News of the Day

State of Wisconsin’s Budget Surplus Shrinks Slightly under Latest Estimate

Wisconsin’s budget surplus is projected to shrink slightly, according to new numbers from the Legislature’s nonpartisan budget office. But the projections would still leave lawmakers and the governor with a balance of more than $3 billion as they craft the next state budget.

The estimate from the nonpartisan Legislative Fiscal Bureau shows Wisconsin’s budget surplus is projected to be around $3.13 billion dollars by the end of next June, which is the end of the current two-year budget cycle. That marks a slight decline compared to LFB projections from January, which anticipated the state would end the current fiscal year with a surplus of around $3.25 billion.

Wisconsin Policy Forum Vice President and Research Director Jason Stein told WPR the latest projections show some “softness” but there’s “no reason for alarm or panic.”

“It’s just another reminder that as lawmakers and the governor put together the next state budget in the spring of 2025, it currently looks like they’ll have resources to work with to address problems in the state and quite a bit of resources, but not infinite,” Stein said.

 

Agrichemical Cleanup Program Fee Holiday to End May 31

The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) has announced that a fee holiday for pesticide and fertilizer licensees, and farmers purchasing fertilizer, will end on May 31, 2024. Pesticides and fertilizers that are registered or purchased on or after June 1, 2024 will include the applicable Agrichemical Cleanup Program (ACCP) fee. The program fund had previously been on a fee holiday since 2018.

The fee surcharge is based on the level of the ACCP fund on May 1 each year, when DATCP is required to review the program funds. When the fund remains above $1.5 million, DATCP may waive the fee. When the fund balance is at or below $1.5 million, the surcharge fees are reactivated to restore the fund balance to the level necessary to operate the ACCP, which helps pay for the costs of cleaning up agrichemical spills.

On May 1, 2024, the fund balance was $1,375,000. Due to the fund being below $1.5 million but above $750,000, half of the ACCP fee will be required on all pesticide products registered and fertilizers sold on or after June 1, 2024. When the surcharge is in effect, fertilizer and pesticide businesses pay the fee when they renew their licenses/product registration.

For more information about the ACCP fund and a complete list of fertilizer and pesticide fees, visit https://datcp.wi.gov/Pages/Programs_Services/ACCPFundSurcharges.aspx.

Biden Administration Releasing 1 Million Barrels of Gasoline from Reserve to Lower Prices

The Bide Administration said Tuesday that it is releasing 1 million barrels of gasoline from a Northeast reserve established after Superstorm Sandy in a bid to lower prices at the pump this summer.

The sale, from storage sites in New Jersey and Maine, will be allocated in increments of 100,000 barrels at a time. The approach will create a competitive bidding process that ensures gasoline can flow into local retailers ahead of the July 4 holiday and sold at competitive prices, the Energy Department said. The move is intended to help “lower costs for American families and consumers,” the department said in a statement.

Gas prices average about $3.60 per gallon nationwide as of Tuesday, up 6 cents from a year ago, according to AAA.

The Biden Administration significantly drained the Strategic Petroleum Reserve in 2022 following Russia’s invasion of Ukraine, dropping the stockpile to its lowest level since the 1980s. The Biden administration has since begun refilling the oil reserve, which had more than 364 million barrels of crude oil as of last month. The total is lower than levels before the Russia-Ukraine war but still the world’s largest emergency crude oil supply.

The Northeast sale will require that fuel is transferred or delivered no later than June 30, the Energy Department said.

United States Supreme Court Lets CFPB Funding Stand

The Supreme Court on Thursday rejected a challenge to the constitutionality of the structure used to fund the Consumer Financial Protection Bureau, the federal agency tasked with enforcing consumer finance laws. By a vote of 7-2, the justices reversed a decision by a federal appeals court in Louisiana, which had ruled that the agency’s funding violates the Constitution because it comes from the Federal Reserve rather than through the congressional appropriations process.

