out-of-state companies. The auditors are keying on corporate and sales tax collections, and not individual income taxes.

The latest budget adds 46 four-year project positions with the expectation they will generate $64 million in revenue over the next two years. The goal of 102 permanent positions in the last budget was to collect $113.5 million more over two years.

The Department of Revenue reported to the Legislature last month that in the first year of the biennium the new positions and related expenses — such as expanding offices in Minnesota, Illinois, Madison and Appleton — cost $9.2 million out of a budgeted $11.8 million. The rest of the money paid for additional audit bureau staff and a bureau reorganization.

The positions generated $26.9 million in new revenue, though the goal was $31.5 million. The report noted the agency’s compliance bureau, which collects delinquent taxes, exceeded its agency goal by $22 million, more than making up for the shortfall in the auditing program. Some of those extra delinquencies were generated by the additional audits.

The program’s corporate auditors also billed companies $15 million that weren’t collected last year, but are due in the current year.

Wisconsin Manufacturers & Commerce, the state’s largest business lobby, opposes the new program. Scott Manley, WMC’s vice president of government relations, said members have reported the audit process is “very long, cumbersome and expensive in terms of investment of time and employee resources to comply.”

DOR was unable to provide historic data on the number of audits it conducts each year, but the number of higher corporate tax assessments increased from 429 in 2014 to 670 in 2015 to 981 last year, according to DOR spokesman Casey Langan. The number of higher sales and use tax assessments increased from 1,195 in 2014 to 1,201 in 2015 to 1,256 last year.

Steve Baas, vice president of government relations for the Metropolitan Milwaukee Association of Commerce, lauded Walker’s goal of recovering more money from tax cheats to help reduce taxes elsewhere.

“The implementation of strategies to meet that goal, however, need to be carefully monitored to see when/if the DOR reaches a point of diminishing return where the marginal increase in collections will be outweighed by the cost of funding the additional auditors,” Baas said in an email.

State Senator wants Audit of Federal Funding, Obligations in State Programs

A conservative lawmaker wants an audit conducted of all state programs that use federal funds — and the ultimate costs federal obligations place on state and local freedom.

State Sen. David Craig sent a letter Tuesday to the Joint Legislative Audit Committee requesting it direct the Legislative Audit Bureau to conduct a “comprehensive audit of all state programs which receive or utilize federal funds.”

The Town of Vernon Republican wants a review of the “federal requirements, regulations, and restrictions which bind the usage of those (federal) funds and tie the hands of our state government officials, local officials, and limits the freedom of our constituents.”

Craig asks the audit bureau to consider:

  • The cost of compliance and freedom lost by the state agency and local officials due to regulation.
  • The estimated savings that could be realized should a regulation be lifted or lessened.
  • The cost of compliance and loss of freedom born by the citizens of the state as a result of the regulation.

A Tax Foundation review found that in fiscal year 2013 a combined 30 percent of state revenues nationally were derived from federal grants-in-aid. That included everything from federal Medicaid payments and education funding assistance to cash for infrastructure projects and housing grants.

Mississippi topped the dependency list in fiscal year 2013, deriving nearly 43 percent of its revenue from federal assistance. Louisiana was next at 41.9 percent, followed by Tennessee (39.5 percent).

Wisconsin ranked 36th in the nation, with 27.7 percent of revenue coming from federal sources, according to the Tax Foundation.

North Dakota was least dependent, at 19 percent, followed by Hawaii (21.5 percent), and Alaska (22.4 percent).

Such dependency creates obligations that can be costly for state and local governments, particularly in funding areas such as transportation and health care. In essence, the federal government demands that state and local governments follow costly rules and procedures or risk losing a portion or all of the federal dollars.

