State Budget-Writing Committee Begins by Stripping Hundreds of Governor Evers’ Items Out

The state Legislature’s powerful budget-writing committee began its work Thursday on the next two-year spending plan by removing hundreds of proposals from Gov. Tony Evers.

The vote by Republican lawmakers to remove nearly 400 measures proposed by the Democratic governor eliminates more than $3 billion in revenue sources proposed in his plan. The Republican-controlled committee will instead work from the state’s current budget, which was largely written by GOP lawmakers in 2019 and modified by Evers through vetoes.

The committee will spend the next several weeks balancing the state’s two-year spending plan, which leaders say they will do without raising taxes.

“We have a large surplus we can use that to invest in priorities,” Joint Finance Committee co-chairman Mark Born, R-Beaver Dam, said. “And we can return some of the money to the taxpayers.”

The Republicans’ plan also removes from the budget tax increases and tax breaks that Evers had recommended.

Evers wanted to scale back a policy that exempts manufacturers from income taxes, keeping it in place only for small operations. He also proposed increased taxes on capital gains.

Evers wanted to let municipalities and counties raise the sales tax by 0.5% in their areas if approved by voters.

Among the measures to be cut from Evers’ budget were:

  • Plans to legalize medical and recreational marijuana that would bring in $165 million a year in marijuana taxes.
  • Raising the minimum wage from $7.25 an hour to $8.60 this year and $10.15 in 2024.
  • Repealing Act 10, the 2011 law that greatly restricted collective bargaining for most public workers.
  • Ending “dark store” policies for property assessments. Municipal officials have long complained that successful big box stores have been able to lower their assessments — and thus their property tax bills — by comparing their stores to shuttered retailers with low values.

SBA Stops Accepting New PPP Applications from Most Lenders as General Funds Run Out

The U.S. Small Business Administration (SBA) has stopped accepting new Paycheck Protection Program (PPP) applications from most lenders almost a full month before the $292 billion program’s application deadline.

The SBA informed lenders Tuesday afternoon that the PPP general fund was out of money and that the only remaining funds available for new applications are $8 billion set aside for community financial institutions (CFIs), which typically work with businesses in underserved communities. The agency also has set aside $6 billion for PPP applications still in review status or needing more information due to error codes.

Congress in late March extended the PPP application deadline two months to May 31, in part to give the SBA and lenders time to resolve error codes that were holding up nearly 200,000 applications in the SBA’s PPP platform. The unresolved error codes were related to validation checks instituted by the SBA to help prevent fraudulent applications from being funded.

The PPP Extension Act of 2021, P.L. 117-6, did not include any additional funding for the current round of the PPP, which Congress provided with more than $290 billion to make forgivable loans to small businesses and not-for-profits suffering economic loss related to the COVID-19 pandemic.

The SBA reported Monday that it had approved more than 5.6 million PPP loans totaling more than $258 billion from the program’s reopening on Jan. 11 through May 2. First-draw PPP loans accounted for $57.3 billion, and second-draw loans totaled nearly $201 billion.

Governor Evers Appoints Three Members to DATCP Board

Today, Governor Tony Evers announced three appointments to six-year terms on the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) Board, effective May 1, 2021. Two of the appointees are current members of the board, and one is a new appointee.

“With a $104.8 billion economic impact in Wisconsin, we all know how important agriculture is to our state’s economic success,” said Governor Evers. “I’m proud to appoint these knowledgeable leaders to the team that guides the important work DATCP does in every corner of our state, every day.”

Doug Rebout is a partner in Roger Rebout & Sons Farms near Janesville. The farm includes over 4,200 acres of cropland, 280 Holstein and crossbred steers, and 400 custom-raised heifers. Rebout is actively engaged in public and community service as a member of the Wisconsin Corn Growers Association Board of Directors and the Governor’s Task Force on Climate Change. Rebout was first appointed to the DATCP Board in July 2020.

Paul Palmby has served as President and CEO at Seneca Foods Corporation since September of 2020 having been Executive Vice President and Chief Operating Officer since 2005. In his 34 years with Seneca he has served in various management roles in the company starting in the agricultural department and progressing through operations to his current role. Paul has served on the Board of Directors of the Midwest Food Processors Association and the Wisconsin FFA Foundation, among others. He served on USDA’s Fruit and Vegetable Industry Advisory Committee from 2002-2006 and 2018 to present. He currently serves on the Board of Wisconsin Manufacturers and Commerce.