The case was one of several on the court’s docket this term involving the division of authority between the three branches of government, as well as the power of administrative agencies. It began as a challenge by two industry groups to a “payday lending” rule that the agency issued in 2017. A three-judge panel of the U.S. Court of Appeals for the 5th Circuit rejected their argument that the rule violated the federal laws governing administrative agencies.

But the court of appeals agreed with the groups that the agency’s funding structure – which was intended to foster its independence – is inconsistent with Article I, Section 9 of the Constitution, which instructs that “[n]o money shall be withdrawn from the Treasury, but in Consequence of Appropriations made by Law.” In fact, the 5th Circuit concluded, the CFPB’s funding is “double-insulated” from Congress’s power under the appropriations clause, because the agency not only receives its funding from the Federal Reserve, but it (rather than Congress) determines the amount of that funding, by requesting the amount that the CFPB director deems “reasonably necessary to carry out” the bureau’s duties.

In a 22-page opinion joined by Chief Justice John Roberts and Justices Sonia Sotomayor, Elena Kagan, Brett Kavanaugh, Amy Coney Barrett, and Ketanji Brown Jackson, Justice Clarence Thomas explained that when the Constitution was ratified in the late 18th century, “appropriations were understood as a legislative means of authorizing expenditure from a source of public funds for designated purposes.”

That understanding, Thomas continued, is supported by both early English history and early American history in the years leading up to the ratification of the Constitution. And although “appropriations needed to designate particular revenue for identified purposes,” Thomas observed, legislatures in that era otherwise “exercised a wide range of discretion.”

That practice also continued in the years immediately following the ratification of the Constitution, Thomas added – for example, with Congress allocating funding for some purposes up to certain amounts and allowing other federal agencies (such as the Customs Service and the Post Office) to fund themselves through the money that they collected.

The CFPB’s funding scheme falls squarely within this definition of a congressional “appropriation,” Thomas concluded: Congress specified the source – the Federal Reserve – from which the CFPB can draw its funding, and it indicated how the CFPB is supposed to use that funding. The court therefore reversed the 5th Circuit’s decision striking down as unconstitutional the CFPB’s funding mechanism.

Interest Costs on the National Debt Surpass Spending on Defense, Medicare

In the first seven months of fiscal year 2024, which began in October, spending on net interest surged to $514 billion, surpassing spending on both national defense ($498 billion) and Medicare ($465 billion). In fact, interest costs have topped spending on veterans, education and transportation combined.

“Rising debt will continue to put upward pressure on interest rates,” the Committee for a Responsible Federal Budget (CRFB), a nonpartisan group that advocates for lowering the national deficit, said in a statement. “Without reforms to reduce the debt and interest, interest costs will keep rising, crowd out spending on other priorities and burden future generations.”

Spending on interest is now the second-largest line item in the budget and is expected to remain so for the duration of 2024. By 2051, it is projected to become the most expensive part of the budget.

“Rising interest costs will crowd out other possible uses of government resources, and then also pose a risk to our economic stability,” said CBO Director Phillip Swagel while testifying on Capitol Hill in February.

Interest rates are not the only factor making servicing the debt more expensive. Over the past decade, the size of the national debt has more than quadrupled. From just four decades ago, the debt skyrocketed from $907 billion to more than $34.5 trillion as of Wednesday afternoon, according to the latest Treasury Department figures.

Report Finds Employer Insurance Plans are Paying More for Hospital Care in Wisconsin

A national report shows employer-sponsored health insurance plans in Wisconsin pay significantly more than Medicare prices.

The report by the RAND Corporation looked at insurance claims data provided by employers and health plans. It found that the costs paid by private insurance in 2022 were 318 percent higher in Wisconsin than the estimated price paid by Medicare for the same services. That puts Wisconsin at the fifth highest in the country, with the national average coming in at 254 percent.

Rachel Ver Velde, WMC’s associate vice president of government relations, said it’s a national issue, but Wisconsin’s even higher prices puts employers in the state at a disadvantage.

Ver Velde said part of the problem behind higher prices is the growing consolidation among hospitals. The RAND report said researchers found a correlation between how much prices varied for private insurance and the amount of market share a hospital controlled in a state.