“As part of the on-going efforts to return powers and flexibilities back to the states though our (legislative) Federalism Committee, I am seeking additional information to identify the areas which would lift the burden of federal government regulations and mandates so the committee can craft reforms which will bring efficiency to our state government and liberty our citizens,” Craig wrote in the letter to state Sen. Robert Cowles, R-Green Bay, and Rep. Samantha Kerkman, R-Salem, co-chairs of the Joint Audit Committee.

Senator Marklein Introduces Rural Broadband Bill to Increase Funding and Expand Access

State Senator Howard Marklein (R-Spring Green) introduced LRB -2042/1, a collaborative rural broadband expansion bill today that is a combination of the proposal that was promoted by Governor Scott Walker on December 1, 2016 and recommendations made by the 2016 Study Committee on Rural Broadband, which he chaired in 2016.

“This bill is the product of hundreds of hours of hard work and study by many dedicated people in Wisconsin,” Marklein said. “We took the funding ideas from the Governor and combined them with the Rural Broadband Study Committee’s recommendations to produce legislation that will make an immediate, significant impact on rural broadband in Wisconsin.”

LRB -2042/1 is co-authored by Rep. Romaine Quinn (R-Rice Lake) and is part of the Assembly’s Rural Wisconsin Initiative for the 2017-2018 session. The bill is currently in circulation for co-sponsorship through Friday, February 17, 2017.

“The Study Committee on Rural Broadband developed several recommendations for improving the Rural Broadband Expansion Grant program that is administered by the Public Service Commission,” Marklein said. “This bill insures that these ideas are applied to any new grants from the program.”

“In December, the Governor announced the availability of surpluses in other programs that could be used for broadband,” Marklein said. “Combining these funds with the study committee’s recommendations is good policy and I look forward to moving this bill through the legislative process quickly.”

The bill accomplishes the following:

1. Allocates an additional $15.5 million to the Rural Broadband Expansion Grant Program for additional 2017 grant awards from surplus funds in E-Rate ($5 million) the Universal Service Fund (USF) ($6 million) and the unencumbered balances from other USF-funded appropriations (estimate $4.5 million).

2. Provides the PSC with a requirement that the grants go to the areas of the state with the greatest need. We want to use scarce resources to “fill from the bottom up”.

3. Includes a policy that prevents broadband service providers from “cherry picking” high value customers, while ignoring the needs of residential customers.

4. Directs the PSC, in evaluating grant proposals, to consider the impact of improved broadband on our students at home, and patients at home.

5. Discourages the duplication of existing service. Seeks to supplement the federal CAFII funding in areas not benefiting from the federal money.

6. Adds funding to the Technology for Educational Achievement (TEACH) program and expands the number of rural school districts who are eligible for the program.

Numerous Ways Governor Walker’s Budget Would Impact Businesses

Gov. Scott Walker’s proposed budget made news on plenty of fronts – including K-12 education, the UW System and transportation — when it was released, but look a little deeper into the executive budget and the budget bill itself and there are some other provisions businesses could be interested in.

Changes in how employment disputes are handled

The governor’s budget would make several changes to the handling of employment disputes. The Wisconsin Employment Relations Commission would be changed from three part-time commissioners to a single chairperson. Walker’s office said the proposal is in recognition of the commission’s decreased workload. The commission conducts elections to determine collective bargaining units, mediates collective bargaining disputes and issues decisions on unfair labor practices.

Walker is also proposing the elimination of the Labor and Industry Review Commission, which reviews Department of Workforce Development decisions on unemployment insurance, employment discrimination and equal enjoyment of places of public accommodation and worker’s compensation decisions by the Division of Hearings and Appeals in the Department of Administration. Instead, those decisions would be reviewed by administrators in the department or division before being appealed to circuit court.

The governor says the change would streamline appellate functions and decrease the time to get a decision for unemployment insurance, equal rights and worker’s compensation cases.

Limiting historic rehab tax credits

The budget puts an annual $10 million limit on the historic rehabilitation tax credit. It also requires the Wisconsin Economic Development Corporation to award the credits competitively based on the potential for job creation, benefit to the state, projected impact on the local economy, likelihood the project would happen without the credits and number of credits given out in the area in prior years. Those receiving the credits could have to repay some of the money if they come up short on job projections.

