Month: June 2021

Governor Evers Vetoes Bill That Would Have Ended Federal Unemployment Benefits Early

Gov. Tony Evers vetoed a bill on Tuesday that would have ended Wisconsin’s participation in federal pandemic relief programs that increase the amount of government assistance available for unemployed people. The supplemental assistance is set to expire on Sept. 6, but at least 25 states started phasing it out earlier this month.

The bill would have reduced the maximum weekly unemployment benefit in Wisconsin from $670 per week to $370 week. It also would have prevented the state Department of Workforce Development from waiving unemployment work search requirements for any reason related to COVID-19. It passed on party-line votes in both chambers of the Legislature.

“Eliminating this lifeline for many Wisconsinites will cause continued economic hardship for those impacted the most by the pandemic and create additional hurdles to return to family-sustaining jobs,” Evers wrote in his veto message. “As a result, the entire state economy likely would be negatively affected.”

“The Legislature needs to confront issues surrounding child care, wages, and workplace COVID-19 safety for those returning to the workforce,” Evers wrote. “Eliminating the supplemental federal benefits while simultaneously failing to address systemic problems faced by individuals remaining in and returning to the workforce is irresponsible.”

Sen. Howard Marklein, R-Spring Green, disputed Evers’ assertion that there is no link between the extra money and the state’s workforce shortage.

“Every single employer I have talked to is challenged to find workers. Hardworking employees, who have been stretched very thin, tell me that they are getting tired,” Marklein said. “From restaurants to manufacturers to city governments to state parks. Every single employer is competing with the government’s unnecessary enhanced unemployment checks.”

Unemployment insurance should be a “safety net,” not a “brick wall for employers,” Marklein argued. Assembly Speaker Robin Vos, R-Rochester, argued the veto only serves to add “one more hurdle” for businesses trying to recover from the pandemic.

Americans Leaving Unemployment Rolls More Quickly in States Cutting Off Benefits

The number of unemployment-benefit recipients is falling at a faster rate in the 22 other states canceling enhanced and extended payments this month, suggesting that ending the aid could push more people to take jobs.

The number of workers paid benefits through regular state programs fell 13.8% by the week ended June 12 from mid-May — when many governors announced changes — in states saying that benefits would end in June, according to an analysis by Jefferies LLC economists. That compares with a 10% decline in states ending benefits in July, and a 5.7% decrease in states ending benefits in September. Workers on state programs would lose the $300 weekly federal enhancement but could continuing receiving the state benefits.

Jefferies also found somewhat larger decreases in the number of people receiving benefits through pandemic programs in states curtailing benefits, though the data lags behind by an additional week. In many cases, those recipients will be cut off entirely when their state ends participation in the federal programs.

Other economists and many Democrats say other factors, including lack of child care and fear of Covid-19, are also keeping many potential workers out of the labor force.

Republicans to Vote This Week on $87.5 billion GOP-Authored Budget

The state Legislature this week will vote on the $87.5 billion GOP-authored biennial budget.

Republicans on the budget committee made use of an estimated $4.4 billion surplus to work more than $3 billion in tax cuts into the proposed 2021-23 biennial budget, but also stripped away several of Evers’ high-profile measures like Medicaid expansion and drastically reduced other proposals like the governor’s call for $1.6 billion in K-12 spending.

All told, the Republican biennial budget spends $87.5 billion in total, $37.3 billion of that in taxpayer money. Evers’ plan would spend $91.2 billion, with $38.6 billion of that from state taxpayers, according to a Thursday report from the nonpartisan Legislative Fiscal Bureau.

Assembly Speaker Robin Vos, R-Rochester, said last week the GOP-authored budget makes the most of the state’s unprecedented surplus, while also taking into account billions in federal stimulus funds, to provide more than $3 billion in tax cuts, including plans to eliminate the state’s more than 170-year-old personal property tax, which businesses pay on furnishings and equipment.

Governor Evers Announces More Than $140 Million for Wisconsin’s Tourism and Entertainment Industries

Yesterday, Governor Tony Evers announced more than $140 million in grants to businesses and organizations that play an integral role in Wisconsin’s tourism and entertainment industries. The new grant programs will be invested in industries hit hard by the COVID-19 pandemic, including live event venues, movie theaters, summer camps, minor league sports, and the lodging industry. Additional investments will be made in reopening Wisconsin historical sites and marketing support for Wisconsin’s tourism industry.