Dr. Clare Hintz runs Elsewhere Farm, a production permaculture farm near the south shore of Lake Superior in Herbster, Wisconsin. The solar-powered farm features perennial fruits and nuts interplanted on five acres, intensive market gardens, and rare-breed pigs and chickens: most marketed through winter and summer CSAs. She is also the editor of the Journal of Sustainability Education. Dr. Hintz holds a bachelor’s degree in biology and writing, a master’s in sustainable systems, and a Ph.D. in sustainability education with a focus on regenerative agriculture. She succeeds Kurt Hallstrand as a member of the DATCP Board.

Finance Committee to Remove Hundreds of Governor Evers Proposals from Budget

Republican lawmakers plan to remove hundreds of proposals from Gov. Tony Evers’ state budget next week, from an expansion of Medicaid to the legalization of marijuana to the partial restoration of public sector union bargaining rights.

The move is the first step — and a big one — toward rewriting the budget from the ground up, something GOP leaders have been hinting at since the Governor  introduced his budget in February.

While many of the biggest financial decisions are yet to be resolved, the plan Republicans on the Legislature’s budget committee hope to pass Thursday will remove hundreds of Evers priorities from the budget. Many of those items will substantially reduce the amount of money lawmakers have to spend in the budget for the next two years.

For example, the expansion of Medicaid would bring the state an influx of $1.6 billion in federal funding. And the legalization of recreational marijuana was projected to generate $165 million.

While hardly unexpected, other sources of new revenue would also be wiped out. They include Evers’ proposal to reduce a tax break for capital gains, which was projected to generate an estimated $350 million. They also include his plan to scale back a tax break for manufacturers, which would generate an estimated $488 million.

The list of items up for removal also includes a wide array of policy ideas, from Evers’ call for automatic voter registration to a proposal for nonpartisan redistricting. Evers’ plan to raise the minimum wage would also be gone.

While the proposals could in theory be restored later in the budget-writing process, many if not most will face an uphill battle with Republicans who followed a similar process two years ago.

 

Restaurant Revitalization Fund Opens Today

Help for local restaurants impacted by COVID-19 opens Monday. The Restaurant Revitalization Fund is part of the American Rescue Plan and aims to keep the doors open for struggling businesses.

Restaurants can get up to $5 million per physical location with a limit of $10 million total per business. Applications for less than $1,000 are not accepted.

Applications open at noon for restaurants looking for relief.

The Small Business Administration says businesses do not have to pay the money back. That’s as long as it’s used for eligible purposes by March 11, 2023.

The SBA says restaurants can use the money for several different business needs including payroll costs, except sick leave, utility and maintenance, outdoor seating construction, mortgage obligations, and rent as long as it’s not pre-paid.

Businesses can register now for the application portal. You can submit applications starting at noon Monday. You can find that here.

According to the SBA, the first 21 days will be a priority period for groups including small businesses that are at least 50% owned by one or more people who are:

  • women
  • veterans
  • socially and economically disadvantaged

Once the priority period ends, the SBA says it’ll process qualifying applicants until the funds run out.

Consumer-Fueled Economy Pushes GDP to 6.4% First-Quarter Gain

Gross domestic product, the sum of all goods and services produced in the economy, jumped 6.4% for the first three months of the year on an annualized basis. Outside of the reopening-fueled third-quarter surge last year, it was the best period for GDP since the third quarter of 2003.

“This signals the economy is off and running and it will be a boom-like year,” said Mark Zandi chief economist at Moody’s Analytics. “Obviously, the American consumer is powering the train and businesses are investing strongly.”

Consumers, who account for 68.2% of the economy, accelerated spending by 10.7% in the quarter, compared with a 2.3% increase in the previous period. The expenditures were largely focused on goods, which increased 23.6%, but spending on services, which had been the missing link in the recovery, still grew by 4.6%.

On the goods side, spending exploded by 41.4% on durable goods like appliances and other long-lasting purchases.

While the numbers indicated that many used the free money to spend, they also tucked a good portion of it away, as the savings rate soared to 21%, from 13% in Q4.

“With the elevated saving rate, households are still flush with cash and, now that restrictions are being eased as the vaccination program proves a success, that will allow them to boost spending on the worst-affected services, without needing to pull back too much on goods spending,” wrote Paul Ashworth, chief U.S. economist at Capital Economics.

