Hamilton Political Tidbits - April 25, 2011
Introduction
The 2011 Wisconsin Supreme Court Election remains in the news even following the canvassing that showed incumbent Justice Prosser the winner by over 7,300 votes. There has never been a recount in Wisconsin that has ever come anywhere close to approaching the margin of victory in this election.
Action on the State’s Biennial Budget Bill is moving forward as the Joint Committee on Finance (JFC) has completed agency briefings and has held several public hearings in various parts of the state. Voting on the bill by JFC is expected to start on Thursday, April 28. Please see some highlights below.
Meanwhile, the Assembly leadership announced that its house will be in session next month on the 10th, 11th and 18th, and will not be in session on the remaining previously scheduled session days of May 12th, 13th, 16th, 17th and 19th.
As is typical of odd-numbered years, the focus over the next several months will be on adoption of the above referenced budget including again addressing a deficit of approximately $3.6 billion.
Joint Finance Continues Work on Budget Bill
The Joint Finance Committee has completed its scheduled agency briefings and four public hearings, which were held at various locations throughout the state. The Committee is scheduled to start voting on the Governor’s Budget Bill (SB 27 / AB 40) April 26.
With the Republicans holding a majority in both houses, the Republican-dominated committee (12-4) is expected to endorse the bulk of the Governor’s proposal, but the JFC co-chairs have already signaled there will likely be a number of JFC revisions, including such issues as splitting UW-Madison from the rest of the UW System, changes to SeniorCare, and funding for local recycling programs.
The Joint Finance Committee expects to complete its action on the budget by the end of May, and most observers believe that most of the significant changes to the Governor’s budget will be made in committee. By tradition, the Senate is in line to take up the budget bill first this session, but the JFC co-chairs announced on April 20 that the JFC Substitute Amendment will be incorporated into AB 40 and taken up first by the Assembly. Both houses of the Legislature are expected to complete their action on the bill and send it to Governor Walker for sign/veto decisions prior to the start of the next state fiscal year (July 1, 2011).
With regard to non-fiscal policy items in the budget, The Legislative Fiscal Bureau (LFB) released its delineation of non-fiscal policy items contained in the Governor’s bill on April 20, which contained 46 separate items. The JFC co-chairs also released a memo on April 20 outlining 21 non-fiscal policy items that would be stripped from the budget and not taken up by the Committee.
On April 15, the LFB released a series of budget memos regarding:
(1) the general fund condition;
(2) the use of certain funds for other purposes;
(3) state tax and fee modifications contained in the budget, and;
(4) property tax estimates under the bill.
Summary points in those various memos include the following:
- The GPR ending balance under the bill is $107 million or $42 million when the required statutory balance of $65 million is applied.
- The structural deficit (the difference between general fund revenue and future spending commitments carried forward to the 2013-15 biennium) is reduced to $31 million. By comparison, going back to the 1997-99 biennium, the prior lowest structural deficit was $1.499 billion in 2007-09. The highest structural deficit was $2.867 billion in 2003-05, followed by $2.511 billion carried into the 2011-13 biennium.
- The budget bill includes several provisions relating to transferring general purpose revenue (GPR) or program revenue (PR) funds to other funds for other purposes. Such lapses or transfers amount to roughly $425 million. In addition, there are two other budget management items that authorize the DOA Secretary to lapse or transfer an additional $176 million from GPR and PR appropriations to balance the general fund.
- Tax increases over the biennium total $49 million, mostly in modifications to the Earned Income Tax Credit. Tax decreases total $83 million, mostly related to deferral of capital gains reinvested in a Wisconsin business and Combined Reporting loss carry forward - for a net decrease of $34 million in GPR taxes.
- Fee increases over the biennium (PR and SEG fees) total $135 million, with the bulk of the increase ($107 million) in UW tuition. Fee decreases total $25 million, with the bulk ($21 million) relating to elimination of the vehicle environmental impact fee, which is recreated as a $9.00 addition to the vehicle title fee and included in the total of fee increases. In total - a net increase of $110 million in various fees.
- Property tax estimates under the bill reflect a $23 increase on a median valued home (roughly $160,000) or 0.8 percent increase in FY 12 and a $13 dollar increase or 0.4 percent in FY 13.
Justice David Prosser Wins Supreme Court Race; Kloppenburg Calls for Recount
Wisconsin Supreme Court Justice David Prosser defeated his opponent, JoAnne Kloppenburg, in the April 5 election. The normally sleepy spring election made headlines due to Gov. Scott Walker’s recent collective bargaining legislation. Opponents used the controversial law as a way to drive out voters and attempt to unseat the conservative Justice Prosser in favor of the liberal Kloppenburg.
The day after the election, Kloppenburg clung to a slight 204-vote lead and claimed victory. However, all the counties had not officially certified their final vote totals. Later in the day, it was revealed that Waukesha County had failed to report the City of Brookfield’s numbers, which gave Justice Prosser a 7,316 lead.