The investments announced by Gov. Evers today include:

• $75 million for lodging grants;
• $11.25 million for movie theaters;
• $12 million for live event small businesses;
• $2.8 million for minor league sports teams;
• $10 million for live venues;
• $15 million for destination marketing organizations;
• $8 million for summer camps;
• $1 million for the Wisconsin Historical Society to assist in reopening historical sites; and
• $7.5 million to increase marketing support for Wisconsin’s tourism industry.

These investments are being funded by the American Rescue Plan Act of 2021 (ARPA) and will be administered by the Wisconsin Department of Administration and the Department of Revenue.

Individuals and businesses interested in receiving more information about the grants, including application, should sign up to receive alerts here.

Congressional GOP Lawmakers Want Answers on Unemployment Fraud in Wisconsin

In a June 17 letter signed by every Republican member of Wisconsin’s congressional delegation, legislators asked Gov. Tony Evers, a Democrat, to respond to reports of unemployment benefits claimed by fraudsters. They cited a May memo from the Secret Service warning against a “massive” scheme by a “well-organized Nigerian fraud ring exploiting the COVID-19 crisis to commit large-scale fraud against state unemployment insurance programs.” That memo didn’t name Wisconsin as one of the states targeted by that specific scheme, but did note “it is extremely likely every state is vulnerable.”

A spokesperson with the state Department of Workforce Development, which oversees the unemployment system, said in a statement that “Wisconsin has been a national leader at detecting fraud.” The department has a variety of means to detect fraud and abuse, including but not limited to auditing employer records, comparing benefit claims to payroll records in Wisconsin and other states, exchange of information between agencies, complaints from employers and tips from the public,” wrote DWD communications specialist Tyler Tichenor.

Every year, states pursue some fraud cases against individuals who claimed funds they weren’t eligible for. What is new is the presence of large-scale scams by organized criminal syndicates, including those operating in other countries, to claim United States unemployment funds. In May, announcing a new federal Department of Justice task force on the issue, President Joe Biden said the issue was among the most serious oversight issues his administration had inherited from the administration of former President Donald Trump.

The unprecedented spike in new jobless claims in 2020 led to long backlogs and a skyrocketing total number of payments. But according to the DWD’s 2021 fraud report, both the number of cases of fraud and the total amount of fraudulently paid benefits actually declined in 2020. There were 4,734 fraud cases in 2019, and just 3,561 in 2020. It accounted for about $4.7 million in 2019 and $4.5 million in 2020, according to the department.

One interpretation of that data, said economist Noah Williams of the conservative Center for Research on the Wisconsin Economy at the University of Wisconsin-Madison, is that “fraud detection basically dropped to near zero” in 2020.

“We had a huge explosion in claims in 2020, but the actual cases in the state that were referred for fraud fell,” Williams said. “We don’t know how big the problem is, but … I wouldn’t have expected the absolute number of cases to fall.”

In a report Williams authored in May, he wrote Wisconsin “was one of the worst-performing states” by several metrics of measuring its unemployment insurance system.

Bill to Eliminate Wisconsin’s Personal Property Tax Passes Committee with Bipartisan Support

A bill to eliminate the state’s personal property tax, which businesses pay on equipment and furnishings, received bipartisan support in a Senate committee Tuesday.

The bill was recommended for approval by the Senate workforce committee 4-1, with Sen. Janis Ringhand, D-Evansville, the lone vote against the measure over concerns future Legislatures could stop providing local entities more state aid to make up for the lost revenue.

The budget committee last week voted to set aside about $202 million for such payments over 2021-23 biennial budget. However, officially eliminating the tax, which lawmakers described as an antiquated and unfair tax on businesses, would be done through separate legislation rather than through the budget process.

Both the budget and a standalone bill to end the tax are expected to come before the Assembly and Senate next week. “It’ll be a great day when we can finally get rid of this tax,” bill author Sen. Duey Stroebel, R-Saukville, said Tuesday.  Stroebel said the intent is to keep providing local taxing authorities with state money to compensate for the reduction in revenue.

Sen. Brad Pfaff, D-Onalaska, said he hoped that revenue to local jurisdictions would be included in future budgets.

“I too have heard from my small-business owners. I recognize the importance of this,” Pfaff said. “But I do want to make sure we keep whole our local units of government.”

More than 40 lobbying groups have filed in favor of eliminating the tax, including business groups and local chambers of commerce. The AFSCME International Union and the League of Women Voters of Wisconsin oppose the bill.

Eliminating the personal property tax through standalone legislation would limit Gov. Tony Evers’ ability to alter it through his partial veto power, which can only be used on bills that spend money, like the budget. But it also opens the door to the Democratic governor vetoing the legislation altogether.

