Federal Tax Threatens to Remove $30 Million from BadgerCare Plus; AG Schimel Files New Lawsuit Seeking a Restraining Order Against Trump Administration

Yesterday, Attorney General Brad Schimel announced that the Wisconsin Department of Justice (DOJ) has filed a new lawsuit, along with a motion for a temporary restraining order,  to prevent President Trump’s Administration from taking more than $30 million from the Wisconsin Medicaid and Children’s Health Insurance Program (also known together as BadgerCare Plus). The filing is joined by Texas, Louisiana, Indiana, Kansas, and Nebraska.

“On behalf of Wisconsin, I will continue to fight to protect our healthcare dollars,” said Attorney General Schimel. “Our healthcare programs should not be overburdened with this illegal tax that threatens Wisconsin’s ability to care for those who need medical services the most.”

Wisconsin’s new lawsuit relates to the Health Insurance Providers Fee (“HIP Fee”), which is a tax imposed as part of the Affordable Care Act. Congress specifically exempted the states from paying the tax, yet the Internal Revenue Service (IRS) and Department of Health and Human Services (HHS) have imposed the tax in such a way as to illegally require the states to pay it.

In 2016, Attorney General Schimel and five other states successfully sued to strike down a rule that allowed the HIP fee to be imposed upon the states. As a result of that ruling, the U.S. District Court recently ordered the federal government to repay $89 million to Wisconsin as a result of the HIP Fee imposed in years 2014, 2015, and 2016. Congress imposed a moratorium on the fee for 2017.

Despite this ruling, the IRS and HHS seeks to impose the tax again in 2018. For Wisconsin, the tax is due on September 25, 2018, and amounts to more than $30 million.

 

US, China Tariffs May Become the ‘New Normal’

The path to peace in a trade war between the United States and China is getting harder to find as the world’s two biggest economies pile ever more taxes on each other’s products.

The United States is scheduled to slap tariffs on $200 billion in Chinese imports Monday, adding to the more than $50 billion worth that already face U.S. import taxes. China has vowed to counterpunch with tariffs on $60 billion in U.S. goods.

President Donald Trump is ready to up the ante, threatening to tax just about everything China ships to the United States.

The Americans and Chinese haven’t held high-level talks since June, raising doubts about whether a resolution can be reached anytime soon.

“Both sides believe they can outlast the other, fearing any conciliatory move will be viewed as weakness and reduce negotiating leverage,” said Wendy Cutler, a former U.S. trade negotiator who is a vice president at the Asia Society Policy Institute.

The tariff exchange is creating casualties in the United States. Companies that import Chinese materials and parts are facing higher prices. So are the consumers who buy everything from burglar alarms to baseball gloves. U.S. farmers are being hurt by China’s retaliatory tariffs on soybeans and other agricultural products.

The administration says its demands are clear: Stop stealing trade secrets. Stop coercing technology transfers. Stop favoring Chinese companies over U.S. and other foreign competitors.

But China’s leaders have ambitious plans to turn their country from the world’s low-cost manufacturer into a technological power in fields from robotics to quantum computing. They are likely to balk at meeting any U.S. demands that would slow the high-tech drive.

National Report: Half of Wisconsin’s Major Roads are in Poor or Mediocre Condition

Half of Wisconsin’s major roads are in poor or mediocre shape, with Madison, Milwaukee and Wausau roads in the worst condition, according to a national report released Tuesday.

The report, “Wisconsin Transportation by the Numbers” was compiled by TRIP, a national nonprofit transportation research group funded by a variety of road-building business interests, including equipment manufacturers, distributors, suppliers, transit engineers and labor unions.

The group used 2016 data the state Department of Transportation provides annually to the Federal Highway Administration in its analysis of road and pavement conditions.

According to that data, 55 percent of Wisconsin’s major locally and state-maintained roads have pavement that is in poor condition and 19 percent in mediocre condition. Milwaukee fares the worst, with poorly rated pavement on 54 percent of the city’s major roads. In Madison, 49 percent of roads have pavement in poor condition, according to federal highway data cited in the report.