Justice Prosser’s final lead fell just under 0.5 percent after all the counties officially certified their numbers – just enough for a candidate to petition for a statewide recount paid for by taxpayers. Kloppenburg filed a petition for a statewide recount, which begins this week. The recount in the large counties may take weeks, if not months, to complete.
High Court Hears Oral Argument in High Capacity Wells Case
The Wisconsin Supreme Court this month heard oral arguments in a case that could have broad implications determining the amount of regulatory authority state agencies have when it comes to issuing permits. The Great Lakes Legal Foundation (GLLF) filed an amicus brief requesting the Court to accept the case.
In Lake Beulah Management District v. Village of East Troy, the underlying issue is whether the Department of Natural Resources (DNR) has authority to regulate high capacity wells beyond the specific provisions set forth in the statutes by the Legislature.
The DNR approved a high capacity well in the Village of East Troy, located 1400 feet from the shores of Lake Beulah, an 834-acre lake. A conservationist group challenged the permit arguing that the DNR failed to consider the environmental effects of the proposed high capacity well. The Village of East Troy countered that the DNR lacked the statutory authority to consider the environmental effects of the well because it is not the type of well that the Wisconsin statutes specifically mandate environmental review prior to permit approval.
The administrative law judge ruled in favor of East Troy. The judge dismissed the arguments made by the conservationist group that the DNR has plenary authority under the Public Trust Doctrine to limit the type of high capacity well applied for by the Village of East Troy. The circuit court affirmed the administrative law judge’s decision.
The Court of Appeals, however, reversed. In its decision, the court swept aside the specific provisions in the statutes describing DNR’s specific authority with respect to regulating high capacity wells. The court ruled that the agency had plenary authority under the Public Trust Doctrine to consider other factors not included in specific statutes pertaining to high capacity wells.
GLLF, on behalf of the Midwest Food Processors Association, Wisconsin Paper Council, and Wisconsin Manufacturers and Commerce filed an amicus brief (friend of the court) with the Court. In its brief, GLLF argued that if allowed to stand, the Court of Appeals decision will result in state agencies having virtually unlimited regulatory authority beyond those powers specifically granted to them by state statutes.
A decision by the Wisconsin Supreme Court is expected by July.
Supreme Court Issues New Decisions – Court Is Once Again Divided
The Wisconsin Supreme Court issued two decisions in recent weeks dealing with the Department of Natural Resources and constitutionality of a law changing the way property value assessments are challenged.Below is a discussion of each case.
Andersen v. Dept. of Natural Resources, 2011 WI 19 (March 23, 2011)
In a 5-2 decision, the Wisconsin Supreme Court concluded that Wisconsin’s permit review law (Wis. Stat. § 283.63) did not require the Department of Natural Resources (DNR) to hold a public hearing on a petition for review of a permit issued under the federal Clean Water Act to Fort James’ Broadway Mill, which is located in Green Bay.
Two environmental groups – Clean Water Action Council of Northeastern Wisconsin, Inc. and the National Wildlife Federation – filed a petition for judicial review of the DNR’s order denying their request for a public hearing under the Wisconsin statute. The permit was reviewed by the federal Environmental Protection Agency (EPA), which did not object to the reissuance of the permit. The two environmental groups alleged that the permit failed to comply with the federal Clean Water Act.
The circuit court affirmed DNR’s order denying the petition for a public hearing. The Court reasoned that Wisconsin’s law allowing review of state permits “does not require DNR to hold a public hearing on a petition for review when the premise of the petition is that the permit fails to comply with…the federal Clean Water Act and federal regulations.” According to the Court, requiring DNR to hold a public hearing on the environmental groups’ petition for review would undermine the careful federal and state balance created by the Clean Water Act. Instrumental in the Court’s decisions was the fact that the EPA had reviewed the permit and did not object to its reissuance.
The decision was authored by Justice Ziegler, and joined by Justices Crooks, Prosser, Roggnsack, and Gableman.
The dissent, authored by Chief Justice Abrahamson and joined by Justice Bradley, argues that the majority decision “inverts the federal-state partnership and the balance set forth in the Clean Water Act and effectively eliminates a meaningful forum for the petitioners.” The dissent further argues that the DNR should have the authority to determine whether permit conditions it established comply with federal law, and that the agency should provide petitioners with a public hearing on the permit in question.
Metropolitan Associates v. City of Milwaukee, 2009 WI 20 (March 25, 2011)
In Metropolitan Associates, the issue was whether a recently enacted law allowing municipalities to pass an ordinance altering the procedure taxpayers must follow when challenging a municipal property tax assessment was unconstitutional.
A taxpayer has the right to challenge a property tax assessment before the Board of Review for the municipality where the tax property is located. Prior to 2007 Wis. Act 86 (Act 86), a taxpayer had two ways of challenging the Board of Review’s decision in circuit court: 1) common law certiorari review, or 2) statutory de novo review. Common law certiorari review is a limited review of the record made before the Board of Review, whereas de novo review provided the taxpayer more protection by allowing the circuit court to create its own record and gave no deference to the Board of Review’s decision.