Wisconsin Housing Market Strong Even as Inventories Remain Tight

Both existing home sales and median prices rose by double-digit margins in May compared to their levels 12 months earlier, when the economy was in lockdown. Housing supply remains very tight with just 2.8 months of available supply in the state. Inventory is tight in all regions, across all urban/rural classifications and across all price ranges

“Basic economics tells us that strong and growing demand in a world of tight supply is going to create significant price pressure, and that’s exactly what we’re seeing in the state housing market. Median prices through the first five months are up at an annual pace of 12.1%. Unless demand moderates or supply improves, neither of which is likely in 2021, we can expect to see more of the same price appreciation through the end of this year. The good news is that mortgage rates remain very low by historical standards, which has at least partially offset the impact of significant price pressure on housing affordability in the state.  Hopefully the inflationary pressures don’t intensify, which could cause mortgage rates to increase and lower affordability,” said Michael Theo, President & CEO of the Wisconsin Realtors Association.


WEDC Looking to Ramp Up Tax Credit Revocation Following Audit

WEDC officials say they’re looking to pick up the pace on revoking tax credits from businesses that fail to meet the terms of their contracts.

During a meeting of the agency’s Audit and Budget Committee, members discussed actions being taken in response to the latest biennial WEDC audit from the state Legislative Audit Bureau. The April audit included a number of recommendations for improving WEDC’s processes, including updating procedures on tax credit revocation to do so in a more “timely manner.”

In one example, a business that received tax credits from the state indicated in March 2017 that it had lost all of the contractually required jobs that were previously created. But WEDC didn’t revoke the $125,000 in tax credits until more than three years later, in June 2020.

Another recommendation from LAB directs WEDC to change its procedures for Enterprise Zone tax credits such that credits are only awarded for wages paid to employees providing a service within the defined enterprise zone. As it stands, WEDC could be awarding these tax credits for wages paid to employees working elsewhere, LAB said.

WEDC will be providing a report in response to the audit’s recommendations to the state’s Joint Legislative Audit Committee in October.

Wisconsin Legislature’s Budget Committee Wraps Up with Massive Tax Cuts

Taking advantage of an unexpected revenue windfall, Republicans on the Wisconsin Legislature’s budget committee voted Thursday to approve about $3.4 billion in income, business and property tax cuts, wrapping up its work on the two-year spending plan.

The Republican plan would bring the state’s third income tax bracket down from 6.27%  to 5.3%, generating about $2.7 billion in relief. That bracket encompasses individuals making between $23,930 and $263,480 per year, and households earning between $31,910 and $351,310 per year.

Lawmakers set aside $202 million to offset a repeal of the state’s personal property tax which applies, in general, to furniture, equipment, machinery and watercraft owned by businesses. A portion of that tax — which provides funding to schools and local governments — was eliminated in the 2017-19 budget.

Committee co-chair Sen. Howard Marklein, R-Spring Green, noted that the tax is frustrating for those who pay it because it continues to apply every year — not just when the taxed item is purchased.

The motions passed Thursday also include a $72 million increase in aid to technical colleges and an additional $408 million for general school aid. They also remove a reduction in general school aid associated with some independent charter schools. Because spending caps remain in place, that funding would result in a decrease in property taxes. In total, the budget reduces property taxes by about $647 million.

The Republican tax measures are based on the idea that “taxpayers will do a better job, a more responsible job” than government would with the majority of the $4.4 billion more than expected that the state is projected to take in over a three-year period, said co-chair Rep. Mark Born, R-Beaver Dam.

Federal Reserve Moves Up its Timeline for Interest Rate Hikes as Inflation Rises

The Federal Reserve on Wednesday considerably raised its expectations for inflation this year and brought forward the time frame on when it will next raise interest rates.

As expected, the policymaking Federal Open Market Committee unanimously left its benchmark short-term borrowing rate anchored near zero. But officials indicated that rate hikes could come as soon as 2023, after saying in March that it saw no increases until at least 2024. The so-called dot plot of individual member expectations pointed to two hikes in 2023.

Though the Fed raised its headline inflation expectation to 3.4%, a full percentage point higher than the March projection, the post-meeting statement stood by its position that inflation pressures are “transitory.” The raised expectations come amid the biggest rise in consumer prices in about 13 years.

The committee did raise the interest it pays on excess reserves by 5 basis points to 0.15%.

In a separate matter, the FOMC announced that it would extend dollar-swap lines with global central banks through the end of the year. The currency program is one of the last remaining Covid-era initiatives the Fed took to keep global markets flowing.