Brian Dake

Wisconsin’s Agriculture Industry Expected to Follow Downward Trend in 2019

Wisconsin’s agriculture industry had a rough go of it in 2018 after losing 638 dairy farms in just one year. According to the latest data from the state Department of Agriculture, Trade and Consumer Protection, that’s a more than 7 percent decline and the biggest drop since 2004.

Steven Deller, a professor in the department of Agricultural and Applied Economics at the University of Wisconsin-Madison, said 2019’s outlook is expected to remain weak due to the uncertainty over international trade policies.

“Farms will continue the trend toward bifurcation, which means that there will be growth in smaller and large farms, with middle-sized farms getting squeezed,” Deller said. “Most of it has to do with cost of production. The issue with the larger farms is that they tend to carry a lot more debt load and if commodity prices stay low, servicing that debt becomes harder. Smaller farms tend to have less debt to service.”

According to Deller, the best way to grow the industry is through exports, since the growth of domestic demand is limited. Most of the growth in smaller scale farming and specialty crops and products came from increasing demand for local foods. While many of the surviving dairy operations are larger, even they are struggling to survive, he said.

“Wisconsin agriculture is surprisingly diverse,” Deller said. “It is still dominated by dairy and cheese production, as most Wisconsin-produced milk goes into cheese, but compared to places like Illinois or Indiana, Wisconsin has lots of fruit and vegetable production.”

Foxconn Construction Jobs Rise in 2018, Company Misses Hiring Goal

Foxconn Technology Group spent $200 million on building early phases of its manufacturing plant in 2018, creating more than 800 construction jobs for people from 52 Wisconsin counties, the company announced Friday.

In a letter to Wisconsin Economic Development Corp. CEO Mark Hogan on Thursday, the Foxconn executive Louis Woo said the company has completed the construction of its first structure, a 120,000-square-foot multipurpose building, and would begin work this spring on buildings to house the company’s manufacturing operations.

Foxconn, however, did not create enough jobs in Wisconsin to qualify for state tax incentives last year. The company had previously said it could ultimately create up to 13,000 jobs in Wisconsin. But in its letter to WEDC, the company said it has “adjusted” its recruitment and hiring timeline. Last year, the company hired 178 employees in Wisconsin who qualified for hiring targets set by WEDC — 82 short of the minimum number required to claim credits in the project’s  first year.

As a result, Foxconn said it is not seeking state incentives for its hiring in 2018. As part of an incentive package worth $4 billion, the company could ultimately receive $1.5 billion for meeting its hiring commitments.

“As a company with operations around the world, we need to have the agility to adapt to a range of factors including global economic conditions,” Woo wrote in the letter to WEDC. “We have done so while simultaneously progressing on other aspects of the project and achieving our foremost priority for 2018 — creating a solid foundation upon which the Wisconsin project can continue to grow further.”

Work on Foxconn’s $10 billion manufacturing plant continues in 2019. The company said it will hold additional information sessions for contractors in coming months and intends to break ground this spring on buildings to be used for work on advanced displays, manufacturing and 8K+5G research and development.

Contractors working on early phases of the company’s plant moved 4 million cubic yards of dirt last year, the company said. The company awarded contracts to 93 companies in 17 Wisconsin counties last year and said 95 percent of all its construction contracts to-date were with Wisconsin companies. In addition, nearly 16 percent of contracts went to companies owned by women, minorities and veterans.

The company has also open a number of satellite offices around the state, in Racine, Eau Claire and Green Bay and opened its North American regional headquarters in Milwaukee.

Assembly GOP Proposes Middle-Class Tax Cut Paid for by State Surplus Funds

The Assembly GOP plan calls for increasing the standard deduction on the state income tax effective in 2020. For married taxpayers filing jointly who would qualify for a tax cut, it would average $231, according to the Legislature’s nonpartisan fiscal bureau.

The Assembly GOP plan would reduce state tax collections by about $490 million in the second and final year of the next state budget cycle. That includes an ongoing total tax reduction of $338 million plus a one-time cost of $152.1 million to account for the timing of the change.

In June the state ended the last fiscal year with about $588 million in the general fund after revenues outpaced expenditures by $9.5 million. In the current fiscal year, a $34.1 million surplus is expected to increase the fund balance to $622.6 million. An updated projection on state finances is due from the fiscal bureau next week.

Vos said Assembly Republicans want to advance the tax cut in a separate bill from the state budget.

Senate Majority Leader Scott Fitzgerald, R-Juneau, praised the plan in a statement issued immediately after the Assembly press conference, saying he’s “glad to see that our colleagues in the Assembly are prioritizing plans to lower taxes.” Fitzgerald said he has asked a trio of GOP senators to work “on a plan to deliver tax relief for hard-working families.”