Act 86 allowed municipalities to pass an ordinance opting out of the de novo review. Instead, taxpayers in these municipalities were provided an “enhanced certiorari review,” which was broader than the existing common law certiorari review, but narrower than the previous de novo review.
The Court concluded that Act 86 treated taxpayers in the “opt out” municipalities significantly different than taxpayers in municipalities that did not opt out of de novo review. The Court ruled that Act 86 violated the equal protection clause of the Wisconsin Constitution, and therefore struck down the law.
The decision was authored by Justice Gableman, and joined by Justices Prosser, Roggensack and Ziegler.
Chief Justice Abrahamson issued a dissenting opinion, and was joined by Justices Crooks and Bradley. The dissent argued that Act 86 did not treat the two sets of taxpayers differently, and even if it did, that a rational basis existed allowing municipalities to opt out of de novo review.
Former State Rep. Montgomery Appointed PSC Chair
Gov. Scott Walker recently announced that Phil Montgomery will be the new Public Service Commission chair. Montgomery is a former state representative from Green Bay, where he served on the Special Committee on Clean Energy Jobs, the Joint Finance Committee, and was the former chair of the Assembly Committee on Energy and Utilities.
Montgomery is replacing outgoing PSC Commissioner Mark Meyer. The two remaining commissioners are former Governor Doyle appointees, Eric Callisto and Lauren Azar. Callisto is the former PSC chair.
EPA Issues New Mercury Regulations
This month, the EPA issued new regulations requiring power plants using coal or fuel oil to reduce emissions of mercury and other hazardous pollutants by 91 percent. The ultimate effect of the regulations could mean a shift to natural gas by many power plants.
A number of groups voiced their opposition over the new regulations, including the Electric Reliability Coordinating Council. According to the group, in addition to the numerous other regulations issued by the EPA, the new mercury regulations will force utilities to invest heavily in new technology or require new construction, which will drive up energy costs.
To learn more about the new rules, please visit the Hamilton Consulting Regulatory Watch.
U.S. Supreme Court Appears Ready to Strike Down Climate Change Lawsuit
The Supreme Court of the United States this month heard oral arguments in a case attempting to give private parties the ability to set emission caps on utilities for their alleged contribution to climate change.
In American Electric Power Co. v. Connecticut, a group of state attorney generals sued five utilities claiming that their emissions are a “public nuisance” under the common law. The federal district court dismissed the claims ruling that the parties did not have standing. The U.S. Court of Appeals for the Second Circuit reversed the lower court and found that there exists a federal common law cause of action for contributing to climate change.
Whether the Second Circuit’s decision is upheld, however, remains to be seen. Based on the questions posed by the Supreme Court Justices during oral arguments, it did not appear that they were buying the plaintiffs’ argument that there is an implied common law nuisance claim. Specifically, the Justices did not seem to approve of the courts setting global warming policies, which is instead something to be handled by the legislative branch.
A decision will be issued by July.
News Clips
Supreme Court recount could be ploy: Chippewa Herald, Apr. 24, 2011. An expert in legal politics says assistant Attorney General JoAnne Kloppenburg may have launched a recount of votes from the April 5 state Supreme Court race to ultimately sway the outcome of a legal challenge to Gov. Scott Walker’s union reform efforts.
Green Bay Sen. Dave Hansen reflects on budget repair bill actions: Green Bay Press-Gazette, Apr. 24, 2011. Hansen, who rose to party leadership in 2002 after just two years in the Senate, now is facing an uncertain future.
Kapanke fires back in recall skirmish; donations rolling in: La Crosse Tribune, Apr. 23, 2011.
Count on some chaos in state Supreme Court recount: Milwaukee Journal Sentinel, April 22, 2011. Under a deal reached Thursday in Dane County Circuit Court, ballots will be tallied by hand in all or part of 31 counties and by machine elsewhere.
A little help, governor (opinion): Milwaukee Journal Sentinel, April 22, 2011. A suggested compromise on Gov. Scott Walker's recycling program is good. But some state financial support from tipping fees would be even better.
Recall petitions filed against 4 lawmakers: Milwaukee Journal Sentinel, April 21, 2011. Both sides questioning the integrity of the groups gathering signatures.
Kloppenburg requests recount in state Supreme Court race: Milwaukee Journal Sentinel, April 20, 2011. The official tally shows Kloppenburg lost to Prosser by 7,316 votes - less than 0.5% of the 1.5 million votes cast in the race.
Recount unnecessary (opinion): Milwaukee Journal Sentinel, April 20, 2011. A mere 0.5% of the votes cast in April separate incumbent Justice David Prosser and challenger JoAnne Kloppenburg. But the likelihood of the challenger overcoming this is slim.
Governor backs down on recycling: Milwaukee Journal Sentinel, April 20, 2011. Administration suggests merging garbage collection operations.
Waukesha canvass gets OK: Milwaukee Journal Sentinel, April 19, 2011. But a few anomalies noted, involving only a handful of notes.
Governor backs down on recycling: Milwaukee Journal Sentinel, April 16, 2011. Administration suggests merging garbage collection operations.