The report blames “inadequate state and local funding” for worsening conditions and estimates that drivers in some Wisconsin cities spend nearly $1,000 a year on repairs due to driving their vehicles on deteriorating roads.

“This is yet another report confirming the poor condition of Wisconsin’s roads and the impact on motorists. While people may immediately think about the muffler they had to replace, this report shows that safety and congestion concerns make up a considerable portion of the cost of driving on deficient roads,” said Craig Thompson, executive director of the Wisconsin Transportation Development Association, which has lobbied for more state road funding.

Scott Walker, Tony Evers Tout Budget Proposals in Midst of Campaign

Gov. Scott Walker and his Democratic challenger Tony Evers are touting proposals for the next state budget in their hotly contested race for governor, trying to score points by highlighting measures that would dramatically increase funding for schools and cut taxes.

Walker revealed details Monday for $200 million in tax relief he wants to enact over the next two years, while Evers is calling for a staggering $1.4 billion more for public schools. Neither proposal will be voted on by the Legislature until sometime next year, long after the November election.

Monday was the deadline for state agencies to submit their requests to Walker’s administration for funding, giving Walker and Evers a chance to spell out their spending priorities.

Whoever is elected governor in November will use those requests as the starting point for submitting a budget plan to the Legislature in early 2019. The Legislature then takes months rewriting the budget in the face of a July 1 deadline to pass a two-year spending plan.

Governor Announces $4 Million in New Direct Assistance Available to Businesses, Homeowners Impacted by Flooding

Wisconsin homeowners and businesses impacted by the recent flooding will be eligible for financial assistance for repair, cleanup and other costs under two new programs that will provide up to $4 million in funding, Governor Scott Walker announced today.

The Wisconsin Housing and Economic Development Authority (WHEDA) is launching a new $2 million Flood Relief Loan program that will provide no-interest loans of up to $10,000 for repairing homes damaged by flooding.

The Wisconsin Economic Development Corporation (WEDC), in conjunction with its regional partners, is unveiling a $2 million Disaster Recovery Microloan Program aimed at small businesses that will provide an immediate source of funds for necessary restoration work and related expenses.

The two programs are being announced as businesses and homes in 21 counties were damaged last month after heavy rains caused widespread flooding. More than 4,300 homes and 140 businesses have sustained more than $150 million in damage, according to preliminary estimates from Wisconsin Emergency Management.

Homeowners interested in applying for a WHEDA Flood Relief Loan can call 1-800-562-5546. For more information about the WEDC small business microloan program, visit wedc.org/disasterrecovery

 

 

Wisconsin on Pace to Hit Highest Loss of Dairy Farms in 4 Years

Wisconsin lost 47 dairy farms in August, putting the state on pace for its worst year since 2013.

The latest data from the state Department of Agriculture, Trade and Consumer Protection shows there were 8,372 licensed dairy producers at the beginning of September. That’s 429 fewer than were licensed at the start of the year.

Mike North, president of the Dairy Business Association, said it’s not surprising given the current market and long-term trend toward consolidation in the industry. “There’s lots of motivating factors in this but it’s a trend that’s been going on for my entire lifetime,” North said

But Shelly Mayer, executive director of Professional Dairy Producers, said low milk prices for more than three years just became too much for some farms. “For some of these farm families, that they just can’t continue on with the businesses and that’s what we always find difficult and devastating, to lose the farm numbers in that way,” Mayer said.

But both Mayer and North say retirement and the absence of a successor to take over the farm are also part of the reasons Wisconsin has fewer dairy farms.

Census: Household Incomes Up, Poverty Down in 2017

Median household incomes grew and the national poverty rate fell for the third consecutive year in 2017, according to new Census Bureau estimates.

Wisconsin’s median household income rose more than $1,000 to $59,305 in 2017. Twenty one states had higher median incomes, including Minnesota ($68,388) and Illinois ($62,992), according to estimates released Thursday. The national median household income was $61,372.