Energy efficiency construction projects at schools

Walker’s budget would eliminate a loophole that allowed school district to exceed their revenue limits for energy efficiency building projects. Many districts had used the exemption to implement multi-million dollar capital improvement campaigns in recent years. Districts would still be able to use referendums for the projects.

The budget also directs the Public Service Commission to prioritize school energy efficiency projects in the Focus on Energy program. Walker proposes an additional $10 million in Focus on Energy funding annually prioritized to public elementary and secondary schools.

Sales tax holiday

The governor is proposing a two-day sales tax holiday in August of the next two years on items related to school supplies, including clothing, computers and certain other supplies. The holiday is expected to reduce tax revenue by $11 million each year.

Businesses get their own court

The state Supreme Court is directed to establish rules for a pilot program that would create a specialized business court program for commercial disputes. The court would have until Jan. 1, 2019 to establish the rules for the project.

Changes to manufacturing and ag tax credit

Walker is proposing a change that would eliminate an “unintended overlap” that allowed businesses to claim the manufacturing and agriculture tax credit and the taxes paid to other states credit on the same income. The change is expected to increase tax revenues by $9.7 million in fiscal 2018 and 2019.

Governor’s Budget Includes $600 Million in Tax and Fee Reductions

Gov. Scott Walker on Wednesday called for nearly $600 million in reduced taxes and fees along with significant new spending in areas where he made sizable cuts in the past as part of his $76.1 billion two-year budget proposal.

Walker is proposing to cut the state’s two lowest income tax rates by a tenth of a percentage point — to 3.9 percent and 5.74 percent — and increase the amount of income taxed at the second-lowest rate by about $30,000. A median income four-person family making about $86,000 a year would save $139 over two years, while state revenues would decline by $203 million under the proposal.

Walker is also seeking to make good on a promise to reduce property taxes below 2010 levels by eliminating a state forestry property tax that brings in about $90 million a year and paying for the programs it funds with other state tax revenue; boosting a property tax credit by $87 million; and increasing aid to school districts by $72 million, which, paired with a state-imposed lid on district revenues, will drive down property taxes.

Walker also plans to create a sales tax holiday in August on certain school supplies, clothing and computers, estimated to cost the state about $11 million in lost sales tax revenue.

His budget also increases a tax credit for low-income working families with one child and increases the Homestead Tax Credit for seniors and the disabled.

For the 2017-19 state budget, Walker and lawmakers are working with revenue estimates that are about $700 million better than expected in the fall when agencies prepared their budget requests. The better budgeting position comes from improved economic forecasts since the November presidential election, which translates to higher tax collection projections and lower-than-anticipated Medicaid costs.

Lifting the Veil on the State Budget Process

When Gov. Scott Walker (R) unveils his 2017-19 state budget next week, it will be the highlight of the two-year legislative session, dominating the attention of lawmakers, the public, and the press until summer or even beyond.

What makes the budget so important? And how do citizens understand how it’s developed and proceeds through the Capitol?

In a new report, “Raising the curtain on the state budget,” the nonpartisan Wisconsin Taxpayers Alliance (WISTAX) explains the critical importance of the budget bill to both state and local government and provides a guide to the state budget process. The report notes:

The budget is big: The 1,000-plus-page bill affects virtually every aspect of state and local government for the next two years. It is often controversial, with recent budgets proposing policy changes ranging from welfare reform to UW System restructuring. And it is costly, spending more than $70 billion on state and local government operations and programs, and regulating more than $20 billion in property taxes.

The budget is political: The state budget implements the tax and spending priorities of the governor and legislative majority. It delivers on campaign promises and lays the groundwork for the next election.