It’s far from the first report to point to consolidation as a negative impact on prices. KFF, which provides health policy research, reports that a substantial body of research shows that consolidation has led to higher health care prices, with the strongest evidence related to hospitals.

Average U.S Consumer Carries $6,218 in Credit Card Debt

Americans now owe $1.12 trillion on their credit cards, the Federal Reserve Bank of New York reported Tuesday.

The average balance per consumer stands at $6,218, up 8.5% year over year, according to a separate quarterly credit industry insights report from TransUnion.

“Consumers continue to use credit, and in particular credit cards, as they navigate the world we face right now,” said Charlie Wise, TransUnion’s senior vice president of global research and consulting.

As a result,credit card delinquency rates are higher across the board, the New York Fed and TransUnion found. Over the last year, roughly 8.9% of credit card balances transitioned into delinquency, the New York Fed reported.

According to TransUnion’s research, “serious delinquencies,” or those 90 days or more past due, reached the highest level since 2010.

Credit cards are one of the most expensive ways to borrow money. The average credit card charges a near-record 20.66%, according to Bankrate.

Biden Administration Sharply Hikes United States Tariffs on an Array of Chinese Imports

U.S. President Joe Biden on Tuesday unveiled steep tariff increases on an array of Chinese imports including electric vehicle (EV) batteries, computer chips and medical products.

Biden will keep tariffs put in place by his Republican predecessor Donald Trump while ratcheting up others, including a quadrupling of EV duties to over 100% and doubling the duties on semiconductor tariffs to 50%. The new measures affect $18 billion in imported Chinese goods including steel and aluminum, semiconductors, electric vehicles, critical minerals, solar cells and cranes, the White House said.

The United States imported $427 billion in goods from China in 2023 and exported $148 billion to the world’s No. 2 economy, according to the U.S. Census Bureau, a trade gap that has persisted for decades and become an ever more sensitive subject in Washington.

U.S. Trade Representative Katherine Tai said the revised tariffs were justified because China was stealing U.S. intellectual property. But Tai recommended tariff exclusions, opens new tab for hundreds of industrial machinery import categories from China, including 19 for solar product manufacturing equipment.

United States Wholesale Prices Rose 0.5% in April

The producer price index, a gauge of prices received at the wholesale level, increased 0.5% in April, the Labor Department’s Bureau of Labor Statistics reported Tuesday. On a year-over-year basis, wholesale inflation rose 2.2%, also the highest in a year. The core PPI inflation was at 2.4%, the biggest annual move since August 2023.

Stripping out volatile food and energy prices, the core PPI also rose 0.5%. Excluding trade services from that core group showed a 0.4% increase on the month and 3.1% on a 12-month basis, the highest level since April 2023.

Services prices boosted the wholesale inflation reading, rising 0.6% and accounting for about three-quarters of the headline gain, while the final demand goods index increased 0.4%. The services increase was the biggest monthly gain since July 2023, the BLS reported.

Goods prices as measured by the PPI rose 0.4%, reversing a 0.2% decline, led by a 2% increase in the energy index, which included a 5.4% surge in gasoline prices. The final demand index for food fell 0.7%.

 

Nearly Half of Master’s Degrees have a Negative ROI

As thousands of new graduates toss their caps this month, research shows more than 40 percent of master’s degrees aren’t financially worth obtaining, the Foundation for Research on Equal Opportunity found.

Looking at career earnings at graduation and a decade later, while accounting for factors such as dropout rate, the study found that bachelor’s degrees are much more likely to be financially worth it for students than graduate degrees.

More than three-quarters, 77 percent, of four-year bachelor degrees have a positive return on investment, the study found, compared to just 57 percent of master’s degrees.

Subject of study had a significant influence on financial return, with the best degrees to pursue for undergraduate studies being engineering, computer science, and nursing degrees, while fine arts, education, and biology programs had the lowest median return.

The average return on investment for a bachelor’s degree is about $160,000, the study found, but degrees in especially lucrative fields could top $500,000 or more.

For graduate study, law, medicine and dentistry were the most lucrative, according to the analysis.