Evers spokeswoman Melissa Baldauff said in a statement the Assembly GOP plan “falls short” of what he seeks.

“The governor’s sustainable plan to cut taxes for middle-class families — which is funded by rolling back tax giveaways for millionaires — would provide relief for 86 percent of taxpayers without adding to the deficit or relying on one-time funds,” Baldauff said.

Top Court Asked to Decide Far-Reaching Cases on Regulation of State Waters

The Wisconsin Supreme Court has been asked to settle a series of longstanding legal disputes over natural resources, a decision that could shape the power of state regulators to protect public waters from pollution and overuse for years to come.

Supreme Court rulings in the lawsuits between conservationists and businesses will put an imprint on every service of state government, a state court of appeals panel said Wednesday as it asked the top court to take the cases.

A key question is whether a state law or a previous Supreme Court decision should take precedence.The 2011 law states that state agencies can’t take actions that haven’t been explicitly authorized in law or rules approved by elected officials.

In asking the Supreme Court to decide the cases, the Waukesha-based appeals court panel said it agreed with parties on both sides about one thing.

“We agree with the State and Clean Wisconsin that the court’s determination regarding the scope and breadth of (the 2011 state law) will have implications far beyond the permitting process for high capacity wells and pollution discharge elimination systems,” the three appeals court judges said in their decision. “(It) will touch every state agency within Wisconsin.”

Governor, GOP Lawmakers Seek Common Ground but Rifts Remain

Wisconsin Gov. Tony Evers and Republican lawmakers vowed Tuesday to find common ground at the Capitol during a meeting that included GOP members from both the state Senate and Assembly.

The governor, a Democrat, championed accepting the federal Medicaid expansion during his campaign, arguing it would decrease health care costs across the state. Republicans have opposed the expansion for years, arguing it could come with unexpected and burdensome expenses for the state.

Assembly Speaker Robin Vos, R-Rochester, however, remained opposed to expanding Medicaid, known as BadgerCare in Wisconsin, and said he urged Evers to find areas of agreement instead.

Eers and Republican lawmakers have spoken about finding possible compromise on an income tax cut for middle-income families and a potential gas tax increase to fund Wisconsin road projects. However, Tuesday’s meeting also outlined a difference in tax policy plans. Evers has considered limiting the scope of the state’s GOP-backed manufacturing and agriculture tax credit.

“When I asked the question about whether or not we would agree that we could not raise taxes on income or sales, (the governor) said, well it depends on how you define that,” Vos said. “I think most of us agree that taking away a credit which makes somebody’s taxes go up is a tax increase.”

While differences remained clear, there were some areas where the two sides seemed to align more closely, as when Fitzgerald lauded Evers for stepping away from his previous statements about shuttering the Wisconsin Economic Development Corp.

“He made the commitment that he would not touch WEDC in this budget,” Fitzgerald said. “I think that’s a huge victory.”

Bucking Trend, Wisconsin Utilities Burned More Coal in 2017

Coal-fired generation, which accounted for 55 percent of all electricity produced in Wisconsin, was up about 7.5 percent from the previous year, according to numbers released last week by the federal Energy Information Administration. Coal use declined 2.2 percent in Illinois and 1.8 percent in Minnesota, while it was up about 1 percent in Iowa. Nationwide it was down about 2.7 percent.

While the data are from 2017, the report comes as utilities across the country are retiring coal-fired units at a record pace and replacing them with increasingly cheap natural gas, as well as wind and solar, generation.

Since 2015, Wisconsin utilities have retired some 2,300 megawatts of coal-fired capacity, including WE Energies’ Pleasant Prairie plant in Kenosha and Alliant Energy plants in Sheboygan and Cassville.

Meanwhile, Alliant Energy is adding 725 megawatts of capacity to its Riverside natural gas plant in Beloit, and Dairyland Power Cooperative has plans to build a 625-megawatt gas plant in Superior. Each project is estimated to cost about $700 million.

Business Leaders to Governor: Lett’s Find Common Ground on Repealing Personal Property Tax

The Coalition to Repeal Wisconsin’s Personal Property Tax is responding to Governor Evers remarks to find common ground on issues and believes that repeal of the personal property tax is an issue that benefits everyone in the State of Wisconsin.

The coalition, consisting of 51 statewide organizations that represent nearly every business in Wisconsin and more than a million employees, is urging Governor Evers to make small, Main Street businesses a priority in his first budget by including repeal of the personal property tax with full  reimbursement to municipalities for lost revenue.