The budget is “the” bill: Because the budget is the only bill the legislature must pass, it has become the primary vehicle for passing a variety of laws. Increasingly, lawmakers have rolled controversial bills that might not otherwise survive as separate legislation into the biennial budget bill.

The budget takes time: The budget process, which lasts nearly a year from beginning to end, starts and finishes with the governor. The summer before the budget is introduced, the governor issues spending guidelines to state agencies. By fall, agency requests are totalled, preliminary revenue estimates are assembled, and the governor begins making spending and tax decisions.

The governor usually introduces the budget proposal in early February of odd-numbered years. The focus then moves to the Joint Committee on Finance (JCF), which is typically the only committee to review, amend, and approve the bill. JCF begins in late February or early March with agency briefings, followed by public hearings.

The real work on the budget lasts from April until late May, when the committee amends the bill, voting on individual proposals. When committee action concludes, the bill moves to each house of the legislature for approval, usually in June. If the two houses can’t agree to each other’s amendments, the bill goes to a conference committee where a compromise is worked out.

After lawmakers pass the budget bill, it returns to the governor. With some of the broadest veto powers in the nation, the governor can veto the whole bill, strike out individual line items or whole sections, or “write down” spending amounts. Lawmakers can always override the governor’s vetoes, but they have not done so in
more than three decades.

Ideally, a new budget takes effect on July 1, the start of the state’s fiscal year, but in recent years, lawmakers have occasionally taken until even October to pass a final bill. In the absence of a new budget, state spending and taxes continue at current levels.

After Critical Audit, Wisconsin Republicans Request Transportation Cost Updates Before Budget

Assembly Republicans have asked the Wisconsin Department of Transportation to update its cost estimates for ongoing, future and completed highway projects after the release this week of a critical audit.

The audit, conducted by the nonpartisan Legislative Audit Bureau, found that the DOT significantly underestimated the costs of ongoing and completed major highway projects.

Costs for 19 completed projects exceeded estimates by $772.5 million, or double what was projected, the audit found, and cost estimates for 16 ongoing major highway projects were underestimated by a total of about $3.1 billion. The discrepancies were attributed to a failure to account for the extent to which inflation and unexpected expenses could contribute to cost increases.

“Taxpayers deserve to know how much a road is going to cost before it’s built,” Assembly Speaker Robin Vos, R-Rochester, said in a statement. “Unfortunately, these miscalculations will probably confirm what many of us fear; our transportation fund is deeper in the red than we thought.”

Vos, Assembly Majority Leader Jim Steineke, R-Kaukauna, and Joint Finance Committee co-chair Rep. John Nygren, R-Marinette, sent a letter on Friday to newly-appointed DOT Secretary Dave Ross seeking updated estimates.

The lawmakers are seeking a “full review” of cost estimates for ongoing mega and major highway projects planned or budgeted for the 2017-19 and 2019-21 budget years, a review of all projects not yet enumerated and a “comprehensive report” on all projects since 2010 documenting estimated and actual costs.

“We would like to have in detail how and why these underestimates continued to occur in order to prevent issues like these from happening again,” they wrote.

They have requested a report from the department by March 15, before the Legislature’s budget committee starts its work this spring on the 2017-19 budget.

“Lawmakers need to account for these new estimates in the overall budget plan as the nearly $1 billion projected deficit in the transportation fund could potentially be far worse than initially reported,” they wrote.

The audit comes weeks before Gov. Scott Walker is set to release his budget proposal, and amid an ongoing debate over how to address a projected $1 billion shortfall in the state’s transportation fund.

“The bottom line is we shouldn’t even be thinking about raising the gas tax or fees until we find every last cost savings at the DOT, and the audit shows we can find more savings. We welcome the opportunity to deliver services taxpayers expect at a price they can afford,” Walker spokesman Tom Evenson said Thursday.

Assembly Republicans last week called for a $300 million increase in funding offset by corresponding cuts elsewhere. They have not said where they would like to raise that revenue, but Vos acknowledged last week a gas tax hike is unlikely.