Wisconsin’s poverty rate was 11.3 percent, statistically unchanged from the previous year and below the national rate of 12.3 percent. The poverty rate among Wisconsin families was 7.1 percent, down from 7.7 percent last year and 9.2 percent in 2013.

Nationwide household income grew by 1.8 percent after adjusting for inflation, but not everyone enjoyed the same gains. Those in the top 5 percent saw income grow by 3 percent, nearly double the rate of those in the middle.

There was also a 1.1 percent decline in median earnings for full-time workers, which is likely the result of more people joining the workforce and starting at the bottom of the pay scale, said Trudi Renwick, the Census Bureau’s assistant division chief of economic characteristics.

How do Wisconsin Municipalities Collect Taxes from Airbnb and Other Home Rental Companies?

Unlike the popular home-renting service Airbnb, which returned hundreds of thousands of dollars to Madison and the state of Wisconsin in the first year of a tax collection agreement, similar companies leave tax payment up to individual property owners.

Under voluntary agreements with Madison, Airbnb returned $324,000 in room tax revenue in the first year of payments. The company returned $2.5 million to the state of Wisconsin over the first year of its agreement.

However, other major players in the home rental business, like Homeaway and VRBO (both owned by Expedia), do not charge the required local taxes up front. Hosts who use these platforms are responsible for collecting and returning local taxes to the municipality.

Under Wisconsin law, people renting out rooms to the public for periods of less than one month are responsible for collecting and paying short-term lodging sales tax. The state only requires companies that have a nexus, or a connection between a seller and the state, to collect tax on sales made in Wisconsin.

Activities that create a nexus in Wisconsin include:

  • A physical presence or employees on the property.
  • The delivery of products into Wisconsin in company-owned vehicles.
  • Selling, servicing, repairing or installing products.
  • Performing construction activities or other services.

 

Dairy Industry, Rural banks ask Wisconsin Supreme Court to Review Stray Voltage Case

Wisconsin’s dairy industry and a group of rural banks are asking the state Supreme Court to uphold a jury’s decision to award more than $13 million to a Trempealeau County farmer in what would be the state’s largest stray voltage settlement.

In August 2017, a jury found that Northern States Power Co., or NSP, a subsidiary of Xcel Energy, was negligent and failed to follow state regulations, causing more than $4 million in losses for Paul Halderson and his wife, Lyn, who operate a nearly 1,000-cow dairy farm near Galesville.

The Haldersons claimed their herd suffered from illness and decreased milk production for more than a decade because of improperly grounded power lines.

The jury awarded the Haldersons about $4.5 million, finding deliberate violation of statute, which would entitle the Haldersons to triple damages. But Judge Scott Horne later overruled the “wanton and willful” finding on the grounds that Xcel conducted multiple tests on the Halderson farm but failed to find unacceptable levels of stray voltage.

A higher court denied the Haldersons’ appeal, upholding Horne’s decision, saying “the evidence at trial was insufficient for a reasonable jury to find, by clear and convincing evidence, that NSP’s conduct was willful, wanton, or reckless.” The appeals court also denied Xcel’s request for a new trial.

The Haldersons are now asking the Supreme Court to review the case, which they say hinges on an issue “of compelling statewide importance.”

Stray voltage refers to current that leaks from neutral wires into the earth. Animals that come into contact with a grounded object — such as a watering trough — can receive small shocks. This can cause dairy cattle to avoid eating, become stressed and generally produce less milk, according to research from the U.S. Department of Agriculture.

Governor Walker Says Flood Damage Tops $200 Million

Gov. Scott Walker says severe flooding has caused more than $200 million in damage.

The governor tweeted Thursday morning that estimates put the damage at $208.7 million overall, including $98.2 million in damage to homes, $40.8 million in damage to businesses and $69.6 million to public infrastructure.

Wisconsin Emergency Management spokeswoman Lori Getter says that number is expected to rise. State and local officials are still responding to rising waters and haven’t gotten full damage estimates yet.

She says Federal Emergency Management Agency survey teams are planning to spend at least a week in Wisconsin assessing damage. She says that data will be used to make a request for federal disaster assistance.