The personal property tax has existed in Wisconsin longer than we have been a state, and even prior to Wisconsin becoming a territory in 1836.  Since then, dozens of exemptions to the tax have been implemented, resulting in non-uniformity with certain businesses taxed and others not as well as specific equipment taxed in one municipality, but not in another.

Repealing the personal property tax is not a partisan issue. If municipalities are held harmless, repeal would be welcomed by local governments and businesses alike. Municipalities would benefit by not having to assess businesses, businesses would benefit by not having to pay the tax, and citizens in Wisconsin would benefit from the additional revenue that businesses would put into their employees, their businesses or their communities.

Main Street businesses in Wisconsin are struggling to compete in today’s hyper-competitive environment. All of the surrounding midwestern states have repealed the onerous personal property tax, and it’s time for Wisconsin to focus on Main Street small businesses by making repeal of the personal property tax a priority this session.    

Wisconsin Assembly Republicans Outline Priorities to Evers

Wisconsin Assembly Republicans delivered what they called a “gesture of our goodwill” to the newly installed Democratic governor on Thursday, outlining some areas where they think they might find common ground.

In a letter delivered to Gov. Tony Evers, the GOP lawmakers said they were trying to be helpful in detailing such areas, including an income tax cut, a school funding increase and a reduction in borrowing to pay for roadwork.

Evers has many of the priorities outlined by the Republicans but supports different approaches to reaching those goals. For example, he wants to cut income taxes by 10 percent but wants to compensate for it by reducing a tax break for corporations by $300 million, a move Vos said would amount to a “massive tax increase.”

The Republican letter did not put a dollar amount on how large of an income tax cut they would support or how it would be paid for.

Some of the other Republican priorities include:

— Enhancing high-speed internet access.

— Expanding the SeniorCare prescription drug program to cover flu shots.

— Working to reduce homelessness.

— Providing more options to reduce the cost of child care for working parents.

— Increasing access to clean water.

— Investing more in state-owned properties.

— Doing more to attract and retain highly qualified state employees.

Governor Evers Shares Plans for Wisconsin Economy

Governor Tony Evers continued his call for state leaders to compromise on Wednesday, speaking at the Wisconsin Bankers Association’s Economic Forecast Luncheon.

He hopes to find common ground with the legislature on issues of healthcare, transportation and education. These three priorities are important to keep a healthy economy, he said.

Evers emphasized that a strong education system creates a good workforce for employers across the state.

“We’ve been working actually with institutions all across the state to build these multiple career pathways so that young people can see where the on-ramps and off-ramps of those are to make sure that they are doing the right things to be good citizens in our society but also good workers to create good products and a good economy in the state of Wisconsin,” he said.

One of Evers’ top priorities is to restore funding to higher education.

“We also need a strong investment in the UW system. I think over the past few years, that has not happened, and I believe the UW system and our vocational technical college systems are the 2 main drivers of making sure that we have a strong economy in this state,” he said.

Evers also emphasized the importance of creating more jobs with higher wages, to help those who are still struggling.

“I know we have a strong economy in this state, I get it. I know we only have 3 percent unemployment in the state, I get it. But when a nonprofit…shows that we have 870,000 families, that’s a bunch of people that are still struggling in this economy,” he said.

U.S. Economy Showing Signs of Weakening

The U.S. economy is showing signs of weakening, with momentum slowing, fiscal stimulus decreasing and interest rates rising, according to a fourth quarter market review from Madison-based First Business Financial Services Inc.

Among the concerns for 2019 are the U.S.-China relationship, particularly when it comes to tariffs; the partial government shutdown; increasing market volatility; and falling consumer confidence.

In addition, manufacturers’ confidence is at its lowest point since October 2016 and manufacturing growth has been slowing, with the national reading from the Institute for Supply Management at 54.1 in December.

In the near term, though, First Business expects the economy will continue expanding. Consumers upped their discretionary spending and real consumption in the fourth quarter, spending more than $1 trillion during the holiday season. Inflation remains in check, at 2.2 percent year-over-year as of November. And employers added 312,000 jobs in December and increased average hourly earnings by 3.2 percent in 2018, which were positive signs.

The dollar continues to be strong, which is an indication of a strong U.S. economy and tight monetary policy, but First Business Bank doesn’t expect that to last long.

“The economic expansion will likely continue into 2019 at a slow and steady pace,” the report says. “At almost 10 years old, this is the second-longest expansion since 1900. Although growth accelerated meaningfully in 2018 on the wings of fiscal stimulus and an improving trade deficit, moving forward growth will moderate as weak productivity, labor force dynamics, waning trade numbers, fading trade stimulus, and higher interests rates slow it to 2 percent or less in 2019 and beyond.”