Some Wisconsinites Who Declined to Return to Unsafe Jobs Could Be Eligible for Federal UI Benefits

Tens of thousands of people in Wisconsin whose applications for COVID-19 pandemic unemployment benefits were denied could be eligible for up to 79 weeks of unemployment payments.

There are three main categories of newly eligible workers:

  • Those who declined to return to work at a site that wasn’t complying with COVID-19 safety standards, such as requiring face masks and physical distancing.
  • Those working for an educational institution who became unemployed or partially unemployed after COVID-19 scrambled workers’ schedules.
  • Those who were laid off or had their hours reduced as a result of COVID-19 measures, including restaurant workers.

Officials with the state Department of Workforce Development said they would be mailing notices to nearly 28,000 people who were denied benefits under the federal Pandemic Unemployment Assistance program to let them know they are eligible to reapply under the expanded guidelines. If they were denied before but found to be eligible now, they could be paid for the entire period of the pandemic thus far.

The Biden administration announced expanded eligibility for the federal program in February after President Joe Biden in an executive order said workers whose employers didn’t follow safety protocols could get the benefits. The Wednesday announcement by DWD follows from that executive order and guidance from Biden’s Department of Labor.

Wisconsinites who weren’t previously denied federal Pandemic Unemployment Assistance can also apply under the expanded eligibility. However, they’ll be limited in the number of weeks of back payments they can claim.

Governor Signs Bipartisan Bill to Allow Worker’s Compensation Benefits for PTSD for Public Safety Officers

Gov. Tony Evers signed into law Senate Bill (SB) 11, now Wisconsin Act 29, which will allow public safety officers—including law enforcement and firefighters—who have been diagnosed with post-traumatic stress disorder under certain conditions to receive worker’s compensation benefits.

“We know the toll post-traumatic stress can take on our first responders might otherwise go unseen, but today we’re going to help make sure it doesn’t go unheard,” said Gov. Evers. “We’re saying today that we want to dismantle that stigma around post-traumatic stress and mental health—we want our first responders to know that we see these effects, we’re going to call it like it is, and there’s no shame in talking about it or getting help.”

SB 11, now Wisconsin Act 29:

• Allows payment of worker’s compensation benefits if a public safety officer, such as a law enforcement officer or firefighter, is diagnosed with post-traumatic stress disorder by a licensed psychologist or psychiatrist, and the mental injury is not accompanied by a physical injury if if proven by a preponderance of the evidence and the mental injury is not a result of a good faith employment action by the employer; and

• Limits the liability for treatment of such injuries and claims to no more than 32 weeks after the injury is first reported, and restricts compensation for such injuries and diagnoses to three times within an individual’s lifetime regardless of a change in employment status.

 

President Biden to Order Raising Federal Contractor Minimum Wage to $15

President Biden on Tuesday is expected to sign an executive order raising the minimum wage for federal contractors to $15 by March 2022.

At that time, the order will result in a 37-percent raise for federal contractors making the current contracting minimum $10.95, and setting their salary at over double the regular statutory federal minimum wage, which has been stuck at $7.25 since 2009.

Biden’s order would also phase out the tipped minimum wage, which stands at $7.25 by 2024, and set minimum wages for workers with disabilities on par with the standard minimum wage for contractors.

Federal agencies will have to begin incorporating the new wages into their contract solicitations by January 30, 2022, for implementation no later than March 30.

The new wages will apply to existing and multi-year contractors when their contracts receive their annual renewals, meaning some workers won’t see the benefits until later in the year.

IRS Provides Safe Harbor for Small Businesses to Claim Deductions relating to First-Round PPP Loans

Last Thursday, the Treasury Department and the Internal Revenue Service issued Revenue Procedure 2021-20 PDF for certain businesses that received first-round Paycheck Protection Program (PPP) loans but did not deduct any of the original eligible expenses because they relied on guidance issued before the enactment of tax relief legislation in December of 2020.

Under prior guidance, businesses that received PPP loans to cover payroll costs, interest on covered mortgage obligations, covered rent obligation payments, and covered utility payments could not deduct corresponding expenses.

With the Dec. 27, 2020, enactment of the Consolidated Appropriations Act, 2021, businesses now may claim these deductions even though they received PPP loans to cover original eligible expenses. These businesses can use the safe harbor provided by this guidance to deduct those expenses on the return for the immediately subsequent year.